options, inc. and affiliates (a nonprofit organization) combined financial statements...

OPTIONS, INC. AND AFFILIATES (A NONPROFIT ORGANIZATION)

COMBINED FINANCIAL STATEMENTS

YEARS ENDED JUNE 30, 2014 AND 2013

OPTIONS, INC. AND AFFILIATES

TABLE OF CONTENTS

JUNE 30, 2014 AND 2013

Page #

INDEPENDENT AUDITOR'S REPORT 1 -2

EINANCIAL STATEMENTS Combined Statements of Financial Position 3 Combined Statements of Activities 4-5 Combined Statements of Functional Expenses 6-7 Combined Statements of Cash Flows 8 Combined Notes to Financial Statements 9-19

SUPPLEMENTARY INEORMATION Independent Auditor's Report on Additional Information 20 Combining Statement of Financial Position 21-22 Combining Statement of Activities 23

GOVERNMENT AUDITING STANDARDS COMPLIANCE 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 24-25

Schedule of Findings and Responses 26

REPORTS BY MANAGEMENT Schedule of Prior Year Findings and Responses 27 Management's Corrective Action Plan 28

"I""""""""™""""""" JOSEPH V. FRANKS II, C.P.A.

BERNARD 8c FRANKS A CORPORATION OF CERTIFIED PUBLIC ACCOUNTANTS NICHOLASF.CHETTA,C.P.A.

NICHOLAS W. LAFRANZ III, C.P.A.

INDEPENDENT AUDITOR'S REPORT JAMES L. WHITE, C.P.A.

To the Board of Directors Options, Inc. and Affiliates Hammond, Louisiana

We have audited the accompanying combined financial statements of Options, Inc. (a nonprofit organization), and its affiliates which comprise the combined statement of fmancial position as of June 30, 2014 and 2013, and the related combined statements of activities, functional expenses, and cash flows for the years then ended, and the related notes to the combined financial statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these combined fmancial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of hitemal control relevant to the preparation and fair presentation of combined fmancial 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 fmancial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. 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 combined financial statements. The procedures selected depend on the auditor's judgment, hicluding the assessment of the risks of material misstatement of the fmancial 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 combined 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 accoimthig policies used and the reasonableness of significant accounting estimates made by management, as well as evaluathig the overall presentation of the combined fmancial statements.

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

-1-MEMBERS: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS; SOCIETY OF LOUISIANA CERTIFIED PUBLIC ACCOUNTANTS

4141 VETERANS BLVD., SUITE 313, METAIRIE, LA 70002 | PHONE: (504) 885-0170 FAX: (504) 456-9531

Opinion

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

Metairie, Louisiana December 22, 2014

J) a

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COMBINED STATEMENTS OF FINANCIAL POSITION JUNE 30, 2014 AND 2013

2014 ASSETS

2013

CURRENT ASSETS Cash and cash equivalents $ 1,343,885 $ 1,213,073 Accounts receivable

Government contracts 765,653 674,762 Other 59,138 60,721

Unconditional promises to give 14,028 19,000 Inventory 8,477 12,328 Accrued interest 252 378 Investments

Certificates of deposit 79,054 81,865 Government securities 501,289 491,258

Prepaid expenses 115,379 57,741 Total current assets $ 2,887,155 $ 2,611,126

RESTRICTED ASSETS Cash restricted for acquisition of property

and equipment $ - $ 34,900 Cash restricted for endowment 13,526 13,526

Total restricted cash $ 13,526 $ 48,426

LONG-TERM INVESTMENTS $ 4,522 $ 1,000

LAND, PROPERTY AND EQUIPMENT $ 5,420,210 $ 5,242,771 Less accumulated depreciation and amortization (1,561,720) (1,387,393)

$ 3,858,490 $ 3,855,378

Total assets $ 6,763,693 $ 6,515,930

2014 2013

LIABILITIES AND NET ASSETS

CURRENT LIABILITIES Accounts payable Other payables Accrued salaries and payroll taxes Current portion of notes payable

$ 86,493 21,066

427,648 25,208

$ 21,119 13,982

395,563

Total current liabilities $ 560,415 $ 430,664

LONG TERM LIABILITIES Notes payable $ 77,950 $

$ 77,950 $ -

Total Liabilities $ 638,365 $ 430,664

NET ASSETS Unrestricted Temporarily restricted Permanently restricted

$ 6,017,774 94,028 13,526

$ 6,017,840 53,900 13,526

Total net assets $ 6,125,328 $ 6,085,266

Total liabilities and net assets $ 6,763,693 $ 6,515,930

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COMBINED STATEMENT OF ACTIVITIES JUNE 30, 2014

Temporarily Permanently Unrestricted Restricted Restricted Total

REVENUES, GAINS AND OTHER SUPPORT Revenues and gains

Contributions United Way Fund-raising income Other

Federal contracts State contracts Vocational rehabilitation Vocational contracts

Less; Cost of services

130,891 154,608

6,418,286 50,651 23,178

14,028 80,000

$689,037

14,028 210,891 154,608

6,418,286 50,651 23,178

Vocational contracts gross profit Interest income Gain on sale of assets Other income Net assets released from restrictions

Expiration of time restriction-United Way Services Expiration of use restriction-Other

159,209 12,482 3,110

496,780

19,000 34,900

(19,000) (34,900)

-

159,209 12,482 3,110

496,780

Total revenues, gains, and other support : $ 7,503,095 $ 40,128 $ $ 7,543,223

EXPENSES Program Services

Residential services : Vocational services Individualized services

Support Services Management and general Fund-raising

$ 1,249,910 $ 1,879,699 3,027,088

1,331,518 14,946

- $ - $ 1,249,910 1,879,699 3,027,088

1,331,518 14,946

Total expenses : $ 7,503,161 $ - $ $ 7,503,161

Change in net assets : $ (66) $ 40,128 $ - $ 40,062

Net assets at beginning of year 6,017,840 53,900 13,526 6,085,266

Net assets at end of year : $ 6,017,774 $ 94,028 $ 13,526 $ 6,125,328

See Notes to Financial Statements.

-4-


COMBINED STATEMENT OF ACTIVITIES JUNE 30, 2013

Temporarily Permanently Unrestrieted Restricted Restricted Total


Contributions United Way $ ; 2,000 3 ; 19,000 $ - $ 21,000 Fund-raising income 171,604 - - 171,604 Grants 108,998 - - 108,998 Other 140,792 34,900 - 175,692

Federal contracts 7,033,232 - - 7,033,232 State contracts 44,594 - - 44,594 Vocational rehabilitation 10,799 - - 10,799 Vocational contracts $648,219

Less: Cost of services (542,626) Vocational contracts gross profit 105,593 - - 105,593

Interest income 12,104 - - 12,104 Gain on sale of asset 3,450 - - 3,450 Other income 469,444 - - 469,444 Net assets released from restrictions

Expiration of time restriction-United Way Services 23,940 (23,940) - -Expiration of time restriction-Other 22,400 (22,400) - -

Total revenues, gains, and other support 3 i 8,148,950 3 ) 7,560 $ $ 8,156,510


Residential services 3 i 1,216,621 3 i - $ $ 1,216,621 Vocational services 1,841,458 - - 1,841,458 Individualized services 3,121,570 - - 3,121,570

Support Services Management and general 1,288,616 - - 1,288,616 Fund-raising 15,123 - - 15,123

Total expenses 3 > 7,483,388 3 S - 3 $ 7,483,388

Change in net assets 3 1 665,562 3 S 7,560 3 $ 673,122

Net assets at beginning of year 5,352,278 46,340 13,526 5,412,144

Net assets at end of year 3 > 6,017,840 3 S 53,900 3 ; 13,526 $ 6,085,266

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OPTIONS, INC. AND AFFILIATES COMBINED STATEMENT OF FUNCTIONAL EXPENSES

FOR THE YEAR ENDED JUNE 30, 2014

Program Services Supporting Services Residential Vocational Individualized Management Fund-

Services Services Services and General raising Total Salaries and related expenses:

Salaries $ 702,573 $ 1,153,460 $ 2,519,814 $ 646,726 $ $ 5,022,573 Employee benefits & taxes 83,744 176,604 293,182 187,763 - 741,293 Workers' compensation 18,239 30,753 59,676 460 - 109,128

$ 804,556 $ 1,360,817 $ 2,872,672 $ 834,949 $ $ 5,872,994

Bank fees $ 494 $ S 108 $ 5,011 $ 1,748 S 7,361 Cost of sales - 515,989 - 13,839 - 529,828 Bad Debt - - - 7,213 - 7,213 Bed tax 95,965 - - - - 95,965 Crisis intervention - - - 37,321 - 37,321 Depreciation 60,975 178,235 11,750 44,721 - 295,681 Dues, licenses, and subscriptions 2,945 149 190 12,034 - 15,318 Employee compliance - - - 27,155 - 27,155 Food and supplies 47,738 1,993 - 6,407 - 56,138 Fund raising - - - - 13,198 13,198 Housekeeping supplies 10,202 9,645 3,915 - - 23,762 Interest 1,860 229 - - - 2,089 Insurance

Liability 4,664 8,098 - 59,974 - 72,736 Motor vehicle 17,155 66,393 4,604 2,820 - 90,972 Other property 17,578 11,832 - 13,022 - 42,432

Job development - - - .1,921 - 1,921 Medical consultants 59,355 - - 2,020 - 61,375 Medical supplies 12,042 221 19 2,062 - 14,344 Miscellaneous 4 2,093 - 3,571 - 5,668 Motor vehicle expenses 20,400 136,632 16,817 3,080 - 176,929 Non capital equipment 1,963 - - 20,301 - 22,264 Office supplies 2,675 16,405 10,036 29,149 - 58,265 Other resident expenses 16,715 125 640 263 - 17,743 Other supplies - 1,154 - 279 - 1,433 Orientation - - - 11,319 - 11,319 Postage - - - 9,339 - 9,339 Professional services - - 1,600 106,008 - 107,608 Rent - 28,696 - - - 28,696 Repairs and maintenance 19,488 6,944 - 19,683 - 46,115 Telephone 7,963 15,250 9,521 16,595 - 49,329 Travel and transportation 3,305 10,488 94,335 4,234 - 112,362 Seminars and training 1,300 5,322 881 15,397 - 22,900 Utilities 40,568 18,978 - 35,670 - 95,216

$ 445,354 $ 1,034,871 $ 154,416 $ 510,408 $ 14,946 S 2,159,995 Less expenses (cost) deducted from

revenues on statement of activities - (515,989) - (13,839) - (529,828) Total expenses, net of cost of sales $ 1,249,910 $ 1,879,699 $ 3,027,088 $ 1,331,518 $ 14,946 $ 7,503,161

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OPTIONS, INC. AND AFFILIATES COMBINED STATEMENT OF FUNCTIONAL EXPENSES


Program Services Supporting Services Residential Vocational Individualized Management Fund-

Services Services Services and General raising Total Salaries and related expenses:

Salaries $ 687,581 $ 1,126,250 $ 2,578,173 $ 658,725 $ $ 5,050,729 Employee benefits & taxes 82,372 177,506 304,729 191,999 - 756,606 Workers' compensation 20,679 36,889 74,696 1,935 - 134,199

$ 790,632 $ 1,340,645 $ 2,957,598 $ 852,659 $ $ 5,941,534

Bank fees $ 503 $ $ $ 4,749 $ 1,026 $ 6,278 Cost of sales - 524,709 - 17,917 - 542,626 Bed tax 125,268 - - - - 125,268 Crisis intervention - - - 27,272 - 27,272 Depreciation 37,264 170,106 16,099 45,423 - 268,892 Dues, licenses, and subscriptions 2,495 - 190 11,282 - 13,967 Employee compliance - - - 16,560 - 16,560 Food and supplies 58,113 2,503 - 5,836 - 66,452 Fund raising - - - - 14,097 14,097 Flousekeeping supplies 14,798 4,766 3,212 - - 22,776 Insurance -

Liability 4,515 8,122 - 53,053 - 65,690 Motor vehicle 12,374 47,431 6,860 2,208 - 68,873 Other property 17,784 12,483 - 12,836 - 43,103

Job development - - - 2,165 - 2,165 Medical consultants 26,484 - - - - 26,484 Medical supplies 10,609 240 - 30 - 10,879 Miscellaneous (6) 8,693 606 4,544 - 13,837 Motor vehicle expenses 31,638 132,903 20,210 3,514 - 188,265 Non capital equipment 2,477 200 1,450 13,287 - 17,414 Office supplies 4,579 22,973 7,858 35,616 - 71,026 Other resident expenses 7,224 - 540 224 - 7,988 Other supplies - 1,383 - 10 - 1,393 Orientation - - - 12,876 - 12,876 Postage - - - 12,307 - 12,307 Professional services - - 2,037 87,560 - 89,597 Rent - 31,960 1,050.00 - - 33,010 Repairs and maintenance 22,726 13,156 - 25,439 - 61,321 Telephone 8,878 13,395 10,559 17,964 - 50,796 Travel and transportation 3,564 7,890 92,681 3,884 - 108,019 Seminars and training 9 607 620 10,468 - 11,704 Utilities 34,693 22,002 - 26,850 - 83,545

$ 425,989 $ 1,025,522 $ 163,972 $ 453,874 $ 15,123 $ 2,084,480 Less expenses (cost) deducted from

revenues on statement of activities ^ Total expenses, net of cost of sales $ 1,216,621

(524,709) ^ (17,917) ^ 1,841,458 $ 3,121,570 $ 1,288,616 $ 15,123

(542,626) 7,483,388

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COMBINED STATEMENTS OF CASH FLOWS JUNE 30, 2014 AND 2013

2014 2013 CASH FLOWS FROM OPERATING ACTIVITIES

Increase (decrease) in net assets Adjustments to reconcile change in net assets to net cash provided by operating activities;

Depreciation (Gain) loss on sale of vehicles Unrealized loss on investments (Increase) decrease in operating assets

Accounts receivable Promises to give Prepaid expenses Inventory

Increase (decrease) in operating liabilities: Accounts payable Other payables Accrued salaries and payroll taxes

Net cash provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES Purchases of investments Purchases of certificates of deposit Accrued interest Change in restricted cash and cash equivalents Proceeds from the sale of assets Payments for land, property and equipment

Net cash used in investment activities

CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long term debt Principal payments

Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

Beginning cash and cash equivalents

Ending cash and cash equivalents

$ 40,062 $ 673,122

174,327 268,892 (3,110) (3,450) 1,224 17,549

(89,308) 154,326 4,972 4,940

(57,638) (1,095) 3,851 (8,288)

65,374 (15,339) 7,084 2,706

32,085 (60,939) $ 178,923 $ 1,032,424

$ (11,966) $ (13,047) - (1,885)

126 -34,900 (12,500) 3,110 3,450

(177,439) (887,021) $ (151,269) $ (911,003)

$ 117,056 $ (13,898) -

$ 103,158 $

$ 130,812 $ 121,421

1,213,073 1,091,652

$ 1,343,885 $ 1,213,073

See Notes to Financial Statements.

OPTIONS, INC. AND AFFILIATES COMBINED NOTES TO THE FINANCIAL STATEMENTS

JUNE 30, 2014 AND 2013

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of the Organization

Options, Inc. is a private nonprofit corporation which provides quality services to the needs of people with disabilities and their families. Options, Inc. has provided quality services since 1973 in the Hammond, Louisiana area. These services include the following:

Residential Services Residential services provides a home to six individuals with 24-hour, awake staff who provide training and support. Each home is located in a residential setting. The purpose is to provide individualized training, support, and a warm and nurturing home-like living arrangement.

Vocational Services The purpose of vocational services is to allow persons with disabilities to develop work skills and to offer a variety of employment options, which help individuals, maximize their potential. Options, Inc. staff works with each individual to find a "job match" based on an interest and skills inventory. We assess the needs and want of the individual, as well as the needs and wants of a business and match those needs to ensure the right fit.

Individualized Services Individualized services include the following types of services:

Children's Choice The purpose of this service is to provide supplemental support services to children with disabilities, from birth to 18 years of age, who currently live at home with their families or will leave an institutional setting to return home. Services provided include: family support, crisis support, family training, diapers, home ramps, bathroom modifications, general adaptations and vehicle lifts.

Independent Living The purpose of the Independent Living Program is to provide the supports needed for eaeh individual with a disability to live in the community as independently as possible. The Independent Living Program offers individuals personalized living choices based on their needs and wants.

Personal Care The purpose of the Personal Care Program is to help meet the needs of people with disabilities who live in their own home or apartment by providing assistance with daily living. We provide assistance to the primary caregiver as needed. Services may be provided to people of all ages with a disability on either an emergency or planned basis in the person's home.

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JUNE 30, 2014 AND 2013

NOTE 1. SUMMARY OE SIGNIFICANT ACCOUNTING POLICIES (continued)

Nature of the Organization (continued)

C'est Tres Bon!, Inc. which is an affiliate of Options, Inc. is a nonprofit corporation organized under the State of Louisiana. The affiliate was formed to design, develop, construct, own and manage housing and related facilities in Tangipahoa Parish, Louisiana and surrounding communities to serve persons with disabilities.

Foundation to Ensure the Future of Options, Inc., also an affiliate of Options, Inc., is a nonprofit corporation organized under the State of Louisiana. The affiliate was formed to generally support Options, Inc. and its clients by seeking and soliciting support, gifts and donations from individuals, corporations (businesses), and charitable foundations. The affiliate will invest the funds received and distribute those funds for the support of Options, Inc.

Basis of Presentation

The combined financial statement presentation follows the recommendations of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) topic 958, Not-for-Profit Entities. 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 accompanying combined financial statements include the accounts of Options, Inc. and its affiliated organizations, C'est Tres Bon!, Inc. and Foundation to Ensure the Future of Options, Inc. Ail significant inter-organization transactions and balances have been eliminated in consolidation.

Basis of Accounting

The combined financial statements of Options, Inc. and Affiliates have been prepared on the accrual basis of accounting and, accordingly, reflect all significant receivables, payables, and other liabilities.

Accounts Receivable

Accounts receivables are stated at the amount management expect to collect from outstanding balances. Management provides for probable uncollectible amounts through a provision for bad debt expense and an adjustment to a valuation allowance based on it's assessment of the current status of individual accounts. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable. The allowance for doubtful accounts at June 30, 2014 and 2013 was $0.

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JUNE 30, 2014 AND 2013

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Organization considers all highly liquid investments with an initial maturity of three months or less to be cash equivalents.

Concentrations

The Organization's primary source of revenue is Medicaid (Title XIX) revenue. For the fiscal year ended June 30, 2014 and 2013, $6,418,286 and $6,182,461, or 85% and 76% of the Organization's total gross revenue was from Title XIX. Additionally, $222,662 and $217,234 or 3% and 3% of the Organization's total gross revenue was from Office for Citizens with Developmental Disabilities and $689,037 and $648,219 8% and 9% of the total gross revenue was from small business contracts. The remaining $213,238 and $1,106,896 or 4% and 13% of the total gross revenue was from various activities, including client cost of care, private pay fees and fundraising activities.

Donated Services

Contributions of donated non-cash assets are recorded at their fair market value in the period received. Contribution of donated services that create or enhance non-financial assets or that requires specialized skills are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation, are recorded at their fair market values in the period received.

Donated Property and Equipment

Donations of property and equipment are recorded as contributions at their estimated fair value at the date of donation. Such donations are reported as increases in unrestricted net assets unless the donor has restricted the donated asset to a specific purpose. Assets donated with explicit restrictions regarding their use and contributions of cash that must be used to acquire property and equipment are reported as restricted contributions. Absent donor stipulations regarding how long those donated assets must be maintained, the Organization reports expirations of donor restrictions when the donated or acquired assets are plaeed in service as instructed by the donor. The Organization reclassifies temporarily restricted net assets to unrestricted net assets at that time.

Rstimates

Management uses estimated and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenue and expenses. Aetual results could differ from those estimates in the near term.

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JUNE 30, 2014 AND 2013


Expense Allocation

The costs of providing various programs and other activities have been summarized on a functional basis in the Statement of Activities and in the Statement of Functional Expenses. Accordingly, certain costs have been allocated among the programs and supporting services benefited.

Inventory

Inventory is carried at cost and consists of janitorial and office supplies.

Income Tax Status

The Organization is a nonprofit organization and exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code and classified by the Internal Revenue Code as other than a private foundation. The Organization believes that it has appropriate support for any tax positions taken and, as such, does not have any uncertain tax positions that are material to financial statements. The Organization's Federal Exempt Information Returns (Form 990) for 2011, 2012 and 2013 are subject to examination by the IRS, generally for three years after they were filed.

Fair Value

Accounting Standard Codification (ASC) Fair Value Measurements establishes a framework for measuring fair value in accordance with Generally Accepted Accounting Principles (GAAP) and disclosures about the fair value measurements. The valuation hierarchy is based upon the reliability of inputs to the valuation of an asset or liability on the measurement date. The three levels of the fair value hierarchy are described below:

LEVEL 1 Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets.

LEVEL 2 Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

LEVEL 3 Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

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JUNE 30, 2014 AND 2013


A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Assets and liabilities measured at fair value are based on one or more of three valuation techniques noted in the standard. The three valuation techniques are as follows:

• Market approach - Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities;

• Cost approach - Amount that would be required to replace the service capacity of an asset (i.e. replacement cost); and

• Income approach - Techniques to convert future amounts to a single present amount based on market expectations (including present value techniques, option-pricing models, and lattice models).

Promises to Give

Unconditional promises to give, if applicable, less an allowance for uncollectible amounts is recognized as revenue in the period received and as assets, decreases of liabilities, or expenses depending on the form of the benefits received. Conditional promises to give are recognized when the conditions on which they depend are substantially met and the promises become unconditional.

Investments

The Organization holds investments in certificates of deposits and government securities and carries such investments at current appraised values (Level 2 measurements). Investment income is reported as increases in unrestricted net assets in the reporting period in which the income and gains are recognized.

Property and Equipment

All acquisitions of property and equipment in excess of $2,000 and all expenditures for repairs, maintenance, renewals, and betterments that materially prolong the useful lives of assets are capitalized. Property and equipment are carried at cost or, if donated, at the approximate fair value at the date of donation. Depreciation is computed using the straight-line method over the useful life of the assets. State funding sources may maintain an 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.

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OPTIONS, INC. AND AFFILIATES COMBINED NOTES TO THE EINANCIAL STATEMENTS

JUNE 30, 2014 AND 2013

NOTE I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Support and Revenue

Options, Inc. received grant and contract support primarily from the State Department of Health and Hospitals, Office for Citizens with Developmental Disabilities, and Louisiana Rehabilitation Services. Support received from those grants and contracts is recognized when it is earned. The Organization also received client fees and Medicaid income for billable client services. Support, fees and income received from these sources is recognized when it is earned.

NOTE 2. CASH AND CASH EQUIVALENTS

Options, Inc. maintains several bank accounts at various banks. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (FDIC) for amounts up to $250,000. Cash exceeded FDIC limits at June 30, 2014 and 2013 by $890,633 and $854,758, respectively. It is the opinion of management that the solvency of the referenced financial institution is not of particular concern at this time.

NOTE 3. INVESTMENTS

For the years ended June 30, 2014 and 2013, the Organization had investments as follows:

Certificates of deposit held by institutions: 2014 2013 Yields .65% per annum, due October 1, 2014 Yields .80% per annum, due March 26, 2017 Yields .45% per annum, due July 17, 2015

Government securities Total investments

$ 79,054 $ 78,426 3,522 3,439 1,000 1,000

$ 85,590 $ 84,878 501,289 491,258

$ 586,879 $ 576,136

A summary of return on investments consists of the following for the years ended June 30, 2014 and 2013:

2014 2013 Government securities

Unrealized loss $ (1,224) $ i (17,549) Interest 11,966 12,104

Total return on investment $ 10,742 $ ; (5,445)

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NOTE 4.


JUNE 30, 2014 AND 2013

FAIR VALUE

The following tables set forth by level, within the fair value hierarchy, the Organization's investment assets at fair value.

For the year ended June 30, 2014:

Based On Quoted Prices Other

Total Assets In Active Observable Unobservable Measured At Markets

Description Certificates of deposit Government Securities:

Franklin Adj US Gov Securities Fd A Franklin US Government Securities A

Total $

$ 85,590 $

247,864 253,425 586,879 $

Inputs Fair Value (Level 1) (Level 2)

Inputs (Level 3)

$ 85,590 $

247,864 253,425

1586,879 _$_

For the year ended June 30, 2013:

Description Certificates of deposit Government Securities:

Franklin Adj US Gov Securities Fd A Franklin US Government Securities A

Total

Based On

Total Assets Measured At

Fair Value

Quoted Prices Other In Active Markets (Level I)

$ 82,865 $

247,204 244,054

$ 574,123 $

Observable Unobservable Inputs Inputs

(Level 2) (Level 3) $ 82,865 $

247,204 244,054

$ 574,123 $

Interest income fiom all sources totaled $12,482 and $12,104 for the years ended June 30, 2014 and 2013, respectively.

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NOTE 5.


JUNE 30, 2014 AND 2013

UNCONDITIONAL PROMISE TO GIVE

At June 30, 2014 and 2013, the Organization received unconditional promises to give. The unconditional promise to give is receivable in the next fiscal year. All amounts are deemed collectible by management. The amounts due consist of the following:

2014 2013

United Way allocation for next year, general allocation $ 14,028

Vocational program support 80,000 Less: Allowance for uncollectible amouni

NOTE 6. PROPERTY AND EQUIPMENT

$ 19,000

$ 94,028 $ 19,000

Property and equipment at June 30, 2014 and 2013 consisted of the following:

2014 2013 Land $ 635,474 $ 635,474 Buildings & improvements 2,765,551 2,765,551 Furniture & fixtures 139,736 187,277 Software 48,101 48,101 Vehicles 1,073,131 979,711 Construction in progress 758,217 626,657

$ 5,420,210 $ 5,242,771 Less: Accumulated depreciation (1,561,720) (1,387,393)

$ 3,858,490 $ 3,855,378

Depreciation expense totaled $295,681 and $268,892 for the years ended June 30, 2014 and 2013, respectively.

NOTE 7. LEASES

Options, Inc. has three leases that are cancelable with one month's notice by either party. The Organization also has a fourth lease with a lease term from of April 1, 2012 to December 31,2013. This lease requires rental payments of $ 1,400 a month from January to December 31, 2013 and $1,600 a month from January 1, 2014 to December 31, 2015. For the years ending June 30, 2014 and 2013 the total lease expense was $28,696 and $33,010, respectively.

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JUNE 30, 2014 AND 2013

NOTE 7. LEASES (continued)

Minimum future rental payments due as of June 30, 2014 are as follows:

Year Ended Minimum June 30. 2014 Rental Payment

2015 $ 19,200 2016 9.600

Total $ 28.800

NOTE 8. ACCRUED LEAVE

Options, Inc.'s employees can earn paid vacation after successful completion of six months initial period of employment.

Vacation and leave accrue at various rates depending upon length of service and hours worked per month, as follows:

Employee Classification Accrual Rate 40 hour employees 6.67 to 14 hours per month up to a

maximum of 120 hours 35-39 hour employees 5.8 to 12.25 hours per month up to a

maximum of 120 hours

Accrued leave recorded at June 30, 2014 and 2013 was $72,095 and $64,666, respectively.

NOTE 9. CAFETERIA PLAN

The Organization has a "Section 125" employee benefits plan, which is also referred to as a "Cafeteria" plan. Employer contributions into this plan are based on length of service. A new employee becomes eligible to participate in the plan after 90 days. Employees can use the employer contribution for term life insurance, health insurance, dependent care and medical expenses.

NOTE 10. LINE OF CREDIT

The Organization has a $250,000 line of credit bearing interest at 4.75% on any outstanding balances at June 30, 2014, and is secured by all present and future deposit accounts the Organization has with the lender. As of June 30, 2014 and 2013, $250,000 is available. There was no interest expense for the years ended June 30, 2014 and 2013.

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OPTIONS, INC. AND AFFILIATES COMBINED NOTES TO THE EINANCIAL STATEMENTS

JUNE 30, 2014 AND 2013

NOTE 11. NOTES PAYABLE

A summary of notes payable as of June 30, 2014, is as follows:

2.9% note payable to Whitney Bank, payable $791 per month, principal and interest. The loan is collateralized by one of the Organization's vehicles. $ 42,713

2.9% note payable to Whitney Bank, payable $1,310 per month, principal and interest. The loan is collateralized by one of the Organization's vehicles.

Less: current portion

60.445 $ 103,158

25.208 Total long term liabilities $ 77.950

Maturities of long term debt for the next five years are as follows:

Year Ending June 30

2016 2017 2018

Current portion

Amount $ 25,208

22,786 4,748

25,208 $ 77,950

NOTE 12. TEMPORARILY RESTRICTED NET ASSETS

At June 30, 2014 and 2013, Options, Inc. had $94,026 and $53,900 respectively, in temporarily restricted net assets. Temporarily restricted net assets are available for the following purposes or periods:

2014 United Way funding for next year Vocational program support

2013 $ 14,028 $ 19,000

80,000 34,900 $ 94,028 $ 53,900

NOTE 13. PERMANENTLY RESTRICTED NET ASSETS

The endowment fund is a permanently restricted investment fund from the donor's restrictions that only the interest from the investment may be used for operations of Options, Inc. At June 30, 2014 and 2013, the restricted balance in this fund was $13,526.

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JUNE 30, 2014 AND 2013

NOTE 11. NOTES PAYABLE

A summary of notes payable as of June 30, 2014, is as follows:

2.9% note payable to Whitney Bank, payable $791 per month, principal and interest. The loan is collateralized by one of the Organization's vehicles.

2.9% note payable to Whitney Bank, payable $1,310 per month, principal and interest. The loan is collateralized by one of the Organization's vehicles.

Less: current portion

$ 42,713

60.445 $ 103,158

25.208 Total long term liabilities $ 77.950

Maturities of long term debt for the next five years are as follows:

Year Ending June 30

2016 2017 2018

Girrent portion

Amount $ 25,208

22,786 4,748

25,208 $ 77,950

NOTE 12. TEMPORARILY RESTRICTED NET ASSETS

At June 30, 2014 and 2013, Options, Inc. had $94,026 and $53,900 respectively, in temporarily restricted net assets. Temporarily restricted net assets are available for the following purposes or periods:

2014 United Way funding for next year Vocational program support

2013 $ 14,028 $ 19,000

80,000 34,900 $ 94,028 $ 53,900

NOTE 13. PERMANENTLY RESTRICTED NET ASSETS

The endowment fund is a permanently restricted investment fund from the donor's restrictions that only the interest from the investment may be used for operations of Options, Inc. At June 30, 2014 and 2013, the restricted balance in this fund was $13,526.

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JUNE 30, 2014 AND 2013

NOTE 14. PENSION PLAN

Employees of the Organization may participate in a 403(b) savings plan, whereby the employees may elect to make contributions pursuant to a salary reduction agreement upon meeting age and length-of-service requirements. Employees may elect to defer a portion of their aimual salary subject to Internal Revenue Service limits. The Organization matched up to 2% of the employees' annual salary. Employer contributions for the years ended June 30, 2014 and 2013 was $15,165 and $17,213, respectively.

NOTE 15. COMPENSATION

The Board of Directors serves Options, Inc. and Affiliates without compensation.

NOTE 16. SUBSEQUENT EVENTS

Subsequent events were evaluated through December 22, 2014, which is the date the financial statements were available to be issued.

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SUPPLEMENTARY INFORMATION

JOSEPH V. FRANKS II, C.P.A.

BERNARD 8c FRANKS A CORPORATION OF CERTIFIED PUBLIC ACCOUNTANTS NICHOLAS F. CHETTA, C.P.A.


JAMES L. WHITE, C.P.A.

INDEPENDENT AUDITOR'S REPORT ON ADDITIONAL INFORMATION

To the Board of Directors Option's, Inc. and Affiliates Hammond, Louisiana

We have audited the combined financial statements of Options, Inc. and affiliates as of and for the year ended June 30, 2014, and have issued our report thereon dated December 22, 2014, which contained an unmodified opinion on those combined financial statements. Our audit was performed for the purpose of forming an opinion on the combined financial statements as a whole. The Combining Statement of Financial Position and Combining Statement of Activities are presented for the purposes of additional analysis and is not a required part of the combined financial statements. Such information is the responsibility of management and was derived fiom and relates directly to the underlying accoimting and other records used to prepare the combined 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 combined fmancial 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 combined financial statements as a whole.


MEMBERS: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUN^TS; SOCIETY OF LOUISIANA CERTIFIED PUBLIC ACCOUNTANTS


OPTIONS, INC. AND AFFILIATES COMBINING STATEMENT OE FINANCIAL POSITION

JUNE 30, 2014

Options, Inc.

Foundation to C'est Tres Ensure the Future Bonl, Inc of Options, Inc. Subtotal Eliminations Combined

ASSETS

CURRENT ASSETS Cash and cash equivalents Accrued interest Accounts receivable

Government contracts Other

Unconditional promises to give Inventory Investments

Certificates of deposit Government securities

Prepaid expenses Due from C'est Tres Bon!, Inc.

$ 1,329,611 : 252

765,653 59,138 14,028

8,477

79,054 501,289 115,379

38,156

$ 209 $ 14,065 $ 1,343,885 252

765,653 59,138 14,028 8,477

79,054 501,289 115,379

38,156

$

38,156

$ 1,343,885 252

765,653 59,138 14,028 8,477

79,054 501,289 115,379

Total current assets $ 2,911,037 $ 209 $ 14,065 $ 2,925,311 $ 38,156 S 2,887,155

RESTRICTED ASSETS Cash restricted for acquisition of property

and equipment Cash restricted for endowment

$ 13,526

$ - $ - $ 13,526

$ $ 13,526

Total restricted cash $ 13,526 $ - $ - $ 13,526 $ $ 13,526

LONG-TERM INVESTMENTS $ $ 4,522 $ - $ 4,522 $ $ 4,522

LAND, PROPERTY AND EQUIPMENT Less accumulated depreciation and amortizatior

$ 4,654,529 (1,561,720)

$ 765,681 $ - S 5,420,210 (1,561,720)

$ $ 5,420,210 (1,561,720)

$ 3,092,809 $ 765,681 $ - $ 3,858,490 S $ 3,858,490

Total assets $ 6,017,372 $ 770,412 $ 14,065 $ 6,801,849 $ 38,156 $ 6,763,693

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OPTIONS, INC. AND AFFILIATES COMBINING STATEMENT OF FINANCIAL POSITION

JUNE 30,2014

Options, Inc. C'estTres Bon!, Inc

Foundation to Ensure the Future of Options, Inc. Subtotal Eliminations Combined

LIABILITIES AND NET ASSETS

CURRENT LIABILITIES Accounts payable Other payables Accrued salaries and payroll taxes Due to Options, Inc. Current portion of notes payable

$ 47,686 16,370

427,648

25,208

$ 38,807 4,696

38,156

$ - ; S 86,493 21,066

427,648 38,156 25,208

S

38,156

$ 86,493 21,066

427,648

25,208 Total current liabilities $ 516,912 $ 81,659 <c < J> ~ ^ 5 598,571 $ 38,156 $ 560,415

LONG TERM LIABILITIES Notes payable $ 77,950 $ S - 3 5 77,950 $ $ 77,950

Total liabilities $ 594,862 S 81,659 $ - 3 1 676,521 $ 38,156 $ 638,365

NET ASSETS Unrestricted Temporarily restricted Permanently restricted

$ 5,314,956 94,028 13,526

$ 688,753 $ 14,065 3 ; 6,017,774 94,028 13,526

$ $ 6,017,774 94,028 13,526

Total net assets $ 5,422,510 $ 688,753 $ 14,065 3 i 6,125,328 $ $ 6,125,328

Total liabilities and net assets $ 6,017,372 $ 770,412 $ 14,065 3 ; 6,801,849 $ 38,156 $ 6,763,693

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OPTIONS, INC. AND AFFILIATES COMBINING STATEMENT OF ACTIVITIES


Foundation to

Options, Inc. C'est Tres Bon!, Inc

Ensure the Future of Options, Inc. Subtotal Elhnmations Combined


Contributions United Way Fund-raising income Other

Federal contracts State contracts Vocational rehabilitation Vocational contracts

Less: Cost of services $ 689,037

(529,828)

$ 14,028 210,891 154,608

6,336,206 50,651 23,178

$

82,080

$ - ; B 14,028 210,891 154,608

6,418,286 50,651 23,178

$ $ 14,028 210,891 154,608

6,418,286 50,651 23,178

Vocational contracts gross profit Interest income Gain on sale of assets Other income

159,209 12,385 3,110

496,780

83 14 159,209 12,482 3,110

496,780 -

159,209 12,482 3,110

496,780 Total revenues, gains, and other support $ 7,461,046 $ 82,163 $ 14 ; 6 7,543,223 $ $ 7,543,223


Residential services Vocational services Individualized services

Support Services Management and general Fund-raising

$ 1,249,910 1,879,699 3,027,088

1,314,978 14,946

$

16,489

$ - ;

51

B 1,249,910 1,879,699 3,027,088

1,331,518 14,946

$ $ 1,249,910 1,879,699 3,027,088

1,331,518 14,946

Total expenses $ 7,486,621 $ 16,489 $ 51 ; B 7,503,161 $ $ 7,503,161

Change in net assets $ (25,575) $ 65,674 $ (37) ; B 40,062 $ $ 40,062

Net assets at beginning of year 5,448,081 623,083 14,102 6,085,266 _ 6,085,266

Net assets at end of year $ 5,422,506 $ 688,757 $ 14,065 3 B 6,125,328 $ $ 6,125,328

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GOVERNMENT AUDITING STANDARDS COMPLIANCE REPORTS

JOSEPH V. FRANKS II, C.P.A.

BERNARD & FRANKS A CORPORATION OF CERTIFIED PUBLIC ACCOUNTANTS NICHOLAS F. CHETTA, C.P.A.


JAMES L. WHITE, C.PA.

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

A UDITING STANDARDS

To the Board of Directors Options, Inc. and Affiliates Hammond, Louisiana

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to fmancial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the combined financial statements of Options, Inc. and Affiliates (a nonprofit organization), which comprise the combined statement of financial position as of June 30, 2014 and 2013, and the related combined 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 22, 2014.

Internal Control over Financial Reporting

In planning and performing our audit of the combined financial statements, we considered Options Inc. and Affihate's internal control over fmancial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opioion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Options Inc. and Affiliate's hitemal control. Accordingly, we do not express an opinion on the effectiveness of the Organization'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 intemal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

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

MEMBERS; AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS; SOCIETY OF LOUISIANA CERTIFIED PUBLIC ACCOUNTANTS


Compliance and Other Matters

As part of obtaining reasonable assurance about whether Options Inc. and affiliate's combined 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.

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 organization'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 organization's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

This report is intended for the information of the Board of Directors, management, the State of Louisiana, Federal Awarding Agencies and pass-through entities and is not intended to be and should not be used by anyone other then these specified parties. Under Louisiana Revised Statue 24:513, this report is distributed by the Legislative Auditor as a public document.


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OPTIONS, INC. AND AFFILIATES SCHEDULE OE FINDINGS AND RESPONSES

SUMMARY OF AUDIT RESULTS

YEAR ENDED JUNE 30, 2014

Section I - Summary of Auditor's Results

Financial Statements

Type of auditor's report issued: Unmodified

Internal control over financial reporting

• Material Weakness (es) identified? Yes X No • Significant deficiency(ies) identified that

are not considered to be material weakness Yes X None reported

Noncompliance material to the financial statements noted? Yes X No

Federal Awards

The Organization did not expend more than $500,000 in federal awards during the year ended June 30, 2014, and therefore is exempt from the audit requirements under the Single Audit Act and 0MB Circular A-133, Audits of States. Local Government, and Non-Profit Organizations.

Section II - Internal Control over Einancial Reporting and Complianee and Other Matters Material to the Basic Einancial Statements


There were no findings noted during the audit for the year ended June 30, 2014 related to internal control over financial reporting.


There were no findings of internal control and compliance during the audit regarding federal awards for the year ended June 30, 2014.

Section III - Federal Award Findings and Questioned Costs

Not applicable.

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REPORTS BY MANAGEMENT

OPTIONS, INC. AND AFFILIATES SCHEDULE OF PRIOR YEAR FINDINGS AND RESPOINSES


Section I - Internal Control over Financial Reporting and Compliance and Other Matters Material to the Basic Financial Statements


There were no findings regarding internal controls over financial reporting reported during the audit for the financial statements for the year June 30, 2013.


No compliance findings material to the financial statements were reported during the audit for the financial statements for the year June 30, 2013.

Section II - Internal Control and Compliance Material to Federal Awards

There were no findings of internal control and compliance during the audit regarding federal awards for the year ended June 30, 2013.

Section III - Management Letter

A management letter was not issued in connection with the audit of the financial statements for the year ended June 30, 2013.

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OPTIONS, INC. AND AFFILIATES MANAGEMENT'S CORRECTIVE ACTION PLAN


Section I - Internal Control over Einancial Reporting and Compliance and Other Matters Material to the Basic Einancial Statements


No material weaknesses were reported during the audit of the financial statements for the year ended June 30, 2014.

No significant deficiencies were reported during the audit of the financial statements for the year ended June 30, 2014.


No compliance findings material to the financial statements were reported during the audit for the year ended June 30, 2014.

Section II - Internal Control and Compliance Material to Federal Awards

The Organization did not expend more than $500,000 in federal awards during the year ended June 30, 2014, and therefore is exempt from the audit requirements under the Single Audit Act and 0MB Circular A-133, Audits of States, Local Government, and Non-Profit Organizations.

Section III - Management Letter

A management letter was not issued in connection with the audit for the year ended June 30, 2014.

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options, inc. and affiliates (a nonprofit organization) combined financial statements...

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