Family Road of Greater Baton Rouge, Inc.app1.lla.la.gov/PublicReports.nsf/B577A4E1C415E10F... ·...

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FAMILY ROAD OF GREATER BATON ROUGE. INC.

FINANCIAL STATEMENTS

SEPTEMBER 30. 2007

Under provisions of state law, this report is $ publicdocument. Acopy of the report has been submitted to.the entity and other appropriate public officials. Thereport is available for public inspection at the BatonRouge office of the Legislative Auditor and, whereappropriate, at the office of the parish clerk of court,

FAMILY ROAD OF GREATER BATON ROUGE, INC

FINANCIAL STATEMENTS

SEPTEMBER 30.2007

Independent Auditors' Report 1

Financial Statements

Statements of Financial Position 2

Statements of Activities 3

Statements of Cash Flows 4

Statements of Functional Expenses < 5 - 6

Notes to Financial Statements 7-12

Single Audit Reports

Independent Auditors* Report on Internal Control Over Financial Reportingand on Compliance and Other Matters Based on an Audit of Financial Statementsperformed in Accordance with Government Auditing Standards 13 -14

Independent Auditors' Report on Compliance with RequirementsApplicable to each Major Program and Internal Control overCompliance in Accordance with OMB Circular A-133 15-16

Schedule of Expenditure of Federal Award . 17

Notes to Schedule of Expenditure of Federal Award 18

Schedule of Findings and Questioned Costs 19 - 20

Summary Schedule of Prior Year Audit Findings 21

Postlethwaite&Netterville

A Professional Accounting CorporationAssociated Office* in Prindpd Cities of rite United States

www.pncpq.com

INDEPENDENT AUPITORST REPORT

Board of DirectorsFamily Road of Greater Baton Rouge, Inc.Baton Rouge, Louisiana

We have audited the accompanying statements of financial position of Family Road of Greater Baton Rouge, Inc. (anon-profit organization) as of September 30, 2007 and 2006, and the related statements of activities, functionalexpenses and cash flows for the years then ended. These financial statements are the responsibility of the Organization'smanagement. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America, andthe standards applicable to financial audits contained in Government Auditing Standards, issued by the ComptrollerGeneral of the United States and the provisions of the Office of Management and Budget (OMB) Circular A-133,Audits of States, Local Governments, and Non-Profit Organizations. Those standards require that we plan and performthe audits to obtain reasonable assurance about whether the financial statements are tree of material misstatement Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.An audit also includes assessing the accounting principles used and significant estimates made by management, as wellas evaluating the overall financial statement presentation. We believe our audits provide a reasonable basis for ouropinion.

In our opinion, the financial statements referred to above present fairly, mFamily Road of Greater Baton Rouge, Lie. as of September 30,2007 and 2006, and the results of its operations and itscash flows for the years then ended in conformity with accounting principles generally accepted in the United States ofAmerica,

Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. Theaccompanying schedule of expenditure of federal awards cm pages 17 - 18 is presented for purposes of additionalanalysis as required by U. S. Office of Management and Budget Circular A-l 33, Audits of States, Local Governments,and Non-Profit Organizations, and is not a required part of the basic financial statements. Such information has beensubjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairlystated in all material respects in relation to the basic financial statements taken as a whole.

In accordance with Government Auditing Standards, we have also issued our report dated March 11, 2008 on ourconsideration of Family Road of Baton Rouge's Inc.'s internal control over financial reporting and our tests of itscompliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purposeof that report is to describe the scope of our testing of internal control over financial reporting and compliance and theresults 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, and should beread in conjunction with this report in considering the results of our audit.

' I

Baton Rouge, LouisianaMarch 11,2008

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8550 United Plaza Blvd, Suite 1001 • Baton Rouge, LA 70809 • Tel: 225.922.4600 • Fax: 225.922.4611

FAMILY ROAD OF GREATER BATON ROUGE. INCBATON ROUGE. LOUISIANA

STATEMENTS OF FINANCIAL POSITIONSEPTEMBER 30.2007 AND 2006

CURRENT ASSETSCash - restrictedAccounts receivablePrepaid expenses

Total current assets

ASSETS

2007 2006

$ 229,092 $172,4632,411

403,966

374,546147,5234,679

526,748

PROPERTY AND EQUIPMENTFurniture and equipmentLeasehold improvements

Less: Accumulated depreciation

Total Assets

297,813385,475683,288

(540,829)142,459

546,425

281,436385,475666,911

(460,050)206,861

733,609

L I A B I L I T I E S A N D N E T ASSETS

CURRENT LIABILITIESAccounts payableAccrued expensesNote payable - current portion

Total current liabilities

LONG-TERM LIABILITIESNote payable - less current portion

Total long-term liabilities

Total liabilities

NET ASSETSUnrestrictedTemporarily restricted

Total net assets

Total y abilities and Net Assets

$ 35,56470,78825,075131,427

$ 62,90684,44824,578171,932

475.890475,890

607.317

(371,488)310,596(60,892)

546,425

500,965500,965

672,897

(371,371)432,08360,712

733,609

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

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FAMILY ROAD OF GREATER BATON ROUGE. INC.BATON ROUGE. LOUISIANA

STATEMENTS OF ACTIVITIESYEARS ENDED SEPTEMBER 30.2007 AND 2006

2007 2006

CHANGES IN UNRESTRICTED NET ASSETSREVENUES AND GAINS

Contributed servicesDonated facilities and materialsPublic supportMiscellaneousGrants

Total revenues

NET ASSETS RELEASED FROM RESTRICTIONSSatisfaction of program restrictions

Total revenue and support

EXPENSES

Management and generalFundraising

Total expenses

Change in unrestricted net assets

CHANGES IN TEMPORARILY RESTRICTED NET ASSETSDonationsNet assets released from restrictions

Change in temporarily restricted net assets

CHANGE IN NET ASSETS

Net assets at beginning of year

Net assets at end of year

292,95221,1897,791

26,0741,249,6081,597,614

946,613

(117)

825,126(946,613)(121,487)

(121,604)

60,712

(60,892) $

274,19786,0139,7315,252

1,086,9131,462,106

81U632,544,227

2,234,074288,66221,608

2,544,344

2,273,369

2,029,690250,79917,083

2,297,572

(24,203)

1,195,921(811,263)384,658

360,455

(299,743)

60,712

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

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STATEMENTS OF CASH FLOWSYEARS ENDED SEPTEMBER 30.2007 AND 2006

2007 2006

CASH FLOWS FROM OPERATING ACTIVITIESChange in net assetsAdjustments to reconcile the change in net assets to net

cash (used in) provided by operating activities:DepreciationChanges in operating assets and liabilities:

Accounts receivablePrepaid expensesAccrued expenses and accounts payable

Net cash (used in) provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIESPurchases of property and equipment

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIESPrincipal payments on notes payable

Net cash used in financing activities

Net (decrease) increase in cash

Cash-beginning of year

Cash - end of year

(121,604) $

80,779

(24,941)2,269

(41,002)(104,499)

(1*377)(16.377)

(24,578)

360,455

84,588

(65,295)3,751

66,482449,981

(91370)(91.370)

(49.092)

$

(24,578)

(145,454)

374,546

229,092 $

(49,092)

309,519

65,027

374,546


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STATEMENTS OF FUNCTIONAL EXPENSESYEARS ENDED SEPTEMBER 30. 2007 AND 2006

Salaries and professional feesPayroll taxes and employee benefitsUtilities and building maintenanceInsuranceDepreciationInterest expenseIn-kind donations (program)Meetings, travel and educationLegal and accounting feesMarketing and mileageRentTelephoneOffice and computer suppliesPrinting and publicationsPostageProgram expenses

ProgramExpenses

$ 1,009,746224,78419,36823,60670,762

-314,141

46,568-

38,67845,66244,81352,78635,0613,649

304,450

2007

Managementand General Fnndraising

$ 150,814 $ 17,67333,573 3,935

2,2245,252

10,0177,839.-

33,065-

10,9901,6735,0931,574

43326,115

Total

$ 1,178,233262,29221,59228,85880,7797,839

314,14146,56833,06538,67856,65246,48657,87936,6354,082

330,565


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FAMILY ROAD OF GREATER BATON ROUGE. INCBATON ROUGE. LOUISIANA

STATEMENTS OF FUNCTIONAL EXPENSESYEARS ENDED SEPTEMBER 30, 2007 AND 2006

I 2006

Salaries and professional feesPayroll taxes and employee benefitsUtilities and building maintenanceInsuranceDepreciationInterest expenseIn-kind donations (program)Meetings, travel and educationLegal and accounting feesMarketing and mileageRentTelephoneOffice and computer suppliesPrintingPostageProgram expenses

ProgramExpenses

$ 795,576173,72814,80624,07974,099

-360,21046,785

-51,70654,74037,34341,84431,4002,589

320,785

$ 2,029,690

Managementand General

$ 118,82625,948

1,7005,239

10,48914,220

-•

26,535-

13,1761,3954,0381,411

30727,515

$ 250,799

Fundraising Total

$ 13,925 $ 928,3273,040 202,716

16,506118 29,436

84,58814,220

360,21046,78526,53551,70667,91638,73845,88232,8112,896

348,300

$ 17,083 $ 2,297,572


FAMILY ROAD OF GREATER BATON ROUGE, INC.BATON ROUGE. LOUISIANA

NOTES TO FINANCIAL STATEMENTS

1. Snmmflry nf Significant Accounting Policies

and Purpose

Family Road of Greater Baton Rouge, Me. (the Organization) is a non-profit organization which wascreated to provide a place to help meet the needs of families through collaboration and coordinationof community resources. Hie sources of income to the Organization include donations (publicsupport), grants, donated services, and materials.

Basis of Accounting and Reporting

The Organization prepares its financial statements on the accrual basis of accounting. Accordingly,revenues are recognized when earned and expenses are recognized when incurred.

Income Taxes

The Organization has been recognized by the Internal Revenue Service as a not-for-profitorganization as described in Section 501(c)(3) of the Internal Revenue Code and is exempt fromfederal income taxes. Accordingly, no provision for income taxes on related income has beenincluded in the financial statements.

Revenue Recognition

Contributions received are recorded as unrestricted, temporarily restricted, or permanently restrictednet assets depending on the existence or nature of any donor restrictions. All donor-restricted supportis reported as an increase in temporarily or pennanentiy restricted net assets, depending on the nanuTeof the restriction. When a restriction expires (that is, when a stipulated time restriction ends orpurpose restriction is accomplished), temporarily restricted net assets are reclassified to unrestrictednet assets and reported in the Statement of Activities as net assets released from restrictions. TheOrganization does not have any permanently restricted net assets.

Grants for fee income are recorded as unrestricted net assets in the Statement of Activities. Allgrantee-restricted support is reported as an increase in temporarily restricted net assets in theStatement of Activities. When the restriction expires, temporarily restricted net assets are reclassifiedto unrestricted net assets and reported as net assets released on the Statement of Activities.

Property and Equipment

Property and equipment are stated at historical cost. Depreciation of property and equipment is basedupon the estimated useful service lives of the assets, which range from 5 -12 years, using the straight-line method. Maintenance and repairs are charged to expense, while additions and improvements arecapitalized.

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1. Summary of Significant Accounting Policies (continued)

The preparation of financial statements in conformity with accounting principles generally acceptedin the United States of America requires management to make estimates and assumptions that affectthe reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at thedate of the financial statements and the reported amounts of revenues and expenses during thereporting period. Actual results could differ from those estimates.

Contributed Services

The Organization recognizes contribution revenue for certain services received at the estimated fairvalue of those services, provided those services create or enhance non-financial assets or requirespecialized skills which are provided by individuals possessing those skills and would typically needto be purchased, if not provided by donation.

Donated Materials and Equipment

Donated materials and equipment are reflected as contribution income and expense in theaccompanying financial statements at their estimated values at the date of receipt. The Organizationoperate^ with a minimal charge, certain premise npnn which their office is located. The estimatedfair rental value of the premises is reported as support and expense m me year in which the premisesare used.

Pension Plan

As of March 1, 2004, the management agreement with The Woman's Hospital Foundation, d/b/aWoman's Hospital, mat included participation in Woman's Hospital benefit program, wasterminated. All employees participating in the Woman's Hospital Employee Retirement SavingsPlan and Cash Balance Retirement Plan were treated as terminated employees with respect to theplans. Each employee could, at their discretion, either cash out their retirement or roll it over into anIndividual Retirement Account (IRA). Since the separation with Woman's Hospital, theOrganization offers its own retirement benefit package to its employees.

All employees, 18 years of age or older, are eligible to participate in the Employee RetirementSavings Plan at the date of hire. Employees may make voluntary contributions of up to 25% of theirpay up to $10,500 per year. There currently is no match requirement under this plan for theOrganization.

Fimrtinnal Allocation of Expenses

The costs of providing the various programs and administrative activities have been summarised on afunctional basis in the statements of functional expenses. Accordingly, certain costs have beenallocated between program and administrative expense based on management's estimate.

FAMILY ROAD OF GREATER BATON ROUGE. INC.BATON ROUGE. LOUISIANAx-*


1. Summary of Significant Accounting Policies (continued)

Cash and Cash Equivalents

Cash and cash equivalents include all monies in banks and highly liquid investments with originalmaturities of less than three months.

Accounts Receivable

The Organization determines past due accounts based on contractual terms and does not chargeinterest on the accounts. The Organization charges off receivables if management considers thecollection of the outstanding balance to be doubtful.

2. Notes Payable

On January 1,2005, the Organization paid Woman's Hospital $40,000 and signed a promissory note for$582,559 to consolidate the Organization's original debt due Woman's Hospital and BRAF along withadditional amounts loaned to the Organization for operating costs. The Organization began makingmonthly payments on this debt on June 1,2005. The Organization made an additional principal paymentof $25,000 during the year ended 2006.

A summary of long-term debt at September 30,2007 and 2006 is as follows:

2007 2006

Woman's Hospital and Baton Rouge Area Foundation;15 years at 2%, requiring a $40,000 initialpayment, monthly payments of $2,947,and a balloon payment at the end of 15 yearsof $176,824; unsecured. $ 500,965 $ 525,543

Less: current maturities { 25.075) ( 24.578)

Long-term debt, net of current maturities $ 475.890 $ 500.965

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$

$

25,07525,58126,09726,62427,161370.427500.965

2. Notes Payable (continued)

Total scheduled debt payments during the years ending September 30th are as follows:

Year Ending Amount

20082009201020112012Thereafter

3. Donated Materials

The Organization received various donations of materials to be used both within the program and to bedistributed to clients without charge during fiscal years 2007 and 2006. These contributions have beenrecorded as revenue with the offset recorded to expenditures. The values of donated materials receivedduring the years ended September 30,2007 and 2006 was $21,189 and $86,013 respectively.

4. Contributed Services

During the years ended September 30,2007 and 2006, the total value of contributed services meeting therequirements for recognition in the financial statements was $292,952 and $274,197 respectively.Contributed services represent volunteer hours worked by various social workers, nutritionists, and otherprofessionals.

5. Temporarily Restricted Net Assets

Temporarily restricted net assets are available for the salaries and other program expenditures for thefollowing programs:

2007 2006Huey and Angelina Wilson Foundation-

Building ExpansionRelief to RecoveryPregnancy to ParenthoodAgenda for ChildrenAmericaresDedicated Dads- PenningtonDedicated Dads-BRAFBuilding Strong FamiliesWilson - Renaissance Village

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$ 33,741 $19,636

--

24,058-

10,000182,62440.537

33,74173,368

123,2266,405

50,00021,533

'123,810

-_31(L596 $ _432J&83



Net Assets Released from Restrictions

Net assets were released from restrictions by incurring expenses satisfying the restricted purposes or byoccurrences of other events specified by the donors to the following programs:

2007Huey and Angelina Wilson Foundation-

Technology ImprovementsHuey and Angelina Wilson Foundation-

Building ExpansionRelief of RecoveryAmericaresBuilding Strong FamiliesAgenda for ChildrenPregnancy to ParenthoodDedicated Dads - PenningtonWilson - Renaissance VillageYK Hurricane Response Collaborative

2006

53,73250,942

681,3126,405

123,22621,5339,463

25,000

16,259

421,75526,437

317,145

4.66781L263

7. Concentration of Credit Risk

The Organization's financial instruments that are exposed to concentrations of credit risk consists of cash.The Organization had cash balances on deposit with one bank at September 30,2007, that exceeded thebalance insured by the FDIC by $113,365. Management believes the credit risk is minimal.

8. Federal Award Program

The Healthy Start Grant was awarded to the Organization during the year ended September 30,2001.The grant was awarded for an additional four years beginning in June 2006. Qualified expenses will bereimbursed to the Organization up to $700,000 per year for four years. In 2006, the Organizationreceived an extension of the grant period from May 31, 2006 to July 31, 2006. This allowed theOrganization to be reimbursed an additional $ 116,667. Funding is provided by the U.S. Department ofHealth and Human Services through the Health Resources and Services Administration-Maternal andChild Health Bureau. The goal of the Healthy Start grant funding is to enhance the community's servicesystem to address significant disparities in infant mortaHry and other perinatal health indicators related todisparities or differences occurring due to lack of education, low income, disability, or living in ruralareas.

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9. Liquidity

As shown in the accompanying financial statements, the Organization incurredanet loss of $121,489 forthe year ended September 30,2007. In the prior year, the Organization received a significant number ofgrants to provide services to those affected by Hurricanes Katrina and Rita. With this grant revenue, theOrganization generated net income of $360,455 for the year ended September 30,2006, which eliminatedthe deficit in prior year net assets. Net assets for the year ended September 30,2006 was $60,712.However, the loss incurred this year has generated a deficit of $60,892 for the year ended September 30,2007. Overall, the deficit in unrestricted net assets has continued to increase each year. The deficit iniinrestricted net assets mcreased by $117 for the year ended 2007. The deficit in unrestricted net assets at2007 and 2006, was ($371,488) and ($371,371), respectively.

Although the Organization has been successful in obtaining restricted grants for programs which doescover program related expenses, there is limited unrestricted revenue to pay for administrative andoverhead costs. At September 30, 2007 and 2006, there was no unrestricted cash. Approximately$80,000 is due to the unrestricted cash balance from the restricted cash balance.

Since inception, the Organization was dependent on Woman's Hospital for administrative supportnecessary to cover payroll costs due to a two month delay in receiving reimbursable grant money fromvarious grantors. This relationship with Woman's Hospital terminated on March 1,2004.

In addition, the Organization incurred debt to Woman's Hospital for start-up costs. During the year endedSeptember 30,2005, the Organization has restructured this debt to Woman's Hospital (see Note 2);however, there is limited unrestricted revenue to make payments on this debt.

Management's plans relating to the above liquidity issues are as follows:

• Management has identified ways to increase overhead reimbursement from grants.• The debt due to Woman's Hospital has been restructured at a favorable interest rate and payment

terms.• Management has prepared a Strategic Plan for 2008 which includes fundraising and corporate

sponsorships.

Management believes that these plans, along with monitoring costs, will provide sufficient liquidity forthe Organization for the coming year.

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Postlethwaite& Netterville

A Professional Accounting CorporationAssociated Officw In Principal G8« of ttw United Stole*

www.pnqxi.com

INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTORL OVERFINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED

ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCEWITH GOVERNMENT AUDITING STANDARDS


We have audited the financial statements of Family Road of Greater Baton Rouge, Inc. (Family Road) (a non-profit organization) as of and for the year ended September 30,2007, and have issued our report thereon datedMarch 11,2008. We conducted our audit in accordance with auditing standards generally accepted in theUnited States of America and the standards applicable to financial audits contained in Government AuditingStandards, issued by the Comptroller General of the United States.

Internal Control Over Financial Reporting

In planning and performing our audit, we considered Family Road's internal control over financial re^^a basis for designing our auditing procedures for the purpose of expressing our opinion on the financialstatements, but not for the purpose of expressing an opinion on the effectiveness of Family Road's internalcontrol over financial reporting. Accordingly, we do not express an opinion on the effectiveness of theOrganization's internal control over financial reporting.

A control deficiency exists when the design or operation of a control does not allow management oremployees, in the normal course of performing their assigned functions, to prevent or detect misstatements on atimely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, thatadversely affects the entity's ability to initiate, authorize, record, process, or report financial data reliably inaccordance with generally accepted accounting principles such that there is more than a remote likelihood thata misstatement of the entity's financial statements that is more than inconsequential will not be prevented ordetected by the entity's internal control

A material weakness is a significant deficiency, or combination of significant deficiencies, that result in morethan a remote likelihood that a material misstatement of the financial statements will not be prevented ordetected by the Organization's internal control.

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Our consideration of internal control over financial reporting was for the limited purpose described in the firstparagraph of this section and would not necessarily identity all deficiencies in internal control that might besignificant deficiencies or material weaknesses. We did not identify any deficiencies in internal control overfinancial reporting that we consider to be material weaknesses, as defined above. We noted certain othermatters that we reported to management in a separate letter dated March 11,2008.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether Family Road's financial statements are free ofmaterial 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 thedetermination of financial statement amounts. However, providing an opinion on compliance with thoseprovisions was not an objective of our audit, and accordingly, we do not express such an opinion. The resultsof our tests disclosed no instances of noncompliance or other matters that are required to be reported underGovernment Auditing Standards.

This report is intended solely for the information of the Board of Directors, Management, and the LouisianaLegislative Auditor and is not intended to be and should not be used by anyone other than these specifiedparties. However, under Louisiana Revised Statute 24:513, this report is distributed by the Legislative Auditoras a public document.


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P&N


A Professional Accounting Corporation

Auodotod Office* in Principal Cities of to United States

www.pnqxi.com

INDEPENDENT AUDITORS'REPORT ON COMPLIANCE WITH REQUIREMENTSAPPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER

COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133


Compliance

We have audited the compliance of Family Road of Greater Baton Rouge, Inc. (Family Road) (a non-profitorganization) with the types of compliance requirements described in the OMB Circular A-133 ComplianceSupplement that are applicable to its major federal program for the year ended September 30,2007. FamilyRoad's major federal program is identified in the summary of auditors* results section of the accompanyingschedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contractsand grants applicable to its major federal program is the responsibility of Family Road's management Ourresponsibility is to express an opinion on Family Road's compliance based on our audit

We conducted our audit of compliance in accordance with auditing standards generally accepted in the UnitedStates of America; the standards applicable to financial audits contained in Government Auditing Standards,issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, LocalGovernments, andNon-Profit Organizations. Those standards and OMB Circular A-133 require that we planand perform the audit to obtain reasonable assurance about whether noncompliance with the types ofcompliance requirements referred to above that could have a direct and material effect on a major federalprogram occurred. An audit includes examining, on a test basis, evidence about Family Road's compliancewith those requirements and performing such other procedures as we considered necessary in thecircumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does notprovide a legal determination on Family Road's compliance with those requirements.

In our opinion, Family Road complied, in all material iespe<^,wilii the requirements referred to above that areapplicable to its major federal program for the year ended September 30,2007.

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Internal Control Over Compliance

The management of Family Road is responsible for establishing and maintaining effective internal control overcompliance with requirements of laws, regulations, contracts and grants applicable to federal programs. Inplanning and performing our audit, we considered Family Road's internal control over compliance with therequirements that could have a direct and niaterial effect on amauditing procedures for the purpose of expressing our opinion on compliance, but not for the purpose ofexpressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not expressan opinion on the effectiveness of Family Road's internal control over compliance.

A control deficiency in an Organization's internal control over compliance exists when the design or operationof a control does not allow management or employees, in the normal course of performing their assignedfunctions, to prevent or detect noncompliance with a type of compliance requirement of a federal program on atimely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, thatadversely affects the entity's ability to administer a federal program such that there is more man a remotelikelihood that noncompliance with a type of compliance requirement of a federal program that is more thaninconsequential will not be prevented or detected by the entity's internal control.

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in moreman a remote likelihood that material noncompliance with a type of compliance requirement of a federalprogram will not be prevented or detected by the entity's internal control.

Our consideration of internal control over compliance was for the limited purpose described in the firstparagraph of this section and would not necessarily identity all deficiencies in internal control that might besignificant deficiencies or material weaknesses. We did not identity any deficiencies in internal control overcompliance that we consider to be material weaknesses, as defined above.

Schedule of Expenditures of Federal Awards

We have audited the financial statements of Family Road as of and for the year ended September 30,2007, andhave issued our report thereon dated March 11,2008. Our audit was performed for the puipose of forming anopinion on the financial statements taken as a whole. The accompanying schedule of expenditures of federalawards is presented for purposes of additional analysis as required by OMB Circular A-133 and is not arequired part of the financial statements. Such information has been subjected to the auditing proceduresapplied in the audit of the financial statements and, in our opinion, is fairly stated, in all material respects, inrelation to the financial statements taken as a whole.

This report is intended for the information and use of the Board of Directors, Management, and the LouisianaLegislative Auditor and is not intended to be and should not be used by anyone other than these specifiedparties. However, under Louisiana Revised Statute 24:513, this report is distributed by the Legislative Auditoras a public document.


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P&N

FAMILY ROAD OF GREATER BATON ROUGE, INC

SCHEDULE OF EXPENDITURE OF FEDERAL AWARDSYEAR ENDED SEPTEMBER 30.2007

Federal Grantor/Pass-Though Grantor/ CFDA

Program Name Number Expenditures

U.S. Department of Health and Human ServicesPass-through from

Health Resources and Services AdministrationMaternal and Child Health Bureau:

Healthy Start 93.926E $ 697,611

TOTAL EXPENDITURE OF FEDERAL AWARDS ~$ 697,611

See accompanying notes to Schedule of Expenditure of Federal Awards.

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NOTES TO SCHEDULE OF EXPENDITURE OF FEDERAL AWARDYEAR ENDED SEPTEMBER 30.2007

NOTE A - BASIS OF PRESENTATION

The accompanying schedule of federal awards includes the federal grant activity of Family Road of GreaterBaton Rouge, Inc. and is presented on the accrual basis of accounting. The information in this schedule ispresented in accordance with the requirements of OMB Circular A-l 33, Audits of States, Local Governments,and Non-Profit Organizations.

NOTE B - RECONCILIATION OF EXPENSES TO FEDERAL EXPENDITURES

Program Expenses $ 2,234,074Non-cash adjustments- depreciation ( 70,762)Non-cash adjustments - donated services ( 314,141)Non-Federal Expenditures ( 1.151.5601

Total Federal Expenditures $ 697.611

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FAMILY ROAD OF GREATER BATON ROUGE. INC,BATON ROUGE. LOUISIANA

SCHEDULE OF FINDINGS AND QUESTIONED COSTSYEAR ENDED SEPTEMBER 30.2007

A. SUMMARY OF AUDITORS* RESULTS

Financial Statements

Type of auditor's report issued: Unqualified

• Material weaknesses) identified? yes• Significant deficiency (ies) identified that are

not considered to be material weaknesses? yes

Noncompliance material to financialstatements noted? yes

Federal Awards

Internal control over major programs:

• Material weaknesses) identified? yes• Significant deficiency (ies) identified that are

not considered to be material weaknesses? yes

no

. none reported

no

.none reported

Type of auditor's report issued on compliance for major programs: Unqualified

Any audit findings disclosed that are requiredto be reported in accordance with section 510(a)of Circular A-133? yes no

The Program tested as major programs include:Healthy Start Program CFDA # 93.926E

• The threshold for distinguishing Types A and B programs was program expenditures equal to orexceeding $300,000.

* Family Road of Greater Baton Rouge, Inc. did qualify as a low-risk auditee.

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SCHEDULE OF FINDINGS AND QUESTIONED COSTSYEAR ENDED SEPTEMBER 30.2007

B. FINDINGS AND QUESTIONED COSTS -Financial Statement Audit

• None

C. FINDINGS AND QUESTIONED COSTS - Maior Federal Award Programs

• None

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SUMMARY SCHEDULE OF PRIOR YEAR AUDIT FINDINGS

. FINDINGS AND QUESTIONED COSTS -Financial Statement Audit

• None

. FINDINGS AND QUESTIONED COSTS - Maior Federal AwarH Programs

2006-1 Cash Management

Criteria: The Healthy Start Program is funded on a reimbursement basis; program costs mustbe expended by the Organization before reimbursement is requested from the FederalGovernment.

Condition: . In the month of July 2006, the Organization submitted a reimbursement request thatincluded an invoice with program costs that were not fully expended as required byFederal compliance requirements.

Questioned Costs: $12,200

gffect: The Organization requested reimbursement for program costs that had not beenexpended before the reimbursement request was made.

fleprnptT^fotipty The Organization should develop a process to ensure that reimbursementrequests are based on program costs that are already expended.

Management *s Response& Corrective Action: Family Road reviews invoices on a weekly basis. However, in the case of this invoice

a coding error caused Family Road to request reimbursement for maintenanceprepayment. In the future invoices will be more closely reviewed to ensure allreimbursements are for expense charges.

Status: Family Road continues to review invoices on a weekly basis. In addition to thereview, Family Road has hired a Director of Finance who oversees the AccountingClerk and works with their independent CPA. The Director of Finance andAccounting Clerk review invoices/check requests on a weekly basis to ensure propercoding of expenses. At month-end the Director of Finance and Accounting Clerkreview invoices/check requests and general ledger to ensure proper coding before thereimbursement request is submitted to the Federal Government In addition, theDirector of Finance, CEO/President and CPA meet on a monthly basis to review thefinancial records, reports and transactions.

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A Profautenol Accounting Corporation

Associated OfRcM in Principal Citta* ol to Untod State*

www.pncpa.com

To the Board of DirectorsFamily Road of Greater Baton Rouge, Inc.Baton Rouge, LA

We have audited the financial statements of the Family Road of Greater Baton Rouge, Inc., for theyear ended September 30,2007 and have issued our report thereon. As part of our examination, wemade a study and evaluation of internal accounting control to the extent we considered necessary toevaluate the system as required by auditing standards generally accepted in the United States ofAmerica. Under these standards, the purposes of such evaluation are to establish a basis forreliance on the system of internal accounting control in determining the nature, timing, and extentof other auditing procedures that are necessary for expressing an opinion on the financialstatements and to assist the auditor in planning and performing his audit of the financial statements.

The objective of internal control is to provide reasonable, but not absolute, assurance as to thesafeguarding of assets against loss from unauthorized use or disposition, and the reliability of thefinancial records for preparing financial statements and maintaining accountability for assets. Theconcept of reasonable assurance recognizes that the cost of a system of internal accounting controlshould not exceed the benefits derived and also recognizes that the evaluation of these factorsnecessarily requires estimates and judgments by management.

No matter how good a system, there are inherent limitations that should be recognized inconsidering the potential effectiveness of internal accounting. In the performance of most controlprocedures, errors can result from misunderstanding of instructions, mistakes of judgment,carelessness, or other personal factors. Control procedures whose effectiveness depends uponsegregation of duties can be circumvented by collusion. Similarly, control procedures can becircumvented intentionally by management either with respect to the execution and recording oftransactions or with respect to the estimates and judgments required in the preparation of financialstatements. Further, projection of any evaluation of internal accounting control to future periods issubject to the risk that the degree of compliance with the procedures may deteriorate. We say thissimply to suggest that any system needs to be constantly reviewed and improved where necessary.

8550 United Plaza Blvd, Suite 1001 * Baton Rouge, LA 70809 • Tel: 225.922.4600 • Fax: 225.922.4611

During the course of our audit, we made the following observations which we feel should bebrought to your attention. Concerning these matters, we offer the following comments andrecommendations:

1) Disaster Recovery Plan

Family Road does not have well defined, written disaster recovery procedures. The time tomake contingency plans is before disaster strikes, so that all personnel will be aware of theirresponsibilities in the event of an emergency situation. We suggest that management develop adisaster recovery plan that includes, but is not limited to, the following matters:

• Location of, and access, to off-site storage• A listing of all data files that would have to be obtained from the off-site storage

location• Identification of a backup location (name and telephone number) with similar or

compatible equipment for emergency processing (management should makearrangements for such back-up with another company, a computer vendor, or a servicecenter; the arrangement should be in writing)

• Responsibilities of various personnel in an emergency• Priority of critical applications and reporting requirements during the emergency

period

Management's response: Management agrees with the recommendation noted above and has plansto perform a cost benefit analysis before implementing a disaster recovery plan.

2) Indirect Cost Allocation

Our audit procedures disclosed that the indirect cost allocation was not accurately calculatedfor one of the grants, which required an adjustment between restricted and unrestrictedrevenue. We recommend that someone review the indirect cost allocations for the grants on amonthly or quarterly basis. We believe that this process will make accounting for andclassifying of grants an easier and more routine task. This should also enhance the ability toachieve more consistent accounting and financial statement presentation.

Management's response: Management agrees with the recommendation noted above and hasimplemented a process for reviewing the calculation of the indirect cost allocations requested forthe grants.


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