options foundation inc. - app.lla.state.la.us€¦ · american institute of c.p.a.'...

Options Foundation, Inc.

Audited Financial Statements

June 30, 2013 and June 30, 2012

Ehricht & Associates, LLC 777 S Acadian Thruway Baton Rouge,LA 70806

225-387-0357

OPTIONS FOUNDATION. INC. BATON ROUGE, LOUISIANA

FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30. 2013 AND 2012

CONTENTS

Page No.

Independent Auditors' Report - I

Financial Statements

Statements of Financial Position 4

Statements of Activities and Changes in Net Assets 5-6

Statements of Functional Expenses 7-B

Statements of Cash Flows 9

Notes to Financial Statements 10-19

Independent Auditors' 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 Auditins Standards 21-22

Schedule of Findings and Questioned Costs 23

Schedule of Prior Year Audit Findings 24.

Ehricht & Associates, LLC CERTIFIED PUBLIC ACCOUNTANTS

Members American Institute of C.P.A.'

I N D E P E N D E N T A U D I T O R S ' R E P O R T ^ Louisiana Society of C.PA.'S

To the Board of Trustees of Options Foundation, Inc.

We have audited the accompanying financial statements of Options Foundation, Inc. (a nonprofit organization), which comprise the statement of financial position as of June 30, 2013 and 2012, 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 forthe Financial Statements

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

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and 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 from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Options Foundation, Inc. as of June 30, 2013 and 2012, 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

Our audits were conducted for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedules on pages 20-24, 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 audits of the financial statements and certain other 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 taken as a whole.

1 P.O. BOX 14214 • BATON ROUGE, LOUISIANA 70898 • FAX (225) 387-0358 • (225) 387-0357

other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated December 12, 2013, on our consideration of Options Foundation, Inc.'s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, 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 the 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 Options Foundation, Inc.'s internal control over financial reporting and compliance

Ehricht & Associates, LLC

Baton Rouge, Louisiana

December 12, 2013

r-^v*^-? ^ .^'^-.t>MKaK'jK:M^.jryJfy^'.M/^^^.-^-^^j /^'<r:-j*--»>;* . ^ M ^ J ^ ' ^ , ^ " 4 Ji, J ^ ^ ^ j i n£ ' ' ^^^^^m,mm0'> i l f A'O'j^W/.flF'JII^*

FINANCIAL STATEMENTS

'••f'Jr/ir,^'^>Jf'S:-4- f i t fmiltmii ' . ' i '^- M'tKjrA.

ASSETS

OPTIONS FOUNDATION. INC. BATON ROUGE. LOUISIANA

STATEMENTS OF FINANCIAL POSITION JUNE 30. 2013 AND 2012

Current Assets Cash and cash equivalents Cash - resident funds Cash - Progressive Bingo Contract receivables Other current assets

Total current assets

Fixed Assets

Land Buildings Vehicles Fumiture and Fixtures Improvements Computers and Equipment

Accumulated Depreciation

Total fixed assets

Other Assets Deposits Goodwill net of 510,500 amortization for 2013/$2,100 for 2012 Due from Related Companies

Total Other Assets

Total Assets

2013 2012

$ 103 154,723 15,000 95,846 31,500

297,172

88,325 860,548 50,397 68,591 43,668 42,857

1,154,386

(507,777)

646,609

3,625 23,100

443,803

470,528

$1,414,309

S 4,376 163,281

2,800 72,007 62,672

305,136

88,325 860,548 50,397 68,591 43,668 41,971

1,153,500

(466,680)

686,820

3,625 31,500

424,428

459,553

$1,451,509

LIABILITIES AND NET ASSETS

Current Liabilities

Accounts payable

Short-term notes payable

Notes payable - current portion

Other accrued expenses

Resident funds payable

Progressive Bingo liability

Accrued wages

Payroll taxes and related payables

Due to related companies

Total current liabilities

Long Term Liabilities

Notes payable

Total liabilities

Net Assets

Unrestricted

Total Liabilities and Net Assets

$ 79,193

130,028

129,480

7,011

154,723

15,000

11,902

140,489 -

667,826

439,060

1,106,886

307,423

$ 1,414,309

$ 59,870

130,154

34,400

-

163,281

2,800

12,292

140,309

5,914

549,020

572,594

1,121,614

329,895

$1,451,509

The accompanying notes are an integral part of these statements.


STATEMENTS OF ACTIVITIES AND CHANGES IN NET ASSETS FOR THE YEARS ENDED JUNE 30. 2013 AND 2012

CHANGES IN UNRESTRICTED NET ASSETS

2013 2012 Revenues and Gains

Unrestricted Support Revenues: Grant-Office of Mental Health-River Oaks Grant-HUD/City of Baton Rouge-Options Villa Grant-HUD-HPRP Rent Income-River Oaks Rent Income-Options Villa Rent Income-Options West Rent Income-Options East Rent Income Bayou Bingo Donations

Income/Sales Retail Thrift Store Management Fees Charitable Gaming Vending Income Penalty Abatement - Intemal Revenue Service Other

Total Revenues and Gains

The accompanying notes are an integral part of these statements.

5

$ 303,952 168,721

-102,600 116,835 28,515 10,621

144,409 38,184 9,033 8,683

186,163 11,628

-6,922

$ 1,136,266

$ 301,740 102,020 7,555

117,085 108,968 45,230 9,133 13,592 67,200 15,201 6,081

173,909 18,209 67,642 27,802

$1,081,367


STATEMENTS OF ACTIVITIES AND CHANGES IN NET ASSETS FOR THE YEARS ENDED JUNE 30. 2013 AND 2012

CHANGES IN UNRESTRICTED NET ASSETS-continued

2013 2012 Expenses

Program Services: River Oaks Options Villa Options West Options East Pines Estates Acadiana HPRP

Support Services: Management and General Bayou Bingo Retail Thrift Store Vending Charitable Gaming

Total Expenses

Increase (decrease) in Unrestricted Net Assets

Net Assets - beginning of period

Net Assets - end of period

$ 423,673 329,678 37,025 31,294

---

18,388 104,630 33,587 17,235

163,227

1,158,737

(22,471)

329,895

$ 307,424

$ 403,114 307,788 38,308 35,167 8,814 12,065 49,387

22,072 14,925 48,331 20,265 144,949

1,105,185

(23,818)

353,713

$ 329,895

The accompanying notes are an integral part of these statements. 6

o S > c ffl 02

oo o

4J <C

g 2

OIJ . H I

rt W

f^ o

a. w O

O

O

2 o

w-i U-) O O Ov — ^ (N r^ O O oo "^ O W-) r - • ^ o -— o fN 0 0

m

00 IT)

rsi

m • ^ • OJ

(N

O

^

so

in r<i

OS

' oo ON • ^ m oo

• CM O 00

rs ^ • ^

^ so o

• ^ m ( 1

^ r -o

O »n oo OC

oo 00

oo

ON

oo

i n (N oo i n

00

(N fN

CS '

^ ip^

1 o

s *o

— (N —

O OS SO fN m m o r— ^ - — m o O Tf — i n fN oo fN fN —- O^ i n — tN ' ^ O

T|- m m O <N (N i n »n OS

i n OS o so o OS m r o in OS

0^ oo i n fN 0^ ^ O OO — (N r*^ r o

fN r - —

O O fN r o r o O OO •'t •— - ^ • * r-

— <N

<n Tf Tt o

oo • ^ so O OS OS OO in — Os 0_ OS i n ro ' tN"

OS so (N i n sO —

rsj Tt Tt r o OS t ^ fN so O^ Os so fN_ —" oo" —"

n

o o i n »n

r o ' ^ -

00 00 i n Os i n •^ OS — " t

— ^ -

fo, .5

0 <i

r,

<

> ^ O u, c/:

O H B .

o

< •

Z < •

y j

o -1 Ui o 3 O Bi Z

o H < •

ca

! / l M v; ^ Eu X U

^ z o

z b.

O h-Z UJ

S u« I f

H in

r J

o

g Q U Q Z

Ei: > •

H a: o u.

5 Di

S = M f> -^ T;

.= -s; =0

3 TD t

< < <

£ . 2 t • o c o c 3 ca o o

< CQ ca u

O w

' 5 OJ ca U

Si £ Q tu

j= J : B-

o " > = 5-U CX

3 O SJ q- o 3

UJ U . tL.

& -

O u

t

a. u u c fTl

^

o O

:? QJ

C m -1

£

O

c

3 O C n

1 l l s U M

^ £ ,£ ^ S ra SI CU o t i Iri w w

V] l/l C

S g ^ =« c3 CJ d ra

tzi c/: c/i H

E (-o OJ

ra r o CL

JJ,

H H D

il o

O

OS O

r - >o O O m Q O ^ O O Os o • Os_ (N — O^ fS 'O - - (N r | so' —"

— \ ^ i ^ — . i o o c i r ~ - i o o s T i - ^ - \ o r - f ^ ^ T r o v i o O O v O s n O o O ^ O ' O f N — ' ^ ^ O O O T T O I O r- u-i_ — o_ oo_ in "Ti 00 o o_ (N w r r- o_ in cn a\ ^' oo rn Q" fN 0 ' O co' oC tN rr O O m fN rO m

m 00 Ov m Tt I

00 ^ 00 00 Wi ' so •* r- o

in o r- c\ oo \0 00 <N ro —

r ^ 00 >n fN r--r~- fN m

t-~ •* •* o 00 so rn os_ in vO >o r-f

OS O

ro —

r - 1 • 8 CO

^O rO

O

8 f>

in o — I i

— in OS ' r~- \ o m r- OS

' r-TT

«n Tf tN

r h

m

fin • n

so r- Os r- o - OS a\ ro

C fO tN (N I

in — r o o o — ^ o o i ( N i n - * o o o OS(N — m r o o o o o o o o o s o o t " J D ^ r - o s — — o o m T r r s i o o ^ m o o : o

o r- 00 IN m oo — p-r- ro m Os

0 z

n

Q <1

^ C

c/:

O H

O

<

<' o u-f

o Y Z n f-

<' oa

S! z u:

S^ u

-< Z

c

Z tJ l i

o 1—

z ? UJ F-- • 1-

r^ f .

tsl

z .J

Q bJ C2 Z

a:

>•

f -

o; 0\

3 « E • c -s u c: g.

< a a u u Q Q m t

3: Q. 3 2 n

a)

3

a

J

o u

c a

1 a.

Si

s

u

1 o S

y 3

si

Jq

£

2

< U 1

§ a ii 3

En

_C

3

S .2

!i

1 a.

OPTIONS FOUNDATION. INC. BATON ROUGE, LOUISIANA

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30. 2013 AND 2012

Cash Paid for Interest

2013 2012

Cash Flows From Operating Activies Change in net assets $ (22,471) $ (23,818)

Adjustments to reconcile change in net assets to net cash provided (used) by operating activities: Depreciation Amortization of loan origination fee Amortization of Goodwill (Increase) decrease in resident fiinds (Increase) decrease in Progresive Bingo fimds (Increase) decrease in contracts receivable (Increase) decrease in other current assets (Increase) decrease in deposits Increase (decrease) in accounts payable Increase (decrease) in accrued rent Increase (decrease) in accrued liabilities Increase (decrease) in resident fimds payable

Net cash provided (used) by operating activities

Cash Flows From Investing Activities Advances to related companies Advances from related companies Acquisition of Goodwill - Bayou Bingo Purchase of property

Net cash used by investing activities

Cash Flows From Financing Activities Loan Proceeds - short term debt Loan Proceeds - long term debt Loan payments-community development block grant program Loan payments - short term debt Loan payments-long term debt

Net cash provided (used) by financing activities

Increase (Decrease) in Cash and Cash Equivalents Cash and cash equivalents, begiiming of period Cash and cash equivalents, end of period

40,891 -206

8,400 8,558

(12,200) (23,839) 31,172

-19,323

-19,001 (8,558)

60,483

(25,290) --

(886) (26,176)

-(18,848)

(126) (19,606) (38,580)

(4,273) $ 4,376

$ 103

$ 28,549

38,596 206

2,100 (43,093) (2,800) 22,679 (26,000) (3,625) 18,562 (33,600)

(106,393) 43,093

(114,093)

(6,750) (21,090) (33,600) (14,000) (75,440)

142,559 100,748 (20,562) (37,081) (11,666) 173,998

(15,535) 19,911

$ 4,376

$ 45,790

The accompanying notes are an integral part of these statements. 9

-,.-'_-T^^-Ti4r;ffr.»r-r-,--'r.?r- T--^s- 'XF/. l i r- i r . ' .

NOTES TO FINANCIAL STATEMENTS

10


NOTES TO FINANCIAL STATEMENTS JUNE 30. 2013 AND 2012

1. Summarv of Significant Accounting Policies

(a) Organization and Nature of Activities

Options Foundation, Inc. is a private, non-profit organization whose purpose is to provide services for people with behavioral health requirements primarily in Baton Rouge, Louisiana. Rent is collected from residents.

Opfions Foundation, Inc. is exempt from federal income taxes under secfion 501(c)(3) ofthe Intemal Revenue Code, and therefore has made no provision for federal income taxes in the accompanying financial statements. In addition, Options Foundation, Inc. has been determined by the Intemal Revenue Service not to be a "private foundation" within the meaning of Secfion 509(a) of the Internal Revenue Code. There was no unrelated business income for 2013 or 2012.

(b) Basis of Accounting

The Organization maintains its books and prepares its financial statements on the accrual basis of accounting according to accounfing principles generally accepted in the United States of America. Consequently, revenues are recognized when eamed, and expenses are recognized when incurred. All significant receivables, payables and other liabilities are reflected in the financial statements.

The Organization 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.

The Organization allocates its expenses on a funcfional basis among its various programs. Expenses that can be identified with a specific program are allocated directly according to their natural expense classification.

(c) Net Assets

Net assets, revenues, expenses, gains and losses are classified based on the existence or absence of contributor imposed restrictions. The Organization's net assets balance is comprised only of net assets for general use with no restrictions.

(d) Other Accounting Policies

Casti Equivalents The Organization considers all highly liquid investments, including certificates of deposit with maturity of three months or less, to be cash equivalents.

Contributions The Organization is required to report its contributions received as unrestricted, temporarily restricted, or permanently restricted depending on the existence and/or nature of any donor restrictions. Contributions are recognized when the donor makes a promise to give to the Organization that is, in substance, unconditional. The organization received various donated items for sale in the Tiirift Sfiop. It is not pracdcal to value these items and the amount in not material. The Organizafion did receive a donafion of the use of a facility which is reflected as donafions received and rent expense. See Note 7.

11


NOTES TO FINANCIAL STATEMENTS JUNE 30. 2013 and 2012

1. Summarv of Significant Accounting Policies (continued)

Accounts Receivable Accounts receivable, where recognized, are actual amounts owed to the Organization and are recognized at net amount owed with no allowance for uncollectible accounts. Management expects all receivables to be collectible for the years ended June 30, 2013 & 2012.

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

Casfi in Banlcs All fiinds are in institutions insured by an agency of the Federal Govemment, the Federal Deposit Insurance Corporafion.

Subsequent Events The Organization has evaluated subsequent events through December 12, 2013, the date the financial statements were available to be issued, for recording and disclosure.

2. Fixed Assets

Fixed assets acquired by Options Foundafion, Inc. are considered owned by the Organization. However, State funding sources may maintain equitable interest in the property purchased with grant monies as well as the right to determine the use of any proceeds from the sale of these assets. The State has a reversionary interest in those assets purchased with its funds, which have a cost of $500 or more, and an estimated useful life of at least two years.

Opfions Foundafion, Inc. follows the practice of capitalizing, at cost, all expenditures for fixed assets in excess of $500. Depreciafion is computed on a straight-line basis over the usefiil lives ofthe assets generally as follows:

Estimated Usefiil Life Buildings & Improvements 30 years

Furniture & equipment 5-12 years Transportation equipment 5 years

Depreciafion expense was $ 41,497 and $40,902 for the years ended June 30, 2013 and 2012, respectively. The Organization acquired $ 885 of fiimiture and equipment during the year ended June 30, 2013 and acquired $14,000 of equipment during the year ended June 30, 2012.

12



3. Resident Funds Pavable/Representative Payee Account

Options Foundation, Inc., as a non-profit organization, has been designated a representative payee by the Social Security Administration for certain individuals participating in Options' residential programs. As representative payee. Options receives Social Security and/or Supplement Security Income (SSI) payments for individuals who cannot manage, or direct someone else to manage his or her money. The main responsibility of the payee is to use the fiinds to pay for the current and foreseeable needs of the beneficiary and to save any remaining funds for the beneficiary. A fee is collected by Options for performing this function. Because the ftinds are maintained and not owned by Options Foundation, Inc., the cash balance has been recorded as an asset on the financial statements with a corresponding liability of an equal amount.

4. Contracts Receivable

Receivables at years ended June 30, 2013 and 2012 are summarized below. 2013 2012

DHH Office of Mental Health $ 23,401 $ 36,536 Office of Community Development 66,008 27,521 Other 6.437 7.950

$ 95.846 $ 72.007 5. Allowance for doubtful accounts - contracts receivable

Uncollectible contracts receivable are charged directly to eamings when they are determined to be uncollectible. All accounts receivable are evaluated completely at the end of each fiscal year and no allowance is deemed necessary.

6. Compensated Absences

The Organization allows fiill-time employees to receive compensation for vacation and sick leave as workload allows. Compensated absences for vacation and sick pay have not been accrued since they cannot be reasonably estimated, but are expensed as incurred.

7. Leased Facilities

Facilities used by Options Foundation, Inc. for River Oaks were leased for $33,600 and $33,600 for the years ended June 30, 2013 and 2012, respectively, from Medical Management Options, Inc. The current lease is a month-to-month lease. During fiscal year ended June 30, 2012, the lease was converted to a donation and is reflected in revenue as a donation.

Opfions Foundation, Inc. entered into a one year lease on June 1, 2011 with C & B Investments for the administrative office located at 8540 Quarters Lake Road in Baton Rouge, Louisiana. The monthly rent is $3,000 per month. There is an automatic renewal clause in the lease. The lease was renewed in fiscal June 30, 2012 for $3,500 per month.

On December 28* 2010, Options Foundation entered into a one year lease for office/storage space located at 544 N. Foster in Baton Rouge, Louisiana. The rent is $1,250 per month. During fiscal June 30, 2012 this space was converted into a Retail Thrift Store. In fiscal year ended June 30* 2013 it was determined that the thrift store was not providing a positive contribution and the operation and the lease was terminated.

13



On March 12, 2012, Options entered into a commercial lease for a Bingo Hall located at 15450 George O'Neal Road, Suites 8&9 in Baton Rouge, Louisiana. The lease was for two years with an option for a two year renewal with a monthly rental of $4,300 per month. Upon acquiring the lease in March of 2012, prepaid rent of $35,000 was paid of which $30,100 remained prepaid at June 30, 2012. During the year ended June 30, 2013 $21,500 of rent was paid and $30,100 of prepaid rent was expensed for a total of $51,600. Future rent payments including the two year renewal period are as follows:

June 30, 2014 $ 51,600 June 30, 2015 51,600 June 30, 2016 46.700 Total $149.900

8. Related Partv Transactions

Options Foundation, Villa Care, Options of Ascension, and CHDO are under common control and have the same board of directors. The total amount owed to Options Foundation, Inc. from the related organizations amounted to $443,803 and $424,428 for the years ended June 30, 2013 and 2012, respecfively. Balances of receivables and payables are a result of working capital advances to and from related organizations. The amounts owed at June 30, 2013 are as follows:

Due from Villa Care Less Villa Care Reserve Due from Options of Ascension Due from CHDO Total Amounts due

$331,602 (34,150) 137,552

8.800 $ 443.803

9. Commitments and Contingencies

Revenue - Options Foundation, Inc. receives a portion of its revenues from federal and state govemment grants and contracts, many of which are subject to audit by the federal or state govemment. The ultimate determination of amounts received under these programs generally is based upon allowable costs reported to, and audited by, the govemment. Until such audits have been completed and final settlement reached, there exists a contingency to refiind any amount received in excess of allowable costs. Management is not aware of any pending audits or proposed adjustments, and no provisions for estimated retroactive adjustments have been made.

10. Pavroll taxes and related payables

Prior to fiscal years ending in 2011 and 2010, payroll was maintained by Option's personnel and there was a problem in that years later it was determined by the Intemal Revenue Service that the employee yearly eamings reports, forms W-2s, were not filed. As a result, significant penalties were assessed against Options Foundation, Inc. These penahies are recorded on these financial statements for the year ended June 30, 2011. Attempts were made to have the penalties waived. During fiscal year June 30, 2012, the Internal Revenue Service did waive penalties which totaled $ 67,642 and are recorded as revenue for the year ending June 30, 2012. The total amount owed to the Intemal Revenue Service for the penalfies amounted to $10,503 and $10,503 for the years ended June 30, 2013 and 2012, respectively.

In prior years the unemployment taxes for the Louisiana Workforce Commission were determined using a reimbursable account which is not the norm for most employers. As a result there is a large balance due for old taxes. As of January 1, 2011, Options has been allowed to pay taxes like most other employers in the state of Louisiana which should result in a much lower tax obligation. Efforts are also being made to reduce

14



or waive the old balance. The total amount owed to the Louisiana Workforce Commission for the unemployment taxes amounted to $129,689 and $129,806 for the years ended June 30, 2013 and 2012, respectively.

11. Notes Payable

Notespayableconsist of the following at June 30, 2013 and 2012: 2013 2012

Note dated September 14, 2000 with an original balance available

of $171,000, maturing April 1, 2021. The loan is a principal only (no interest) loan for a term of twenty years, payable in monthly installments of $712.50 beginning April 1, 2001. The loan is secured by a first mortgage on the subject property listed as 143 & 145 N. 24' Street and 2386 Convenfion St., Baton Rouge, LA. The source ofthe loan is Federal grant fiinds available under the Community Development Block Grant (CDBG) Program, as provided to the City of Baton Rouge-Parish of East Baton Rouge under grant agreements with the U.S. Department of Housing and Urban Development. The loan proceeds are restricted to property acquisition and rehabilitation construction costs. $ 67,938 $ 76,237 Less: current maturities (8.550) (8,550) Long-term debt, less current portion ' $ 59.688 $ 67.687 Note dated June 14, 2002 with an original balance available of $54,000, maturing November 1, 2020. The loan is a principal only (no interest) loan for a term of twenty years, payable in monthly installments of $250.00 beginning November 1, 2002. The loan is secured by a first mortgage on the subject property listed as 150 North 26* Street, Baton Rouge, LA. The source ofthe loan is Federal grant fiinds available under the Community Development Block Grant (CDBG) Program, as provided to the City of Baton Rouge, of East Baton Rouge under grant agreements with the U.S. Department of Housing and Urban Development. The loan proceeds are restricted to property acquisition and rehabilitation construction costs. As of June 30, 2010 $52,000 had been disbursed for the purchase of property. $ 19,427 $ 22,197 Less: current mafiirities (3,000) (3.000) Long-term debt, less current portion $ 16.197 $ 19.197

15


NOTES TO FINANCIAL STATEMENTS

JUNE 30. 2013 and 2012

11. Notes Payable (continued) 2013 2012

Note dated July 7, 2003 with an original balance available of $88,000, maturing July 15, 2023. Principal is first repayable in 60 equal installments of $656.20 each, commencing August 15, 2003. Starting August 15, 2008, principal is repayable in 179 equal Installments of $635.67 each. The final principal payment of $634.35 will be made on July 15, 2023. For the first sixty months, the interest rate on this note will be 6.5%. Thereafter, the interest rate is subject to change based on changes in an independent index, the Weekly Average Yield on U.S. Treasury Securities. The variable interest rate on this note can be no less than 6% and no higher than 14.5%. This interest rate at June 30, 2010 was 6%. The loan is secured by Collateral Mortgage Note dated July 7,2003. $ 65,346 $ 68,928 Less: current maturities (4.418) (4.162) Long-term debt, less current portion $ 60.928 $ 64.766 Note dated Febmary 15, 2008 with an original balance of $125,000, mahiring May 31, 2028. The loan is a principal only (no interest) loan for a term of twenty years, payable in monthly installments of $521.00 beginning May 31, 2008. The loan is secured by a first mortgage on the subject property listed as 2631 Convention Street, Baton Rouge, LA. The source ofthe loan is Federal grant fiinds available under the Community Development Block Grant (CDBG) Program, as provided to the City of Baton Rouge-Parish of East Baton Rouge under grant agreements with the U.S. Department of Housing and Urban Department. $ 92,672 $ 98,403 Less: current maturities (6.252) (6.252) Long-term debt, less current portion $ 86.420 $ 92.151

Note dated May 19, 2008 with an original balance of $55,000, maturing June 30, 2028. The loan is a principal only (no interest) loan for a term of twenty years, payable in monthly installments of $230.00 beginning June 30, 2008. The loan is secured by a first mortgage on the subject property listed as 2618 Convention Street, Baton Rouge, LA. The source ofthe loan is Federal grant fiinds available under the Community Development Block Grant (CDBG) Program, as provided to the City of Baton Rouge-Parish of East Baton Rouge under grant agreements with the U.S. Department ofHousing and Urban Development. $ 41,441 $ 43,489 Less: current maturities (2.760) (2.760) Long-term debt, less current portion $ 38.681 $ 40.729

16



Notes Payable (continued) 2013 2012

Note dated October 25, 2010 with a balance of $210,658 due in 60 monthly payments of $1,853.17 at 6.56 % interest with a balloon payment consisting ofthe remaining amount of principal and any accmed interest due, payable on October 25, 2015. The loan is secured by land, buildmgs and deposit accounts.

$ 187,567 $ 196,992 Less: current maturities (10.330) (9.676) Long-term debt, less current portion $ 177.237 $ 187.316

Note dated May 21, 2012 with an original balance of $100,000 at 7% interest payable on or before 24 months from the date issue.

$94,149 $100,748 Less: current Maturities (94.149) ( 6.599) Long-term debt, less current portion S : 94.149

Estimated principal maturities on long-term debt are as follows:

June 30,2014 $ 129,480 June 30, 2015 36,282 June 30, 2016 191,749 June 30, 2017 25,849 June 30, 2018 26.173

Thereafter $ 159.024

Options Foundation, Inc. has short term financing agreements for insurance with Imperial Credit Corporation with interest at 7 percent and a line of credit with Citizens Bank with a variable interest rate which was 5% as ofJune30, 2013.

12. Charitable Gaming

During 2008 Options Foundation, Inc. began conducting charitable gaming in the form of traditional and video bingo games. Louisiana law allows non-profit organization to partner with for profit organizations to conduct these activities with the proceeds going to the non-profit organization. Expenses for these activities include session rent, supplies and labor. There are separate cash accounts used for these purposes and a separate account used to fund the Progressive Bingo liability.

17



13. Uncertainties

As disclosed in note 8 Related Party Transactions, there are significant amounts owed to Options Foundation, Inc. from related affiliate non-profit organizations. These affiliated organizations are fiinded by government grants and contracts which only provide for certain support. As a result of the needs of residents in Villa Care the expenses are much greater than the amount which has been provided in the fiinding with the govemment agency. In order to maintain the facilities for the residents. Options Foundation has continued to provide additional fiinds. At this time management is attempting to recover additional funds from the agency to cover the shortages created over the years and to get the current amount increased to the amount needed to support the residents. An allowance has been made for the amount receivable from Villa Care. In November of 2013 a new contract was executed with the City of Baton Rouge for a HUD program grant in the amount of $500,000 for a period of twelve months from Febmary 1, 2013 through January 31, 2014. The grant includes Options Foundation and all ofthe related affiliate non-profit organizations. It is hoped that this will improve the chances for the ultimate collectability of the related party receivables. At this time, the ultimate collectability of these accounts is uncertain.

14. Restrictions on Net Assets

Grants and fiinds received by Options Foundation, Inc. are temporarily restricted in that the funds are generally program specific and to be spent in accordance with grant guidelines. All temporarily restricted fiinds were disbursed during the year.

15. Board of Directors' Compensation

The Board of Directors is a voluntary board; therefore, no compensation has been paid to any member for director's fees.

16. Retirement Plan

All employees are covered under the social security program. No other retirement plan is mamtained.

17. Advertising

The Organizafion expenses advertising expenses as incurred. The advertising expenses for 2013 were $3,735 and the advertising expense for 2012 were $266.

18. Functional Allocation of Expenses

The costs of providing various programs and activities have been summarized in the statements of activities. Accordingly, certain costs have been allocated among the programs and supporting services benefited. The Organization has determined that fiind-raising costs other than charitable gaming are not material.

19. Uncertain Tax Positions

The organization is subject to examination by various taxing authorities. Management has reviewed the Organization's activities and believes that no additional amounts or disclosures are needed, as the effect of any uncertain positions is not material to the financial statements. The tax retiims for the years 2013, 2012, 2011, and 2010 are open for examination by various taxing authorities.

18



20. Major Sources of Revenue

Most of the support Options Foundation receives is in the from of govemment contracts and grants.

Prior to fiscal year 2012, Options Foundation had a significant dependence on Medical Management Options, Inc. for support. Much ofthe support that Options Foundation received was in the form of advances which were recorded as liabilities. In fiscal 2010, significant liabilities to Medical Management Options, Inc. were forgiven and recognized as revenue. For the first part of 2011 Options Foundation received significant donations from Medical Management Options, Inc. An effort was made to reduce the dependence on support from Medical Management Options, Inc. Presented below is a breakdown ofthe major percentages of revenue sources for fiscal 2013 and 2012:

2013 2012 Govemment Contracts and Grants 42% 38% Donations - Medical Management Options, Inc. 3% 6% Charitable Gaming/Bingo 16% 16%

19

SUPPLEMENTAL INFORMATION

20

Ehricht & Associates, LLC CERTIFIED PUBLIC ACCOUNTANTS

Members _ u HO onH o ^ ^ ^ ^ American Institute of C.P.A.'s December 1/^, ZUlO ^-^ Louisiana society of C.P.A.'S

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

To the Board of Directors Options Foundation, Inc. Baton Rouge, Louisiana

We have audited, in accordance v\/ith 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 Options Foundation, Inc., which comprise the statements of financial position as of June 30, 2013 and 2012, 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 December 12, 2013.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered Options Foundation, Inc.'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 Options Foundation, Inc.'s internal control. Accordingly, we do not express an opinion on the effectiveness of Options Foundation, Inc.'s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies 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. However, material weaknesses may exist that have not been identified. We did identify certain deficiencies in internal control, described as 2013-001 in the accompanying schedule of findings and questioned costs that we consider to be significant deficiencies.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether Options Foundation, Inc.'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 instances of noncompliance or other matters that are required to be reported under Government Auditing Standards and which are described as item 2013-001 in the accompanying schedule of findings and questioned costs.

21

P.O. BOX 14214 • BATON ROUGE, LOUISIANA 70898 • FAX (225) 387-0358 • (225) 387-0357

Options Foundation, Inc.'s Response to Findings

Options Foundation, Inc.'s response to the findings identified in our audit is described in the accompanying schedule of findings and questioned costs. Options Foundation, Inc.'s response was not subjected to the auditing procedures applied in the audit ofthe 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 the entity'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 entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

< S n ^ ^ ^ m^<?e>ct/'' >

Ehricht & Associates. LLC

Baton Rouge, Louisiana December 12, 2013

OPTIONS FOUNDATION. INC. SCHEDULE OF FINDINGS AND OUESTIONED COSTS

FOR THE YEAR ENDED JUNE 30, 2013

Summarv of Audit Results

a. The auditors' report expressed an unqualified opinion on the financial statements of Options Foundation, inc., for the year ended June 30, 2013.

b. Report on Internal Control and Compliance Material to tlie Financial Statements Intemal Control

Material Weaknesses _ Yes JC No Significant Deficiencies 2LYes _ No

Compliance Compliance Material to Financial Statements Yes j c_ No

Findings - Internal Control

Finding 2013-001

Observation As is common in small organizations, management has chosen to engage the auditors to propose certain year-end adjusting entries and to prepare the organization's annual financial statements. This condition is intentional by management based upon the Organization's financial complexity, along with the cost effectiveness of acquiring the ability to prepare fmancial statements in accordance with generally accepted accounting principles. Consistent with this decision, intemal controls over the preparation of year-end adjusting entries and annual financial statements, complete with notes, in accordance with generally accepted accounting principles have not been established. Under generally accepted auditing standards, this condition represents a significant deficiency in intemal controls.

Recently issued professional auditing standards require that we report the above condition as a control deficiency. The standards do not provide exceptions to reporting deficiencies that are adequately mitigated with non- attest services rendered by the auditors or deficiencies for which the remedy would be cost or otherwise impractical.

Criteria Proper intemal controls under professional auditing standards require management to prepare the Organization's annual financial statements.

Effect This finding has no effect on the financial statements.

Cause It is not cost effective for the Organization to cure this control deficiency.

Recommendations: As mentioned above, whether or not it would be cost effective to cure a control deficiency is not a factor in applying the reporting requirements. Because pmdent management requires that the potential benefit from an intemal control must exceed its cost, it may not be practical to correct all the deficiencies that an auditor reports under professional auditing standards. In this case, we do not believe that curing the significant deficiency described above would be cost effective or practical and, accordingly, do not believe any corrective action is necessary.

Management's corrective action plan: Management agrees with this finding and the recommendation.

Compliance Findings There were no compliance findings.

Questioned Costs There are no questioned costs for the year ended June 30,2013.

23

OPTIONS FOUNDATION. INC. SUMMARY SCHEDULE OF PRIOR YEAR AUDIT FINDINGS

FOR THE YEAR ENDED JUNE 30, 2012

Summarv of Prior Audit Findings

Finding 2012-1

Observation As is common in small organizations, management has chosen to engage the auditors to propose certain year-end adjusting entries and to prepare the organization's annual financial statements. This condition is intentional by management based upon the Organization's financial complexity, along with the cost effectiveness of acquiring the ability to prepare financial statements in accordance with generally accepted accounting principles. Consistent with this decision, intemal controls over the preparation of year-end adjusting entries and annual financial statements, complete with notes, in accordance with generally accepted accounting principles have not been established. Under generally accepted auditing standards, this condition represents a significant deficiency in intemal controls.

Recently issued professional auditing standards require that we report the above condition as a control deficiency. The standards do not provide exceptions to reporting deficiencies that are adequately mitigated with non- attest services rendered by the auditors or deficiencies for which the remedy would be cost or otherwise impractical.

Status As stated in finding 2012-1, Options Foundation, Inc. has concluded because prudent management requires that the potential benefit from an intemal control must not exceed the cost, it is not practical to correct all ofthe deficiencies that an auditor reports under professional standards and no action has been taken as recommended by the auditors.

24

options foundation inc. - app.lla.state.la.us€¦ · american institute of c.p.a.'...

Documents