Financial Statements (With Summarized Financial Information for the Year Ended December 31, 2010) and Report Thereon Reports Required in Accordance with Office of Management and Budget Circular A-133
TABLE OF CONTENTS Page Independent Auditor s Report... 1-2 Financial Statements Statement of Financial Position... 3 Statement of Activities... 4 Statement of Cash Flows... 5 Notes to Financial Statements... 6-11 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... 12-13 Independent Auditor s Report on Compliance With Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance With OMB Circular A-133... 14-15 Schedule of Expenditures of Federal Awards... 16 Notes to Schedule of Expenditures of Federal Awards... 17 Schedule of Findings and Questioned Costs... 18-21 Supplemental Information Supplemental Schedule of Functional Expenses... 22
INDEPENDENT AUDITOR S REPORT To the Board of Directors of Experience Corps CONSULTING ACCOUNTING TECHNOLOGY Certified Public Accountants We have audited the accompanying statement of financial position of Experience in Action DBA Experience Corps as of December 31, 2011, and the related statements of activities and cash flows for the year then ended. These financial statements are the responsibility of Experience Corps management. Our responsibility is to express an opinion on these financial statements based on our audit. The prior year summarized comparative information has been derived from Experience Corps 2010 financial statements and, in our report dated September 7, 2011, we expressed an unqualified opinion on those financial statements. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Experience Corps internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Experience Corps as of December 31, 2011, and the changes in its net assets and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated September 7, 2012, on our consideration of Experience Corps internal control over financial reporting and on our 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 our 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 and should be considered in assessing the results of our audit. Continued - 1 -
Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The schedule of functional expenses is presented for purposes of additional analysis and is not a required part of the financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also 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 in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. RAFFA, P.C. Washington, DC September 7, 2012-2 -
STATEMENT OF FINANCIAL POSITION December 31, 2011 (With Summarized Financial Information as of December 31, 2010) 2011 2010 ASSETS Cash and cash equivalents $ 323,187 $ 634,514 Grants, contributions and contracts receivable 1,680,959 439,876 Accounts receivable - 1,130 Prepaid expenses 31,907 13,773 Fixed assets, net of accumulated depreciation and amortization of $800 and $5,449 as of December 31, 2011 and 2010, respectively 4,000 6,837 Security deposit 3,298 - TOTAL ASSETS $ 2,043,351 $ 1,096,130 LIABILITIES AND NET ASSETS Accounts payable and accrued expenses $ 773,960 $ 454,924 Accrued salaries and benefits 281,720 59,867 TOTAL LIABILITIES 1,055,680 514,791 Net Assets Unrestricted 57,024 154,806 Temporarily restricted 930,647 426,533 TOTAL NET ASSETS 987,671 581,339 TOTAL LIABILITIES AND NET ASSETS $ 2,043,351 $ 1,096,130 The accompanying notes are an integral part of these financial statements. - 3 -
STATEMENT OF ACTIVITIES (With Summarized Financial Information as of December 31, 2010) Temporarily 2011 2010 Unrestricted Restricted Total Total REVENUE AND SUPPORT Grants, contributions and contract revenue $ 3,469,499 $ 2,160,127 $ 5,629,626 $ 3,638,219 In-kind revenue 436,775-436,775 - Program service fees 72,925-72,925 - Rental income 23,925-23,925 - Interest income 310-310 1,598 Net assets released from restrictions: Satisfaction of purpose restrictions 1,551,846 (1,551,846) - - Satisfaction of time restrictions 104,167 (104,167) - - TOTAL REVENUE AND SUPPORT 5,659,447 504,114 6,163,561 3,639,817 EXPENSES Program services Mentoring and tutoring 4,332,847-4,332,847 2,628,040 Public awareness 74,918-74,918 191,821 Research 10,200-10,200 24 Total Program Services 4,417,965-4,417,965 2,819,885 Supporting Services General and administrative 948,827-948,827 345,751 Fundraising and advocacy 390,437-390,437 365,667 Total Supporting Services 1,339,264-1,339,264 711,418 TOTAL EXPENSES 5,757,229-5,757,229 3,531,303 CHANGE IN NET ASSETS (97,782) 504,114 406,332 108,514 NET ASSETS, BEGINNING OF YEAR 154,806 426,533 581,339 472,825 NET ASSETS, END OF YEAR $ 57,024 $ 930,647 $ 987,671 $ 581,339 The accompanying notes are an integral part of these financial statements. - 4 -
STATEMENT OF CASH FLOWS (With Summarized Financial Information For the Year Ended December 31, 2010) Increase (Decrease) in Cash and Cash Equivalents 2011 2010 CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets $ 406,332 $ 108,514 Adjustments to reconcile change in net assets to net cash (used in) provided by operating activities: Depreciation and amortization 4,240 3,344 Loss on disposal of fixed assets 7,805 - Changes in assets and liabilities: Grants, contributions and contracts receivable (1,241,083) 35,132 Accounts receivable 1,130 9,891 Prepaid expenses (18,134) (4,006) Security deposit (3,298) - Accounts payable and accrued expenses 319,036 289,440 Accrued salaries and benefits 221,853 8,495 NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (302,119) 450,810 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of fixed assets (9,208) (3,619) NET CASH USED IN INVESTING ACTIVITIES (9,208) (3,619) NET (DECREASE) INCREASE IN CASH (311,327) 447,191 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 634,514 187,323 CASH AND CASH EQUIVALENTS, END OF YEAR $ 323,187 $ 634,514 The accompanying notes are an integral part of these financial statements. - 5 -
NOTES TO FINANCIAL STATEMENTS 1. Organization and Summary of Significant Accounting Policies Organization Experience in Action DBA Experience Corps was incorporated on September 10, 2008 under the laws of the District of Columbia. Experience Corps is a not-for-profit organization formed to engage experienced adults in high-impact community service and leadership activities and to promote the importance of the contributions these individuals make to their communities. These activities are funded primarily through federal and nonfederal awards. Fixed Assets and Related Depreciation and Amortization Fixed assets at December 31, 2011 consist of leasehold improvements recorded at cost. Amortization is provided for on a straight-line basis over the shorter of the remaining life of the lease or estimated useful life of the improvement. The cost of fixed assets retired or disposed of is removed from the accounts along with the related accumulated depreciation and amortization and any gain or loss is reflected in income or expense in the accompanying statement of activities. Major additions are capitalized while replacements, maintenance and repairs that do not improve or extend the lives of the respective assets are expensed as incurred. Total depreciation and amortization expense for the year ended December 31, 2011 was $4,240. Net Assets The net assets of Experience Corps are classified as follows: Unrestricted net assets represent funds that are available for support of Experience Corps operations. Temporarily restricted net assets represent amounts that are subject to donor-imposed restrictions to be used for a particular purpose or within a specific time period. Revenue Recognition Contract awards in exchange for services are recognized as costs are incurred on the basis of direct costs plus allowable indirect expenses. Revenue recognized on these awards for which billings have not been presented or collected from the awarding agency is included in grants, contributions and contracts receivable in the accompanying statement of financial position. Continued - 6 -
NOTES TO FINANCIAL STATEMENTS 1. Organization and Summary of Significant Accounting Policies (continued) Revenue Recognition (continued) Grants and contributions are considered to be available for unrestricted use unless specifically restricted by the donor. Amounts received that are designated for future periods or restricted by the donor for specific purposes are reported as temporarily restricted support. Conditional promises to give are not included as support until such time as the conditions are substantially met. When a donor restriction expires (that is, when a stipulated time restriction ends or a purpose restriction is accomplished), temporarily restricted net assets are reclassified to unrestricted net assets and reported in the accompanying statement of activities as net assets released from restrictions. Unconditional grants and contributions that have been promised but not yet received are included in grants, contributions and contracts receivable in the accompanying statement of financial position. Experience Corps receives donations of services of human resources, technology, finance and other professional services as well as donated office space. The value of these services and rent is recorded based on the estimated fair market value of the services and rent provided and is shown as in-kind revenue in the accompanying statement of activities. Functional Allocation of Expenses The costs of providing the various programs and other activities have been summarized on a functional basis in the accompanying statement of activities. Accordingly, certain costs have been allocated proportionately among the programs and supporting services to which they relate on the basis of direct labor costs. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. 2. Cash and Cash Equivalents Experience Corps considers all money market funds to be cash equivalents. Continued - 7 -
NOTES TO FINANCIAL STATEMENTS 3. Grants, Contributions and Contracts Receivable Grants, contributions and contracts receivable represent unconditional promises to give and amounts owed for services performed by Experience Corps. As of December 31, 2011, grants, contributions and contracts receivable are considered fully collectible and are due to be received as follows: Less than one year $ 1,530,959 One to five years 150,000 Total grants, contributions and contracts receivable $ 1,680,959 4. Temporarily Restricted Net Assets As of December 31, 2011, temporarily restricted net assets were available for the following purposes: Mentoring and Tutoring $ 730,647 Research 200,000 Total temporarily restricted net assets $ 930,647 5. Risks and Uncertainties Office of Management and Budget Circular A-133 Experience Corps has instructed its independent auditors to audit its applicable federal programs for the year ended December 31, 2011, in compliance with Circular A-133 issued by the U.S. Office of Management and Budget (OMB). Until such audit is reviewed and accepted by the contracting or granting agencies, there exists a contingent liability to refund any amounts received in excess of allowable costs. Management believes that any matters arising from reviews by the Federal or state agencies of the independent auditor s reports for fiscal year 2011 will not have a material effect on Experience Corps s financial position as of December 31, 2011, or its results of operations for the year then ended. Continued - 8 -
NOTES TO FINANCIAL STATEMENTS 6. Retirement Plan Effective May 1, 2009, Experience Corps provides retirement benefits for eligible employees through a 403(b) defined contribution plan. All full-time employees of Experience Corps who have reached the age of 18 years and have been employed for at least six months are eligible to participate. Employees are fully vested after two years of service. The plan provides for a minimum contribution of 3% by all eligible employees. In 2011, Experience Corps provided a discretionary contribution of 9% to employees who had completed six months of service. Employer contributions for the year ended December 31, 2011 under this plan were $41,317. 7. Income Taxes Experience Corps is exempt from federal taxes on income other than net unrelated business income under Section 501(c)(3) of the Internal Revenue Code (IRC). No provision for federal or state income taxes was required as of December 31, 2011 as Experience Corps had no net taxable unrelated business income. Management of Experience Corps has evaluated its tax positions for the year ended December 31, 2011 in accordance with the authoritative guidance relating to accounting for uncertainty in income taxes included in Accounting Standards Codification Topic Income Taxes and has determined that it has no material uncertain tax positions. Accordingly, no provision for income taxes for any uncertain tax positions was recognized. As of December 31, 2011 the statute of limitations for tax years 2008 through 2010 remains open in the major U.S. taxing jurisdictions in which Experience Corps is subject to taxation. Experience Corps practice is to recognize interest and/or penalties related to income tax matters in income tax expense. There was no income tax expense or interest and penalties for the year ended December 31, 2011. 8. Future Operations In September 2011, Experience Corps entered into an agreement with AARP, a nonprofit organization as defined in Section 501(c)(4) of the IRC. Under the terms of the agreement, beginning on or around January 8, 2012, AARP will assume management and control of the non-federal grant program activities of Experience Corps. Experience Corps will continue to exist as a separate legal nonprofit entity but under amended bylaws of Experience Corps, effective January 2012, AARP shall have the power to appoint the Board of Directors of Experience Corps. Continued - 9 -
NOTES TO FINANCIAL STATEMENTS 8. Future Operations (continued) Under the terms of the agreement, AARP agrees to provide $12 million in funding for Experience Corp s program activities ratably over a four year period following the effective date of the agreement. Additionally, AARP shall provide support services including human resources, legal, bookkeeping, accounting, audit, grants administration, development and information technology. To the extent funding is available to cover these costs, Experience Corps is to reimburse AARP at no more than fair market value. To the extent restricted funds do not cover these costs, AARP shall provide the services at no charge. AARP will also provide office space and equipment for Experience Corps National Office operations free of charge. AARP, in its sole discretion, has the right to cease operating the program of Experience Corps anytime during the term of this agreement provided it gives Experience Corps 12 months notice. As such, future commitments from AARP under this agreement were determined to be conditional and not recognized in the accompanying financial statements. During the year ended December 31, 2011, AARP provided $1 million of the $12 million funding commitment to Experience Corps. This amount is included in grants, contributions and contract revenue in the accompanying statement of activities. During the year ended December 31, 2011, Experience Corps also received donated services and rent from AARP with an estimated fair value of $436,775 which is included in in-kind revenue in the accompanying statement of activities. Such in-kind services and rent benefited all programs and supporting services and were allocated on the basis of direct labor costs. Additionally, Experience Corps was awarded $181,555 from AARP during the year ended December 31, 2011 related to integrating Experience Corps into AARP s financial and administrative systems. This amount is included in grants, contributions and contract revenue in the accompanying statement of activities and in grants, contributions and contracts receivable in the accompanying statement of financial position. 9. General and Administrative Expenses In order for Experience Corps and AARP to initiate the agreement described in Note 8, significant general and administrative expenses were incurred in 2011. While the general and administrative costs in 2010 were approximately 10% of total 2010 expenses, the rate increased to approximately 16% in 2011. As stated in Note 8, AARP contributed cash and in-kind support to Experience Corps. It is anticipated that increased general and administrative expenses will continue to be incurred in 2012 as well. AARP has made similar provisions to cover the additional expenses. Continued - 10 -
NOTES TO FINANCIAL STATEMENTS 10. Subsequent Events Subsequent to year end Experience Corps management exercised its option to renew two office space lease agreements that expired and continued on a month to month basis in 2011 until they were renewed in 2012. The agreements will expire in 2014 and 2016, respectively, and require monthly minimum rental payments of approximately $3,000 each. Additionally, on June 6, 2012, Experience Corps formally changed its name to Experience Corps and on July 27, 2012 registered to do business as AARP Experience Corps. In preparing the financial statements, Experience Corps management has evaluated events and transactions for potential recognition or disclosure through September 7, 2012, the date the financial statements were available to be issued. There were no other subsequent events identified through September 7, 2012 that require recognition or disclosure in these financial statements. - 11 -
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 CONSULTING ACCOUNTING TECHNOLOGY Certified Public Accountants To the Board of Directors of Experience Corps We have audited the financial statements of Experience in Action DBA Experience Corps as of and for the year ended December 31, 2011, and have issued our report thereon dated September 7, 2012. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control over Financial Reporting Management of Experience Corps is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered Experience Corps internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Experience Corps internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of Experience Corps internal control over financial reporting. A deficiency in internal control exists when the 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 and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of the internal control over financial reporting 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 financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. Continued - 12 -
Compliance and Other Matters As part of obtaining reasonable assurance about whether Experience Corps financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, 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 our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. We noted certain matters that we reported to management of Experience Corps in a separate letter dated September 7, 2012. This report is intended solely for the information and use of management, the Board of Directors, others within the entity, federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. RAFFA, P.C. Washington, DC September 7, 2012-13 -
INDEPENDENT AUDITOR S REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 To the Board of Directors of Experience Corps CONSULTING ACCOUNTING TECHNOLOGY Certified Public Accountants Compliance We have audited the compliance of Experience in Action DBA Experience Corps with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of Experience Corps major federal programs for the year ended December 31, 2011. Experience Corps major federal programs are identified in the summary of auditor s results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major federal programs is the responsibility of Experience Corps management. Our responsibility is to express an opinion on Experience Corps compliance based on our audit. We conducted our 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 OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we 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 Experience Corps compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of Experience Corps compliance with those requirements. In our opinion, Experience Corps complied, in all material respects, with the 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, 2011. However, the results of our auditing procedures disclosed instances of noncompliance with those requirements, which are required to be reported in accordance with OMB Circular A-133 and which are described in the accompanying schedule of findings and questioned costs as items 2011-1, 2011-2 and 2011-3. Internal Control Over Compliance Management of Experience Corps is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered Experience Corps internal control over compliance with the requirements that could have a direct and material effect on a major federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test Continued - 14 -
and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Experience Corps 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. Our 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 deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, we identified certain deficiencies in internal control over compliance that we consider to be significant deficiencies as described in the accompanying schedule of findings and questioned costs as items 2011-1, 2011-2 and 2011-3. 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. Experience Corps responses to the findings identified in our audit are described in the accompanying schedule of findings and questioned costs. We did not audit Experience Corps responses and, accordingly, we express no opinion the responses. This report is intended solely for the information and use of management, the Board of Directors, others within the entity, federal awarding agencies, and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. RAFFA, P.C. Washington, DC September 7, 2012-15 -
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Agency or Federal Federal Grantor / Pass-Through Pass-Through CFDA Federal Grantor / Program Title Grant Number Number Expenditures CORPORATION FOR NATIONAL AND COMMUNITY SERVICE AmeriCorps 09NDHDC005 94.006 $ 1,140,690 AmeriCorps 11NDHDC002 94.006 482,726 AmeriCorps Pass-through from Intergenerational Community Services 11AC128902 94.006 91,616 Subtotal CFDA No. 94.006 1,715,032 U.S. DEPARTMENT OF JUSTICE Experience Corps Academic Mentoring Program 2009-JU-FX-0063 16.726 909,597 TOTAL EXPENDITURES OF FEDERAL AWARDS $ 2,624,629 See accompanying notes to this schedule. - 16 -
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 1. Summary of Significant Accounting Policies Basis of Accounting The accompanying schedule of expenditures of federal awards is presented on the accrual basis of accounting. Consequently, amounts are recorded as expenditures when the obligations are incurred. 2. Reconciliation of Schedule of Expenditures of Federal Awards to Financial Statements Expenditures per schedule of federal awards $ 2,624,629 Plus: Other non-federal grants, contributions and contract revenue 3,004,997 Grants, contributions and contract revenue per the statement of activities $ 5,629,626 3. Subrecipients Included in the federal expenditures presented in the accompanying schedule of expenditures of federal awards are amounts provided to subrecipients which related to the following awards: Federal Amount CFDA Provided to Program Title Number Subrecipients Experience Corps Academic Mentoring Program 16.726 $ 699,569 AmeriCorps 94.006 1,447,823 Total $ 2,147,392-17 -
SCHEDULE OF FINDINGS AND QUESTIONED COSTS A. SUMMARY OF AUDITOR S RESULTS Financial Statements Type of auditor s report issued: X Unqualified Qualified Adverse Disclaimer Internal control over financial reporting: Material weakness(es) identified? Yes X No Significant deficiency(ies) identified? Yes X None Reported Noncompliance material to financial statements noted? Yes X No Federal Awards Type of auditor s report issued on compliance for major programs: X Unqualified Qualified Adverse Disclaimer Internal control over major programs: Material weakness(es) identified? Yes X No Significant deficiency(ies) identified? X Yes None Reported Any audit findings disclosed that are required to be reported in accordance with Section 510(a) of OMB Circular A-133? X Yes No Identification of Major Program(s): CFDA # / Grant # Program Title 16.726 / 2009-JU-FX-0063 Academic Mentoring Program 94.006 / 09NDHDC005, 11NDHDC002 and 11AC128902 Americorps Dollar threshold used to distinguish between Type A and Type B programs: $ 300,000 Auditee qualified as a low-risk auditee? Yes X No Continued - 18 -
SCHEDULE OF FINDINGS AND QUESTIONED COSTS B. FINDINGS - FINANCIAL STATEMENT AUDIT None required to be reported C. FINDINGS AND QUESTIONED COSTS - COMPLIANCE AND OTHER MATTERS Finding No. 2011-01 Corporation for National and Community Service, AmeriCorps, 09NDHDC005, 11NDHDC002 and 11AC128902, CFDA No. 94.006; and U.S. Department of Justice, Academic Mentoring Program, 2009-JU-FX-0063, CFDA No. 16.726 Condition: Criteria: Effect: Questioned Costs: Cause: Recommendation: Views of Responsible Officials and Planned Corrective Actions: Although the results of our audit testwork did not identify any exceptions in actual procurement practices, it was noted that until October 2011, Experience Corps did not have a written procurement policy in place that addressed the procurement standards prescribed by OMB Circular A- 110. Experience Corps adopted such a policy on October 1, 2011. OMB Circular A-110 requires all federal award recipients to establish specific written procurement policies and procedures. Experience Corps did not comply with the procurement standards of OMB Circular A-110. None Management was unaware that Experience Corp s written policies and procedures were specifically required to address procurement practices in accordance with OMB Circular A-110. We recommend management review the procurement policy provisions of OMB Circular A-110 and develop a written policy which addresses all requirements of the Circular. Management concurs with this finding and has developed a written procurement policy which is in accordance with OMB Circular A-110. Continued - 19 -
SCHEDULE OF FINDINGS AND QUESTIONED COSTS C. FINDINGS AND QUESTIONED COSTS - COMPLIANCE AND OTHER MATTERS (continued) Finding No. 2011-02 Corporation for National and Community Service, AmeriCorps, 09NDHDC005, 11NDHDC002 and 11AC128902, CFDA No. 94.006 Condition: Criteria: Effect: Questioned Costs: Cause: Recommendation: Views of Responsible Officials and Planned Corrective Actions: From a sample of forty payroll disbursements, we noted one instance in which an employee s time was charged based on the federal award budget rather than the actual hours worked as supported by the timesheet; two instances in which a timesheet was not approved by the employee s supervisor; and two instances in which the timesheets included total hours worked but not a breakdown of the projects on which the individuals spent their time. As prescribed in OMB Circular A-122, charges to federal awards for salaries must be based on documented payrolls approved by a responsible official(s) of the organization. Additionally, the distribution of salaries and wages to awards must be supported by contemporaneous personnel activity reports. Experience Corps did not comply with the requirements of OMB Circular A-122 related to documented support of salaries and wages. None. Management has policies and procedures in place regarding the documentation and review of payroll allocations but such policies and procedures were not consistently followed and management s review procedures did not identify the oversights reported. We recommend that all timesheets be approved by the appropriate supervisor and all timesheets include the time worked by project. Salary costs should be billed to the grants based on actual hours worked as supported by the contemporaneous timesheets. Management concurs with this finding and will work to strengthen its review procedures to timely identify payroll allocation discrepancies and/or incomplete documentation. Continued - 20 -
SCHEDULE OF FINDINGS AND QUESTIONED COSTS D. FINDINGS AND QUESTIONED COSTS - COMPLIANCE AND OTHER MATTERS (continued) Finding No. 2011-03 Corporation for National and Community Service, AmeriCorps, 09NDHDC005, 11NDHDC002 and 11AC128902, CFDA No. 94.006 Condition: Criteria: Effect: Questioned Costs: Cause: Recommendation: Views of Responsible Officials and Planned Corrective Actions: There was one instance noted in which the underlying data used to measure program achievement reported in the semiannual progress report for the period ended September 30, 2011 included erroneous information. A recipient of AmeriCorps state funds, not federal funds, was included in the Experience Corps calculation in error. The AmeriCorps award requires that 95% of members trained as tutors, classroom assistants and mentors will have a Good or Excellent rating for their understanding of basic tutoring and mentoring strategies by the end of the service year. Inaccurate achievement was reported on the progress report examined. However, after appropriately adjusting to exclude the erroneous information, Experience Corps still met the 95% target requirement. None The inclusion of the recipient of AmeriCorps state funds in this report was an oversight which was not noted by Experience Corps prior to their submission of the report. We recommend management closely review the statistics used to measure program achievements and implement necessary review procedures to ensure the accuracy of the data reported to the federal awarding agencies. Management concurs with this finding and is evaluating the process for preparing and reviewing all federal reports to better ensure accurate reporting and that errors will be found and corrected in a timely manner. - 21 -
SUPPLEMENTAL INFORMATION
SUPPLEMENTAL SCHEDULE OF FUNCTIONAL EXPENSES (With Summarized Financial Information for the Year Ended December 31, 2010) Fundraising General and and 2011 2010 Programs Administrative Advocacy Total Total Subgrants $ 2,192,858 $ - $ - $ 2,192,858 $ 1,803,362 Salaries 1,108,203 324,623 175,252 1,608,078 742,792 Professional fees 356,153 338,160 100,238 794,551 610,413 In-kind facilities and services - 436,775-436,775 - Employee benefits 61,939 105,581 13,554 181,074 78,023 Payroll taxes 92,022 30,535 14,965 137,522 53,472 Rent 22,286 97,023-119,309 69,890 Travel 60,912 7,807 3,086 71,805 40,732 Conferences and meetings 38,419 7,072 2,216 47,707 31,067 Pension plan 25,383 10,109 5,825 41,317 38,937 Professional development 22,302 9,946 118 32,366 7,368 Telephone and internet 9,222 16,487 274 25,983 17,454 Insurance - 22,362-22,362 4,708 Office supplies 9,005 9,925 266 19,196 22,178 Printing and publications 4,746 3,720 546 9,012 4,991 Loss on disposal of fixed assets - 7,805-7,805 - Depreciation and amortization 800 3,440-4,240 3,344 Bank and other charges - 205 2,679 2,884 1,083 Postage and delivery 1,547 711 127 2,385 1,489 Overhead allocation 412,168 (483,459) 71,291 - - TOTAL EXPENSES $ 4,417,965 $ 948,827 $ 390,437 $ 5,757,229 $ 3,531,303-22 -