DRUG ABUSE FOUNDATION OF PALM BEACH COUNTY, INC. FINANCIAL STATEMENTS JUNE 30, 2018 Mari Huff C.P.A., P.A. Certified Public Accountants Stuart, Florida
TABLE OF CONTENTS INDEPENDENT AUDITOR'S REPORT 1 FINANCIAL STATEMENTS: Statement of Financial Position 3 Statement of Activities 4 Statement of Functional Expenses 6 Statement of Cash Flows 7 Notes to Financial Statements 8 SUPPLEMENTARY SCHEDULES: Schedule of Expenditures of Federal Awards and State Financial Assistance 18 Schedule of Support, Revenues, & Gains by Cost Center 19 Schedule of Expenses by Cost Center 21 Schedule of Related Party Transaction Adjustments 23 REQUIRED REPORTS: Schedule of Findings and Questioned Costs - Federal Awards Programs and State Financial Assistance. INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS.... 25 26 INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND STATE PROJECT AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY UNIFORM GUIDANCE AND CHAPTER 10.650, STATE OF FLORIDA RULES OF THE AUDITOR GENERAL... 28
Statement of Financial Position as of June 30, 2018 (with Comparative Totals as of June 30, 2017) Totals 2018 2017 Assets: Current assets: Cash and cash equivalents $ 523,771 $ 1,073,338 Grants and contracts receivable 1,540,613 583,793 Inventory 14,613 17,934 Prepaid expenses 88,551 86,328 Total current assets 2,167,548 1,761,393 Property and equipment, net 2,090,092 2,087,774 Other assets: Deposits 16,730 16,730 Loan fees and other 4,496 26,738 Total other assets 21,226 43,468 Total assets $ 4,278,866 $ 3,892,635 Liabilities and Net Assets: Liabilities: Current liabilities: Accounts payable $ 161,818 $ 163,899 Accrued payroll liabilities 382,524 300,936 Mortgage payable, current portion (less unamortized debt issuance costs of $3,113 in FY 2018) 49,750 50,240 Total current liabilities 594,092 515,075 Mortgage payable, long-term portion (less unamortized debt issuance costs of $13,285 in FY 2018) 1,863,459 1,928,089 Total liabilities 2,457,551 2,443,164 Net assets: Unrestricted 1,703,091 1,401,269 Temporarily restricted 118,224 48,202 Total net assets 1,821,315 1,449,471 Total liabilities and net assets $ 4,278,866 $ 3,892,635 See independent auditor s report and notes to financial statements - 3 -
Statement of Activities for the Year Ended June 30, 2018 (with Comparative Totals for the Year Ended June 30, 2017) Unrestricted Temporarily Restricted Totals 2018 2017 Support and Revenues Public Support Federal and state ADM grants Substance abuse $ 5,980,945 $ - $ 5,980,945 $ 5,514,070 Substance abuse-prior year 450,000-450,000 - Ounce of Prevention 131,373-131,373 131,533 US Dept. of Probation 34,500-34,500 46,509 Palm Beach County 1,407,348-1,407,348 1,103,020 Contributions and donations 106,648 118,224 224,872 108,134 In-kind contributions 175,000-175,000 55,000 Total public support 8,285,814 118,224 8,404,038 6,958,266 Other revenues Client fees 46,739-46,739 50,482 Food stamps 42,631-42,631 38,619 State and local service revenue 1,167,179-1,167,179 981,025 Other revenues 10,365-10,365 7,931 Investment income 1,111-1,111 1,705 Rental income (FY 2017 presented as net) 6,055-6,055 1,405 Total other revenues 1,274,080-1,274,080 1,081,167 Total support and revenues $ 9,559,894 $ 118,224 $ 9,678,118 $ 8,039,433 (continued on next page) See independent auditor s report and notes to financial statements - 4 -
Statement of Activities (continued from previous page) for the Year Ended June 30, 2018 (with Comparative Totals for the Year Ended June 30, 2017) Unrestricted Temporarily Restricted Totals 2018 2017 Expenses Program services Child substance program $ - $ - $ - $ 568,896 Adult substance program 8,286,948-8,286,948 5,594,392 Total program services 8,286,948-8,286,948 6,163,288 Support services Administration 1,058,216-1,058,216 1,876,377 Rental expense 5,846-5,846 - Total support services 1,064,062-1,064,062 1,876,377 Total expenses 9,351,010-9,351,010 8,039,665 Net assets released from restrictions 48,202 (48,202) Change in net assets 257,086 70,022 327,108 (232) Prior period adjustment 44,736-44,736 - Net assets, beginning of year 1,401,269 48,202 1,449,471 1,449,703 Net assets, end of year $ 1,703,091 $ 118,224 $ 1,821,315 $ 1,449,471 See independent auditor s report and notes to financial statements - 5 -
Statement of Functional Expenses for the Year Ended June 30, 2018 (With Comparative Totals for the Year Ended June 30, 2017) PROGRAM SERVICES SUPPORT SERVICES TOTALS Administration Auditorium Rentals 2018 2017 Personnel expenses: Salary expenses $ 5,102,188 $ 690,390 $ - $ 5,792,578 $ 4,939,315 Employee benefits 959,090 103,437-1,062,527 834,876 Total personnel expenses 6,061,278 793,827-6,855,105 5,774,191 Operating expenses: Building occupancy 532,540 38,121 3,941 574,602 484,554 Professional services 351,631 45,341-396,972 454,882 Travel 10,077 4,618-14,695 13,592 Equipment 2,216 70-2,286 1,526 Food services 361,443 - - 361,443 364,991 Medical & pharmacy 369,319 - - 369,319 213,872 Subcontracted services - - - - 38,000 Insurance 151,181 18,814-169,995 181,051 Interest - 105,342-105,342 103,610 Operating supplies & expenses 78,723 15,205 83 94,011 111,134 Other 79,025 19,184 803 99,012 69,257 Administration 1,058,216 (1,058,216) - - - Total direct expenses 9,055,649 (17,694) 4,827 9,042,782 7,810,660 Amortization and depreciation 289,515 17,694 1,019 308,228 265,524 Less: rental expenses presented in net rental income - - - - (36,520) Total Expenses $ 9,345,164 $ - $ 5,846 $ 9,351,010 $ 8,039,665 See independent auditor s report and notes to financial statements - 6 -
Statement of Cash Flows for the Year Ended June 30, 2018 (with Comparative Totals for the Year Ended June 30, 2017) Totals 2018 2017 Cash flows from operating activities Receipts from public and private support, net of amounts restricted for long-term purposes $ 8,363,806 $ 8,898,364 Receipts from fees charged to clients 46,739 50,482 Payments to suppliers and employees (8,681,834) (7,962,728) Rents receieved 6,055 37,926 Other cash received 10,362 7,931 Interest received 1,111 1,705 Interest paid (105,342) (103,610) Net cash (used in) / provided by operating activities (359,103) 930,070 Cash flows from investing activities: Loan costs - 3,820 Capital expenditures (263,078) (565,374) Net cash used in investing activities (263,078) (561,554) Cash flows from financing activities: Principal payments under note payable (45,610) (46,272) Contributions restricted for long-lived assets 118,224 - Net cash provided by /(used in) investing activities 72,614 (46,272) Net change in cash and cash equivalents (549,567) 322,244 Cash and cash equivalents, beginning of year 1,073,338 751,094 Cash and cash equivalents, end of year $ 523,771 $ 1,073,338 Reconciliation of change in net assets to net cash (used in) / provided by operating activities: Change in net assets $ 327,108 $ 449,768 Adjustments to reconcile change in net assets to net cash (used in) provided by operating activities Depreciation expense 308,228 265,524 Contributions restricted for building project and other long-term purposes (118,224) - Change in: Grants and contracts receivable (956,820) 67,121 Inventory 3,321 495 Prepaid expenses (2,223) 158,716 Accounts payable (2,081) (67,629) Accrued payroll liabilities 81,588 56,075 Net cash (used in) / provided by operating activities $ (359,103) $ 930,070 See independent auditor s report and notes to financial statements - 7 -
Notes to Financial Statements June 30, 2018 NOTE 1: NATURE OF THE ORGANIZATION Drug Abuse Foundation of Palm Beach County, Inc. (the Foundation ) is a not-for-profit organization exempt from federal income taxes under Section 501 (c)(3) of the Internal Revenue Code. Founded in 1968, the Foundation s central mission is to encourage and support the process of recovery from chemical addiction, to promote drug free living and mental well-being. The Foundation pursues its mission through the operation of thirteen programs/services which are organized into five key focus areas and service groups, including The Prevention Service Group, The Intervention Service Group, The Crisis Stabilization Service Group and The Treatment and Aftercare Service Group. NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The accounting and reporting policies of the Foundation conform to accounting principles generally accepted in the United States of America and are in accordance with the Financial Accounting Standards Codification 958-205 Not-for-Profit Entities Presentation of Financial Statements. These financial statements are prepared on the accrual basis of accounting and report information regarding the Foundation s financial position and activities according to three classes of net assets, based upon the absence or existence, along with the nature, of donor-imposed restrictions: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Promises to Give Contributions are recognized when a donor makes promises to give to the Organization that are, in substance, unconditional. Unconditional promises to give that are expected to be collected within one year are recorded at their net realizable value. Conditional promises to give are not included as support until the conditions are substantially met. All contributions are available for unrestricted use unless specifically restricted by the donor. Amounts received that are restricted for future periods or are restricted by the donor for specific purposes are reported as temporarily restricted or permanently restricted support, depending upon the nature of the restrictions, and increase those net asset accounts. When a donor restriction expires, that is, when a stipulated time restriction ends, or purpose restriction is accomplished, restricted net assets are reclassified to unrestricted net assets and are reported in the statement of activities as net assets released from restrictions. - 8 -
Notes to Financial Statements June 30, 2018 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Revenue Recognition Contributions and grants received are recorded as unrestricted, temporarily restricted, or permanently restricted net assets depending on the existence or nature of any donor/grantor restrictions. Cash and Cash Equivalents For purposes of the statement of financial position and statement of cash flows, the Foundation considers demand deposits with banks, certificates of deposit, money market funds and highly liquid debt instruments purchased with initial maturities of three months or less to be cash equivalents. Client Fees Receivable The Foundation requires payment before services are rendered, and therefore did not record client fees receivable, for the year ended June 30, 2018. Grant and Contract Receivable/Revenue Revenue from grants and contracts is recognized when the allowable costs, as defined by the individual grants or contracts, are incurred and/or the unit of service has been performed. Grant and contracts receivable at year end represent units of service performed that were not reimbursed by the granting agency by year end. Any of the funding sources may, at its discretion, request reimbursement for expenses or the return of funds, or both, upon finding non-compliance by the Foundation with the terms of the grants and contracts. Inventory The Foundation purchases office supplies, janitorial supplies, medical testing kits, and medical supplies in bulk. The purchases are recorded in inventory at cost and charged to appropriate departments, at cost, when removed from the store room. At June 30, 2018, total inventory was $14,613. Property and Equipment The Foundation capitalizes property and equipment in excess of $500. Lesser amounts are expensed. Purchased property and equipment are capitalized at cost. Donations of property and equipment are recorded as contributions at their estimated fair value. Such donations are reported as unrestricted contributions unless the donor has restricted the donated asset to a specific purpose. Assets donated with explicit restrictions regarding their use and contributions of cash that must be used to acquire property and equipment are reported as restricted contributions. Absent donor stipulations regarding how long those donated assets must be maintained, the Foundation reports expirations of donor restrictions when the donated or acquired assets are placed in service. The Foundation reclassifies temporarily restricted net assets to unrestricted net assets at that time. Property and equipment are depreciated using the straightline method over estimated useful lives ranging from five to thirty-six years. Maintenance and repairs are charged to expense when incurred. NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) - 9 -
Notes to Financial Statements June 30, 2018 Compensated Absences The Foundation accrues for compensated absences after a six-month probationary period. An accrual is made for any unused time that carries over from year to year, based upon each employee s current pay rate and years of employment at the Foundation. Total accrued compensated absences for the year ended June 30, 2018 was $136,381, including related accrued payroll expenses amount of $9,692. Debt Issuance Costs Debt issuance costs of $16,398 are presented on the balance sheet as a direct deduction from the carrying amount of the related debt liability and are being amortized as interest expense using the effective interest method. The debt issuance costs are being amortized over the term of the underlying debt, which is described in Note 6 below. Accumulated amortization amounted to $11,771 at June 30, 2018. Amortization expense for the year ended June 30, 2018 was $3,037. Donated Rent The Prevention/Intervention Day program receives the use of facilities from the Palm Beach County School Board free of charge. The fair market value of this rent is $55,000 per year. Further, the Palm Beach County Sheriff's Office provides the Foundation donated space in Belle Glade, Florida, valued at $120,000 per year, that the Foundation uses as a correctional facility. Management has determined the above valuations based upon the fair rental value of comparable space and facilities in privately-owned structures in the same areas. The above amounts are reflected as public support in the Statement of Activities, denoted as in-kind contributions, and as expense in the Statement of Functional Expenses, denoted as building occupancy. Income Taxes The Foundation is a not-for-profit corporation exempt from Federal income taxes under Internal Revenue Code Section 501(c)(3) and is classified as other than a private foundation. Therefore, no income taxes are required to be paid on activities related to its mission. The Foundation holds rental property from which it collects unrelated rental income. Expenses related to the rental property are allocated as such and are not included in the functional expenses. Income taxes are due on net rental income. For the year ended June 30, 2018 the Foundation had no taxable income, and therefore no income tax expense. The Foundation s Forms 990, Return of Organization Exempt from Income Tax, for the years ending June 30, 2016, 2017 and 2018 are subject to examination by IRS, generally for three years after they were filed. None of the Foundation s returns for years after 2015 are currently under examination by the IRS. No provision has been recorded with respect to any uncertain tax positions based upon management s evaluation of positions adopted. NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Functional Expenses - 10 -
Notes to Financial Statements June 30, 2018 The grant contracts with the Department of Children and Families that pass through to the Southeast Florida Behavioral Health Network have contractual reporting requirements under the State of Florida Administrative Code. The Foundation reports its functional expenses expanded by cost center to satisfy this requirement. Reclassifications It is the Foundation s policy to reclassify, where appropriate, prior year financial statements to conform to the current year presentation. NOTE 3: PROPERTY AND EQUIPMENT Property and equipment consisted of the following at June 30: Land $ 325,000 Building and improvements 4,857,373 Furniture and equipment 1,106,018 Vehicles 101,516 Total 6,389,907 Less: accumulated depreciation 4,299,815 Net $ 2,090,092 Depreciation expense for the year ended June 30, 2018 was $308,228. These amounts represent a combination of amounts charged to both functional expenses and expenses of rental income. NOTE 4: RENTAL INCOME The Foundation rents its auditorium to various lessees on an as needed basis. Total rental revenues were $6,055 and total rental expenses were $5,846 for the year ended June 30, 2018. NOTE 5: LINE OF CREDIT PAYABLE The Foundation has an available line of credit with a bank that allows for borrowings up to $250,000. Interest is payable at TD Bank, N.A. s floating prime rate. There was no outstanding balance on this line for the years ended June 30, 2018 and 2017, and no interest expense was incurred under this line for either year. This line is set to expire in January 2019 but is expected to be renewed. NOTE 6: MORTGAGE PAYABLE On September 29, 2014, the Foundation refinanced its existing line of credit and long-term promissory note with TD Bank. The line of credit remained at $250,000 and is subject to a 2.5% increase over the monthly LIBOR rate for a term of 12 months. The amount borrowed under the promissory note was - 11 -
Notes to Financial Statements June 30, 2018 $2,100,000, with a net cash payment to the Foundation in the amount of $194,329 to allow the Foundation to access some of its real estate equity for support in its operations. The note established a ten-year term at a rate of 5.1%. A prepayment penalty exists that starts at 5% and gradually decreases to 1% as of September 29, 2022 and for the remainder of the loan. In connection with the refinancing, the Foundation granted security interests to TD Bank that generally collateralized all of the Foundation s real and personal property. Additionally, the Foundation assumed certain limited restrictions on its ability to sell, transfer, encumber, and engage in other transactions with respect to its real property. The aggregate maturities of the promissory note subsequent to June 30, 2018, shown net of debt unamortized debt issuance costs, are as follows: Years ending June 30 2019 $ 49,750 2020 52,586 2021 55,655 2022 58,710 2023 62,013 Thereafter 1,634,495 $ 1,913,209 NOTE 7: NET ASSETS At June 30, 2018, the Foundation s net assets comprised two categories: Unrestricted net assets This category consisted of funds available for general activities and operations without restrictions. Temporarily restricted net assets This category consisted of funds contributed during Fiscal Year 2018 with donor-imposed stipulations that they be used for the construction of the Center for Women and Children. Management determined that the transfers should be classified as contributions, as opposed to exchanges, in their entirety. Management based its conclusion upon various facts and circumstances, including the value of naming rights incidentally conferred in connection with the transfers, the Foundation s revenue recognition policies applicable to the fiscal year, and other relevant considerations. The funds are expected to be spent for their stipulated purpose, thereby releasing the related net assets from restrictions, during the Fiscal Year 2019. NOTE 8: LEASE COMMITMENTS Equipment lease The Foundation leases telephone equipment under a capital lease agreement with Graybar Financial Services. The lease began on July 18, 2014. The lease called for sixty (60) equal monthly payments of - 12 -
Notes to Financial Statements June 30, 2018 $330 plus taxes with two months due up front. The remaining minimum rent obligation attributable to this lease, in the amount of $3,960, is due in the year ending June 30, 2019. Commercial real estate leases The Foundation entered into a sixty-one-month, non-cancellable, triple net lease in West Palm Beach beginning December 1, 2015 and expiring December 31, 2020. The lease calls for monthly rent payments of $2,718 per month, plus applicable sales taxes for the first year. As a triple net lease, the Foundation is also responsible for taxes, insurance, and operating expenses. These costs are in addition to the base rent and were estimated to be $2,626 for the initial twelve-month period. Annual rent increases of up to 3.5% may be assessed following the initial twelve-month lease term. Total rent expense under this lease for the year ended June 30, 2018 was $51,024. In March of 2018, the Foundation renewed its office lease in Belle Glade, Florida for one year, beginning April 1, 2018 and expiring March 31, 2019. The lease requires monthly rent payments of $1,633. It further requires the Foundation to purchase and maintain liability insurance at prescribed levels throughout the term of the lease. Additionally, the Foundation was required to pledge and assign to the lessor all furniture, goods, and chattels as security for rental obligations. The Foundation was generally granted a right of first refusal for periods subsequent to the expiration of the term. For Fiscal Year 2018, rental expense arising from the expired and the renewed lease totaled $17,499, with additional obligations of $14,697 coming due in Fiscal Year 2019. NOTE 9: EMPLOYEE BENEFITS In Fiscal Year 1995, the Foundation established a defined contribution retirement plan for its eligible employees and their beneficiaries under Internal Revenue Code Section 403(b). All employees are eligible to participate in the plan immediately upon their hiring date. After two years of service, the Foundation contributes an amount equaling each participant s contribution up to 1.0% of the employee s annual salary for the first year in which she is eligible for employer contributions. The Foundation s contribution increases up to a maximum of 11.0% by the 20th year of eligibility. Contributions by the Foundation were $93,067 and $83,471 for the years ended June 30, 2018 and 2017, respectively. NOTE 10: STATE MATCHING REQUIREMENT The Foundation entered into an agreement PDA04-2 effective October 1, 2013 through September 30, 2015 with Southeast Florida Behavioral Health Network, Inc. (the Managing Entity ) that calls for thirtythree percent (33%) local matching funds pursuant to s.394.763(3), Florida Statutes. This contract was extended via agreement PDA04-1517 through June 30, 2019. Subsequently, agreement PDA48, as amended, superseded agreement PDA04-1517, becoming effective on July 1, 2017 and ending on June 30, 2019. For the period July 1, 2017 through June 30, 2019, contract #PDA48 authorized funds totaling $11,189,613 to be paid by the Managing Entity to the Foundation upon submission of funding request invoices meeting relevant compliance standards. NOTE 10: STATE MATCHING REQUIREMENT (continued) During the fiscal year ended June 30, 2018, the reimbursable services under these contracts were as follows: - 13 -
Notes to Financial Statements June 30, 2018 Total Expenditures $ 9,351,010 Less Other State and Federal Funds (131,373) Less Non-Match SAMH Funds (3,361,810) Less: unallowable costs per 65E-14, F.A.C. Legal costs (463) Interest expense allocated to Admin (105,342) (105,805) Total Allowable Expenditures 5,752,022 Maximum Available Earnings 4,314,017 Amount of State Funds Requiring Match 2,699,413 Amount of Overmatch $ 1,614,604 NOTE 11: RELATED PARTY TRANSACTIONS The Foundation s Executive Director is also a Board Member of South Florida Behavioral Health Network; the Foundation s largest funder by dollar value. All contracts are handled as arm s length transactions and the amounts paid are disclosed in the Schedule of Related Party Transaction Adjustments included in these statements. NOTE 12: CONCENTRATIONS Major Funders Major funders who have provided greater than 10% of total revenues for the year ended June 30, 2018 are as follows: Revenue Receivable Southeast Florida Behavioral Health $ 5,980,945 $ 957,223 Palm Beach County Community Services 1,407,348 303,448 Total $ 7,388,293 $ 1,260,671 The Foundation received approximately 80% of its revenue from the above funders for each of the fiscal years ended June 30, 2018. The Foundation s right to payment for valid funding requests is generally protected by statutory and contractual frameworks that govern the relationships between the entities, subject to limitations and conditions. However, a policy change at these agencies could have an adverse effect on operations, and the concentrations make the Foundation vulnerable to the risk of a near-term severe impact. NOTE 12: CONCENTRATIONS (continued) Concentration of Credit Risk The Foundation maintains its cash at financial institutions in Palm Beach County. The accounts are fully - 14 -
Notes to Financial Statements June 30, 2018 insured by the Federal Deposit Insurance Corporation up to $250,000. The Foundation had approximately $382,000 as of June 30, 2018. NOTE 13: STATE AND LOCAL SERVICE REVENUES The Foundation is reimbursed for fees from state and local agencies for services provided based on individual client participation in the program. These agencies and related service revenues received are summarized as follows: NOTE 14: BED-DAY AVAILABILITY Drug Court $ 41,669 Department of Corrections 702,682 FADA 303,251 PBSO Trust Fund 80,000 Other 39,577 Total $ 1,167,179 The Foundation received a portion of its support from the Federal Government and the State of Florida under grant contract number PDA48 with Southeast Florida Behavioral Health Network. Under the contracts, the Foundation must provide the Southeast Florida Behavioral Health Network with a schedule of bed-day availability payments. Cost Center Detoxification Unit cost $ 221.00 Available bed days 8,030 Units paid by other parties 3,648 Eligible units (B - C) 4,382 Amount paid by SEFBHN $ 765,548 Maximum value of C (A x D) $ 968,333 Units Paid by Others Received PBC Community Services $ 806,297 Unit rate 221.00 Unit equivalent 3,648 Department of Corrections N/A Unit rate N/A Unit equivalent N/A NOTE 15: EVALUATION OF SUBSEQUENT EVENTS The Foundation has evaluated subsequent events through December 10, 2018, which is the date which the financial statements were available to be issued. - 15 -
Notes to Financial Statements June 30, 2018 NOTE 16: PRIOR PERIOD ADJUSTMENT During Fiscal Year 2018, certain accounting misstatements were identified that implied an understatement of net assets in the amount of $44,736 to reflect a correction to accumulated depreciation and a correction in connection with the Foundation s presentation of debt issuance costs in order to satisfy requirements established by Accounting Standards Update (ASU) 2015-03. This overall adjustment was immaterial to the financial statements but was deemed necessary in order to correct the presentation of overall assets at June 30, 2018 and future years. - 16 -
SUPPLEMENTARY SCHEDULES - 17 -
Schedule of Expenditures of Federal Awards and State Financial Assistance for the Year Ended June 30, 2018 Federal Grantor/Pass-through Grantor/Program Contract Number CFDA Number CSFA Number Total Expenditures Federal Awards: U.S. Department of Health and Human Services Pass-through: Florida Department of Children and Families Southeast Florida Behavioral Health Network, Inc. Prevention and Treatment of Substance Abuse PDA48-15-4 93.959 - $ 2,772,310 Temporary Assistance for Needy Families PDA48-15-4 93.558-105,647 State Targeted Response to the Opioid Crisis PDA48-15-4 93.788-931,470 Total Florida Department of Children and Families 3,809,427 Total Expenditures of Federal Awards $ 3,809,427 State Financial Assistance: Florida Department of Children and Families Pass-through: Southeast Florida Behavioral Health Network, Inc. Prevention and Treatment of Substance Abuse PDA48-15-4-60.034 $ 2,621,518 Florida Department of Health: Pass through: The Ounce of Prevention Fund of Florida 17-18-167-64.035 131,373 Total Expenditures of State Financial Assistance $ 2,752,891 NOTE: A - BASIS OF PRESENTATION The above Schedule of Expenditures of Federal Awards and State Financial Assistance includes the federal award and state financial assistance activity of the Foundation under programs of the federal and state government for the year ended June 30, 2018. 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) and Chapter 10.650 of the State of Florida Rules of the Auditor General. Because the schedule presents only a selected portion of the operations of the Foundation, it is not intended to and does not present the financial position, changes in net asssets, or cash flows of the Foundation. NOTE: B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (1) Expenditures reported on the above schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance and Chapter 10.650 of the State of Florida Rules of the Auditor General, wherein certain types of expenditures are not allowed or are limited as to reimbursement. (2) Pass-through entity identifying numbers are presented where available. NOTE: C - INDIRECT COST RATE Drug Abuse Foundation of Palm Beach County, Inc. has elected to use the 10% de minimus indirect cost rate as allowed under the Uniform Guidance. See independent auditor s report - 18 -
Schedule of Expenses by Cost Center Southeast Florida Behavioral Health Network PDA48 for the Year Ended June 30, 2018 SAMH COVERED SERVICES STATE SAMH-FUNDED COST CENTERS ADULT SUBSTANCE PROGRAM Residential Level 1 Residential Level 2 Residential Level 4 Assessment Incidental Intervention Case Management Crises Services Medical Psych Prevention Outpatient Outreach Detox HIV Vouchers Total Adult Program Personnel expenses: Salaries $ 389,592 $ 1,358,611 $ 196,821 $ 441,620 $ - $ 470,005 $ 492,619 $ 289,394 $ 199,177 $ 502,232 $ 59,129 $ 621,135 $ 81,853 $ - $ 5,102,188 Fringe Benefits 76,727 239,772 38,364 82,109-85,146 95,909 57,545 52,164 91,699 5,382 115,091 19,182-959,090 Total personnel expenses 466,319 1,598,383 235,185 523,729-555,151 588,528 346,939 251,341 593,931 64,511 736,226 101,035-6,061,278 Other Expenses Building Occupancy 42,603 133,135 21,302 45,460-47,540 53,254 31,952 29,096 50,786 2,857 63,905 10,651-532,540 Professional Services - 173,046 - - - - - - - - - 178,585 - - 351,631 Travel 645 2,014 322 696-703 806 483 2,451 777 51 967 161-10,077 Equipment 177 554 89 192-191 222 133 118 215 15 266 44-2,216 Food Services 37,952 180,722 36,144 - - - 45,180 - - - - 61,445 - - 361,443 Medical and Pharmacy - 40,547 - - 31,145 - - 161,090 - - - 136,537 - - 369,319 Subcontracted Services - - - - - - - - - - - - - - - Insurance 6,923 47,499 3,462 7,513-7,476 21,586 18,124 4,603 8,378 589 23,298 1,731-151,181 Interest Paid - - - - - - - - - - - - - - - Operating Supplies & Expenses 6,298 19,681 3,149 6,859-6,750 7,872 4,723 4,162 7,646 561 9,447 1,574-78,723 Other 28,334 88,545 14,167 30,181-31,722 59,283 21,251 9,899 33,725 1,848 42,501 1,203 5,881 368,540 Donated Items - - - - - - - - - - - - - - - Total other expenses 122,932 685,743 78,635 90,901 31,145 94,382 188,203 237,756 50,329 101,527 5,921 516,951 15,364 5,881 2,225,670 Total personnel and other expenses 589,251 2,284,126 313,820 614,630 31,145 649,533 776,731 584,695 301,670 695,458 70,432 1,253,177 116,399 5,881 8,286,948 Distributed costs Other Support Costs - - - - - - - - - - - - - - - Administration 84,657 264,554 42,328 89,949-95,240 105,821 63,493 58,202 100,530 5,291 126,986 21,165-1,058,216 Total distributed costs $ 84,657 $ 264,554 $ 42,328 $ 89,949 $ - $ 95,240 $ 105,821 $ 63,493 $ 58,202 $ 100,530 $ 5,291 $ 126,986 $ 21,165 $ - $ 1,058,216 Less: unallowable costs: 22,427 70,545 11,214 23,830-25,231 28,034 16,821 15,419 26,633 1,402 33,642 5,607-280,805 Total allowable operating expenses $ 651,481 $ 2,478,135 $ 344,934 $ 680,749 $ 31,145 $ 719,542 $ 854,518 $ 631,367 $ 344,453 $ 769,355 $ 74,321 $ 1,346,521 $ 131,957 $ 5,881 $ 9,064,359 Capital Expenditures $ 12,067 $ 88,203 $ 8,028 $ 10,798 $ - $ 7,534 $ 48,092 $ - $ - $ 29,786 $ 1,206 $ 9,707 $ - $ - $ 215,421 (continued on next page) See independent auditor s report - 19 -
Schedule of Expenses by Cost Center Southeast Florida Behavioral Health Network PDA48 for the Year Ended June 30, 2018 (continued) Total for State SAMH-Funded Covered Services Total for Non- State-Funded Covered Services Total for All Covered Services Non-SAMH Covered Services Auditorium Rental Expenses Other Support Costs Administration Total Expenses Personnel expenses: Salaries $ 5,102,188 $ - $ 5,102,188 $ - $ - $ - $ 690,390 $ 5,792,578 Fringe Benefits 959,090-959,090 - - - 103,437 1,062,527 Total personnel expenses 6,061,278-6,061,278 - - - 793,827 6,855,105 Other Expenses Building Occupancy 532,540-532,540-3,941-38,121 574,602 Professional Services 351,631-351,631 - - - 45,341 396,972 Travel 10,077-10,077 - - - 4,618 14,695 Equipment 2,216-2,216 - - - 70 2,286 Food Services 361,443-361,443 - - - - 361,443 Medical and Pharmacy 369,319-369,319 - - - - 369,319 Subcontracted Services - - - - - - - - Insurance 151,181-151,181 - - - 18,814 169,995 Interest Paid - - - - - - 105,342 105,342 Operating Supplies & Expenses 78,723-78,723-83 - 15,205 94,011 Other 368,540-368,540-1,822-36,878 407,240 Donated Items - - - - - - - - Total other expenses 2,225,670-2,225,670-5,846-264,389 2,495,905 Total personnel and other expenses 8,286,948-8,286,948-5,846-1,058,216 9,351,010 Distributed costs Other Support Costs - - - - (5,846) - - (5,846) Administration 1,058,216-1,058,216 - - - (1,058,216) - Total distributed costs 1,058,216-1,058,216 - (5,846) - (1,058,216) (5,846) Less: unallowable costs: 280,805-280,805 - - - - 280,805 Total allowable operating expenses $ 9,064,359 $ - $ 9,064,359 $ - $ 5,846 $ - $ - $ 9,064,359 Capital Expenditures $ 215,421 $ - $ 215,421 $ - $ 38,124 $ - $ 9,533 $ 263,078 See independent auditor s report - 20 -
Schedule of Support, Revenues, and Gains by Cost Center Southeast Florida Behavioral Health Network PDA48 for the Year Ended June 30, 2018 SAMH COVERED SERVICES STATE SAMH-FUNDED COST CENTERS ADULT SUBSTANCE PROGRAM Residential Level 1 Residential Level 2 Residential Level 4 Assessment Incidental Intervention Case Management Crises Services Medical Psych Prevention Outpatient Outreach Detox HIV Vouchers Total Adult Program State SAMH Funding: From District Contract Funding $ 159,190 $ 2,511,472 $ 362,441 $ 409,541 $ 30,719 $ 169,021 $ 580,089 $ 535,469 $ - $ 189,824 $ 64,340 $ 755,067 $ 91,177 $ 5,800 $ 5,864,150 Fund Transfer - District Contract 13,500-5,000 40,500-24,000 238,500 13,500 16,000 27,000 4,500 67,500 - - 450,000 TANF - 115,815 - - - 540 - - - 437 - - - - 116,792 Total State SAMH Funding 172,690 2,627,287 367,441 450,041 30,719 193,561 818,589 548,969 16,000 217,261 68,840 822,567 91,177 5,800 6,430,942 Other governmental funding Other State agency funding 390,484 - - 12,552-555,870 - - - 89,659 - - - - 1,048,565 Medicaid - - - - - - - - - - - - - - - Local government - - - 265,000 - - 61,500 131,000 25,000 421,669 10,000 614,848 - - 1,529,017 Federal grants and contracts 12,000 - - - - 22,500 - - 131,373 - - - 39,578-205,451 In-kind (local gov't only) - - - - - - - - - - - - - - - Total other governmental funding 402,484 - - 277,552-578,370 61,500 131,000 156,373 511,328 10,000 614,848 39,578-2,783,033 All other revenues 1st and 2nd party payments - - - - - - - - - - - - - - - 3rd party payments - - - - - - - - - - - - - - - Medicare - - - - - - - - - - - - - - - Contributions and donations 124,872 - - - - - - - 100,000 - - - - - 224,872 Other 3,137 4,733-6,447-118 92-16,302 21,875 123-5,389-58,216 In-kind - - - - - - 80,000-14,000 80,700 300 - - - 175,000 Total all other revenues 128,009 4,733-6,447-118 80,092-130,302 102,575 423-5,389-458,088 Total Support, Revenues, & Gains $ 703,183 $ 2,632,020 $ 367,441 $ 734,040 $ 30,719 $ 772,049 $ 960,181 $ 679,969 $ 302,675 $ 831,164 $ 79,263 $ 1,437,415 $ 136,144 $ 5,800 $ 9,672,063 (continued on next page) See independent auditor s report - 21 -
Schedule of Support, Revenues, and Gains by Cost Center Southeast Florida Behavioral Health Network PDA48 For the Year Ended June 30, 2018 (continued) Total for State SAMH-Funded Covered Services Total for Non- State-Funded Covered Services Total for All Covered Services Auditorium Rental Expenses Total Support, Revenues, and Gains State SAMH Funding: From District Contract Funding $ 5,864,150 $ - $ 5,864,150 $ - $ 5,864,150 Fund Transfer - District Contract 450,000-450,000-450,000 TANF 116,792-116,792-116,792 Total State SAMH Funding 6,430,942-6,430,942-6,430,942 Other governmental funding Other State agency funding 1,048,564-1,048,564-1,048,564 Medicaid - - - - - Local government 1,529,017-1,529,017-1,529,017 Federal grants and contracts 205,452-205,452-205,452 In-kind (local gov't only) - - - - - Total other governmental funding 2,783,033-2,783,033-2,783,033 All other revenues 1st and 2nd party payments - - - - - 3rd party payments - - - - - Medicare - - - - - Contributions and donations 224,872-224,872-224,872 Other 58,216-58,216 6,055 64,271 In-kind 175,000-175,000-175,000 Total all other revenues 458,088-458,088 6,055.00 464,143 Total Support, Revenues, and Gains $ 9,672,063 $ - $ 9,672,063 $ 6,055 $ 9,678,118 See independent auditor s report - 22 -
Schedule of Related Party Transaction Adjustments Southeast Florida Behavioral Health Network for the Year Ended June 30, 2018 Revenues from Grantee: Residential Level 1 ResidentialLevel 2 ResidentialLevel 4 Assessment Incidental SAMH Covered Services Intervention Case Management Crises Services Medical Psych Prevention Outpatient Outreach Detox HIV Vouchers Total DCF/SEFBHN funding $ 172,690 $ 2,627,287 $ 367,441 $ 450,041 $ 30,719 $ 193,561 $ 818,589 $ 548,969 $ 16,000 $ 217,261 $ 68,840 $ 822,567 $ 91,177 $ 5,800 $ 6,430,942 Other - - - - - - - - - - - - - - - Total Revenue from Grantee 172,690 2,627,287 367,441 450,041 30,719 193,561 818,589 548,969 16,000 217,261 68,840 822,567 91,177 5,800 6,430,942 Expenses Associated with Grantee Transactions: Legal services - - - - - - - - - - - - - - - Total Associated Expenses - - - - - - - - - - - - - - - Amount allowable (necessary operating expenses in arms-length transaction) - - - - - - - - - - - - - - - Related Party Adjustment $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - See independent auditor s report - 23 -
REQUIRED REPORTS SUMMARY OF AUDITOR S RESULTS - 24 -
1. The auditor s report expresses an unmodified opinion on the financial statements of Drug Abuse Foundation of Palm Beach County, Inc. 2. No significant deficiencies or material weaknesses relating to the audit of the financial statements are reported in the INDEPENDENT AUDITOR S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS. 3. No instances of noncompliance material to the financial statements of Drug Abuse Foundation of Palm Beach County, Inc. were disclosed during the audit. 4. No significant deficiencies or material weaknesses relating to the audit of the major federal award programs and statement financial assistance are reported in the INDEPENDENT AUDITOR S REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR FEDERAL PROGRAM AND STATE FINANCIAL ASSISTANCE AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE AND CHAPTER10.650, RULES OF THE AUDITOR GENERAL, STATE OF FLORIDA. 5. The auditor s report on compliance with requirements that could have a direct and material effect on each major Federal program and State financial assistance project for the Drug Abuse Foundation of Palm Beach County, Inc. expressed an unmodified opinion. 6. Our audit disclosed no findings required to be reported related to Federal programs under section 510(a) of the Uniform Guidance, nor did our audit disclose any findings related to State financial assistance required to be disclosed under Chapter 10.650, rules of the Auditor General, State of Florida. 7. The programs tested as major programs include Substance Abuse Services, CFDA #93.959, CFDA #93.788 and CSFA #60.034. 8. The threshold for distinguishing Types A and B programs was $300,000. 9. Drug Abuse Foundation of Palm Beach County, Inc. was determined to be a low-risk auditee. FINDINGS FINANCIAL STATEMENTS AUDIT No management letter is required because there were no findings required to be reported in the management letter. FINDINGS AND QUESTIONED COSTS MAJOR FEDERAL AWARD AND STATE PROGRAM AUDIT No findings noted. SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS No Summary Schedule of Prior Audit Findings is required because there were no prior audit findings related to Federal programs or State projects. No corrective action plan is required because there were no findings required to be reported under the Federal or Florida Single Audit Acts. - 25 -