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JEFFERSON COMMUNITY HEALTH CARE CENTERS, INC.

FINANCIAL STATEMENTS

December 31, 2014 and 2013

k CRI C A R R RIGGS & INGRAM CPAs and Advisors

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Jefferson Community Health Care Centers, Inc. Table of Contents

December 31, 2014

REPORT Independent Auditor's Report

FINANCIAL STATEMENTS Statements of Financial Position

Statements of Activities

Statements of Cash Flow

Notes to the Financial Statements

SUPPLEMENTARY INFORMATION Statement of Functional Expenses - 2014

Statement of Functional Expenses - 2013

Schedule of Compensation, Benefits, and Other Payments to Agency Flead

4

5

6

7

16

17

18

OMB CIRCULAR A-133 COMPLIANCE AND GOVERNANCE AUDITING STANDARDS REPORTS 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 19

Independent Auditor's Report on Compliance for Each Major Federal Program and on Internal Control over Compliance Required by OMB Circular A-133

Schedule of Expenditures of Federal Awards

Notes to Schedule of Expenditures of Federal Awards

Schedule of Findings and Questioned Costs

Views of Responsible Officials and Planned Corrective Action

Status of Prior Year Findings

21

24

25

26

28

29

A CRI A • n Q Riggs & Ingram, LLC

mono o 3501 North Causeway Boulevard

IwrPflM Suite 810 INGRAM Metalrle, Louisiana 70002

CPAs and Advisors (504) 837-9116

(504) 837-0123 (fax)

www.cricpa.com

Independent Auditor's Report

Board of Directors of Jefferson Community Health Care Centers, Inc.

Report on the Financial Statements

We have audited the accompanying financial statements of Jefferson Community Health Care Centers, Inc. ("JCHCC") {a nonprofit organization), which comprise the statements of financial position as of December 31, 2014 and 2013, and the related statements of activities and cash flows for the years 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 audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits 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 JCHCC'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 JCHCC'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 JCHCC as of December 31, 2014 and 2013, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters

Supplementary Information

Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The schedules of functional expenses on pages 16-17 and the schedule of compensation, benefits, and other payments to agency head are on page 18 are presented for purposes of additional analysis and are 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.

Other Information

Our audits were 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 Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, 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.

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other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated June 9, 2015 on our consideration of JCHCC'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 JCHCC's internal control over financial reporting and compliance.

June 9, 2015

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Jefferson Community Health Care Centers, Inc.

Statements of Financial Position

December 31,

Assets

2014 2013

Current Assets Cash and cash equivalents Investments

Grants receivable Patient and contracts receivable, net Other current assets

$ 690,580 1,502,774 1,348,895

511,343 91,284

$ 2,642,466

1,476,350

915,887

240,480

80,898

Total Current Assets 4,144,876 5,356,081

Non-Current Assets Certificate of deposit - restricted Property and equipment,

net of accumulated depreciation

475,000

3,433,754 3,079,488

Total Non-Current Assets 3,908,754 3,079,488

Total Assets s 8,053,630 $ 8,435,569 Liabilities and Net Assets

Current Liabilities Accounts payable Accrued expenses Current portion of long-term debt

Deferred revenue

s 225,290 259,281

21,756 147,122

$ 281,790 570,177

18,907

258,751

Total Current Liabilities 653,449 1,129,625

Long-term Liabilities Long-term debt 1,857,115 1,283,607

Total Liabilities 2,510,564 2,413,232

Net Assets Unrestricted 5,543,066 6,022,337

Total Net Assets 5,543,066 6,022,337

Total Liabilities and Net Assets s 8,053,630 $ 8,435,569

See accompanying notes to financial statements. -4-


Statements of Activities

For the years ended. 2014 2013

Unrestricted Revenues, Gains, and Other Support Patient service revenue, net of contractual

allowances and discounts Provision for bad debts

$ 5,357,093 (1,238,455)

$4,976,539 (373,482)

Net patient service revenue, less provision for bad debts

Federal program revenues Other program revenues Other Income

4,118,638 2,399,840 1,148,621

23,435

4,603,057 2,189,246 1,311,080

16,568

Total Unrestricted Revenues, Gains, and Other Support 7,690,534 8,119,951

Expenses Program services Support services

6,611,724 1,558,081

6,242,305 1,405,705

Total Expenses 8,169,805 7,648,010

(Decrease) Increase In Unrestricted Net Assets (479,271) 471,941

Net Assets at beginning of year 6,022,337 5,550,396

Net Assets at end of year S 5,543,066 $6,022,337

See accompanying notes to financial statements.

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Statements of Cash Flows

For the years ended, 2014 2013

Cash flows from operating activities (Decrease) increase in net assets S (479,271) $ 471,941 Adjustments to reconcile the change in net assets to cash

and cash equivalents used in operating activities:

Depreciation expense 239,217 293,030 Bad debt expense 1,238,455 373,482 Realized and unrealized loss (gain) on investments 6,267 (10,164)

(Increase) decrease in operating assets: Other assets (10,386) 12,082 Grants receivable (433,008) (645,603) Patient and contracts receivable (1,509,318) 1,391,105

Increase (decrease) in operating liabilities: Accounts payable (56,500) (36,483) Accrued expenses (310,896) 387,223 Deferred revenue (111,629) 113,215

Net cash (used in) provided by operating activities (1,427,069) 2,349,828

Cash flows from investing activities Purchase of Certifcate of Deposit (475,000) -Purchase of Investments (732,684) (1,479,672) Proceeds from the sale of Investments 699,993 13,486 Purchase of property and equipment (593,483) (1,618,955)

Net cash used in investing activities (1,101,174) (3,085,141)

Cash flows from financing activities Principal borrowings on notes payable 591,031 1,052,514 Principal payments on notes payable (14,674) -Principal payments on line of credit - (72,550)

Net cash provided by financing activities 576,357 979,964

Net (decrease) increase in cash and cash equivalents (1,951,886) 244,651

Cash and cash equivalents, beginning of year 2,642,466 2,397,815

Cash and cash equivalents, end of year S 690,580 $ 2,642,466

Supplementary Disclosure of Noncash Information: Interest paid S 74,855 $ 26,432

See accompanying notes to financial statements. -6-

Jefferson Community Health Care Centers, Inc. Notes to the Financial Statements

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Jefferson Community Health Care Centers, Inc. ("JCHCC") is a nonprofit organization organized under the laws of the State of Louisiana. Its mission is to provide healthcare services, including medical, mental health, optometry, dental, and social services to underinsured and uninsured citizens of Jefferson Parish, Louisiana. JCHCC has four (4) locations: Avondale, Marrero, River Ridge, and Lafitte, Louisiana. Each location is considered a federally qualified health center.

Basis of Accounting

JCHCC's financial statements are prepared on the accrual basis of accounting, whereby revenue is recorded when earned and expenses are recorded when incurred.

Public Support and Revenue

JCHCC receives its support primarily from federal, state, and local governmental agencies. Revenue is recorded on the accrual basis as they are earned, and allowances are provided for receivables that are estimated to be uncollectible. Revenues are considered available for unrestricted use unless specifically restricted by the grant. Prepayments on reimbursement based grants are recorded as deferred revenues until earned. Grants whose restrictions are met in the same reporting period are reported as unrestricted support.

The balance in patients' accounts receivable is net of contractual adjustments and an allowance for uncollectible doubtful accounts. The allowance for doubtful accounts is based upon a review of aging of outstanding receivables, historical collection information, and existing economic conditions. In 2014, management refined their estimate of the allowance for doubtful accounts. The allowance was $645,145 and $373,482 at December 31, 2014 and 2013, respectively.

Deferred Revenue

Grant funds are considered to be earned when qualifying expenditures are made and all other grant requirements have been met and accordingly, when such funds are received, they are recorded as deferred revenue until earned.

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NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Functional Expenses

The cost of program and supporting services has been reported on a functional basis. This requires the allocation of certain costs based on total program costs and estimates made by management.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Property and Equipment

Improvements which significantly extend the useful life of an asset and purchases of furniture, fixtures and equipment in excess of $1,500 are capitalized. The straight line method of depreciation is used for the assets owned by JCHCC. Useful lives of furniture and equipment are between 5-10 years, leasehold improvements are 10 years, and buildings are 40 years.

Income Taxes

JCHCC is a tax exempt organization under Internal Revenue Code Section 501(c)(3) and as such is not subject to income tax. Accounting principles generally accepted in the United States of America require management to evaluate tax positions taken by JCHCC and recognize a tax liability if JCHCC has taken an uncertain position that more likely than not would not be sustained upon examination by the Internal Revenue Service. Management has analyzed the tax positions taken by JCHCC, and has concluded that as of December 31, 2014 and 2013, there are no uncertain positions taken or expected to be taken that would require recognition of a tax liability or disclosure in the financial statements. JCHCC is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.

Cash and Cash Equivalents

Cash is comprised of cash on hand and in banks. JCHCC considers all highly liquid investments available for current use with an original maturity of three months or less to be cash equivalents.

Certificate of Deposit - Restricted

A restricted certificate of deposit is held at a local bank as collateral for the note payable described in Note 10 to the financial statements.

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NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Basis of Presentation

JCHCC follows the provisions of Not-For-Profit Entities Topic of FASB ASC (FASB ASC 958), which establishes external financial reporting for not-for-profit organizations which includes three basic financial statements and classification of resources into separate categories of net assets, as follows:

• Unrestricted - Net assets which are free of donor imposed restrictions; all revenues, expenses, gains and losses that are not changes in permanently or temporarily restricted net assets.

• Temporarily Restricted - Net assets whose use by JCHCC is limited by donor-imposed stipulations that either expire by the passage of time or that can be fulfilled or removed by actions of JCHCC pursuant to such stipulations.

• Permanently Restricted - Net assets whose use by JCHCC is limited by donor-imposed stipulations that neither expire with the passage of time nor can be fulfilled and removed by actions of JCHCC.

Advertising Expense

JCHCC uses advertising to promote the operations of its clinics and the costs associated with advertising are expensed when incurred. Advertising and marketing expenses for the years ended December 31, 2014 and 2013 were $176,801 and $48,315, respectively.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

Subsequent Events

JCHCC has evaluated subsequent events through June 9, 2015, which is the date the financial statements were available to be issued and noted no events that required disclosure.

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NOTE 2 - CASH AND CASH EQUIVALENTS

Deposits held In noninterest-bearing transaction account are aggregated with any interest-bearing deposits the owner may hold in the same ownership category, and the combined total insured up to at least $250,000. At times during the year, JCHCC exceeded the federally insured deposit amount.

NOTE 3 - FAIR VALUE MEASUREMENTS

FASB ASC 820, Fair Value Measurements and Disclosures {"ASC 820") and FASB ASC 825, Financial Instruments ("ASC 825") require disclosure of fair value information about financial instruments, whether or not recognized in the Statements of Financial Position. The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for JCHCC's various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. ASC 825 excludes certain financial instruments from its disclosure requirements.

In accordance with FASB ASC 820, JCHCC establishes a fair value hierarchy for inputs used in measuring fair market value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that market participants would use in pricing the asset or liability based on the best information available in the circumstances. The fair value hierarchy is categorized into three levels based on the inputs as follows:

Level 1-Valuations based on adjusted quoted prices in active markets for identical assets or liabilities as of the reporting date. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment.

Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly, as of the reporting date.

Level 3 - Valuations based on inputs are unobservable and include situations where there is little, if any, market activity for the investment. The inputs into the determination of fair value require significant management judgment or estimation.

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NOTE 3 -FAIR VALUE MEASUREMENTS (CONTINUED)

Investment securities are carried at fair value based on quoted prices in active markets (all Level 2 Measurements) and consist of the following at December 31, 2014 and 2013:

December 31, 2014 2013 U.S. Municipal Bonds s 1,186,154 $ 453,659 U.S. Corporate Bonds 316,620 323,067 U.S. Commercial Paper - 699,624

Total s 1,502,774 S 1,476,350

Investment income consists of the following:

For the years ended December 31, 2014 2013

Dividends/interest s 17,339 $ 5,996 Net realized and unrealized gains (loss) on investments (6,267) 10,164

Total $ 11,072 S 16,160

NOTE 4 - BUSINESS AND CREDIT CONCENTRATIONS

Most of JCHCC's patients are Greater New Orleans residents insured under third-party payor agreements. The mix of revenues from third-party payors for the year ended December 31, 2014 and 2013 were as follows:

December 31, 2014 2013 Medicare 2% 2% Medicaid 3% 4% GNOCHC 46% 55% Commercial insurance and

managed care organizations 49% 39%

100% 100%

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NOTE 4 - BUSINESS AND CREDIT CONCENTRATIONS (CONTINUED)

If significant adverse changes are made at the federal, state, and/or local level regarding the use of community health care centers to provide services to Indigent and underinsured patients, the amount of contract revenue that JCHCC receives could be significantly reduced. This could have an adverse Impact on JCHCC's operations, its financial position and results of operations. JCHCC's grant revenue was approximately 40% and 41% of total revenues for the years ended December 31, 2014 and 2013, respectively.

NOTE 5 - NET PATIENT SERVICE REVENUE

JCHCC net patient service revenue for the years ended December 31, 2014 and 2013 Is earned under agreements with third-party payors. These agreements with third-party payors provide for payments to JCHCC at amounts different from Its established rates. These third-party payors Include the Medicare and Medicaid programs, health maintenance organizations, and various commercial Insurance and preferred provider organizations. A summary of the payment arrangements with major third-party payors follows:

• Medicare and Medicaid: JCHCC Is paid for Inpatient acute care services rendered to Medicare and Medicaid program beneficiaries under prospectively determined rates-per-dlscharge. These rates vary according to a patient classification system that Is based on clinical, diagnostic and other factors.

Outpatient services are paid via the outpatient prospective payment system. Outpatient services subject to the outpatient prospective payment system are not subject to cost report settlement with several exceptions, and without regard to the transitional corridor.

• Greater New Orleans Communltv Health Connection ("GNOCHC"): JCHCC also receives reimbursement for services rendered to Medicaid beneficiaries from the GNOCHC waiver program. The GNOCHC program period Is from October 2010 through December 2013, with an extension through June 30, 2015, pending funding.

• Other Agreements: JCHCC has entered into payment agreements with certain commercial Insurance carriers, health maintenance organizations, and preferred provider organizations. The basis for payment to JCHCC under these agreements Includes prospectively determined rates per discharge, discounts from established charges, prospectively determined dally rates, and capitated per member per month rates.

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NOTE 5 - NET PATIENT SERVICE REVENUE (CONTINUED)

Presented below is a summary of net patient service revenue for the years ended December 31, 2014 and 2013:

2014 2013 Commercial insurance and managed care organizations GNOCHC Medicaid Medicare

$ 3,689,590 3,513,217

198,065 184,699

$ 3,348,296 4,806,311

350,325 210,995

Gross patient service revenue Less discounts, allowances, and estimated contractual adjustments

7,585,571 2,228,478

8,715,927 3,739,388

Patient service revenue (net of contractual allowances and discounts) $ 5,357,093 $ 4,976,539

NOTE 6 - PROPERTY AND EQUIPMENT

Property and equipment at December 31, 2014 and 2013 consist of the following:

December 31, 2014 2013 Furniture, fixtures, and equipment $ Building and leasehold improvements Construction in process Land

1,475,954 $ 3,033,256

278,750

1,436,518 2,495,994

6,965 255,000

Accumulated depreciation (1,354,206) (1,114,989)

Property and equipment, net $ 3,433,754 $ 3,079,488

Depreciation expense for the years ended December 31, 2014 and 2013 was $239,217 and $293,030, respectively.

NOTE 7 - IN-KIND CONTRIBUTIONS

JCHCC has four (4) locations in which it provides services, of these locations JCHCC receives free rent on two (2) of the locations in Marrero and River Ridge. JCHCC is unable to determine a value of these in-kind contributions as of the date of this report.

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NOTE 8-RENT EXPENSE

During the year ended December 31, 2013, JCHCC entered Into two (2) sixty (60) month operating lease agreements for the rental of various office and medical equipment. Additionally, JCHCC has entered into a lease for facilities with an expiration date of June 30, 2016. Rental expenses under these leases and other short term operating leases were approximately $207,572 and $154,771 for the years ended December 31, 2014 and 2013, respectively.

Future minimum lease payments under the operating lease agreements are as follows:

2015 $ 98,069

2016 56,069

2017 14,069

201 8 5,511

Total $ 173,718

NOTE 9-LINE OF CREDIT

JCHCC has a line of credit for $200,000 with a bank bearing interest at the Wall Street Journal Prime Rate (3.25% at December 31, 2014) plus 1.5 basis points subject to a floor of 4.75%. The line is secured by JCHCC's deposits at the bank, along with interest in both present and future real property of JCHCC. JCHCC had no outstanding balance on this line of credit as of December 31, 2014 and 2013, respectively.

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NOTE 10- LONG-TERM DEBT

Long-term debt at December 31, 2014 consists of the following:

5.09% collateral mortgage loan, due in monthly installments of $8,882, including interest, through December 2043, secured by the value of the land and building. $ 1,403,871

4.25% CD secured loan, with a balloon payment due in December 2019, secured by the CD held by the lender. 475,000

Less current portion (21,756)

Long-term debt $ 1,857,115

The future scheduled maturities of long-term debt at December 31, 2014 are as follows:

Years ending December 31: 2015 $ 21,756 2016 22,889 2017 24,082 2018 25,337 2019 501,657

Thereafter 1,283,150

Long-term debt $ 1,878,871

NOTE 11 - ECONOMIC DEPENDENCY

The primary source of revenue for JCHCC is federal, state and local grants and contracts provided through various funding agencies. The continued success of JCHCC is dependent upon the renewal of contracts from current funding sources as well as JCHCC's ability to obtain new funding.

The state Medicaid program (GNOCHC) was originally scheduled to end in December 31, 2013 but was extended through June 2016. During the years ended December 31, 2014 and 2013, JCHCC received 46% and 55% of its revenue from the GNOCHC program, respectively.

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SUPPLEVIBrrARiriNPORMATION


Statement of Functional Expenses - 2014 For the year ended Program Support

December 31, 2014 Services Services Total

Salaries and fringe benefits $ 4,439,092 S 971,588 S 5,410,680 Contract labor and services 626,478 157,144 783,622 Supplies 371,001 7,305 378,306

Dues and subscriptions 241,682 - 241,682 Depreciation expense 47,843 191,374 239,217 Telephone and utilities 228,309 7,629 235,938

Rent and leasing 202,435 5,137 207,572 Marketing and advertising 123,416 53,385 176,801 Miscellaneous expense 71,275 29,155 100,430

Travel and development 16,793 91,797 108,590 Repairs and maintenance 94,206 2,212 96,418 Insurance 88,400 893 89,293

Interest expense 41,170 33,685 74,855 Information technology 12,592 3,085 15,677 Equipment 7,032 3,692 10,724

Total Expenses $ 6,611,724 $ 1,558,081 $ 8,169,805

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Statement of Functional Expenses - 2013 For the year ended Program Support

December 31, 2013 Services Services Total

Salaries and fringe benefits $ 3,895,360 S 841,458 S 4,736,818 Contract labor and services 712,581 176,984 889,565 Supplies 385,944 15,212 401,156

Equipment 329,613 8,424 338,037 Depreciation expense 58,606 234,424 293,030 Telephone and utilities 203,863 - 203,863

Rent and leasing 154,771 - 154,771 Repairs and maintenance 152,357 - 152,357 Travel and development 18,302 100,044 118,346

Dues and subscriptions 102,590 - 102,590 Insurance 60,988 616 61,604 Information technology 49,410 12,105 61,515

Miscellaneous expense 57,695 1,916 59,611 Marketing and advertising 33,793 14,522 48,315 Interest expense 26,432 - 26,432

Total Expenses $ 6,242,305 $ 1,405,705 $ 7,648,010

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Schedule of Compensation, Benefits, and Other Payments to Agency Head

For the year ended December 31, 2014 Dr. Shondra Williams, CEO

Salary $ 155,000 Benefits - health insurance 4,595

Benefits - retirement 6,200 Benefits - dental and vision insurance 322 Benefits - other insurance 499 Deferred compensation -0-Car allowance 4,800 Vehicle provided byJCHCC -0-

Cell phone 616 Dues -0-Vehicle rental -0-

Per diem 802 Reimbursements -0-Travel 165 Registration fees -0-Conference travel 3,013 Housing -0-

Unvouchered expenses -0-Special meals -0-Other -0-

Total Compensation, Benefits, and Other Payments s 176,012

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0MB CIRCULAR A-133 COMPLIANCE AND GOVERNANCE AUDITING STANDARDS REPORTS





(504) 837-0123 (fax)

www.cricpa.com

Independent Auditors' 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


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 Jefferson Community Health Care Centers, Inc. {"JCHCC") {a nonprofit organization), which comprise the statements of financial position as of December 31, 2014 and 2013, and the related statements of activities, and cash flows for the years then ended, and the related notes to the financial statements, and have issued our report thereon dated June 9, 2015.

Internal Control over Financial Reporting

In planning and performing our audits of the financial statements, we considered JCHCC'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 JCHCC's internal control. Accordingly, we do not express an opinion on the effectiveness of JCHCC'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 JCHCC'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 the 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 and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses.

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We did identify a deficiency in internal control, described in the accompanying schedule of findings and questioned costs that we consider to be a significant deficiency (2014-001).

Compliance and Other Matters

As part of obtaining reasonable assurance about whether JCHCC'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.

JCHCC's Response to Findings

JCHCC's response to the finding identified in our audit is described in the accompanying schedule of findings and questioned costs. JCHCC's response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.

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 JCHCC's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the JCHCC's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

June 9, 2015

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(504) 837-0123 (fax)

www.cricpa.com

Independent Auditors' Report on Compliance for Each Major Program and on Internal Control over Compliance Required by OMB Circular A-133


Report on Compliance for Each Major Federal Program

We have audited Jefferson Community Health Care Center, Inc.'s ("JCHCC") {a nonprofit organization) compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of JCHCC's major federal programs for the year ended December 31, 2014. JCHCC's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs.

Management's Responsibility

Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs.

Auditors' Responsibility

Our responsibility is to express an opinion on compliance for each of JCHCC'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 OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about JCHCC'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 JCHCC's compliance.

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Opinion on Health Centers Program

In our opinion, JCHCC complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on the Health Centers Program for the year ended December 31, 2014.

Report on Internal Control Over Compliance

Management of JCHCC 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 JCHCC's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with 0MB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of JCHCC'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 and therefore, material weaknesses or significant deficiencies may exist that were not identified. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. 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.

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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 0MB Circular A-133. Accordingly, this report Is not suitable for any other purpose.

June 9, 2015

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Jefferson Community Health Care Centers, Inc. Schedule of Expenditures of Federal Awards

For the Year Ended December 31, 2014

Grantor CFDA Number Expenditures

U.S. Department of Health and Human Services: Health Resources and Services Administration 93.224 $ 2.399.840

Total Expenditures of Federal Awards S 2.399.840

The accompanying notes to the Schedule of Expenditures of Federal Awards are an integral part of this schedule.

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Jefferson Community Health Care Centers, Inc. Notes to the Schedule of Expenditures of Federal Awards

NOTE 1 - GENERAL

The accompanying Schedule of Expenditures of Federal Awards presents the revenues from federal awards of JCHCC as defined In Note 1 to JCHCC's basic financial statements. All federal awards were received directly from Federal agencies.

NOTE 2 - BASIS OF ACCOUNTING

The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of JCHCC and is presented on the accrual basis of accounting.

NOTE 3 - RELATIONSHIP TO BASIC FINANCIAL STATEMENTS

Federal awards revenues are reported in JCHCC's basic financial statements as program revenues.

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Jefferson Community Health Care Centers, Inc. Schedule of Findings and Questioned Costs

A. SUMMARY OF AUDITOR'S RESULTS

1. The auditor's report expresses an unmodified opinion on the financial statements of Jefferson Community Health Care Centers, Inc. {"JCHCC").

2. No instances of noncompliance material to the financial statements of JCHCC were identified during the audit.

3. No material weaknesses were noted relating to the audit in the Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards.

4. The Independent Auditor's Report on Compliance for each Major Program and on Internal Control over Compliance Required by 0MB Circular A-133 expresses an unmodified opinion on all major federal programs.

5. There were no findings that are required to be reported in accordance with Section 510(a) of 0MB Circular A-133.

6. The program tested as a major program for the year ended December 31, 2014 was:

Program Title CFDA Number Health Resources and Services Administration 93.224

7. The threshold for distinguishing between Type A and Type B programs was $300,000.

8. JCHCC did not qualify as a low-risk auditee under Section 530 of 0MB Circular A-133.

B. FINDINGS RELATED TO THE FINANCIAL STATEMENTS

Significant Deficiencies

2014-001 - Defer Recognition of Revenue on Advance Receipts until Earned

Condition: There were no grant compliance findings identified; however, we noted prepayments of $123,031 from a grantor were incorrectly recognized in revenue for the current year.

Criteria: Grant prepayments should be recorded as deferred revenue until the related services are performed at which time they are recognized as revenue.

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Jefferson Community Health Care Centers, Inc. Schedule of Findings and Questioned Costs

Cause: Accounting Department did not have a deferred revenue account to capture prepayments on grants. In addition, there was turnover in the CFO position at year end that attributed to deferred revenues not being recorded.

Effect: Revenue was overstated by $123,031; however, this amount was corrected in the 2014 financial statements.

Recommendation: JCHCC should record advance receipts in a deferred revenue account supported by a subsidiary ledger and transferring the amounts to revenue in the month in which they are earned.

C. FINDINGS RELATED TO COMPLIANCE AND OTHER MATTERS

None Noted

D. FINDINGS AND QUESTIONED COSTS - MAJOR FEDERAL AWARD PROGRAMS

None Noted

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Jefferson Community Health Care Centers, Inc. Views of Responsible Officials and Planned Corrective Actions

Finding Anticipated Responsible Number Planned Corrective Action Completion Date Contact Person

JCHCC will comply with the recommendations in which all

unearned revenue will be recorded as deferred revenue until received.

Adjustments have been made to CFO, Senior 2014-001 JCFICC's policies and procedures. June 2015 Accountant

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Jefferson Community Health Care Centers, Inc. Status of Prior Year Findings

For the Year Ended December 31, 2013

SECTION I. FINDINGS RELATED TO THE FINANCIAL STATEMENTS

Material Weakness

2013-01 - Reconcile the General Ledger Balance with the Subsidiary Ledaer-ResoWed

Significant Deficiencies

2013-02 - Defer Recognition of Revenue on Advance Receipts until Earned -See finding 2014-01

2013-03 - Record Accounts Payable on Jobs in Process - Resolved

SECTION 11. FINDINGS AND QUESTIONED COSTS - MAJOR FEDERAL AWARD PROGRAM AUDIT

2013-04 - Review of Patient Documentation Obtained during Office Visits - Resolved

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