crossroads louisiana, incorporated...-2 ah 9:19 financial report crossroads louisiana, inc., and...

-2 AH 9:19

Financial Report

Crossroads Louisiana, Inc., and Subsidiary

June 30, 2007

Under provisions of state law, this report is. a publicdocument. Acopy of the report hoe bsen submitted tothe entity and other appropriate public officials. Thereport is available for public inspection at the BatonRouge office of the legislative Auditor and, whereappropriate, at the office of the parish clerk of court.

-. / /

Release Date

TABLE OF CONTENTS


June 30, 2007

Independent Auditor's Report

Exhibits

Consolidated Statements of Financial Position

Consolidated Statements of Activities

Consolidated Statement of Functional Expenses, 2007

Consolidated Statement of Functional Expenses, 2006

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

PageExhibits Number

1-2

A

B

C-l

C-2

D

E

3 - 4

5

6 - 7

8-9

10

11-21

Supplementary Information

Independent Auditor's Report on the Supplementary Information

Consolidated Statement of Activities and FunctionalExpenses by Program, 2007

Consolidated Statement of Activities and FunctionalExpenses by Program, 2006

PageSchedules Number

22

23-24

25-26

TABLE OF CONTENTS (Continued)


June 30, 2007

Special Report of Certified Public Accountants

PageNumber

Report on Internal Control Over FinancialReporting and on Compliance and OtherMatters Based on an Audit of FinancialStatements Performed in Accordancewith Government Auditing Standards 27 - 29

Schedule of Findings and Responses 30 - 31

Reports By Management

Schedule of Prior Year Findings and Responses 32

Management's Corrective Action Plan on Current Year Findings 33 - 34

B o u r g e o i s B e n n e t t

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors,Crossroads Louisiana, Inc., and Subsidiary,

New Orleans, Louisiana.

We have audited the accompanying consolidated statements of financial position ofCrossroads Louisiana, Inc., and Subsidiary (a nonprofit organization) as of June 30, 2007 and 2006,and the related consolidated statements of activities, functional expenses, and cash flows for the yearsthen ended. These consolidated financial statements are the responsibility of the Organization'smanagement. Our responsibility is to express an opinion on these consolidated financial statementsbased on our audits.

We conducted our audits in accordance with auditing standards generally accepted in theUnited States of America and the standards applicable to financial audits contained in GovernmentAuditing Standards, issued by the Comptroller General of the United States. Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the consolidatedfinancial statements are free of material misstatement. An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in the consolidated financial statements. An auditalso includes assessing the accounting principles used and significant estimates made by management,as well as evaluating the overall consolidated financial statement presentation. We believe that ouraudits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, inall material respects, the financial position of Crossroads Louisiana, Inc., and Subsidiary as of June 30,2007 and 2006, and the changes in their net assets and their cash flows for the years then ended, inconformity with accounting principles generally accepted in the United States of America.

1340 West Tunnel Blvd., Suite 430P.O. Box 2168Houma,LA7036l-2l68Phone (985) 868-0139Fax (985) 879-1949

Certified PublicAccountants | Consultants

A Limited Liability Company

P. O. Box 60600New Orleans, LA 70160-0600Heritage Plaza, 17th FloorPhone (504) 831-4949Fax (504) 833-9093

507-D St. Philip Street?. O. Box 1205Thibodaux,LA70302-l205Phone (985) 447-5243

In accordance with Government Auditing Standards, we have also issued our reportdated December 27, 2007, on our consideration of the Organization's internal control over financialreporting and our tests of its compliance with certain provisions of laws, regulations, contracts, andgrant agreements and other matters. The purpose of that report is to describe the scope of our testingof internal control over financial reporting and compliance and the results of that testing, and not toprovide an opinion on internal control over financial reporting or on compliance. That report is anintegral part of an audit performed in accordance with Government Auditing Standards and should beread in conjunction with this report in considering the results of our audit.

0Certified Public Accountants.

New Orleans, Louisiana,December 27, 2007.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION


June 30, 2007 and 2006

ASSETS

2007 2006

Current AssetsCash and cash equivalentsAccounts receivableAdvances to officersAdvances to affiliates:

The Saint Charles, Inc.Job Link, Inc.

Other receivablesPrepaid expenses

Total current assets

Investments

Property and Equipment,Net of accumulated depreciation

Other AssetsNote receivable - The Saint Charles, Inc.Deposits

Total other assets

$ 289,915566,045

4,716148,46798,84628,177

1,136,166

916,622

566,323

191,0451,492

192,537

$ 358,475278,781

23,541

222,393130,55941,72059,672

1,115,141

948,466

408,780

191,0451,492

192,537

Total assets $ 2,811,648 $ 2,664,924

See notes to consolidated financial statements.

Exhibit A

LIABILITIES AND NET ASSETS

2007 2006

Current LiabilitiesClient deposits $ 119,967 $ 119,967Advances from officers 12,048Accounts payable 82,510 39,885Accrued expenses:

Salaries and payroll taxes 38,575 22,724Insurance 59,635 7,168Other 6,000 6,105

Notes payable - current 5,104Notes payable - line of credit :_ 17,646

Total current liabilities 323,839 213,495

Long-Term LiabilitiesNotes payable - long-term 14,315Deferred compensation 916,345 878,936Deferred severance pay 1_ 19,000

Total long-term liabilities 930,660 897,936

Total liabilities 1,254,499 1,111,431

Net AssetsUnrestricted 1,557,149 1.553,493

Total liabilities and net assets $ 2,811,648 $ 2,664,924

Exhibit B

CONSOLIDATED STATEMENTS OF ACTIVITIES


For the years ended June 30, 2007 and 2006

2007 2006Support and Revenues

Government fees for services $ 3,148,493 $ 2,434,708Investment income 50,842 184,946Tenant rents 153,406 130,442Miscellaneous 4,793 18,165

Total support and revenues - unrestricted 3,357,534 2,768,261

ExpensesProgram services:

Olivier Street Program - 48,755Melbrooke Street Program 29,620State Street Program 449,757 277,109Toledano Street Program 289,610 220,576Timberwood Drive Program 152,195 123,579Nunez Street Program 307,947 251,044Hancock Street Program 332,330 233,991RHSProgram 809,112 310,530St. Charles Place Program 98,830 140,671McArthur Program 225,621Specific assistance to individuals 28,434 -_

Total program services 2,723,456 1,606,255

Supporting services:Management and general 630,422 817,752Hurricane Katrina expenses, net ^_ 4,560

Total supporting services expenses 630,422 822,312

Total expenses 3,353,878 2,428,567

Increase In Unrestricted Net Assets 3,656 339,694

Net AssetsBeginning of year 1,553,493 1,213,799

End of year $ 1,557,149 $ 1,553,493


CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES

Crossroads Louisiana, Inc., and

For the year ended June 30, 2007

Subsidiary

Program Services

SalariesEmployee benefits:

InsuranceRetirement planPayroll taxesDeferred compensation

Bed feesDepreciationFoodInsuranceInterestLocal transportationMiscellaneousOccupancy:

Contract servicesMaintenanceRentRepairs, buildingRepairs, furnitureUtilities

Professional servicesSuppliesTelephoneVocational program

Total expenses

See notes to consolidated

Olivier Melbrooke StateStreet Street Street

Program Program Program

$ - - $ 193,840

$ 27 12,565.

16,655-

30,88813,75117,348

-_

13,330670 1,667

3,143916

24,000 24,000560 4,810

998256 7,484

3,181 7,57334,335

10 3,33964,031

$ - $ 29,620 $ 449,757

financial statements.

6

Toledano TimberwoodStreet Drive

Program Program

$ 114,986 $ 96,195

5,692 3,976417

9,874 8,295-

31,3177,925 6,2398,294 5,315

--

13,694 2972,444 5,448

1,499 961-

15,000 9,0005,419 3,457

993 207,821 3,6235,414 335

17,207 5,9832,431 2,634

39,600

$ 289,610 $ 152,195

NunezStreet

Program

$ 135,880

6,949-

11,694•

26,6708,160

12,058~-

16,8857,347

3,333-

15,600948725

1,5638,462

17,3402,433

31,900

$ 307,947

Program ServicesHancock St. Charles Specific

Street RHS Place McArthur AssistanceProgram Program Program Program to Individuals

$ 149,940 $ 672,911 $ 60,145 $ 86,913 $

7,875 42,643 2,882 5,169_

12,877 58,359 5,180 7,571_

26,055 - - 19,3489,139 4,285 - 8,4229,451 104 1,520 10,101

.720

12,875 4,963 1,854 9,89510,419 8,444 11,050 5,355 28,434

1,386 422 - 1,648257

15,600 12,000 14,360 24,0003,766 - - 2,878

722 5944,328 - 569 3,514

11,231 645 - 6,25223,300 1,357 809 9,920

1,763 2,002 461 1,49131,603 - - 22,550

$ 332,330 $ 809,112 $ 98,830 $ 225,621 $ 28,434

7

Totals

$ 1,510,810

87,778417

130,505-

134,27857,92164,191

-720

73,79381,278

12,3921,173

153,56021,838

4,05229,15843,093

110,25116,564

189,684

$ 2,723,456

Support ServicesManagement

andGeneral

$ 327,851

19,7761,257

26,44337,094

-13,866

56021,677

8303,578

38,328

2,3254,035

30,3385,1574,8863,042

67,5818,520

13,278-

$ 630,422

Exhibit C-l

Totals

$ 1,838,661

107,5541,674

156,94837,094

134,27871,78764,75121,677

1,55077,371

119,606

14,7175,208

183,89826,995

8,93832,200

110,674118,77129,842

189,684

$ 3,353,878

CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES

SalariesEmployee benefits:

InsuranceRetirement planPayroll taxesDeferred compensation


Contract servicesMaintenanceRentRepairs, buildingRepairs, furnitureUtilities


Total expenses

See notes to consolidated

Crossroads Louisiana, Inc.,

For the year ended June

Olivier MelbrookeStreet Street

Program Program

$ 12,090 $ -

576(574)954

--

3,4701,937

---

5,120

--

14,9291,707

-4,547

7152,469

815-

$ 48,755 $ -

financial statements.

8

and Subsidiary

30, 2006

Program ServicesState ToledanoStreet Street

Program Program

$ 96,629 $ 82,510

6,967 5,114(1,068) (863)7,915 6,872

-27,769 27,769

7,807 7,2086,936 4,987

--

11,242 9,4725,322 2,652

1,144 796-

26,000 9,375997 5,891756 2,270

4,113 3,728673 2,380

13,697 12,523427 1,449

59,783 36,443

$ 277,109 $ 220,576

TimberwoodDrive

Program

$ 72,294

4,495(1,147)6,062

--

3,6703,700

--

4612,836

761-

9,0007,1611,5352,687

-8,3631,701

-

$ 123,579

NunezStreet

Program

$ 100,376

5,926(2,592)8,335

-27,389

4,7816,110

--

12,0637,625

610-

15,6002,749

3971,6954,062

12,9831,318

41,617

$ 251,044

ProgramHancock

StreetProgram

$ 78,587

4,789(1,342)6,599

-26,222

9,3194,883

--

13,7024,823

1,150-

15,6002,395

3835,7432,411

14,9181,299

42,510

$ 233,991

ServicesSt. Charles

RHS PlaceProgram Program

$ 252,015 $ 93,648

19,227 6,454(3,246) (586)19,989 7,713

.-

212 3,681339 3,253

--

1,840 9,6583,030 648

1,536 688-

12,000 8,1641,849

170-

1,350 1652,053 2,547

185 2,619-

$ 310,530 $ 140,671

Totals

$ 788,149

53,548(11,418)64,439

-109,14940,14832,145

--

58,43832,056

6,685-

110,66822,749

5,51122,51311,75669,553

9,833180,353

$ 1,606,255

Support ServicesManagement

andGeneral

$ 338,917

13,998(5,326)26,679

250,899-

7,310-

18,0042,5186,359

53,142

2,9447,880

15,2449,347

8641,375

45,19414,2278,177

-

$ 817,752

Exhibit C-2

Totals

$ 1,127,066

67,546(16,744)91,118

250,899109,14947,45832,14518,0042,518

64,79785,198

9,6297,880

125,91232,0966,375

23,88856,95083,78017,990

180,353

$ 2,424,007

9

CONSOLIDATED STATEMENTS OF CASH FLOWS


For the years ended June 30, 2007 and 2006

Exhibit D

2007Cash Flows From Operating Activities

Increase in unrestricted net assetsAdjustments to reconcile increase in net assets to net

cash provided by (used in) operating activities:Depreciation and amortization(Gain) loss on sale of property and equipmentGain on disposition of property and equipment - Hurricane KatrinaUnrealized (gain) loss on investmentsRealized (gain) loss on sales of investments(Increase) decrease in operating assets:

Accounts receivableOther receivablesPrepaid expensesDeposits

Increase (decrease) in operating liabilities:Accounts payableAccrued expensesClient depositsDeferred compensationDeferred severance pay

Net cash provided by (used in) operating activities

Cash Flows From Investing ActivitiesPurchases of property and equipmentInsurance recoveries from Hurricane Katrina claimsProceeds from sale of equipmentAdvances to officers, net advancesAdvances from (to) affiliates, netPurchases of investmentsProceeds from sales of investments

Net cash used in investing activities

Cash Flows From Financing ActivitiesNet repayments on line of credit

Net Increase (Decrease) In Cash

CashBeginning of year

End of year


3,656

71,7876,596

(48,636)24,188

(287,264)(57,126)31,495

42,62568,213

37,409(19,000)

(126,057)

(216,507)

35,589199,769

(3,805,072)3,861,364

75,143

(17,646)

(68,560)

358,475

$ 289,915

2006

$ 339,694

47,458(6,386)(16,682)67,090

(240,122)

(114,838)(10,919)(14,236)

(75)

(2,392)(11,813)119,967241,399(18,989)

379,156

(206,979)27,5896,386

45,747(108,169)

(2,453,567)2,469,461

(219,532)

(14,024)

145,600

212,875

$ 358,475

10

Exhibit E

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


June 30, 2007 and 2006

Note 1 - NATURE OF ACTIVITIES

Crossroads Louisiana, Inc., and Subsidiary (the Organization) is a nonprofit corporationwhich provides residential treatment services for the psychologically handicapped in theNew Orleans area and is substantially funded by the State of Louisiana and FederalMedicaid payments.

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Organization and Income Taxes

The Organization is a nonprofit corporation organized under the laws of the State ofLouisiana in 1981. It is exempt from Federal income tax under Section 501(c)(3) ofthe Internal Revenue Code, and qualifies as an organization that is not a privatefoundation as defined in Section 509(a) of the Code. It is also exempt fromLouisiana income tax under the authority of R.S.47:121(5).

b. Financial Statement Presentation

Financial statement presentation follows the recommendations of the Statement ofFinancial Accounting Standards, (SFAS) No. 117, "Financial Statements of Not-For-Profit Organizations." Under SFAS No. 117, the Organization classifies its netassets, revenues, and expenses based on the existence or absence of donor-imposedrestrictions. Accordingly, net assets and changes therein are classified and reportedas follows:

Unrestricted Net Assets - Net grants and other revenues and expenditures offunds for the general operation of its facilities.

11

Exhibit E(Continued)

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

b. Financial Statement Presentation (Continued)

Temporarily Restricted Net Assets - Grants and other revenues specificallyauthorized by the grantor or donor to be used for a certain purpose or to benefit aspecific accounting period. There were no temporarily restricted net assets atJune 30, 2007 or 2006.

Permanently Restricted Net Assets - There were no permanently restricted netassets at June 30, 2007 or 2006.

c. Consolidated Financial Statements

Following the guidance of Statement of Position 94-3, the consolidated financialstatements include the accounts of the Organization and the accounts of Cher-AmiHome of Gretna, LA., Inc. The Organization obtained control of the Cher-AmiHome early in the 1996 fiscal year and has assumed control of its operations. Allsignificant inter-company transactions and accounts are eliminated in consolidation.In the Consolidated Statements of Functional Expenses, the operations of Cher-AmiHomes are labeled Hancock Street Program.

d. Basis of Accounting

The consolidated financial statements of the Organization are prepared on theaccrual basis of accounting generally accepted in the United States of America.

e. Use of Estimates

The preparation of financial statements in conformity with accounting principlesgenerally accepted in the United States of America requires management to makeestimates and assumptions that affect certain reported amounts and disclosures.Actual results could differ from those estimates.

12



f. Cash and Cash Equivalents

Cash and cash equivalents consist primarily of operating funds maintained inchecking and operating accounts. Any investments in money market accounts,certificate of deposit or other investments with maturities of three months or lesswould also be considered cash and cash equivalents, except for money market fundsmaintained in the Fidelity Investments Brokerage accounts which are reported asinvestments.

g. Allowance For Doubtful Accounts

The Organization provides services under contracts entered into with various stateand local agencies. Accounts receivable includes amounts billed under thesecontracts and amounts due from patients for services provided. A major portion ofthe accounts receivable balance as of June 30, 2007 and 2006 is from the State ofLouisiana Department of Health and Hospitals.

Accounts receivable are stated at the amount management expects to collect fromoutstanding balances. Management provides for probable uncollectible amounts andadjustments to amounts billed through a valuation allowance based on its assessmentof the current status of individual receivables from contracts and Medicaid.

h. Investments

Investments are carried at fair market value based on quoted market prices for theinvestments.

i. Property and Equipment

Property and equipment are recorded at cost. Depreciation is provided over theestimated useful life of each class of depreciable asset and is computed on thestraight-line method. Donated property is recorded at its fair market value at thedate of donation.

13



j. Allocated Expenses

The cost of providing the various programs and other activities are summarized inthe consolidated statement of functional expenses. Expenses by function have beenallocated among program and supporting services classifications based on State ofLouisiana Rate Setting classifications. Shared expenses are allocated amongprograms based on the portion of direct expenses by program to total expenses.

Note 3 - ADVANCES TO OFFICERS

The amount due from officers represents unsecured advances to officers. Interest paymentsare not required on the advances to officers.

Note 4- INVESTMENTS

Investments include amounts held in investment accounts with Fidelity Investments, Inc.Details of investments are as follows:

June 30, 2007

CostMarketValue

Money market funds $ 916,622 $ 916,622

June 30, 2006

CostMarketValue

StocksMoney market funds

782,997214,105

Total investments $ 997,102

734,361214,105

$ 948,466

14


Note 4- INVESTMENTS (Continued)

The market values and costs of investments held at June 30,2007 and 2006 are as follows:

MarketValue Over

Market (Under)Cost Value Cost

Balances at June 30,2007 $ 916,622 $ 916,622 $Balances at June 30,2006 $ 997,102 $ 948,466 (48,636)

Increase in unrealized appreciationduring 2007 $ 48,636

Investment returns for the year ended June 30,2007 and 2006 are summarized as follows:

2007 2006

Interest and dividend income $ 26,394 $ 11,914Unrealized gain (loss) 48,636 (67,090)Realized gain (loss) (24,188) 240,122

Net investment income $ 50,842 $ 184,946

Note 5 - PROPERTY AND EQUIPMENT

At June 30, 2007 and 2006, the cost of property and equipment and accumulateddepreciation are as follows:

Depreciation2007 2006 Annual Rates

Equipment, furniture, and fixtures $ 282,391 $ 291,107 5-20%Leasehold improvements 575,077 451,305 20%Vehicles 162,666 142,015 20%

1,020,134 884,427Less accumulated depreciation (453,811) (475,647)

Net property and equipment $ 566,323 $ 408,780

15


Note 5 - PROPERTY AND EQUIPMENT (Continued)

Depreciation expense charged to income was $71,787 and $47,458 for 2007 and 2006,respectively.

Note 6- NOTE RECEIVABLE

On December 15,2003, the Organization received a note from The Saint Charles, Inc., anaffiliate. The note receivable consists of a 5% note due in monthly installments of $1,120,scheduled to begin on January 31, 2006 and through December 2036. Payments will beapplied to accrued interest first before any portion will be applied to principal. Interest willaccrue from the date of the note. The first payment towards principal will be in February2012. No payments have been made as of June 30, 2007.

Interest income of $10,438 and $10,486 was earned on this note for 2007 and 2006,respectively.

Note 7 - NOTES PAYABLE - LINE OF CREDIT

The Organization has available a revolving line of credit with a bank in the amount of$100,000. This is a demand obligation with a variable rate of interest, which was 8.25% atJune 30, 2007. There was no balance outstanding at June 30, 2007. At June 30, 2006,$17,646 was outstanding.

NoteS- LONG-TERM DEBT

Long-term debt at June 30, 2007 consisted of the following:

Note payable to bank, monthly paymentsof $524 including interest at 6.67%until December 2010, collateralizedby a vehicle. $ 19S419

Current portion 5,104

Long-term debt $ 14,315

16


Note 8 - LONG-TERM DEBT (Continued)

Debt maturities are as follows:

Year EndingJune 30, Amount

2007 $ 5,1042008 5,4682009 5,8572010 2,990

Total $ 19,419

Note 9- LEASES

The Organization leases its administrative and residential facilities under the followingoperating leases:

The Olivier Street facility is leased from the wife of the Executive Director for $1,866per month, The lease began July 1, 2002 and ends on June 30,2008. The lease has anoption for renewal for 5 years at a monthly rental of $2,146. Total rent expense was$22,394 for each of the years ended June 30, 2007 and 2006. One-third of the facilitywas used for administration and the other two-thirds as a residential facility during theyear ended June 30, 2006. The facility was used solely for administration during theyear ended June 30, 2007

The Nunez Street facility is leased from the wife of the Executive Director for $1,300per month. The lease began July 1, 2002 and ends on June 30, 2008. The lease has anoption for renewal for 5 years at a monthly rental of $1,495. Total rent expense is$15,600 for each of the years ended June 30, 2007 and 2006.

The Hancock Street residential facility is leased from the wife of the Executive Directoron a monthly basis for $1,300 per month. The lease began July 1, 2002 and ends onJune 30, 2008. The lease has an option for renewal for 5 years at a monthly rental of$1,495, Total rent expense is $15,600 for each of the years ended June 30, 2007 and2006.

The RHS Program leases a facility owned by Job Link, Inc. for $1,000 per month on amonth-to-month basis, beginning on July 1,2004. Rent expense is $12,000 for each ofthe years ended June 30, 2007, and 2006.

17


Note 9 - LEASES (Continued)

The State Street residential facility is leased from an officer of the Organization for$2,000 per month. The lease began March 1, 2003, and ends on February 28, 2008.The lease has an option for renewal for 5 years at a monthly rental of $2,100. Total rentexpense is $24,000 and $26,000 for the years ended June 30, 2007 and 2006,respectively.

The Toledano Street residential facility is leased for a 5 year term commencingSeptember 1,2003 and ending August 31,2008. The monthly payment is $ 1,250. Totalrent expense is $15,000 and $9,375 for the years ended June 30, 2007 and 2006,respectively.

The Timberwood Drive facility is leased from the wife of the Executive Director for$750 per month. The lease began on July 1, 2002 and ends June 30, 2008. The leasehas a renewal option for 5 years at a monthly rental of $863. Total rent expense is$9,000 for each of the years ended June 30, 2007 and 2006.

The Melbrooke facility is leased for $2,000 per month on a month-to-month basis,beginning on July 1, 2006. Rent expense is $24,000 for the year ended June 30,2007.

The St. Charles Place facility is leased for on a month-to-month basis. Rent expense is$14,360 and $8,164 for the years ended June 30, 2007 and 2006, respectively.

The McArthur facility is leased for $2,000 per month on a month-to-month basis,beginning on July 1, 2006. Rent expense is $24,000 for the year ended June 30, 2007.

During the years ended June 30, 2007 and 2006, the Organization leased equipment onmonth-to-month leases in the amount of $7,944 and $7,779, respectively.

Rent expense related to these leases totaled $183,898 and $125,912 for the years endedJune 30, 2007 and 2006, respectively.

18

Exhibit £(Continued)

Note 9 - LEASES (Continued)

The future minimum lease payments under the above described leases are as follows:

Year EndingJune 30, Amount

2008 $ 91,5942009 2,500

Total $ 94,094

Note 10 - RETIREMENT PLAN

The Organization has a non-contributory defined contribution retirement plan which coverssubstantially all of its employees. Contributions to the defined contribution retirement planare determined at the discretion of the Organization's Board of Directors. No contributionswere made for the years ended June 30, 2007 and 2006.

Note 11 - OFFICERS COMPENSATION

Officer's compensation is as follows for the years ended June 30, 2007 and 2006:

2007 2006

Executive Director $ 108,000 $ 74,000Assistant Director 50,000 96,744

Totals $ 158,000 $ 170,744

Note 12 - RELATED PARTY TRANSACTIONS

The Organization uses Job Link, Inc. to provide development services for group homeprograms in accordance with State of Louisiana regulations. Job Link, Inc. is owned bymembers of the Organization's Board of Directors. The Organization incurredapproximately $191,000 and $183,000 in 2007 and 2006, respectively, in fees related tothese services. The Organization paid rent of $12,000 on a building owned by Job Link,Inc. for both the years ended June 30,2007 and 2006 to operate the RHS Program. At June30, 2007 and 2006, $148,467 and $130,559, respectively, is due from Job Link, Inc.,principally due to the costs of salaries of shared employees for the portion of time spent onJob Link, Inc. activities, and is reported as advances to affiliates.

19


Note 12 - RELATED PARTY TRANSACTIONS (Continued)

The Organization has agreed to assist with the operation of The Saint Charles, Inc. (St.Charles Place), which is a brain and spinal injury center owned by the Executive Director ofthe Organization. The Saint Charles, Inc. has agreed to reimburse the Organization for allof the program costs related to the Center plus a portion of the Organization's managementand general expenses. The Saint Charles, Inc. began operations in March 2002. For theyears ended June 30, 2007 and 2006, the Organization billed The Saint Charles, Inc.$98,830 and $140,671, respectively, for program costs and $23,751 and $51,806,respectively, for management and general expenses.

The Organization has a note receivable from The Saint Charles, Inc. as described in Note 6.

At June 30, 2007 and 2006, accounts receivable due from The Saint Charles, Inc. totaled$4,716 and $222,393, respectively, related to current operating expenses.

The Organization also leases some property and equipment from related parties described inNote 9. Total rent expense for these leases totaled $86,594 and $88,594 for the years ended2007 and 2006, respectively.

During September 1995, the Organization took over control of the operations of the Cher-Ami Homes of Gretna, LA., Inc. (Cher-Ami). Cher-Ami's major assets consisted of itscontract with the State of Louisiana and the related accounts receivable. At June 30,2007,Cher-Ami had no debts outstanding. The intercompany receivable balance of $ 161,196 atJune 30, 2007 and 2006 has been eliminated in consolidation.

Note 13 - SIGNIFICANT CONTRACTS AND GRANTS

For the years ended June 30, 2007 and 2006, approximately $3,026,000 and $2,242,000,respectively, of government fees for services was from the State of Louisiana Departmentof Health and Hospitals acting as a Medicaid fiscal intermediary. These programs arereimbursed on a per diem rate based on costs and budgets, received annually by the State ofLouisiana. The State provides annual contracts to the Organization which grant the Statethe right to audit program accounts and activities. The State, acting as the Medicaidintermediary for Medicaid patients, reimburses services rendered to Medicaid programbeneficiaries under an allowable cost reimbursement formula that is subject to audit andretroactive adjustments. Management believes that the Organization is in compliance withthe provisions of these contracts and grants and that the findings of an audit, if any, wouldnot have a material impact on the financial statements.

20


Note 14 - DEFERRED COMPENSATION AGREEMENT

The Organization entered into a deferred compensation agreement with one of its officerseffective July 1,1993. The agreement provides that upon reaching age 65, the officer willreceive monthly compensation commencing with retirement and continuing for the rest ofhis life. In the event of his death, prior to normal life expectancy at retirement (age 65), theparticipant's designated beneficiary shall be paid a death benefit equal to the present valueof the future payments to which the participant would have been entitled. If the retiredparticipant dies before the end of his life expectancy, his beneficiary will receive a deathbenefit equal to the present value for the installments that the participant would havereceived if he had lived to his life expectancy.

At June 30,2004, the agreement was amended to discontinue future funding. Accordingly,no contribution was accrued for the years ended June 30, 2007 and 2006. The funds owedunder this agreement are maintained in a separate investment account, with investmentactivity reported as income and corresponding deferred compensation expense. Theliability each year is adjusted to equal the balance of the investments in the account. Theamount charged to expense was $37,094 and $241,399 for the years ended June 30, 2007and 2006, respectively. There were no contributions accrued for the years ended June 30,2006. The total liability under the agreement as of June 30, 2007 and 2006 wasapproximately $916,000, and $879,000, respectively.

Note 15 - CONCENTRATION OF CREDIT RISK

The Organization maintains its cash accounts in various financial institutions where theaccounts are insured by Federal Deposit Insurance Corporation up to $ 100,000 per financialinstitution. At June 30,2007 and 2006, the Organization had approximately $149,000 and$234,000, respectively, in excess of the insured limits.

Note 16 - CASH FLOW INFORMATION

Cash payments of interest during the years ended June 30, 2007 and 2006 are $1,550 and$2,518, respectively.

Non cash financing and investing activities during the year ended June 30,2007 include theacquisition of a vehicle through new long-term debt borrowing for $I9S4I9.

21

SUPPLEMENTARY INFORMATION


INDEPENDENT AUDITOR'S REPORTON THE SUPPLEMENTARY INFORMATION

To the Board of DirectorsCrossroads Louisiana, Inc., and Subsidiary,

New Orleans, Louisiana

Our audits were preformed for the purpose of forming an opinion on the basicconsolidated financial statements of Crossroads Louisiana, Inc., and Subsidiary taken as a whole. Thesupplementary information is presented for purposes of additional analysis and is not a required part ofthe basic consolidated financial statements. Such information has been subjected to the auditingprocedures applied in the audits of the consolidated basic financial statements and, in our opinion, isfairly stated in all material respects in relation to the consolidated basic financial statements taken as awhole.

Certified Public Accountants.


22

1340 West Tunnel Blvd., Suite 430P.O. Box 2168Houma,LA7036l-2l68Phone (985)868-0139Fax (985) 879-1949

Certified PublicAccountants | Consultants


R O. Box 60600New Orleans. LA 70160-0600Heritage Plaza, 17th FloorPhone (504) 831 -4949Fax (504) 833-9093

507-D St. Philip StreetP.O.Box 1205Thibodaux, LA 7030M 205Phone (985) 447-5243

CONSOLIDATED STATEMENT OF ACTIVITIES ANDFUNCTIONAL EXPENSES BY PROGRAM



Program Services

Support and RevenuesGovernment fees for servicesInvestment incomeRentsOther

Total support and revenues

ExpensesSalariesEmployee benefits:

Workers compensationPensionPayroll taxesDeferred Compensation


Contract servicesMaintenanceRentRepairs - BuildingsRepairs - FurnitureUtilities

Professional ServicesSuppliesTelephoneVocational program

Total direct program expenses

Hurricane Katrina expenses, net

Management and general expense allocation

Increase (decrease) inunrestricted net assets

Oliver MelbrookeStreet Street

Program Program

$ 6,417 $---

6,417

-

27---------

670

-916

24,000560

-256

3,181-

10-

29,620

6,165

$ 6,417 $ (35,785)

23

StateStreet

Program

$ 487,591-

37,9335

525,529

193,840

12,565-

16,655-

30,88813,75117,348

--

13,3301,667

3,143-

24,0004,810

9987,4847,573

34,3353,339

64,031

449,757

.

93,609

$ (17,837)

ToledanoStreet

Program

$ 376,034-

29,841-

405,875

114,986

5,692-

9,874-

31,3177,9258,294

--

13,6942,444

1,499-

15,0005,419

9937,8215,414

17,2072,431

39,600

289,610_

60,276

$ 55,989

TimberwoodDrive

Program

$ 180,354---

180,354

96,195

3,976417

8,295--

6,2395,315

--

2975,448

961-

9,0003,457

203,623

3355,9832,634

-

152,195

,

36,250

$ (8,0911

NunezStreet

Program

$ 281,179-

35,32115

316,515

135,880

6,949-

11,694-

26,6708,160

12,058--

16,8857,347

3,333-

15,600948725

1,5638,462

17,3402,433

31,900

307,947

.

64,092

$ (55,524)

Program ServicesHancock

StreetProgram

$ 292,162 !-

20,688-

312,850

149,940

7,875-

12,877-

26,0559,1399,451

-.

12,87510,419

1,386-

15,6003,766

7224,328

11,23123,300

1,76331,603

332,330

RHSProgram

& 1,179,798--

30

1,179,828

672,911

42,643-

58,359--

4,285104

-720

4,9638,444

422257

12,000---

6451,3572,002

-

809,112

St. CharlesPlace

Program

$ 122,581--

3,843

126,424

60,145

2,882-

5,180---

1,520--

1,85411,050

_-

14,360--

569-

809461

-

98,830

SpecificMcArthur AssistanceProgram to Individuals

$ 222,377 $-

16,35083

238,810

86,913

5,169-

7,571-

19,3488,422

10,101

-9,8955,355 28,434

1,648-

24,0002,878

5943,5146,2529,9201,491

22,550

225,621 28,434

Totals

$ 3,148,493-

140,1333,976

3,292,602

1,510,810

87,778417

130,505-

134,27857,92164,191

-720

73,79381,278

12,3921,173

153,56021,838

4,05229,15843,093

110,25116,564

189,684

2,723,456

Support Services

Management& General

$ 50,84213,273

817

64,932

327,851

19,7761,257

26,44337,094

-13,866

56021,677

8303,578

38,328

2,3254,035

30,3385,1574,8863,042

67,5818,520

13,278-

630,422

Schedule 1

Totals

$ 3,148,49350,842

153,4064,793

3,357,534

1,838,661

107,5541,674

156,94837,094

134,27871,78764,75121,677

1,55077,371

119,606

14,7175,208

183,89826,995

8,93832,200

110,674118,77129,842

1 89,684

3,353,878

.

69,168

$ (88,648)

168,400

5 202,316

20,570

$ 7,024

46,960

$ (33,771) $ (28,434)

565,490

$ 3,656

(565,490)

$

_

$ 3,656

24

CONSOLIDATED STATEMENT OF ACTIVITIESFUNCTIONAL EXPENSES BY

Crossroads Louisiana, Inc., and

For the year ended June 30,

PROGRAM

Subsidiary

2006

AND

Program Services

Support and RevenuesGovernment fees for servicesRentsInvestment incomeOther

Total support and revenues

ExpensesSalariesEmployee benefits:

Workers compensationPensionPayroll taxesDeferred compensation


Contract servicesMaintenanceRentRepairs - BuildingsRepairs - FurnitureUtilities


Total direct program expenses

Hurricane Katrina expenses, net

Management and general expense allocation

Increase (decrease) inunrestricted net assets

Oliver ArtsStreet Street

Program Program

$ 63,862 $ -7,346

-23

71,231

12,090

576(574)954

--

3,4701,937

---

5,120

-_

14,9291,707

-4,547

7152,469

815.

48,755

19,789

$ 2,687 $ -25

StateStreet

Program

$ 490,53238,913

-700

530,145

96,629

6,967(1,068)7,915

-27,769

7,8076,936

--

11,2425,322

1,144-

26,000997756

4,113673

13,697427

59,783

277,109

110,417

$ 142,619

ToledanoStreet

Program

$ 336,01928,660

--

364,679

82,510

5,114(863)

6,872-

27,7697,2084,987

--

9,4722,652

796-

9,3755,8912,2703,7282,380

12,5231,449

36,443

220,576

.

88,160

$ 55,943

TimbenvoodDrive

Program

$ 164,026---

164,026

72,294

4,495(1,147)6,062

--

3,6703,700

--

4612,836

761-

9,0007,1611,5352,687

-8,3631,701

-

123,579_

41,069

$ (622)

NunezStreet

Program

$ 410,68022,970

-6,496

440,146

100,376

5,926(2,592)8,335

-27,3894,7816,110

.-

12,0637,625

610-

15,6002,749

3971,6954,062

12,9831,318

41,617

251,044

100,147

$ 88,955

ProgramHancock

StreetProgram

$ 354,65932,553

--

387,212

78,587

4,789(1,342)6,599

-26,222

9,3194,883

--

13,7024,823

1,150-

15,6002,395

3835,7432,411

14,9181,299

42,510

233,991

93,438

$ 59,783

Services

RHSProgram

$ 422,563---

422,563

252,015

19,227(3,246)19,989

--

212339

--

1,8403,030

1,536-

12,000---

1,3502,053

185-

310,530

122,212

$ (10,179)

St. CharlesPlace

Program

$ 192,367--

350

192,717

93,648

6,454(586)

7,713--

3,6813,253

--

9,658648

688-

8,1641,849

170-

1652,5472,619

-

140,671

51,806

$ 240

Totals

$ 2,434,708130,442

-7,569

2,572,719

788,149

53,548(11,418)64,439

-109,14940,14832,145

--

58,43832,056

6,685-

110,66822,749

5,51122,51311,75669,553

9,813180,353

1,606,255

.

627,038

$ 339,426

Support Services

Management& General

$-

184,94610,596

195,542

338,917

13,998(5,326)26,679

250,899-

7,310-

18,0042,5186,359

53,142

2,9447,880

15,2449,347

8641,375

45,19414,2278,177

-

817,752

(4,560)

(627,038)

$ 268

Schedule 2

Totals

$ 2,434,708130,442184,94618,165

2,768,261

1,127,066

67,546(16,744)91,118

250,899109,14947,45832,14518,0042,518

64,79785,198

9,6297,880

125,91232,0966,375

23,88856,95083,78017,990

180,353

2,424,007

(4,560)_

$ 339,69426

SPECIAL REPORT OF CERTIFIED PUBLIC ACCOUNTANTS


REPORT ON INTERNAL CONTROL OVERFINANCIAL REPORTING AND ON COMPLIANCE

AND OTHER MATTERS BASED ON AN AUDITOF FINANCIAL STATEMENTS PERFORMED IN

ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

To the Board of Directors,Crossroads Louisiana, Inc., and Subsidiary,

New Orleans, Louisiana.

We have audited the consolidated financial statements of Crossroads Louisiana, Inc.,and Subsidiary (a nonprofit organization) as of and for the year ended June 30,2007, and have issuedour report thereon dated December 27, 2007. We conducted our audit in accordance with auditingstandards generally accepted in the United States of America and the standards applicable to financialaudits contained in Government Auditing Standards, issued by the Comptroller General of the UnitedStates.

Internal Control Over Financial Reporting

In planning and performing our audit, we considered the Crossroads Louisiana, Inc., andSubsidiary's internal control over financial reporting as a basis for designing our audit procedures forthe purpose of expressing our opinion on the consolidated financial statements, but not for the purposeof expressing an opinion on the effectiveness of the Crossroads Louisiana, Inc., and Subsidiary'sinternal control over financial reporting. Accordingly, we do not express an opinion on theeffectiveness of the Crossroads Louisiana, Inc., and Subsidiary's internal control over financialreporting.

Our consideration of the internal control over financial reporting was for the limitedpurpose described in the preceding paragraph and would not necessarily identify all deficiencies ininternal control over financial reporting that might be significant deficiencies or material weaknesses.However, we identified a deficiency in internal control over financial reporting that we consider to bea significant deficiency and which is described in the accompanying schedule of findings andresponses as item 07-01.

27

1340 West Tunnel Blvd., Suite 430P. O. Box 1168Houma,LA7036l-2168Phone (985) 868-0139Fax (985) 879-1949

Certified PublicAccountants I Consultants


P. O. Box 60600New Orleans, LA 70160-0600Heritage Plaza, 17th FloorPhone (504) 831-4949Fax (504) 833-9093

507-D St. Philip StreetP.O.Box 1205Thibodaux, LA 70302-1205Phone (985) 447-5243

A control deficiency exists when the design or operation of a control does not allowmanagement or employees, in the normal course of performing their assigned functions, to prevent ordetect misstatements on a timely basis. A significant deficiency is a control deficiency, orcombination of control deficiencies, that adversely affects the Crossroads Louisiana, Inc., andSubsidiary's ability to initiate, authorize, record, process, or report financial data reliably inaccordance with generally accepted accounting principles such that there is more than a remotelikelihood that a misstatement of the Crossroads Louisiana, Inc., and Subsidiary's consolidatedfinancial statements that is more than inconsequential will not be prevented or detected by theCrossroads Louisiana, Inc., and Subsidiary's internal control. We consider the deficiency described inthe accompanying schedule of findings and responses to be a significant deficiency in internal controlover financial reporting.

A material weakness is a significant deficiency, or combination of significantdeficiencies, that results in more than a remote likelihood that a material misstatement of the financialstatements will not be prevented or detected by the Crossroads Louisiana, Inc., and Subsidiary'sinternal control.

Our consideration of internal control over financial reporting was for the limited purposedescribed in the first paragraph of this section and would not necessarily identify all deficiencies ininternal control that might be significant deficiencies and, accordingly, would not necessarily discloseall significant deficiencies that are also considered to be material weaknesses. However, we believethat the significant deficiency described in item 07-01 is a material weakness.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Organization's consolidatedfinancial statements are free of material misstatement, we performed tests of its compliance withcertain provisions of laws, regulations, contracts, and grant agreements, noncompliance with whichcould 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 ofnoncompliance that are required to be reported under Government Auditing Standards.

28

This report is intended solely for the information and use of the Board of Directors,management, the State of Louisiana and the Legislative Auditor for the State of Louisiana and is notintended to be and should not be used by anyone other than those specified parties. Under LouisianaRevised Statue 24:513, this report is distributed by the Legislative Auditor as a public document.

Certified Public Accountants.


29

SCHEDULE OF FINDINGS AND RESPONSES



Section I - Summary of Auditor's Report

a) Financial Statements

Type of auditor's report issued: unqualified

Internal control over financial reporting:

• Material weakness(es) identified? X yes no• Significant deficiency(ies) identified that are not

considered to be material weakness yes _X_ no

Noncompliance material to financial statements noted? yes X no

b) Federal Awards

Crossroads Louisiana, Inc., and Subsidiary did not receive federal awards in excess of$500,000 during the year ended June 30, 2007 and, therefore, is exempt from the auditrequirements under the Single Audit Act and OMB Circular A-133, Audits of States, LocalGovernments, and Non-Profit Organizations.

Section II - Financial Statement Findings

Internal Control

07-01 Lack of Segregation of Duties

Criteria - Adequate internal controls relating to cash receipts, bank deposits, generalledger postings, and bank reconciliations require that specific procedures be in place toensure that receipts are properly accounted for and that there are no misappropriation ofthe Crossroads Louisiana, Inc., and Subsidiary's assets.

30

(Continued)

Section II - Financial Statement Findings (Continued)

Internal Control (Continued)

07-01 Lack of Segregation of Duties (Continued)

Condition - Incoming cash receipts are received, deposited and posted to the generalledger by the same employee. The same employee also receives the bank statementsand reconciles them without management oversight. In addition, bank reconciliationsare not documented as approved by a management level employee.

Cause - Lack of segregation of duties in the cash receipts function of CrossroadsLouisiana, Inc., and Subsidiary.

Effect - The lack of adequate internal controls relating to cash receipts could result inCompany assets being misappropriated and/or the financial statements being materiallymisstated.

Recommendation - Crossroads Louisiana, Inc., and Subsidiary should implementadequate internal controls relating to the cash receipts function and cash reconciliationprocess in the form of a segregation of duties. There should be management oversightto ensure that Crossroads Louisiana, Inc., and Subsidiary is complying with its policiesand procedures and to ensure that the Organization's assets are not misappropriated.

Views of responsible officials of the auditee when there is disagreement with thefinding, to the extent practical. - None.

Compliance

No compliance findings material to the financial statements were noted during the auditof the consolidated financial statements for the year ended June 30, 2007.

Section III - Federal Award Findings and Questioned Costs

Not applicable.

31

REPORTS BY MANAGEMENT

SCHEDULE OF PRIOR YEAR FINDINGSAND RESPONSES



Section I - Internal Control and Compliance Material to the Financial Statements

Internal Control

No material weaknesses were reported during the audit of the consolidated financial statementsfor the year ended June 30, 2006.

06-01 Recommendation - We recommend the Organization consider having other personnelinvolved in the accounting function, although to employ such controls may not be costbeneficial.

Management's Corrective Action Plan - The Organization's office has neither thequalified personnel nor the funds to hire additional personnel to assist in the accountingfunctions. Unresolved; see finding 07-01.

Compliance

No compliance findings material to the financial statements were noted during the audit of theconsolidated financial statements for the year ended June 30, 2006.

Section II - Internal Control and Compliance Material To Federal Awards


Section III - Management Letter

A management letter was not issued in connection with the audit for the year ended June 30,2006.

32

MANAGEMENT'S CORRECTIVE ACTION PLANON CURRENT YEAR FINDINGS



Section I - Internal Control and Compliance Material to the Financial Statements

Internal Control

07-01 Lack of Segregation of Duties

Recommendation - The School should implement adequate internal controls relatingto the cash receipts function and cash reconciliation process in the form of asegregation of duties. There should be management oversight to ensure that theSchool is complying with its policies and procedures and to ensure that CrossroadsLouisiana, Inc., and Subsidiary's assets are not misappropriated.

Management's Corrective Action Plan - The Organization's office has neither thequalified personnel nor the funds to hire additional personnel to assist in the accountfunctions.

Compliance

No compliance findings material to the financial statements were noted during the audit of theconsolidated financial statements for the year ended June 30, 2007.

33

(Continued)

Section II - Internal Control and Compliance Material To Federal Awards


Section III - Management Letter

A management letter was not issued in connection with the audit for the year ended June 30,2007.

34

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