LEGAL AID SERVICES OF OKLAHOMA, INC. FINANCIAL STATEMENTS AND SUPPLEMENTAL INFORMATION. For the Year Ended December 31, 2017

LEGAL AID SERVICES OF OKLAHOMA, INC. FINANCIAL STATEMENTS AND SUPPLEMENTAL INFORMATION For the Year Ended December 31, 2017 LSC Grant Recipient No. 737066

TABLE OF CONTENTS Page Independent Auditor s Report 1 Statement of Financial Position 3 Statement of Activities and Changes in Net Assets 4 Statement of Functional Expenses 5 Statement of Cash Flows 6 Notes to Financial Statements 7 Supplemental Information: Statement of Revenues and Expenses and Changes in Net Assets All Funds 15 Reports Required by Governmental Auditing Standards and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) 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 16 Independent Auditor s Report on Compliance for Each Major Program and on Internal Control over Compliance Required by the Uniform Guidance 18 Schedule of Expenditures of Federal Awards 20 Notes to the Schedule of Expenditures of Federal Awards 22 Schedule of Findings and Questioned Costs 23 Summary Schedule of Prior Audit Findings 25

INDEPENDENT AUDITOR'S REPORT To the Board of Directors Legal Aid Services of Oklahoma, Inc. Report on the Financial Statements We have audited the accompanying financial statements of Legal Aid Services of Oklahoma, Inc. ( LASO ), (a nonprofit organization), which comprise the statement of financial position as of December 31, 2017, and the related statements of activities, functional expenses, and cash flows for the year then ended, and the related notes to the financial statements. 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 Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to the 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 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, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of LASO, as of December 31, 2017, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. 309 N. Bryant Ave. Edmond, OK 73034 405.348.0615 Fax 405.348.0931 www.jmacpas.com Member of AICPA and OSCPA

Other Matters Other Information Our 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 Part 200, Uniform Administrative Requirements, Cost Principles, 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 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. Report on 2016 summarized comparative information We have previously audited LASO s 2016 financial statements (not presented herein), and we expressed an unmodified audit opinion on those audited financial statements in our report dated April 3, 2017. In our opinion, the accompanying summarized comparative information as of and for the year ended December 31, 2016 is consistent, in all material respects, with the audited financial statements from which it has been derived. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated April 10, 2018, on our consideration of LASO s 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 in considering LASO s internal control over financial reporting and compliance. April 10, 2018

STATEMENT OF FINANCIAL POSITION As of December 31, 2017 (With Comparative Totals as of December 31, 2016) ASSETS 2017 2016 Current assets: Cash and cash equivalents $ 1,495,526 $ 1,888,260 Grants receivable 1,414,592 1,549,438 Unconditional promises to give 8,822 49,846 Prepaid expenses 143,836 114,979 Total current assets 3,062,776 3,602,523 Property and equipment: Land 6,500 6,500 Buildings & improvements 278,032 278,032 Furniture 10,000 10,000 Equipment 64,281 193,540 Less: accumulated depreciation (271,083) (390,767) Property and equipment, net 87,730 97,305 Beneficial interests in community foundations 870,209 921,768 TOTAL ASSETS $ 4,020,715 $ 4,621,596 LIABILITIES & NET ASSETS Current liabilities: Accounts payable $ 82,093 $ 77,799 Other payables 48,401 47,959 Deferred revenue 194,438 130,561 Client trust payable 17,357 17,410 Accrued salaries and benefits 182,053 188,404 Accrued vacation 545,553 494,268 Total current liabilities 1,069,895 956,401 Net assets: Unrestricted: Undesignated 1,417,330 1,784,504 Temporarily restricted Legal Services Corporation 347,590 366,754 Non-LSC 310,533 592,169 Permanently restricted 875,367 921,768 Total Net Assets 2,950,820 3,665,195 TOTAL LIABILITIES AND NET ASSETS $ 4,020,715 $ 4,621,596 The accompanying notes are an integral part of these financial statements. 3

STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS For the Year Ended December 31, 2017 (With Comparative Totals for the Year Ended December 31, 2016) Temporarily Restricted Permanently Restricted Unrestricted LSC Non-LSC Sub-total REVENUES, GAINS, AND OTHER SUPPORT Government grant revenue $ 818,442 $ 4,187,199 $ 3,223,140 $ 7,410,339 $ - $ 8,228,781 $ 7,079,184 Private grant revenue 85,000-266,280 266,280-351,280 219,393 Contract revenue 657,594-455,524 455,524-1,113,118 1,413,144 United Way (81) - 789,335 789,335-789,254 943,550 Contributions 644,253-397,104 397,104-1,041,357 1,613,909 Attorney fee awards - 89,065 161,253 250,318-250,318 146,558 Miscellaneous income 40,723-1,289 1,289-42,012 6,809 Interest income - 3,587-3,587-3,587 322 Realized/unrealized gains - - - - 95,659 95,659 43,520 Donated services 562,207 - - - - 562,207 580,355 Total revenue and gains 2,808,138 4,279,851 5,293,925 9,573,776 95,659 12,477,573 12,046,744 Net assets released from restrictions Satisfaction of program requirements 10,016,636 (4,299,015) (5,575,561) (9,874,576) (142,060) - - Total revenues, gains and other support 12,824,774 (19,164) (281,636) (300,800) (46,401) 12,477,573 12,046,744 EXPENSES Civil legal services 11,260,315 - - - - 11,260,315 10,264,476 Public defender 392,471 - - - - 392,471 395,533 Management and general 1,290,130 - - - - 1,290,130 1,079,839 Fundraising 249,032 - - - - 249,032 269,632 Total expenses 13,191,948 - - - - 13,191,948 12,009,480 Change in net assets (367,174) (19,164) (281,636) (300,800) (46,401) (714,375) 37,264 Net assets beginning of year 1,784,504 366,754 592,169 958,923 921,768 3,665,195 3,627,931 NET ASSETS, END OF YEAR $ 1,417,330 $ 347,590 $ 310,533 $ 658,123 $ 875,367 $ 2,950,820 $ 3,665,195 2017 Totals 2016 Totals The accompanying notes are an integral part of these financial statements. 4

STATEMENT OF FUNCTIONAL EXPENSES For the Year Ended December 31, 2017 (With Comparative Totals for the Year Ended December 31, 2016) Civil Legal Services Public Defender Management and General Fundraising 2017 Totals 2016 Totals Salary $ 6,592,290 $ 208,713 $ 827,427 $ 72,114 $ 7,700,544 $ 6,726,052 Fringe benefits 2,101,034 56,751 212,525 24,952 2,395,262 1,981,444 Occupancy 672,843 62,580 40,788-776,211 762,971 Office expense 142,397 5,935 33,784 19,292 201,408 162,294 Telephone 217,549 2,492 30,979 410 251,430 247,744 Travel 150,315 457 13,038 934 164,744 142,743 Litigation 43,859 454 478-44,791 63,313 Training 73,930 687 11,831 1,404 87,852 118,968 Library 72,086 2,492 2,218 1,307 78,103 73,976 Dues and fees 36,715 1,440 10,521 100 48,776 46,537 Insurance 750 30 28,204 30 29,014 75,932 Professional services 253,861 44,000 61,556 113,389 472,806 598,746 Equipment 98,755 1,633 8,405 1,271 110,064 133,760 Other 232,149 4,807 8,376 13,829 259,161 276,080 Depreciation expense 9,575 - - - 9,575 18,565 Donated services 562,207 - - - 562,207 580,355 Total expenses - 2017 $ 11,260,315 $ 392,471 $ 1,290,130 $ 249,032 $ 13,191,948 Total expenses - 2016 $ 10,264,476 $ 395,533 $ 1,079,839 $ 269,632 $ 12,009,480 The accompanying notes are an integral part of the financial statements. 5

STATEMENT OF CASH FLOWS For the Year Ended December 31, 2017 (With Comparative Totals for the Year Ended December 31, 2016) CASH FLOWS FROM OPERATING ACTIVITIES: 2017 2016 Change in net assets $ (714,375) $ 37,264 Adjustments to reconcile change in net assets to net cash provided (Used) by operating activities: Depreciation 9,575 18,565 Valuation adjustment to beneficial interests in community foundations (96,638) (43,520) Change in current assets and liabilities (Increase) decrease in receivables 175,870 (62,263) (Increase) decrease in prepaid expenses (28,857) 10,319 Increase (decrease) in payables 4,736 22,058 Increase (decrease) in client trust liabilites (53) 2,485 Increase (decrease) in accrued salaries and benefits (6,351) 5,917 Increase (decrease) in deferred revenue 63,877 (292,338) Increase (decrease) in accrued vacation 51,285 64,440 Total adjustments 173,444 (274,337) Net cash provided (used) by operating activities (540,931) (237,073) CASH FLOWS FROM INVESTING ACTIVITIES: Property and equipment purchases - (13,201) Contributions to investment in community foundations - (61,018) Distributions from investment in community foundations 148,197 5,644 Net cash Provided (used) by investing activities 148,197 (68,575) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (392,734) (305,648) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,888,260 2,193,908 CASH AND CASH EQUIVALENTS AT END OF YEAR $ 1,495,526 $ 1,888,260 The accompanying notes are an integral part of these financial statements. 6

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations - Legal Aid Services of Oklahoma, Inc. ( LASO ) is a nonprofit corporation organized for the purpose of providing quality legal services in non-criminal proceedings and other matters to eligible low income and elderly people within the State of Oklahoma. The project is funded by a Legal Services Corporation ( LSC ) grant, Victims of Crime Act ( VOCA ) grant, and various other grants and contracts as may be awarded during the year. LASO also conducts fundraising activities to support its mission. Basis of Accounting - The financial statements are prepared in accordance with accounting principles generally accepted (GAAP) in the United States of America, utilizing the accrual basis of accounting. Under the accrual basis of accounting, revenues are recorded when earned and expenses are recorded when incurred. Financial Statement Presentation - LASO is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. In addition, LASO is required to present a statement of cash flows. The financial statements include certain prior year summarized comparative information in total but not by net asset class and without 2016 disclosures. Such information does not include sufficient detail to constitute a presentation in conformity with GAAP. Accordingly, such information should be read in conjunction with LASO s financial statements for the year ended December 31, 2016, from which summarized information was derived. Restriction on Assets - Net assets and revenues, expenses, gains and losses are classified based on the existence or absence of donor-imposed restrictions. Accordingly, net assets of LASO and changes therein are classified and reported as follows: Unrestricted Net Assets - Net assets that are not subject to donor-imposed stipulations. Temporarily Restricted Net Assets - Net assets subject to donor-imposed stipulations that may or will be met, either by actions of LASO and/or the passage of time. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Permanently Restricted Net Assets - Net assets subject to donor-imposed stipulations that may be maintained permanently by LASO. Generally, the donors of these assets permit LASO to use all or part of the income earned on any related investments or beneficial interests for general or specific purposes. Contributions Received and Made - Contributions, including pledges, are recognized as revenue or gain in the period received. A contribution is defined as "an unconditional transfer of cash or other assets." Beneficial Interest in Community Foundations LASO reports its beneficial interest in community foundations at fair value. Gains and losses on the beneficial interest in community foundations are reported in the statement of activities as increases or decreases in unrestricted net assets unless their use is restricted by donor stipulations. Donor restricted income in the beneficial interest in community foundations is reported as an increase or decrease to temporarily restricted or permanently restricted net assets, depending upon the type of restriction. 7

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont d) Concentrations and Risks Financial instruments, which potentially subject LASO to credit risk, consist primarily of cash, equivalents, and receivables. LASO maintains its cash in bank deposit accounts, which, at times, may exceed federally insured limits. LASO receives a substantial amount of its support from LSC, VOCA, and federal, state and local governments and agencies. A significant reduction in the level of this support, if this were to occur, may have an effect on LASO's programs and activities. Management is not aware of any actions that would adversely affect the amount of funds LASO will receive in the next fiscal year. 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 the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Legal Services Corporation Grant - LASO recognizes revenue from LSC grants on a straight-line basis over the grant period. Funds remaining unexpended at the end of an accounting period are recorded in net assets. The portion of net assets related to LSC funding is subject to the provisions of LSC's Fund Balance Regulation. Under this regulation, LASO is not permitted to maintain net assets in excess of 10% of their annualized LSC support. Under certain conditions, a waiver of this policy, up to a maximum of 25% of LASO's annualized grant amount, may be obtained from LSC. In the absence of a waiver, any net asset amount in excess of 10% of LSC support is required to be repaid to LSC in a lump sum payment or by pro rata deductions from LASO's grant checks over a period specified by LSC. In the instance that LASO is not in compliance with the LSC grant requirements, LSC may, at its sole discretion, require LASO to return all current year expended and unexpended LSC funds. In addition, if LASO terminates its LSC grant activities, all unexpended funds are required to be refunded to LSC. LSC excess net assets are as shown below: Annualized Grants $ 4,254,855 Interest 3,587 Other 89,065 Total LSC Support $ 4,347,507 10% Allowed Retaining Without Need for a Waiver $ 434,751 Actual Net Assets End of Year $ 347,590 Excess net assets did not exceed 10 percent of total LSC support as of December 31, 2017. 8

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont d) Other Grants - A portion of LASO's support is provided by cost reimbursable grants. Funds from these grants are recognized as support when eligible costs are incurred. A receivable is recognized to the extent support earned exceeds cash advances. Conversely, a liability (deferred revenue) is recorded when contract cash advances exceed support earned. Grants and Other Receivables Due to the nature of the receivables being primarily government grants, LASO considers them to be fully collectible; accordingly, no allowance for doubtful accounts is required. LASO maintains an allowance for uncollectible promises for estimated losses resulting from the inability of donors to fulfill pledges. This estimate is based on historical collection and write-off experience. At December 31, 2017, all pledges are considered collectible. Property and Equipment - Property and equipment acquired with LSC funds are considered to be owned by LASO while used in the program or in future authorized programs. However, LSC maintains a reversionary interest in these assets and has the right to determine the use of any proceeds from the sale of assets purchased with LSC funds. Property and equipment in excess of $5,000 are carried at cost. Depreciation and amortization are computed on a straight-line basis over the estimated lives of the assets, generally using a three to seven-year life for personal property and a twenty-five to thirty-year life for real property. When fixed assets are sold or retired, the cost of the asset and related accumulated depreciation are removed from the accounts and the resulting gains or losses are recognized as revenue or expenses. Additions and improvements that extend the useful lives of the assets are capitalized. Expenditures for repairs and maintenance are expensed as incurred. Allocation of Expenses - Certain common expenses are incurred which benefit more than one grant. Salary expenses are allocated to the grants primarily based on the relationship of advocates' time devoted to cases, which qualify under the criteria of each grant. Common expenses are distributed based on advocate salary costs. Donated Services - Donated services primarily represent the estimated value of services rendered to LASO by attorneys at no charge or a reduced charge. The value of donated services is based upon the estimated average standard fee charged less any fee actually paid to the attorneys rendering the services. Donated services are recognized both as support and expenses. Non-specialized services have not been recognized as support and expense. Income Taxes and Uncertain Tax Positions - LASO qualifies as an organization exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code and is subject to a tax on income from any unrelated business, as defined by Section 509(a)(1) of the Code. LASO currently has no unrelated business income. Accordingly, no provision for income taxes has been recorded. LASO has adopted the recognition requirements for uncertain income tax positions as required by generally accepted accounting principles. Income tax benefits are recognized for income tax positions taken or expected to be taken in a tax return only when it is determined that the income tax position will more-likelythan-not be sustained upon examinations by taxing authorities. LASO has analyzed tax positions taken for filing with the Internal Revenue Service and all state jurisdictions where it operates. 9

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont d) Income Taxes and Uncertain Tax Positions (Cont d) - LASO believes that income tax filing positions will be sustained upon examination and does not anticipate any adjustments that would result in a material adverse effect on LASO's financial condition, results of operations, or cash flows. Accordingly, LASO has not recorded any reserves, or related accruals for interest and penalties for uncertain income tax positions at December 31, 2017. Federal and state income tax statutes dictate that tax returns filed in any of the previous three reporting periods remain open to examination. Currently, LASO has no open examinations with the Internal Revenue Service or the Oklahoma Tax Commission. Cash and Cash Equivalents - For purposes of the statement of cash flow, cash and cash equivalents consist of demand deposits and money market funds. Reclassifications - Certain accounts in the prior-year financial statements have been reclassified for comparative purposes to conform to the presentation in the current-year financial statements. Future Accounting Guidance - In August 2016, the Financial Accounting Standards Board issued Accounting Standards Update ASU No. 2016-14 Not-for-Profit Entities (Topic 958). This update will affect reporting requirements related to net asset classes, cash flow presentation, liquidity and expense information, among other disclosures. The new guidance will be effective for the LASO s year ending December 31, 2018. The ASU permits application of the new not-for-profit guidance to be applied on a retrospective basis in the year that the ASU is first applied. LASO has not yet determined the potential effects of the new standard on the financial statements, if any. 2. BENEFICIAL INTERESTS IN COMMUNTY FOUNDATIONS Beneficial interest in community foundations at December 31, 2017 consist exclusively of balances held by the Tulsa Community Foundation and the Oklahoma City Community Foundation (collectively referred to as the Foundations ). LASO follows the provisions in Financial Accounting Standards Board Accounting Standards Codification (FASB ASC) 958-605-25-21 to 33, Transfers of Assets to a Not-for-Profit Organization or Charitable Trust That Raises or Holds Contributions for Others. In accordance with FASB ASC 958-605-25-21 to 33, the portions of the funds contributed by LASO and held by the Foundations are considered reciprocal transfers, because LASO is also a beneficiary of the funds. As a result, LASO has recorded its separated fund held by the Tulsa Community Foundation and its portion of the investment pool of the Oklahoma City Community Foundation as an investment in its December 31, 2017 statement of financial position. The Foundations have variance power assuring donors that if the charitable purpose of their contribution becomes impractical or impossible, the distributions will be directed to similar purposes in the community. Therefore, the portions of the funds held by the Foundations on behalf of LASO contributed by unrelated third-party donors is included in the net assets of the Foundations and are not reflected in the accompanying financial statements. 10

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 2. BENEFICIAL INTERESTS IN COMMUNTY FOUNDATIONS (Cont d) LASO s interests held by the Foundations may generally not be redeemed and are classified as permanently restricted net assets in the accompanying financial statements. Activity related to the Tulsa Community Foundation for the year ended December 31, 2017 is as follows: Reciprocal Third Party Balances Balances Totals Balance at December 31, 2016 $ 890,557 $ 107,499 $ 998,056 Distributions (147,022) (720) (147,742) Gains (losses) on investments and third party contributions 86,294 17,681 103,975 Balance at December 31, 2017 $ 829,829 $ 124,460 $ 954,289 Activity related to the Oklahoma City Community Foundation for the year ended December 31, 2017 is as follows: Reciprocal Third Party Balances Balances Totals Balance at December 31, 2016 $ 31,211 $ 101,972 $ 133,183 Distributions (1,175) (4,938) (6,113) Gains (losses) on investments and third party contributions 10,344 15,131 25,475 Balance at December 31, 2017 $ 40,380 $ 112,165 $ 152,545 3. CLIENT DEPOSITS LASO is the custodian of funds deposited by clients for court costs and other related expenses. Such amounts totaled $17,357 at December 31, 2017. 4. FAIR VALUE MEASUREMENTS Various inputs may be used to determine the value of an asset or liability. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value the asset or liability are not necessarily an indication of the risk associated with those assets or liabilities. 11

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 4. FAIR VALUE MEASUREMENTS (Cont d) The fair value hierarchy is as follows: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Significant other observable inputs including quoted prices for similar assets or liabilities in active markets, quoted prices for similar assets and other observable inputs. Level 3: Significant unobservable inputs including the funds own assumptions used to determine the fair value of the assets or liabilities. The following table summarizes LASO s financial assets measured at fair value on a recurring basis as of December 31, 2017, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value: Total fair value Level 1 Level 2 Level 3 Tulsa Community Foundation $ 829,829 $ 829,829 $ - $ - Oklahoma City Foundation 40,380 - - 40,380 Total Investments $ 870,209 $ 829,829 $ - $ 40,380 The beneficial interest in assets held at the Oklahoma City Community Foundation (the Foundation ) of $40,380 as of December 31, 2017 reported as beneficial interest in community foundations in the accompanying statement of financial position, has been valued as a practical expedient, at the fair value of LASO s share of the Foundation s investment pool as of the measurement date. The Foundation values securities and other financial instruments on a fair value basis of accounting. The estimated fair values of certain investments of the Foundation, which includes private placements and other securities for which prices are not readily available, are determined by management of the Foundation and may not reflect amounts that could be realized upon immediate sale, nor amounts that ultimately may be realized and are considered Level 3 measurements. Accordingly, the estimated fair values may differ significantly from the values that would have been used had a ready market existed for these investments. A reconciliation of the activities for these Level 3 financial instruments is included in Note 2. 12

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 5. LEASES LASO is obligated on lease agreements for equipment and office facilities which are classified as operating leases for accounting purposes. With the exception of the equipment lease and one facility lease, the leases contain cancellation clauses in the event funding is substantially decreased or terminated. Rent expense incurred for leases during 2017 was $685,574. Future minimum lease payments of non-cancelable leases are as follows: December 31, 2018 $ 179,440 2019 10,114 $ 189,554 6. CONTINGENT LIABILITIES LASO participates in a number of federal and state assisted programs. These programs are audited in accordance with Government Auditing Standards and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) as applicable, in accordance with the required levels of Federal Financial assistance. Audits of prior years have not resulted in any significant disallowed costs. Additionally, the grant programs are subject to audits by the granting authority, the purpose of which is to insure compliance with conditions precedent to the granting of the funds. Management believes that any liability for reimbursement which may arise as the result of audits of grant funds would not be material. 7. PENSION PLAN LASO has a 401(a) defined contribution pension plan covering all full-time and part-time employees who work 18 hours or more per week. LASO contributes 4% of each participant's qualified compensation to the plan. Participants become fully vested in the plan after three years. Contributions to the plan by LASO were $296,548 for 2017. 8. PRIVATE ATTORNEY INVOLVEMENT For 2017, LASO was required to devote an amount equal to at least $530,779 (12.5% of basic field grant of $4,246,235) to the involvement of private attorneys. This requirement was met. 9. SUBSEQUENT EVENTS Management of LASO has evaluated subsequent events through April 10, 2018, which is the date the financial statements were available to be issued. 13

SUPPLEMENTAL INFORMATION

STATEMENT OF REVENUES AND EXPENSES AND CHANGES IN NET ASSETS ALL FUNDS For the Year Ended December 31, 2017 (With Comparative Totals for the Year Ended December 31, 2016) LSC Basic Non Private Attorney LSC Migrant Grant LSC Basic Private Attorney LSC TIG 16054- Non Private Attorney LSC TIG 16054- Private Attorney LSC TIG 16055- Non Private Attorney LSC TIG 16055- Private Attorney LSC Property Total LSC Grants Non LSC Private Attorney Non LSC Non Private Attorney 2017 Totals 2016 Totals SUPPORT AND REVENUE Government grant revenue $ 3,760,933 $ 101,272 $ 392,650 $ (17,115) $ 33 $ (50,732) $ 158 $ - $ 4,187,199 $ 574,432 $ 3,467,150 $ 8,228,781 $ 7,079,184 Private grant revenue - - - - - - - - - - 351,280 351,280 219,393 Contract revenue - - - - - - - - - - 1,113,118 1,113,118 1,413,144 United Way - - - - - - - - - - 789,254 789,254 943,550 Contributions - - - - - - - - - - 1,041,357 1,041,357 1,613,909 Attorney fee awards 89,065 - - - - - - - 89,065-161,253 250,318 146,558 Miscellaneous income - - - - - - - - - - 42,012 42,012 6,809 Interest income 3,587 - - - - - - - 3,587 - - 3,587 322 Realized/unrealized gains - - - - - - - - - - 95,659 95,659 43,520 Donated services - - - - - - - - - 562,207-562,207 580,355 Total support and revenue 3,853,585 101,272 392,650 (17,115) 33 (50,732) 158-4,279,851 1,136,639 7,061,083 12,477,573 12,046,744 EXPENSES Salaries 2,831,754 11,087 191,723 10,363-10,641 118-3,055,686 197,504 4,447,354 7,700,544 6,726,052 Fringe benefits 827,553 3,624 58,460 2,844-2,904 37-895,422 58,964 1,440,876 2,395,262 1,981,444 Occupancy 235,506 1,187 19,565 - - - - - 256,258 27,174 492,779 776,211 762,971 Office expense 81,763 262 2,941 740-43 - - 85,749 3,808 111,851 201,408 162,294 Telephone 124,649 732 3,719 - - - - - 129,100 7,631 114,699 251,430 247,744 Travel 44,398 285 5,661 127 33 187 3-50,694 4,137 109,913 164,744 142,743 Litigation 16,709 203 - - - - - - 16,912 2,203 25,676 44,791 63,313 Training 29,477 221 10,687 152 - - - - 40,537 1,712 45,603 87,852 118,968 Library 29,302-1,559 - - 96 - - 30,957 1,046 46,101 78,104 73,976 Dues and fees 23,241-2 - - - - - 23,243 725 24,808 48,776 46,537 Insurance 28,785 - - - - - - - 28,785-229 29,014 75,932 Professional services 51,145 16 35,440 - - 144 - - 86,745 214,042 172,019 472,806 598,746 Equipment 85,724 239 502 - - - - - 86,465 474 23,125 110,064 133,760 Other 737,384-1,943 16,515-10,000 - (37,116) 728,726 6,154 (475,729) 259,151 276,080 Depreciation expense 2,130 - - - - - - 6,742 8,872-713 9,585 18,565 Donated services - - - - - - - - - 562,208-562,208 580,355 Litigation service support (254,787) 429 12,060 826-690 - - (240,782) 10,049 230,733 - - Administrative support (1,041,148) 2,018 48,388 3,119-3,269 - - (984,354) 38,808 945,544 (2) - Total expenses 3,853,585 20,303 392,650 34,686 33 27,974 158 (30,374) 4,299,015 1,136,639 7,756,294 13,191,948 12,009,480 Change in net assets - 80,969 - (51,801) - (78,706) - 30,374 (19,164) - (695,211) (714,375) 37,264 Net assets - beginning of year - 236,247-51,801-78,706-366,754-3,298,441 3,665,195 3,627,931 NET ASSETS - END OF YEAR $ - $ 317,216 $ - $ - $ - $ - $ - $ 30,374 $ 347,590 $ - $ 2,603,230 $ 2,950,820 $ 3,665,195 15

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 To the Board of Directors Legal Aid Services of Oklahoma, Inc. We have audited, in accordance with the 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, the financial statements of Legal Aid Services of Oklahoma, Inc. (a nonprofit organization) ( LASO ), which comprise the statement of financial position as of December 31, 2017, and the related statements of activities, functional expenses, and cash flows for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated April 10, 2018. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered LASO s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of LASO s internal control. Accordingly, we do not express an opinion on the effectiveness of LASO s internal control. 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. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether LASO s financial statements are free from 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. 309 N. Bryant Ave. Edmond, OK 73034 405.348.0615 Fax 405.348.0931 www.jmacpas.com Member of AICPA and OSCPA

Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of LASO s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering LASO s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. April 10, 2018

INDEPENDENT AUDITOR S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE To the Board of Directors Legal Aid Services of Oklahoma, Inc. Report on Compliance for Each Major Federal Program We have audited Legal Aid Services of Oklahoma, Inc. s ( LASO ) compliance with the types of compliance requirements described in the OMB Compliance Supplement and the LSC Audit Guide and Compliance Supplement that could have a direct and material effect on each of LASO s major federal programs for the year ended December 31, 2017. LASO 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 federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditor s Responsibility Our responsibility is to express an opinion on compliance for each of LASO s major federal programs based on our audit of the types of compliance requirements referred to above. 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 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) and the LSC Audit Guide and Compliance Supplement. Those standards and the Uniform Guidance and the LSC Audit Guide and Compliance Supplement 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 LASO s 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 on compliance for each major federal program. However, our audit does not provide a legal determination of LASO s compliance. Opinion on Each Major Federal Program In our opinion, LASO 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, 2017. Report on Internal Control over Compliance Management of LASO is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered LASO 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 309 N. Bryant Ave. Edmond, OK 73034 405.348.0615 Fax 405.348.0931 www.jmacpas.com Member of AICPA and OSCPA

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, we do not express an opinion on the effectiveness of LASO 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. 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 material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we 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 our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance and the LSC Audit Guide and Compliance Supplement. Accordingly, this report is not suitable for any other purpose. April 10, 2018

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Year Ended December 31, 2017 Federal Federal Grantor/Pass-Through CFDA Grant Grantor/Program Title Number Period Federal Support Recognized Federal Program Expenditures U.S. Department of Health and Human Services Passed Through State of Oklahoma Department of Human Services and Area Agencies on Aging: Special Programs for the Aging - Title III Part B - Grants for Supportive Services and Senior Centers: Areawide Aging Agency 93.044 7/1/16 to 6/30/17 $ 14,254 $ 14,254 7/1/17 to 6/30/18 54,425 54,425 Association of South Central Oklahoma Governments 93.044 7/1/16 to 6/30/17 5,708 5,708 7/1/17 to 6/30/18 9,483 9,483 Central Oklahoma Economic Development District 93.044 7/1/16 to 6/30/17 8,723 8,723 7/1/17 to 6/30/18 10,918 10,918 Eastern Oklahoma Development District 93.044 7/1/16 to 6/30/17 16,169 16,169 7/1/17 to 6/30/18 23,298 23,298 Grand Gateway Economic Development Association 93.044 7/1/16 to 6/30/17 22,009 22,009 7/1/17 to 6/30/18 24,387 24,387 Kiamichi Economic Development District of Oklahoma 93.044 7/1/16 to 6/30/17 4,959 4,959 7/1/17 to 6/30/18 14,182 14,182 Long Term Care Authority of Enid 93.044 7/1/16 to 6/30/17 11,238 11,238 7/1/17 to 6/30/18 12,518 12,518 Oklahoma Economic Development Association 93.044 7/1/16 to 6/30/17 7,463 7,463 7/1/17 to 6/30/18 14,358 14,358 Southern Oklahoma Development Association 93.044 7/1/16 to 6/30/17 3,268 3,268 7/1/17 to 6/30/18 11,793 11,793 Southwestern Oklahoma Development Authority 93.044 7/1/16 to 6/30/17 2,435 2,435 7/1/17 to 6/30/18 15,211 15,211 Indian Nations Council of Governments 93.044 7/1/16 to 6/30/17 20,807 20,807 7/1/17 to 6/30/18 21,557 21,557 Part E-Grants for Supportive and Senior Citizens: Eastern Oklahoma Development District 93.052 7/1/16 to 6/30/17 795 795 7/1/17 to 6/30/18 1,246 1,246 Passed through the Oklahoma Primary Care Association Cooperative Agreement to Support Navigators in Federally 93.332 9/2/16-9/1/17 114,263 84,098 Facilitated and State Partnership Marketplaces 9/13/17-9/12/17 50,463 84,643 Corporation for National and Community Service: Passed Through Equal Justice Works Americorps-Veterans Legal Corps Fellowship Program 94.006 8/1/16 to 9/30/17 58,474 58,474 8/1/17 to 9/30/18 10,741 10,741 20

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Year Ended December 31, 2017 Federal Federal Grantor/Pass-Through CFDA Grant Grantor/Program Title Number Period Federal Support Recognized Federal Program Expenditures Americorps - Elder Justice Legal Fellowship Program 94.006 8/11/17 to 9/30/18 7,309 7,309 Passed Through Oklahoma Community Service Commission Americorps 94.006 8/1/16 to 9/30/17 8,780 8,780 8/1/17 to 9/30/18 2,520 2,520 Passed through New Mexico Legal Aid Americorps 94.006 11/01/16-10/31/17 14,381 14,381 11/01/17-10/31/18 3,582 3,582 Legal Services Corporation: Basic Field Grant 09.737066 1/1/17 to 12/31/17 4,153,583 4,153,583 Migrant Component 09.737066 1/1/17 to 12/31/17 101,272 20,302 Technology Grant 09.737066 10/1/16-9/30/19 (50,574) 28,133 10/1/16-3/31/19 (17,082) 34,720 U. S. Department of Housing and Urban Development: Private Enforcement Initiative 14.418 01/02/17 to 01/01/18 300,000 300,000 Passed Through City of OKC Emergency Shelter Grant 14.231 7/1/16 to 6/30/17 10,892 10,892 7/1/17 to 6/30/18 7,885 7,885 Passed Through City of Tulsa Community Development Block Grants/Entitlement Grants 14.218 7/1/16 to 6/30/17 0 0 7/1/17 to 6/30/18 11,649 11,649 U.S. Department of Justice: Passed through Okla District Attorney's Council Crime Victim Assistance 16.575 7/1/16 to 9/30/17 1,399,088 1,399,088 10/1/17 to 9/30/18 470,000 470,000 Rural Domestic Violence, Dating Violence, Sexual Assault, and 16.589 10/01/15-09/30/18 152,274 152,274 Stalking Assistance Progrm U.S. Department of Veterans Affairs: Passed through Oklahoma Goodwill Industries Inc VA Supportive Services for Veteran Families 64.033 10/01/16 to 9/30/17 12,008 7,823 10/01/17 to 9/30/18 37,216 29,368 U.S. Department of the Treasury/ Internal Revenue Service: Low Income Tax Clinics 21.008 01/01/17-12/31/17 42,503 42,503 TOTAL EXPENDITURES OF FEDERAL AWARDS $ 7,232,431 $ 7,273,952 21

NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Year Ended December 31, 2017 1. BASIS OF PRESENTATION The accompanying schedule of expenditures of federal awards include the federal grant activity of LASO, under programs of the federal government for the year ended December 31, 2017. The information in the schedule of expenditures of federal awards is presented in accordance with the requirement 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 LASO, it is not intended to and does not present the financial position, changes in net assets or cash flows of LASO. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Expenditures reported on the schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. 3. CONTINGENT LIABILITIES LASO participated in a number of federal assisted programs. These programs are audited in accordance with Government Auditing Standards and the Uniform Guidance, if applicable, in accordance with the required levels of Federal Financial assistance. Audits of prior years have not resulted in any significant disallowed costs. Additionally, the grant programs are subject to audits by the granting authority, the purpose of which is to ensure compliance with conditions precedent to the granting of the funds. Management believes that any liability for reimbursement which may arise as the result of audits of grant funds would not be material. 4. RELATIONSHIP TO FEDERAL FINANCIAL REPORTS Amounts reported in the accompanying schedule may not agree with the amounts reported in the related Federal financial reports filed with the grantor agencies because of accruals made in the schedule which will be included in future reports with agencies. 22