ADVENT GROUP MINISTRIES, INC.

Transcription

1 ADVENT GROUP MINISTRIES, INC. Financial Statements With Independent Auditor's Report December 31, 2016 Dave K & Associates Certified Public Accountant Davis, California

2 ADVENT GROUP MINISTRIES, INC. Table of Contents December 31, 2016 Pages(s) Independent Auditor's Report 1-2 Financial Statements: Statement of Financial Position 3 Statement of Activities 4 Statement of Functional Expenses 5 Statement of Cash Flows 6 Notes to Financial Statements 7-12 Supplemental Information 13 Schedule of Expenditures of Federal Awards 14 Independent Auditor's Report on Compliance and Internal Control over Financial Reporting Based on an Audit of Financial Statements in accordance with Government Auditing Standards Independent Auditor's Report on Compliance with Requirements Applicable to Each Major program and Internal Control Over Compliance in accordance with OMB Uniform Guidance Schedule of Findings and Question Cost 19 Summary of Audit Results 20 Audited Cost Data Sheets SR3, SR4 & SR10 21

3 Dave tg & Associates Certified Public Accountants Dave Kakwani, CPA ' Keefe Place Davis, CA (530) Fax :( 530) INDEPENDENT AUDITOR'S REPORT To the Board of Trustees Advent Group Ministries, Inc. San Jose, California Report on the Financial Statements I have audited the accompanying statement of financial position of Advent Group Ministries, Inc., (a nonprofit corporation) as of December 31, 2016, and the related statements of activities, functional expenses and cash flows for the year then ended, and the related notes to the financial statements. Report on Schedule of Expenditure of Federal Awards I have audited the accompanying schedule of expenditures of federal awards for the Advent Group Ministries, Inc. for the year ended December 31, 2016, and the related notes. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to fmancial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, I express no such opinion. An audit also includes evaluating 1

4 the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as Ill as evaluating the overall presentation of the financial statements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion. Opinion In my opinion, the financial statements and Schedule of Expenditures of Federal Awards referred to above present fairly, in all material respects, the financial position of Advent Group Ministries, Inc. as of December 31, 2016 and the changes in its net assets and cash flows for the year then ended in conformity with generally accepted accounting principles, generally accepted in the United States of America. Other Matters My audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal Regulations (CFR) Uniform Administrative Requirements, Cost Principle, and Audit Requirements for Federal Awards, is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures ineaccordance with auditing standards generally accepted in the United States of America. In My opinion, the information is fairly stated, in all material respects, in relation to the fmancial statements as a whole. In accordance with Government Auditing Standards, I have also issued my report dated June 28, 2017, on my consideration of Advent Group Ministries, Inc., Inc.'s internal control over financial reporting and on my tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of my testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Advent Group Ministries, Inc., Inc.'s internal control over financial reporting and compliance. Davis, California June 28, 2017 sp k J. -3 d

5 ADVENT GROUP MINISTRIES, INC. Statement of Financial Position December 31, 2016 The accompanying notes are an integral part of the financial statements. ASSETS Current Assets Cash and Cash Equivalents 51,051 Accounts Receivable (Net) 334,559 Prepaid Expenses 7,181 Employee Advances Total Current Assets 410,541 Fixed Assets Property and Equipment(Note 2) 1,881,034 Less: Accumulated depreciation (933,554) Net Fixed Assets 947,480 Other Assets Loan Fees- Net of Amortization 17,914 Hungerford Accounts Receivable Trust 11,774 Security Deposits 5,100 Total Other Assets 34,788 Total Assets $ 1,392,809 LIABILITIES AND NET ASSETS Current Liabilities Accounts Payable 107,534 Accrued Expenses 208,118 Deferred Income 128,249 Other Refunds and Deposits 1,200 Credit Cards Payble 49,002 Current Portion of Note Payable 65,544 Total Current Liabilities 559,647 Long-Term Liabilities Notes Payables, Net of Current Portion Total Long-Term Liabilities 411,125 Total Liabilities $ 970,772 NET ASSETS Total Unrestricted Net Assets 422,037 Total Liabilities and Net Assets $ 1,

6 ADVENT GROUP MINISTRIES, INC. Statement of Activities For the Year Ended December 31, 2016 The accompanying notes are an integral part of the financial statements. REVENUE AND OTHER SUPPORT Unrestricted Support, Revenue and Grant: Group Home Foster Care $ 1,605,330 Group Home Nest Program 215,608 Counseling Income 1,062,457 Fund Raising, Donations and Contributions 491,123 Other Income 65 Investment Income 19,195 Total Unrestricted Support, Revenue and Gains $ 3 393,778 EXPENSES Program Expenses Group Homes $ 1,731,697 Group Homes- The Nest Program 213,982 Counseling Programs 939,819 Other Programs 50,615 Total Program Expenses 2,936,113 Fund Raising Expenses 110,808 General and Administrative Expenses 557,277 Total Expenses $ 3,604,198 INCREASE (DECREASE) IN NET ASSETS (210,420) NET ASSETS AT BEGINNING OF YEAR 632,457 NET ASSETS AT END OF YEAR $ 422,037 4

7 ADVENT GROUP MINISTRIES,INC. Statement of Functional Expenses For the Year ended December 31, 2016 The accompanying notes are an integral part of the financial statements. Group Group Home The Refuge Total Fund Management Homes The Nest Counseling programs Programs Raising and General Total Salaries and Wages $ 1,059,392 $ 128,065 $ 719,759 $ 30,293 $ 1,937,509 $ 61,398 $ 247,429 $ 2,246,336 Payroll Taxes 83,599 9,356 43,285 2, ,453 3,773 22, ,122 Medical and Dental Insurace 54,324 12,997 31,007 3, ,402 13,258 25, ,634 Employee Benefits 96,234 16,042 25,021 3, ,091 3,003 2, ,551 Direct Program Expenses 102,869 6,049 5,948 1, , ,351 Food 39,752 2,486 16, ,934 58,934 Education and Training 10,957 1,325 7, , ,559 23,233 Building and Equipment 43,866 9,821 53, ,408 71,097 Dues and Subscriptions 2,929 9,099 3,887 2,152 18,067 6,684 24,751 Administration Operation 38,522 3,043 19, ,497 7, , ,136 Bank Charges and Interest ,647 17,979 Taxes and Licenses 13, ,930 47,667 61,597 Mortgages and Property Taxes 3,895 7,126 1,686 12,707 7,335 20,042 Insurance 24,020 2,609 15, , ,169 Rent 15,018 4,467 17,493 1,057 38,035 7,999 46,034 Utilities 28,872 6,910 1,634 37,416 12,020 49,436 Professional Services 1, , , ,105 21,216 Vehicle Expenses 33,393 2, ,299 1,430 38,729 Travel and Transportation 28,898 1,044 17, ,964 1,021 6,173 55,158 Depreciation Expenses 50,600 50,600 11,300 61,900 Other Miscellaneous Expenses 3,737 3, Fund Raising Expenses 19,649 19,649 Total expenses $ 1,731,697 $ 213,982 $939,819 $50,615 $ 2,936,113 $ 110,808 $ 557,277 $ 3,604,198

8 ADVENT GROUP MINISTRIES, INC. Statements of Cash Flows For the Years Ended December 31, 2016 The accompanying notes are an integral part of the financial statements. CASH FLOWS FROM OPERATING ACTIVITIES Unrestricted Increase in Net Assets: $ (210,420) Adjustments to reconcile increase in net assets to net cash provided by operating activities: Depreciation and Amortization 62,307 (Increase) Decrease in Operating Assets: Accounts Receivable (84,705) Accounts Payable (4,670) Accrued Expenses 14,968 Employee Advances (9,447) Prepaid Expenses (31) Other Advances 400 Defferred Income 128,249 Credit Card and Line of Credit (6,843) Net Cash Provided by Operating Activities (110,192) CASH FLOWS FROM INVESTING ACTIVITIES Investments Net Cash (Used) Provided by Investing Activities CASH FLOW FROM FINANCING ACTIVITIES Loan Fees (18,321) Notes Payable (36 145) Net Cash (Used) Provided by Financing Activities (54,466) NET INCREASE IN CASH AND CASH EQUIVALENTS (145,487) CASH, AS OF DECEMBER 31, ,538 CASH, AS OF DECEMBER 31, ,051 6

9 ADVENT GROUP MINISTRIES, INC. Notes to Financial Statements December 31, 2016 NOTE 1 ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Advent Group Ministries, Inc. (AGM), a nonprofit corporation was organized in 1985 under the laws of the State of California for public benefits and charitable purposes within the meaning of section 501 (C) (3) of the Internal Revenue Code. The specific purpose of AGM is to provide Group Home residential care in various locations for children with social emotional, mental health issues and provide drug and alcohol recovery services. At present, AGM has a skilled group of professionals working with difficult children and their families in a broad array of programs. These professionals believe in challenging themselves and meet on an on-going basis extensive training in the area of monitoring, counseling, support, and case management services. Basis of Presentation The financial statements are presented in conformity with Financial Accounting Standards Board Accounting Standards Codification 958 (FASB ASC 958) of Not-For- Profit Organizations. Under FASB ASC 958, the Organization reports information regarding its financial position and activities according to three classes of net assets: unrestricted, temporarily restricted, and permanently restricted. The net assets of the AGM are classified and reported as follows: Unrestricted net assets: Net assets that are not subject to or restricted by donor-imposed. Restricted net assets: Net assets subject to donor-imposed stipulations that will expire by the passage of time or can be fulfilled and removed by action of the organization pursuant to those stipulations. AGM does not have any restricted net assets as of December 31, Basis of Accounting The accompanying financial statements have been prepared on the accrual basis of accounting and accordingly reflect all significant receivables, payables and other liabilities. 7

10 ADVENT GROUP MINISTRIES, INC. Notes to Financial Statements December 31, 2016 NOTE 1 ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued) Income taxes No provision has been made for income taxes in the financial statements. AGM is a California not-for-profit corporation that is exempt from income taxes under Section 501(c) (3) of the Internal Revenue Code and classified by the Internal Revenue Services as other than a private foundation. Use of estimations The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimations and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimations. Support and Revenue Funding for AGM is provided by a combination of federal, state and local funds through the oversight of the State of California granting agencies. Promises to Give Unconditional promises to give are recognized as revenues or gains in the period received and as assets, decreases of liabilities, or expenses depending on the form of the benefits received and approximate fair value at December 31, In addition, bequests are recorded as unconditional promises to give when a will has been declared valid. Conditional promises to give are recognized when the conditions on which they depend are substantially met. Cash and Cash Equivalents For financial statement purposes, AGM considers cash on hand in banks and investments with maturities of three months or less as cash and cash equivalent. 8

11 ADVENT GROUP MINISTRIES, INC. Notes to Financial Statements December 31, 2016 NOTE 1 ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued) Accounts Receivable and Uncollectible AGM uses the direct write off method to recognize bad debt expense only when a specific account is determined to be uncollectible. Ordinarily, the direct write-off method is not considered to be in accordance with generally accepted accounting principles. However, AGM is able to estimate net receivable on the basis of allowed units of services and chances of not collecting from governmental agencies are remote, therefore, the direct write off method is acceptable. Property and equipment Purchased property and equipment are carried at cost. It is the policy of AGM to capitalize property and equipment in excess of $1,000. Depreciation of property and equipment is calculated using the straight line cost recovery system based on estimated useful lives. Concentration of Credit Risk AGM maintains its cash balance in various financial institutions in California. The balances are insured by the Federal Depository Insurance Corporation up to $250,000 per institution. As of December 31, 2016 the AGM had cash balance under $250,000, although cash balances do rise above this amount from time to time during the normal course of business. Functional Allocation of Expenses Expenses are charged to each program and support services based on a combination of specific identification and percentage allocation. Costs incurred in direct connection to the operation of the program are allocated to program services in full. General and Administrative costs that are incurred in connection with the general operations of the agency and support of the program have been allocated based on estimate of benefits derived, as assessed by the management.

12 ADVENT GROUP MINISTRIES, INC. Notes to Financial Statements December 31, 2016 NOTE 1 ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued) Contingencies AGM has received federal and other governmental funds for specific purposes that are subject to review and audit by the funding agencies. Such audit could generate expenditure disallowances or refunds payable under terms of the agency contract. No material amounts are currently payable. Loss of governmental support would have a significant impact on AGM's ability to provide its program services. NOTE 2 PROPERTY AND EQUIPMENT Property and Equipment consist of the following: Description Value Land $645,405 Real Property and Building 751,595 Capital Improvements 322,302 Furniture and Equipment 88,217 Vehicles 73,515 Total Property and Equipment $1,881,034 Less Accumulated depreciation (933,554) Net Property and Equipment 947 (Some donated assets are not depreciated) NOTE 3 NOTES PAYABLE Long-term debts primarily consisted the following at December 31, 2016 Mortgage Note Payable: Health Facilities Financing Authority $410,606 Meriwest Business Bank 66, ,669 Less Current Portion (65,544) Total Long-term debts

13 ADVENT GROUP MINISTRIES, INC. Notes to Financial Statements December 31, 2016 A note of California Health Facilities Financing Authority that bears interest at 3% per annum and collateralize by certain real estate. Payments are due monthly and the note matures August On March 2015, AGM converted a revolving line of credit with Meriwest Business Bank, into a fixed term loan at 4.25% interest per annum; payments are monthly. The balance at December 31, 2016 including accrued interest was $66,063. The following is schedule of future minimum payments: Year ended December 31, 2017 $ 65, , , , ,640 Payable After five years 334,849 Total 583 NOTE 4 ACCOUNTS RECEIVABLE The Accounts Receivables as of December 31, 2016 consist of the following: Receivable from public agencies and fundraising collections $346,332 Hungerford Trust Account written off (11 773) Net Accounts Receivable as of December 31, 2016 $334,559 NOTE 5 - OPERATING LEASES OBLIGATION Effective September 1, 2014 AGM renewed additional five years lease extension for office space at 90 Great Oaks Blvd, Suite 108 San Jose, California, under non-cancelable lease agreements expiring on August 31, The current rent is $3, per month, adjustable upward by 4.95% each September. 11

14 ADVENT GROUP MINISTRIES, INC. Notes to Financial Statements December 31, 2016 The following is a schedule of future minimum lease payments: For fiscal year ending December 31, 2017 $48,314 For fiscal year ending December 31, ,022 For fiscal year ending December 31, ,345 Total Future minimum Lease payments $ NOTE 6- CONTINGENCIES AGM receives a substantial portion of its support from Federal, State, and local government agencies for specific purposes. A significant reduction in the level of this support may have an adverse effect on AGM to continue those programs and activities which are funded by these grantors. In addition, the related grants/contracts are subject to review and audit by the grantor agencies. Such an audit could disallow any or all expenditures under the terms of the grants. NOTE 7- EVALUATION OF SUBSEQUENT EVENTS AND GOING CONCERN The management of AGM reviewed the results of operations and evaluated the ability of the organization to meet its obligations, for the period of time from its year end December 31, 2016 through June 28, 2017 the date of the financial statements were available to be issued and have determined that no adjustments are necessary to the amounts reported in the accompanying financial statements nor have any subsequent events occurred, the nature of which would require disclosure. Management evaluated and assessed the organization's ability to continue as a going concern. Management believes that the organization will be able to meet its obligations as they become due, based on relevant conditions such as its liquid funds at the date of financial statements issued, rate of foster care has been increased for FY 2017, and the organization is undergoing accreditation requirements, the accreditation of organization will increased the future rate of foster care. 12

15 SUPPLEMENTARY INFORMATION 13

16 ADVENT GROUP MINISTRIES, INC. Schedule of Expenditures of Federal Awards December 31, 2016 Federal Grantor/Pass through Grantor/ Program title Federal CFDA Number Federal Expenditure U. S. Department of Health and Human Services Pass-through program from State Department of Social Services: Group Home Program $815,953 Group Home NEST PROGRAM ,589 U. S. Department of Health and Human Services Pass-through program from Santa Clara County: Block Grant for SAPT-Prevention and Treatment of Substance abuse ,166 Block Grant for SAPT-Adolescent Residential Treatment of Substance abuse ,008 Total Federal Assistance Note: The schedule of expenditures of federal awards includes the federal award activity of the Organization under programs of the federal government for the year ended. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Organization, it is not intended to and does not present the financial position, changes in net position, or cash flows of the Organization. Expenditures reported on the Schedule are reported on the basis of accounting generally accepted in the United States of America (U.S. GAAP). Such expenditures are recognized following the costs principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. 14

17 Dave K. &Associates Certified Public Accountants Dave Kakwani, CPA ' Keefe Place Davis, CA (530) Fax :( 530) INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE AND INFERNAL CONTROL IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Board of Trustees Advent Group Ministries, Inc. San Jose, California I have audited the financial statements of Advent Group Ministries, Inc. (a nonprofit corporation) as of and for the year ended December 31, 2016, and have issued my report thereon dated June 28, I conduc eel my audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audit contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing my audit, I considered Advent Group Ministries, Inc. internal control over financial reporting in order to determine my auditing procedures for the purpose of expressing my opinion on the financial statements and not to provide an opinion on internal control over financial reporting. Accordingly, I do not express an opinion on the effectiveness of the entity's internal control over financial reporting. A control deficiency exists when design or operation of a control does not allow management or employees in the normal course of performing their assigned functions, to prevent or detect misstatement on a timely basis A significant deficiency is a control deficiency, or combination of control deficiency that adversely affect the entity's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally acceptable accounting principles such that there is more than a remote likelihood that a misstatement of the entity's financial statements that is more than inconsequential will not be prevented or detected by the entity's internal control. A material weakness is a significant deficiency, or combination of significant deficiency that results in more than a remote likelihood that a material misstatement of the consolidated fmancial statements will not be prevented or detected by the entity's internal control. My consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weakness. I did not identify any deficiencies in internal control over financial reporting that I consider to be material weakness, as defined above. 15

18 Compliance and Other Matters As part of obtaining reasonable assurance about whether Advent Group Ministries, Inc. financial statements are free of material misstatement, I performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of my audit, and accordingly, I do not express such an opinion. The results of my tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. This report is intended solely for the information and use of the board of directors, management, and awarding agencies and pass-through entities. This report is not intended for and should not be used by anyone other than these specified parties. Davis, California speout-t IC. ic (aitoothcza4 June 28,

19 Dave K & Associates Certified Public Accountants Dave Kakwani, CPA ' Keefe Place Davis, CA (530) Fax :( 530) INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB UNIFORM GUIDANCE. To the Board of Trustees of Advent Group Ministries, Inc. San Jose, California Report on Compliance for Each Major Federal Program I have audited Advent Group Ministries, Inc.'s compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of Advent Group Ministries, Inc.'s major federal programs for the year ended December 31, Advent Group Ministries, Inc.'s major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Management's Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs. Auditor's Responsibility My responsibility is to express an opinion on compliance for each of Advent Group Ministries, Inc.'s major federal programs based on my audit of the types of compliance requirements referred to above. I conducted my audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S., Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that I plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Advent Group Ministries, Inc.'s compliance with those requirements and performing such other procedures as I considered necessary in the circumstances. I believe that my audit provides a reasonable basis for my opinion on compliance for each major federal program. However, my audit does not provide a legal determination of Advent Group Ministries, Inc.'s compliance. Opinion on Each Major Federal Program In My opinion, Advent Group Ministries, Inc. complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended December 31,

20 Report on Internal Control Over Compliance Management of Advent Group Ministries, Inc. is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing My audit of compliance, I considered Advent Group Ministries, Inc.'s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance Accordingly, I do not express an opinion on the effectiveness of Advent Group Ministries, Inc.'s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. My consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. I did not identify any deficiencies in internal control over compliance that I consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of my testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Davis, California June 28, 2017 iout k oit azocloi 18

21 ADVENT GROUP MINISTRIES, INC. Schedule of Findings and Question Cost December 31, 2016 FENDING FOR FISCAL YEAR ENDING DECEMBER 31, 2016 No finding reported for the year ended December 31, QUESTION COST FOR FISCAL YEAR ENDING DECEMBER 31, 2016 No question cost reported for the year ended December 31,

22 ADVENT GROUP MINISTRIES, INC. Summary of Audit results December 31, 2016 Financial Statements: Type of auditor's report issued Unqualified Internal Control over financial reporting: Material Weaknesses identified Reportable conditions identified that are not considered to be material weakness Material noncompliance to financial statements noted No No No Federal Awards: Internal Control over major program: Material Weaknesses identified Reportable conditions identified that are not considered to be material weakness Type of auditor's report issued on compliance for Major program: Any audit finding disclosed that are required to Be reported in accordance with section 510(a) of Circular A-133? No Unqualified No Identification of major programs: CFDA Number Name of Federal Program Federal Foster care program SAPT Adolescent Residential Treatment of Substance Abuse Cost data reported on SR3 and SR4 are based on costs data reported on the audited financial statements. 20

23 AUDITED COST DATA SR3, SR4 and SR 10 21

24 STATE OF CALIFORNIA- HEALTH AND HUMAN SERVICES AGENCY CALIFORNIA DEPARTMENT OF SOCIAL SERVICES CERTIFICATION OF AUDITED COST DATA The Group Home or Foster Family Agency corporation should have their Certified Public Accountant (CPA) complete and submit this form as part of the required financial audit if the CPA has not otherwise provided written documentation which clearly shows that the required cost data reports were audited and that the information was fairly stated in all material respects in relation to the basic financial statements taken as a whole. Please have the completed and signed form sent to: California Department of Social Services Program and Financial Audits Bureau ATTENTION: Financial Audits Unit Manager 744 P Street, MS 9-23 Sacramento, California GROUP HOME OR FOSTER FAMILY AGENCY CORPORATE NAME ADVENT GROUP MINISTRIES, INC. STREET ADDRESS 90 GREAT OAKS BLVD, #108 CITY, STATE, AND ZIP CODE SAN JOSE, CA PROGRAM NUMBERS(S) and PROGRAM FISCAL YEAR (MONR-MONR) 01/ /2016 PROVIDER PHONE NUMBER (408) The attached supplementary cost data reports are presented for the purposes of additional analysis and are not a required part of the basic financial statements but are required as supplementary information by the California Department of Social Services in accordance with Manual of Policies and Procedures Section Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, is fairly stated in all material respects in relation to the basic fianancial statements taken as a whole. Check only the forms which apply: SR 3 SR 4 FCR 12FFA In compliance with the False Claims Act (31 U.S.C ), I certify that the information on this form is true and correct. PRINTED NAME OF CPA DAVE K & ASSOCIATES ADDRESS ' KEEFFE PLACE CITY, STATE AND ZIP CODE DAVIS, CA SIGNATURE OF CPA cup k 41( DATE June 28, 2017 SR 10 (2/06)

25 STATE OF CALIFORNIA - HEALTH AND HUMAN SERVICES AGENCY CALIFORNIA DEPARTMENT OF SOCIAL SERVICES GROUP HOME PROGRAM COSTS REPORT (SR 3) This form is to collect cost information for the group home program. Report actual allowable and reasonable costs. If the corporation operates more than one group home program and/or the program provides other services (example: day care, on-site education, adult services, foster family agency, etc.) costs must be allocated to the appropriate activity and only the allowable group home program costs for the program are to be reported. Describe the methodology used to allocate costs if other than the standard allocation methodology indicated in current regulations (MPP Section et seq.) NOTE: A separate cost report form must be completed for each group home program operated by the corporation. Number of months in cost reporting period 12 CORPORATE NAME: ADVENT GROUP MINISTRIES, INC. COST GROUPS I PROGRAM NAME (IF DIFFERENT) CORPORATE NUMBER PROGRAM NUMBER PROVIDER FISCAL YEAR (MO/YR - MO/YR) 01/ /2016 A Et C D E F TOTAL i PROGRAM I OFFSETS COSTS L. REASONABLENESS ADJUSTMENTS FINAL COSTS (COL. A MINUS COLS. B &C) I Child Care & Supervision $996,0321 $996, % 2 Social Work Activities $297,5171 $297, % 3 Food $39,752 $39, % 4a Al. Shelter Costs - Buildin_g Rent & Leases $19,736 Shelter Costs - Approved by Attorney General 1 Self-Dealing Transactions Affiliated Leases $19,736 4a Shelter Costs Acquisition Mortgage: Principal & Interest $8,2211 $8, % 5 Building & Equipment $54,1331 $54, % Utilities $35,9611 _ $35, % Vehicles & Travel $66,775 1 $66, % 8 Child -Related $102,8691 $102, % u I r 9e Executive Director Salary $122,3521 $73,411 $48, % 9b Assistance Director Salary $0 0.0% 9c Administrator Salary $70,784 $70, % I9d All Other Admin. Salaries $56,479` $56, % e Financial Audit Costs $7,500i $7, r Administration (Minus Admin. Salaries and Financial Audit Costs" i $255,6751 $255, %1 TOTAL 2,133,7861 $73,411 $2,060, /01 CDSS USE ONLY $0 PERCENTAGE OF TOTAL 1 CDSS USE ONLY COSTS 1.0% 0.0%1 KDE DATE SR 3 (12/04)

26 STATE OF CALIFORNIA-HEALTH AND HUMAN SERVICES AGENCY GROUP HOME PROGRAM PAYROLL & FRINGE BENEFIT REPORT (SR 4) CALIFORNIA DEPARTMENT OF SOCIAL SERVICES Number of months in cost reporting period: 12 CORPORATE/LICENSEE NAME: ADVENT GROUP MINISTRIES, INC. CORPORATE NUMBER: PROGRAM NUMBER PROVIDER FISCAL YR (MO/ YR - MO NR) 01/ 16-12/ 16 (1) (2) Child Care & Supervision Social Work Activities (3) CDSS USE ONLY I. PAYROLL (DO NOT INCLUDE BENEFITS) $815,732 $243,660 II. FRINGE BENEFIT EXPENSE 1. FICA Employer Tax (include MEDICARE) $62,403 $18, Unemployment Coverage (State & Federal) $1,968 $ Workers' Compensation Insurance 4. Medical Insurance Expense $41,829 $12, Retirement 6. Other (Specify on back of form) $74,100 $22,134 TOTAL FRINGE BENEFITS (Add Lines 1 through 6) $180,300 $53,857 III. TOTAL PAYROLL & FRINGE BENEFITS $996,032 $297,517 IV. CONTRACTOR COSTS V. TOTAL (Add Line III and Line IV) Transfer to Column A, Lines 1 and 2, Cost Report (SR 3) CDSS USE ONLY $996,032 $297,517 8R 4 (12/04)

27 STATE OF CALIFORNIA - HEALTH AND HUMAN SERVICES AGENCY CALIFORNIA DEPARTMENT OF SOCIAL SERVICES GROUP HOME PROGRAM COSTS REPORT (SR 3) This form is to collect cost information for the group home program. Report actual allowable and reasonable costs. If the corporation operates more than one group home program and/or the program provides other services (example: day care, on-site education, adult services, foster family agency, etc.) costs must be allocated to the appropriate activity and only the allowable group home program costs for the program are to be reported. Describe the methodology used to allocate costs if other than the standard allocation methodology indicated in current regulations (MPP Section et seq.) NOTE: A separate cost report form must be completed for each group home program operated by the corporation. Number of months in cost reporting period 12 CORPORATE NAME: (ADVENT GROUP MINISTRIES, INC. 1 Child 3 COST GROUPS PROGRAM NAME (IF DIFFERENT)!NEST CORPORATE NUMBER PROGRAM NUMBER PROVIDER FISCAL YEAR (MONR - MON111 01/ /2016 A B C D E F TOTAL PROGRAM COSTS OFFSETS REASONABLENESS ADJUSTMENTS FINAL COSTS (COL. A MINUS COLS B ) PERCENTAGE OF TOTAL COSTS Care & Supervision $128,1741 $128, %1 Social Work Activities $38,2861 $38, %1 Food $2,486 $2, %. 4a Shelter Costs - Building Rent & Leases $5,0501 $5, % Shelter Costs - Approved by Attorney General 4b Self-Dealing Transactions Affiliated Leases $0 0. 0% 4c Shelter Costs - Acquisition Mortgage: Principal & Interest $7,6611 $7, % 5 Building & Equipment $1,2691 $1, % 6 Utilities $7,786 $7, % 7 Vehicles & Travel $4,265 $4, % 8.._ Child-Related $6,049 $6, %. ] 19a:, Executive Director Salary j $122,352 T $110,1171 $12, % 9b 1 Assistance Director Salary. $0 0.0%. 19c Administrator Salary $9,538 $9, %I 9c1 I-- All Other Admin. Salaries $0 $0 0.0% 16e Financial Audit Costs $5001 $ % O f Administration (Minus Admin. Salaries and Financial Audit Costs) $31,2971 $31, % TOTAL $364,7131 $110,1171 $0 $254, % CDSS USE ONLY CDSS USE ONLY KDE DATE SR 3 (12/04)

28 STATE OF CALIFORNIA-HEALTH AND HUMAN SERVICES AGENCY GROUP HOME PROGRAM PAYROLL & FRINGE BENEFIT REPORT (SR 4) CALIFORNIA DEPARTMENT OF SOCIAL SERVICES Number of months in cost reporting period: 12 CORPORATE/LICENSEE NAME: ADVENT GROUP MINISTRIES-NEST CORPORATE NUMBER: PROGRAM NUMBER PROVIDER FISCAL YR (MO/ YR - MO/YR) 01/ 16-12/ 16 (t) (2) Child Care & Supervision Social Work Activities (3) CDSS USE ONLY I. PAYROLL (DO NOT INCLUDE BENEFITS) $98,610 $29,455 H. FRINGE BENEFIT EXPENSE 1. FICA Employer Tax (include MEDICARE) $6,558 $1, Unemployment Coverage (State & Federal) $647 $ Workers' Compensation Insurance 4. Medical Insurance Expense $10,007 $2, Retirement 6. Other (Specify on back of form) $12,352 $3,690 TOTAL FRINGE BENEFITS (Add Lines 1 through 6) $29,564 $8,831 III. TOTAL PAYROLL & FRINGE BENEFITS $128,174 $38,286 ' IV. CONTRACTOR COSTS V. TOTAL (Add Line III and Line IV) Transfer to Column A, Lines 1 and 2, Cost Report (SR 3) CDSS USE ONLY $128,174 $38,286 SR 4 (12/04)