westbank arc, incorporated financial report june 30, 2013 · 2013, and the related statements of...

WESTBANK ARC, INCORPORATED FINANCIAL REPORT

JUNE 30, 2013

TABLE OF CONTENTS

PAGE NO.

INDEPENDENT AUDITORS REPORT 1-2

FINANCIAL STATEMENTS

Statement of Financial Position 3-4

Statements of Activities 5

Statements of Functional Expenses 6

Statement of Cash Flows 7

Notes to Financial Statements 8-14

COMPLIANCE AND INTERNAL CONTROL SECTION

Independent Auditor's Report on Intemal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards 15-16

Schedule of Findings and Responses 17-18

INDEPENDENT AUDITORS REPORT

Catnnetar & Co,, CPAs a professional accounting corporation

2550 Belle Chasse Highway, Suite 170, Gretna, LA 70053 504.362.2544 (Fax) 504.362.2663

Edward L. Camnetar, Jr., CPA Orfelinda G. Richard, CPA Members: American Institute of Certified Public Accountants Jamie G. Rogers, CPA Society of Louisiana Certified Public Accountants

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors Westbank ARC, Incorporated

Report on the Financial Statements

We have audited the accompanying financial statements of Westbank ARC, Incorporated (a nonprofit organization), which comprise the statement of financial position of as of June 30, 2013, and the related statements of activities, functional expenses, ^id cash flows for the year then ended, and the related notes to the financial statements.

Management 's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of intemal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor 's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit 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 intemal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's intemal 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 ofthe financial statements.

Camnetar & Co,, CPAs a professional accounting corporation

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Westbank ARC, Incorporated as of June 30, 2013, and the changes in its net assets and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated December 31, 2013, on our consideration of Westbank ARC, Incorporated's intemal control over financial reporting and on our tests of its compli^ice 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 intemal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on intemal 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 Westbank ARC, Incorporated's internal control over fin^icial reporting and compliance.

Camnetar & Co., CPAs a professional accotintitig corporation

Gretna, Louisiana December 31, 2013

FINANCIAL STATEMENTS

WESTBANK ARC, INCORPORATED STATEMENT OF FINANCIAL POSITION

June 30, 2013

ASSETS

Current Assets Cash Mid cash equivalents $ 91,132 Certificates of deposit 50,200

Due from funding sources 92,192 Inventory of donated assets 2,500 Prepaid expenses 29,800

Total Current Assets 265,824

Property and Equipment Automobiles 240,218 Fumiture and equipment 114,544

Leasehold Improvements 3,000 357,762

Accumulated Depreciation (238,328)

Total Property and Equipment 119,434

Other Assets

Investments 179,984 Deposits 300

Total Other Assets 180,284

Total Assets $ 565,542

The accompanying notes are an integral part of these financial statements.

3

WESTBANK ARC, INCORPORATED STATEMENT OF FINANCIAL POSITION

June 30, 2013

LIABILITIES AND NET ASSETS

Current Liabilities Accounts payable $ 2,086 Current portion of long-term debt 14,492

Accrued salaries and wages 15,250 Payroll taxes payable 5,218 Insurance Payable 25,242

Total Current Liabilities 62,288

Long Term Liabilities

Long term debt, net of current maturities 55,159 Total Long Term Liabilities 55,159

Net Assets Unrestricted

Designated 23,984

Undesignated 424,111

Total Net Assets 448,095

Total Liabihties and Net Assets $ 565,542


3

WESTBANK ARC, INCORPORATED STATEMENTS OF ACTIVITIES For the Year Ended June 30, 2013

REVENUES

DIRECT PROGRAM REVENUE Day-Habilitation Program Supported Employment Program Janitorial Services Program

$ 729,469 5,860

498,471

INDIRECT SUPPORT AND OTHER INCOME Donations Rental Donation Fundraising Net gain (loss) on investments carried at fair value Interest and dividend income Gain on sale of fixed assets Miscellaneous income

Total Revenue

14,739 84,000 40,648 23,103 20,717 10,898 2,756

1,430,661

EXPENSES

Day-Habilitation Program Expenses Supported-Employment Program Expenses Janitorial Services Program Management and General

Total Expenses

Increase in net assets

Unrestricted net assets beginning of year

Unrestricted net assets end of year

600,943 24,252

536,335 205,829

1,367,359

63,302

384,793

$ 448,095


5

WESTBANK ARC, INCORPORATED STATEMENT OF FUNCTIONAL EXPENSES

For the Year Ended June 30, 2013

Salaries Advertising Bad debts Depreciation Employee related expenses Fundraising Insurance Interest Lease Office expense and postage Payroll tax expense and benefits Professional services Repairs and maintenance Supplies Telephone

Utilities Vehicle expense

Totals

Day Habilitation

$ 323,242 624 844

29,820 963 374

47,362 3,426

71,600 17,397 27,812

5,980 963

9,776 5,039

10,455 45,266

$ 600,943

Supported Employment

$

$

22,150 --------122

1,980 ----

--

24,252

Janitorial Services

$ 382,761 361 121

9,905 1,161

-24,619

1,103 -

8,236 34,874 2,802

338 27,485 4,230

6,158 32,181

$ 536,335

Management and General

S

$

120,074 419

1,653 6,371

-8,229

25,056 133

12,400 4,695

10,376 2,802

283 1,016 2,745

5,167 4,410

205,829

Totals

$ 848,227 1,404 2,618

46,096 2,124 8,603

97,037 4,662

84,000 30,450 75,042 11,584

1,584 38,277 12,014

21,780 81,857

$ 1,367,359


6

WESTBANK ARC, INCORPORATED STATEMENT OF CASH FLOWS For the Year Ended June 30, 2013

Cash flows from operating activities Increase in net assets $ 63,302 Adjustments to reconcile net income to net cash

provided by operating activities;

Depreciation and Amortization 46,095 Interest Income on Certificates of Deposit (200) Unrealized (gain) loss on investments (18,204) Realized (gain) loss on investments (4,899) Dividend Income on investments (4,539) Gain on sale of fixed assets (10,898) Increase in due from funding source (24,693) Increase in prepaid expenses (5,495) Decrease in accounts payable (23,976) Increase in accrued expenses 9,730 Increase in payroll taxes payable 1,046

Total adjustments (36,033)

Net cash used by operating activities 27,269

Cash flow from financing activities Proceeds from notes payable 80,000 Principal payments on note payable (10,348)

Net cash provided by fmancing activities 69,652

Income Tax Paid

Cash flow from investing activities Proceeds from sale of investments 33,000 Proceeds from sale of equipment 10,898 Purchase of equipment (102,903)

Net cash provided by investing activities (59,005)

Net increase in cash and cash equivalents 37,916 Cash and cash equivalents, beginning of year 53,216 Cash and cash equivalents, end of year $ 91,132

Interest Paid $ 4,662


7

WESTBANK ARC, INCORPORATED NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2013

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization - Westbank ARC, Incorporated (Formerly Westbank Association for Retarded Children, Inc.), a Louisiana Not-for-Profit Organization, organized October 24, 1956, provides supported employment and day habilitation services to individuals diagnosed with developmental disabilities. The ARC is located in Gretna, Louisiana and serves individuals throughout a three parish area (Jefferson, Orleans, and Plaquemines). The majority ofthe Associations' revenue is derived from contracts for services with the State of Louisiana and Jefferson Parish.

Basis of Accounting - The accompanying financial statements have been prepared on the accrual basis of accounting and in accordance with the principles of not-for-profit accounting; consequently, revenues and gains are recognized when eamed, and expenses and losses are recognized when incurred.

Basis of Presentation - Financial statement presentation follows the guidance of Financial Accounting Standards Board (FASB) in its Accounting Standards Codification (ASC) 958-205, Not-for-Profit Entities - Presentation of Financial Statements. Under FASB ASC 958-205, the Association is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets.

A description ofthe three net asset categories required follows:

Permanently Restricted Net Assets - These are net assets subject to donor-imposed stipulations that they be maintained permanently by the Association. Generally, the donors of these assets permit the Association to use all or part of the income earned on related investments for general or specific purposes.

Temporarily Restricted Net Assets - These are assets subject to donor-imposed stipulations that may or will be met by actions of the Association and/or the passage of time.

Unrestricted Net Assets - These are net assets not subject to donor-imposed stipulations.

As of June 30, 2013, the Westbank ARC, Inc. had no permanently restricted or temporarily restricted net assets. Revenues are reported as increases in unrestricted net assets unless use ofthe related assets is limited by donor-imposed restrictions. Expenses are reported as decreases in unrestricted net assets. Gains and losses on investments and other assets or liabilities are reported as increases or decreases in unrestricted net assets unless their use is restricted by explicit donor stipulation or by law.


JUNE 30, 2013

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

Cash and Cash Equivalents - Cash and cash equivalents, for statement of cash flow purposes, include investments in highly liquid debt instruments with original maturity of three months or less.

Accounts Receivable - In the opinion of management substantially all receivables are collectable in full and accordingly no allowance for doubtful accounts is provided. When an account is deemed uncollectible it is written off to bad debt expense. Accounts Receivable with balances past due ninety days or more amounted to approximately $7,303 on June 30, 2013.

Investments - In accordance with FASB ASC 958-320 Non-for-Profiit Entities-Investment-Debt and Equity Securities, investments in equity securities with readily determinable fair values and all investments in debt securities are reported at fair value in the statement of financial position and realized and unrealized gains and losses included in the statement of activities.

Property and Equipment - Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, as follows: Autos 5-7 years

Machinery and Equipment 3-7 years Leasehold Improvements 7-39 years.

Depreciation expense for the year ended June 30, 2013 was $46,095.

Contributed Services - Various functions of the Association are conducted by unpaid officers, board members, and volunteers. The association recognizes donated services, if significant amount, which create or enhance non-financial assets or require specialized skill that are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation. For the year ended June 30, 2013, the Association believes the value of contributed services meeting the requirement for recognition, under FASB ASC 958-60-03 Non-for-Profit Entities - Contributions Received, for recognition in the financial statements was not material and therefore has not been recorded.

Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.


JUNE 30, 2013 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING

POLICIES (CONTINUED):

Concentration of Credit Risk - The Association maintains a cash balance at four financial institutions. At the present time accounts at each institution are insured by the Federal Deposit Insurance Corporation up to $250,000. As of June 30, 2013 there were no uninsured balances.

- Credit risk for amounts due from funding sources is concentrated because substantially all of the balance is due from govemmental entities (State of Louisiana and Jefferson Parish). The association is exposed to credit related losses only in the event of default from the State of Louisiana, and Jefferson Parish, LA, but the association does not expect any parties to fail to meet their obligations.

Functional Expense Allocation - Expenses are charged to programs and supporting services on the basis of periodic time and expense studies. Management and general expenses include those expenses that are not directly identifiable with any other specific function but provide for the overall support and direction ofthe Organization.

Income Taxes - The Association is exempt from taxes under Section 501 (c)(3) ofthe Intemal Revenue Code. No provision for taxes is necessary.

NOTE 2 - CERTIFICATE OF DEPOSIT

Certificates of deposit are carried at cost. At June 30, 2013 the Association had certificates of deposit as follows:

Interest Maturity Maturity Bank Cost Rate Date Value

Mississippi River Bank $ 50,200 2.250% March 13,2014 $ 50,200

NOTE 3 - FAIR VALUE MEASUREMENTS

FASB ASC 820- Not-for-Profit Entities - Fair Value Measurement, establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy consists of three broad levels: Level 1 inputs consist of unadjusted quoted prices in active markets for identical assets and have the highest priority, and level 3 inputs have the lowest priority. The Association uses appropriate valuation techniques based on the available inputs to measure the fair value of its investments. When available, the Association measures fair value using Level 1 inputs because they generally provide the most reliable evidence of fair value. No Level 2 inputs were available to the Association, and Level 3 inputs were only used when Level 1 or Level 2 inputs were not available.

10


JUNE 30, 2013

NOTE 3 - FAIR VALUE MEASUREMENTS (Continued)

The Association's investments are reported at fair value in the accompanying statement of net assets.

Fair Value Measurements Using:

June 30,2013

Mutual Funds

Fair Value

$179,984

Quoted Prices in Active Markets

for Identical Assets

(Level 1)

$ 179,984

Significant Unobservable Inputs (Level 3)

Level 1 Fair Value Measurements

The Fair value of mutual funds is based on quoted net assets values ofthe shares held by the Association at year-end. The fair values of common stock, corporate bonds, and U.S. Govemment securities are based on quoted market prices. The following table provides further details ofthe Level 1 fair value measurements.

June 30, 2013

Beginning Balance

Income Total Gains or losses (realized and unrealized) included in changes in net assets

Purchases

Ending Balance

Government Bonds

$

-

_

$

Mutual Funds

$ 185,342

4,539

23,103

(33,000)

S 179,984

$

$

Total

185,342

4,539

23,103

(33,000)

179,984

11


JUNE 30, 2013

NOTE 4 - INSURANCE PAYABLE

During the year ended June 30, 2013 the Association entered into the following note payables to finance various insurance policies.

An unsecured non-interest bearing note payable. The monthly payment of this note is $1,307.73 with maturity date of September 2012. Principal balance at June 30, 2012, is $3,923.

An unsecured non-interest bearing note payable. The monthly payment of this note is $2,291.89 with a maturity date of January 2014. Principal balance at June 30, 2013, is $16,043.

An unsecured non-interest bearing note payable. The monthly payment of this note is $3,047.78 with a maturity date of July 2013. Principal balance at June 30, 2013, is $5,276

NOTE 5 - LINE OF CREDIT

The Association has a line of credit available totaling $50,000.00. the unpaid principal balance bears interest rate of 2.25%. as of June 30, 2013 the Association had not drawn on the line of credit. The line of credit is secured by a $50,000 Certificate of Deposit.

NOTE 6 - LONG TERM DEBT

As of June 30, 2013 Long Tenn Debt consisted ofthe following note payable

An auto loan with local credit union, with monthly payments of $1,602.83, bearing interest of 7.50yo, secured by automobiles (vans). The loan will be paid in full in September 2017.

Total debt: $69,651 Less amount due in less than one year: (14,492)

Long term debt; $55,159

Maturity of long term debt is as follows: Year ending June 30,

2014 $14,492 2015 15,617 2016 16,828 2017 18,134 2018 4,580

12


JUNE 30, 2013

NOTE 7 - COMMITMENTS

The Association leases it's building under a one-hundred year lease beginning October 1, 2010 and ending October 1, 2110 for a yearly rental of one dollar. The current estimated fair rental value ofthe facility less the Association's annual contractual lease obligation is equal to $84,000, which is recorded as rental donation revenue and lease expense.

The lease restricts the use ofthe premises to the operation of a facility to provide support services for people with developmental disabilities. The Lessee is required to maintain pubhc Hability insurance on the building in the amount of $1,000,000/$3,000,000. The lease may be renewed for a like term and at the same rental by giving sixty days notice to the City of Gretna before expiration.

NOTES - CONCENTRATION OF SUPPORT

The association receives a substantial amount of its support from the State of Louisiana and Parish of Jefferson, Louisiana. A significant reduction in the level of this support, if it were to occur, would have an effect on the Association's programs and activities.

Receivables from funding sources for services rendered are unsecured.

NOTE 9 - AMOUNTS PAID TO GOVERNING BOARD MEMBERS

For the year ended June 30, 2013 there was no compensation paid to the members of the Board of Directors of Westbank ARC, Incorporated.

NOTE 10 - DESIGNATED UNRESTRICED NET ASSETS

The Board of Directors of the Association has set aside $23,984 of its unrestricted net assets to be used for the enhancement and improvement of the lives of the clients of the Association. There was no change in this amount during the fiscal year.

NOTE 11 - SUBSEQUENT EVENTS

Management has evaluated subsequent events through December 31, 2013, which is the date the financial statements were available to be issued and concluded no disclosure is required.

13


JUNE 30, 2013

NOTE 12 - COMPENSATED ABSENCES

Employees of the Association are entitled to paid vacation, depending upon length of service and other factors. It is impractical to estimate the amount of compensation for future absences, and accordingly, no liability has been recorded in the accompanying financial statements. The Association's policy is to recognize the costs of compensated absences when actually paid to employees.

NOTE 13 - RELATED PARTY TRANSACTIONS

During the year ended June 30, 2013, the association purchased general liability, property and accident insurance coverage totaling $84,669 from a board member.

NOTE 14 - CONTINGENCY

The Association is involved in legal matters arising in the ordinary course of business. Management is working with legal counsel of both its general liability insurance carrier and the worker's compensation carrier in these legal matters. Management has not established a reserve as the outcome ofthe litigation is undetermined as of June 30, 2013. The Association maintains appropriate insurance coverage for both its general and liability and worker's compensation policies.

14

COMPLIANCE AND INTERNAL CONTROL SECTION


2550 Belle Chasse Highway, Suite 170, Gretna, LA 70053 504.362.2544 (Fax) 504.362.2663

Edward L. Camnetar, Jr., CPA Members: American Institute of Certified Public Accountants Orfelinda G. Richard, CPA Society of Louisiana Certified Public Accountants

Jamie G. Rogers, CPA S

INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS

BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

To the Board of Trustees of Westbank ARC, Incorporated

We have audited, 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 the financial statements of Westbank ARC, Incorporated (a nonprofit organization) which comprise the statement of financial position as of June 30, 2013, and the related statements of activities, and cash flows for the year ended, and the related notes to the financial statements, and have issued our report thereon dated December 31, 2013.

Internal Control Over Financial Reporting

In planning and performing our audit, we considered Westbank ARC, Incorporated's intemal control over financial reporting (intemal 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 sea opinion on the effectiveness ofthe Organization's intemal control. Accordingly, we do not express an opinion ofthe effectiveness on the Organization's intemal 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 intemal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in intemal control that is less severe than a material weakness, yet important enough to merit attention by those charged with govemance.

Our consideration of intemal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

15


C'ompliance and Other Matters

As pm"t of obtaining reasonable assurance about whether Westbank ARC, Incorporated's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of intemal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the organization's intemal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the organization's intemal control and compliance. Accordingly, this communication is not suitable for Miy other purpose.

This report is intended solely for the information and use of management, the Board of Trustees, the Louisiana Legislative Auditor, others within the entity, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified pm^ties. Under the Louisiana Revised Statue 24:513, this report is distributed by the Legislative Auditor as a public document

Camnetar & Co., CPAs a professional accounting corporation

Gretna, Louisiana December 31, 2013

16

WESTBANK ARC, INCORPORATED SCHEDULE OF FINDINGS AND RESPONSES


We have audited the financial statements of the Westbank ARC, Inc. as of and for the year ended June 30, 2013, and have issued our report thereon dated December 31, 2013. We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Our audit ofthe financial statements as of June 30, 2013 resulted in an unqualified opinion.

Section I Summary of Auditor's Reports

a. Report on Internal Control and Compliance Material to the Financial Statements.

Intemal Control

Material Weaknesses Q Yes ^ No

Significant Deficiencies Q Yes ^ No

Compliance

Compliance Material to Financial Statements Q Yes ^ No

Was a management letter issued? O Yes ^ No

Section II Financial Statement Findings

A - Issues of Noncompliance

None

B - Significant Deficiencies

None

17

WESTBANK ARC, INCORPORATED SCHEDULE OF PRIOR YEAR FINDINGS


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

None

Section II - Management Letter

None

westbank arc, incorporated financial report june 30, 2013 · 2013, and the related statements of...

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