Holy Angels Residential Facility, Inc.app1.lla.la.gov/PublicReports.nsf/55A2BD0985548AAA862578770079E… · /o^ff^ HOLY ANGELS RESIDENTIAL I ACILITV, INC. SHREVEPORT, LOUISIANA FINANCIAL

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HOLY ANGELS RESIDENTIAL I ACILITV, INC.

SHREVEPORT, LOUISIANA

FINANCIAL STATEMENTS

JUNE 30, 2010

Under provisions of state law. tliis report is a public document. A ccpy of ths report .has been siJi:f'nftted to the entity and other appropriate public officials. The report is available for public inspection at the Baton Rouge office of the LegisiativeAuditor and. where appropriate, at the ofnce of ihe pansh clerk cf court.

Release Date 'f- / ^ ^ / / / '/ Uo I

SMITH PUGH AND COMPANY. LLP

Cenified Puhlic Accountants • Managemeni Consultants • Business Advisors

HOLY ANGELS RESmENTJAL FACILITY, INC,

Table ol Contents

Page

Independent Auditor's Report 1

Financial Statements:

Statements of Financial Position 2

Statements of Activities 3

Statements of Functional Expenses 5

Statements of Cash Flows 7

Notes to Financial Staiements 8

Other Report:

Report on Inlcfnal ConlroJ Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Staiements Perlbrmed in Accordance with Govemment Audiiing Standards 14

Schedule of Audit Findings and Responses ] 6

SMITH PUGH A N D C O M P A N Y . LLP

Certified Public Accountants • Manai^ement C-onsultants • Business Advisors

INDEPENDENT AUDITOR'S REPORT

Board of Directors Holy Angels Residential Facility, Inc. Shreveport. Louisiana

We have audited the accompanying statements ol' financial position of Ploly Angels Residential Facility, Inc. (a not-for-profit corporation) as of June 30, 2010 and 2009, and the related statements of activities, functional expenses, and cash flows for the years then ended. These fmancial statements are the responsibility of Holy Angels Residential Facility, Inc.'s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America, and fnc standards applicable lo fmancial audits contained in Govemment Auditing Standards, issued by the Controller General ofthe United Stales. Those standards require that we plan and perfonTi the audit to obtain reasonable assurance about whether the fmancial slatemenis are free of material misstatement. Ais audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fmancial statements. An audii also includes assessing the accounting principles used and signiilcant estimates made by managemeni, as well as evaluating the overall financial slalement presentation. We believe thai otir audii provides a reasonable basis for our opinion.

In our opinion, the fmanctal statements referred to above present fairly, in all material res]")ecls. the financial position of Floly Angels Residential Facility, Inc. as of June 30, 2010 and 2009, and the changes in its nei assets and its cash Dows for the years then ended in conformiiy with accounling principles generally accepted in the United Slates of America.

In accordance wilh Government Auditing Standards, we have also issued our report dated September 13, 2010, on our consideration of Holy Angels Residential Facility, Inc.'s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of intemal control over fmancial reporting and compliance and the results of that testing, and not provide an opinion on intemal control over fmancial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Slandards and should be considered in assessinu the results of our audit.

rmith'Pugh < '̂Con

FINANCIAL STATEMENTS

HOLY ANGELS RESIDENTIAL FACILITY, INC.

Statements of Financial Position As of June 30, 2010 and 2009

ASSESS

2010

LIABILITIES AND NET ASSETS

2009 Current Assets

Cash and cash equivalents Accounts receivable Prepaid items

Total current assets Cash and cash equivalents - temporarily restricted Property and equipment, net Total Assets

$

$

222,302 1,032,318

9.362 1,263,982

953,518 1,176,953 3,394.453

S

s

421,302 1,002,155

7,538 1,430,995 1,093,319 1,022,499 3,546.813

Current Liabilities Accrued salaries Accrued payroll taxes and employee withholdings Accounts payable .Accrued compensated absences Due to residents fi"om temporarily restricted assets Provider fees payable

Total currenl liabilities

Net Assets Unrestricted Temporarily restricted

Total Net Assets Total Liabilities and Net Assets

335,718 25,847 98,117

182,614 222,647

80,080

S 332,027 37,866

158.769 212,910 229309

76,692 945,023

1,681,469 767,961

2,449,430 $ 3.394,453

1.047,573

1,598,139 901.101

2,499.240 $ 3.546,813

The accompanying notes are an integral part of these financial statements. 2

IJOLY ANGELS RESIDENTIAL FACILITY, INC.

Statement of .Activities For the Year Ended June 30, 2010

Public Support, Revenue! Reclassification Client care:

Title XIX Funds Private tuition:

Private pay Medicaid Social security VA Tolal private tuition

Total client care Ijitcresl Contributions Grants Fund raisinu aciivities Work activitv center Rovaliies Miscellaneous Nel assets released from i

satisfaction of program 'fotal public support.

and reclassiilcation

< a n d

-esirictions m expenditures revenues

Unrestricted

S 10,055,237

309,831 104,996

1,061,612 11.927

1,488,366 11,543,603

6.493 253,223

-228,731

-84.661 38,854

656.330

12.811.895

'lemporarily Restricted

$ - :

--' ---

50 94,438

344,477 3,148

81.077 --

(656,330)

(133.140)

Total

S 10,055,237

309,831 104,996

1,061,612 11,927

1,488,366 11,543,603

6,543 347,661 344,477 231.879

81.077 84.661 38.854

-

12,678,755

Expenses Program services:

Client care Work activity center

Supporting services: General and administrative

Total expenses

Change in Net Assets Net Assets at July 1,2009 Net Assets at June 30, 2010

11,105,718 44,326

1.578.521 12,728.565

83,330 .1.598,139

S 1.681,469 S

-

-

(133,140) 901,101 767.961

11,105,718 44,326

1,578.521 12,728,565

(49,810) 2,499.240

S 2.449.430

The accompanying notes are an integral part of these financial statements. 3


Statement of Activities For the Year Ended June 30, 2009

PubUc Support, Revenues Reclassification Client care:

Title XLX Funds Private tuition:

Private pay Medicaid Social sectirity VA Total private tuition

Total client care Interest Contributions Grants Fund raising activities Work activitv center Rovalties Miscellaneous

; and

Nei assets released from restrictions in SLU is faction of program

Total public support, i and reclassification

expenditures revenues

Unrestricted

$ 10,201,444

275,728 125,684 905,015

5.343 1.311.770

11,513,214 14,654

238,648 -

2,120 -

69.804 9,071

()54.647

12.502.158

Temporarily Restricted

S

------

164 519.541 227,980 205,657

60,102 --

• (654.647)

358.797

Total

S 10,201.444

275,728 125,684 905,015

5,343 1.311,770

11,513,214 14,818

758.189 227,980 207,777

60,102 69,804 9.071

-

12.860.955

Expenses Program services:

Client care Work activity center

Supporting services: General and adminLstrative

Total expenses

Change in Net Assets Net Assets at July 1,2008 Net Assets at June 30. 2009

11,442,555 48,199

1,604.064 13.094,818

(592,660) 2,190,799

S 1.598.139 S

-

-

358,797 542.304 901,101

11,442,555 48,199

1.604.064 13.094.818

(233,863) 2,733.103

S 2.499,240

The accompanying notes arc an integral part of these financial statements. 4

HOLY ANGELS RESIDENTIAL. FACILITY, INC.

Statement of Functional Expenses For the Year Ended June 30, 2010

Program Services

Salaries Payroll taxes and benefits Workers' compensation insurance Dietary supplies Medical supplies Flabilitative supplies Flousekeeping supplies WAC materials and supplies Provider fees Automobile expense Building and occupancy Church aciivities Client needs and assistive devices Consultants and professional fees Dues and sub.scriptions Insurance - propcriy Miscellaneous Office expense Postage Taxes - Uncmpioymenl Telephone expenses Travel expenses Total expenses before deprecialion Depreciation Tolal program and supporting services expenses

Client Care $ 6,567,247

1,213,514 162,353 353,160 161,795 38,459 48,333

-975,060

-1,117,189

-139,063 149.065

-----

48,855 --

10.974.093 131,625

S 1L105.71S

Work Activity Center

S -' -----

44,326

44,.-

$ 44.:

--------------

526 -

i26

General and Administrative $ 690,466

133,738 17,069

------

56,511 124,132

6,958 -

96.306 6,680

261,371 42.339 52,750 5,906 5,136

26,991 1.826

1,528,179 50.342

S 1,578,521

Total S 7,257,713

1,347,252 179,422 353,160 161,795 38,459 48,333 44,326

975,060 56,511

1,241,321 6,958

139,063 245,371

6,680 261,371

42,339 52,750

5.906 53,991 26,991

1.826 12,546,598

181.967

S 12.728.565

The accompanying notes arc an integral pari of these financial statements. 5

HOLY ANGELS I^SIDENTIAL FACILITY, INC.

Statement of Functional Expenses For the Year Ended June 30,2009

Salaries Payroll taxes and benefits Workers' compcnsalion insurance Dietary supplies Medical supplies Habilitative supplies Housekeeping supplies WAC materials and supplies Provider fees Automobile expense Building and occupancy Church activities Client needs and assistive devices Consultants and professional fees Dues and subscriptions Insurance - property Miscellaneous Ofl"ice expense Postage Taxes - Unemployment Telephone expenses Travel expenses Total expenses before depreciation Depreciation Total program and supporting services expenses

Program

Client Care $ 6,773,717

1,281,590 222,499 366,111 115,731 35,056 49,499

-956J56

-1,254,166

-103,006 147.553

-----

30,184 --

11.335,868 106.687

S 11.442.555

Services

Work Activily Center

S ------

48,199 --------~ -----

48,199 -

$ 48.199

General and Administrative S 685,204

142,988 22,507

------

62,529 139,352

1.576 -

79,550 9,168

274,858 31.70] 87,704 5,121 3,053

23,294 35

1,568,t̂ 40 35.424

$ 1,604,064

Total $ 7,458,921

1,424,578 245,006 366,111 115,731 35,056 49,499 48,199

956,756 62,529

1,393,518 1,576

103,006 227,103

9,168 274,858

31,701 87,704 5,121

33,237 23,294

35 12,952,707

142.111

$ ]3,094,SIS

The accompanying notes are an integral part of these financial staiements. 6

HOLY ANGELS RESIDENTIAL FAC1LH Y, INC.

Statements of Cash Flows For the Years Ended June 30, 2010 and 2009

2010 2009

Supplemental Disclosure of Cash Flow Information Noncash transactions -

Equipment $ 96,594

Cash Flows From Operating Activities: Decrease in net assels $ (49,810) % (233,863) .Adjustments lo reconcile change in net assels lo net cash provided by operating activities: Depreciation 181,967 142,111 Equipment procured directly from the Slate of Louisiana included in grant revenue Donated vehicle included in contributions (Increase) decrease in operating assets:

Accounis receivable Prepaid items

Increase (decrease) in operating liabilities: Accrued salaries Accrued payroll taxes and employee withholdings Accounts payable Accrued compensated absences Due lo residents Provider fees payable Total Adjustments

Net Cash Provided (Used) by Operating .Activities Ciash Flows From Investing Activities:

Proceeds from maturity of ceriiilcaie of deposit Purchase of fixed assets

Net Cash Used by Investing Activities Net Decrease in Cash Cash and cash equivalents al the beginning of the year Cash and cash equivalents at the end ofthe year

(83,994)

(12,600)

(30,163)

(L824)

3,691

02,019) (60,652)

(30,296)

(6,662)

3,388 (49,164)

(98,974)

(239,827)

(239.827)

(338,801)

1.514,621 $ 1,175,820

-

-

84 5,413

102.426

35,918

10,216 33,423

14,852

(99)

344.344

110.48!

100,000

(607.227)

(507,227) (396,746)

1.911,367 S 1,514.621

The accompanying notes are an integral pari of these financial statements. 7


Notes to Financial Statements June 30,2010

1. Summary of Significant Accounting Policies

Nature of Organization

Holy Angels Residential Facility, Inc. (the Facility) is a Louisiana noi-for-profit corporation chartered on August 8, 1986. The Facility is a private, residential training facility whose purpose is to provide health and habilitative services lo developmentally disabled individuals that maximize their dignity and future potential. The Facility is supported primarily through the Louisiana Medical Assistance Program and private tuition payments.

For the year ended June 30, 2010, the Facility was exempt fi"om income taxes as an organization described in Section 501(c)(3) ofthe Internal Revenue Code. The Facility was classified as an organization Ihat was not a private foundation under Section 509(a). Accordingly, there is no provision for income taxes in these financial staiements.

Basis of Accounting

The accompanying fmancial statements have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles.

Financial Statement Presentation

The Facility is required lo report inlbrniaiion regarding its iinancial position and acri^'ities according to Ihe following three classes of nel assets;

Unrestricted nel assels Nel assets thai are not subject to donor-imposed stipulations. Unrestricted net assets may be designated for specific purposes by action of the Board of Directors.

Temporarily restricted net assets - "Net assets subject lo donor-imposed stipulations that will be mel either by actions of ihe Board of Directors and/or the passage of time.

Permanently restricted net assels •- Nei assels subject to donor-imposed stipulations that they be inaintained permanently by the Facility.

No permanently restricted assets were held during fiscal years 2010 or 2009 tind accordingly, these financial statements do not reflect any activity related to this class of nel assets for the years ended .Tune 30, 2010 and 2009.

As permitted by the statement, the Facility does not use lund accounting.

HOLY ANGELS RESIDENTIAL- FACILITY, INC.

Notes to Financial Statements June 30, 2010

/, Summary of Significant Accounfing Policies (continued)

Cash Equivalents

For purposes ofthe statements of cash Hows, the Facility considers all highly liquid investments available ibr current use with an initial maturity of three months or less to be cash equivalents.

Cash and Cash Equivalents - Temporarily Restricted

Cash and cash equivalents - temporarily restricted primarily include cash accounts set aside for future capital improvements, client fiinds, and other donor-imposed stipulations.

Promises to Give

Conlribulioiis are recognized when the donor makes a promise to give to the Facility that is, in substance, unconditional. All donor-restricted contributions are reported as increases in temporarily or permanently restricted nel assets depending on the nattire ofthe restrictions. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted nel assets.

Accounts Receivable

The Facility carries its accounts receivable al cost. The Facility considers all receivables to be fully eolleciible: accordingly, no allowance for doubtful accounis is required.

Property and Equipment

Donations of property and equipment are recorded as support at their estimated fair value. Such donations are reported as unrestricted support unless the donor has restricted the donated asset to a specific purpose. Assets donated with explicit restrictions regarding their use and contributions of cash thai must be used to acquire property and equipment are reported as restricted suppoit. Absent donor stipulations regarding how long those donated assets tnusi be maintained, the Facility repons expirations of donor restrictions when the donated or acquired assets are placed in service as in.structed by the donor. The Facility reclassifies temporarily restricted net assets to unrestricted nei assets at that time.

The Facility follows the practice of capitalizing, at cost, all expendilures for property and equipment in excess of $500. Gains or losses on dispositions of properly are included in the Statement of Activities. r.)eprecialion is computed on a straight-line basis over the estimated useful lives oflhc assets.

Contributions

Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support depending on the existence or nature of any donor restrictions.

HOLY ANGELS RESIDENHAL FACH^ITY, INC.


1. Summary of Significant Accounting Policies (continued)

Contributed Services

During the years ended June 30, 2010 and 2009, the value of contributed services meeting the requireinents for recognition in the financial statements was not material and, accordingly, has not been recorded.

Functional Allocation of Expenses

The costs of providing the Facility's various programs and supporting ser\dces have been summarized on a functional basis in the Statement of Activities. Accordingly, certain costs have been allocated among the programs and supporting ser\Mces benefited.

Use of Estimates

The preparation of fmancial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions thai afiect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Subsequent Events

Managemeni has evaiuaicd stibsequen: events througli September 13, 20'. (), the date the financial statements were available to be issued.

Reclassifications

Certain amounts for the year ended .lune 30, 2009 have been reclassified in these comparative financial staiements. These reclassifications had no effect on the total change in nei assets for that year.

2. Cash and Cash Equivalents

The Facihly maintains a master repurchase agreement (repo account) with .IP Morgan Chase Bank. The St. Michael Flome cash account retains enough money to pay daily operating expenses while the balance is used to purchase securities. The St. Michael Home repo account is currently yielding A5%. As of .lune 30, 2010 and 2009, the St. Michael Home repo account balances were $31,000 and $35,000, respecfivcly.

10

HOLY ANGELS RESU)EN TIAL FACILMY, INC.


3. A ccounts Receivable

Accounts receivable al .lunc 30 consist ofthe following:

2010 2009

Government programs Patient Zita Trust Other

Total accounts receivable

$ 953,813 8,210

53,5^0 16,715

S 1,032,318

$

S

941,402 3,955

54,468 2.330

L00^,155

4. Property and Equipment

Property and equipment at .lune 30 consist ofthe following:

2010 2009

Equipmeni Land improveinents Leasehold improvemenis Vehicles Work activitv center

Less accumulated depreciation Property and equipment, nei

%

%

1.611,463 73,495

676,559 601.442 53,451

3,016.410 1.839-457 IJ 76.953

S

S

1.518,797 53,551

587,903 483.848

35.891 2,679,990 1.657.491 1.022.499

5. Temporarily Restricted Net Assets

Temporarily restricted net assets are available for the following purposes:

2010 2009

Work Acfivity Center $ 46,362 $ 17,172 Lquipment and construction projects 721,599 883,929

S 767,961 S 901,101

11



5. Temporarily Restricted Net Assets (continued)

Net assets were released from donor restricfions by incurring expenses satisfying the purpose or time restrictions specified by donor as follows:

2010 2009

Work activity expenses Wages Strategic planning and funding of operafions Lquipment purchases and building additions

$

S

44,326 104,701

100,000

407-303 656,330

$

S

48,199 46,968

78,750

480.730 654.647

(5. Lease Agreement i n "

Holy Angels Residential Facility leases its premises from Zita Residential Facility, LLC. The lease is ibr a period of ten years, ending on .lune 30, 2016. The terms of ihe lease require rental payments of $20,000 per month. Lease expense paid lo Zita Residential Facility. LLC was $2'40,()00 for each ofthe years ended .lune 30, 2010 and 2009.

Floiy Angels Residenfial Facility leases five of its group homes from Zila Homes, LLC. These leases are for periods ranging from five to ten years with tolal monthly rental payments of S7,880. Lease expense paid to Zita Homes, LLC was $94,559 and $87,812 for the years ended .June 30, 2010 and 2009. respecfivcly.

Miniinuni lease payments on long-temi leases by year are as follows:

Year Endin



8, Federal and State Funds

1'hc Facility is participating in Federal and State funded government programs. For the fiscal years ending Jtmc 30, 2010 and 2009 the percentages of client care received by the Facility from Federal and State funded Title XIX Funds were 87.1% and 88.6%, respecfiveiy.

9. Retirement Plan

The Facility has a 403(b) retirement plan for the benefit of eligible employees, as defined by the plan, who meet certain minimum service requirements. Eligible employees may defer a portion of their salai;>\ up to the elective deferral limit set by the Intemal Revenue Service. The Facility contributes up to five percent oflhc eligible employees' compensafion based on years of service. Employees are immediately vested in both employee and employer contribution amounts. Refirement plan costs for the year ended .lune 30, 2010 and 2009 were $220,595 and $218,882 respectively.

1(K Concentrations of Credit Risk

'fhe Facility has coneeritraied its credit risk for ca.sh by maintaining deposits in fmancial institutions, which may ai times exceed amounts covered by insurance provided by the U.S. Federal Deposit Insurance Coqioralion (FDIC) or provided by the Securities Investor Protection Corjx)rafion (SIPC). Ai .lune 30, 2010, the maximum loss that would have resulted from i\vd\ risk totaled approximately S990,O00 for the excess of deposit liabiUties repoiied by the finarieiai institutions over the amounts thai would have been covered by insurance. The Facility has noi experienced any losses in such accounts and believes il is not exposed lo any significant credit risk to cash and cash equivalents.

The Facility's operations are located in Shreveport, Louisiana and its clients come primarily from northwest Louisiana, 'fhe Facility's major source of revenue is derived fi-om tuition and room and board.

The Facility relies upon Title XIX Funds provided by Medicaid for a substantial portion of its revenue. Laws and regulations governing the Medicaid program are extremely complex and subject to interpretafion. As a result, there is at least a reasonable possibility that funding through the Medicaid program will change by a material amouni in the near term.

IL Contingencies

As discussed in Note 6, the Facility is leasing a substantial porlion of its premises from Zita Residential Facility, LLC. Should this entity disconfinue the current leasing arrangement, the Facility's ability to continue as a going concern would be in jeopardy.

13

OTHER REPORT

SMITH PUGH AND COMPANY. LLP

Certified Puhlic Accountants • Management Consultants • Business Advisors

Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based

on an Audit of Financial Statements Performed in Accordance With Governmental Auditing

Standards

To the Board of Directors Holy Angels Residenfial Facility, Inc. Shreveport, Louisiana

We have audited the financial statements of Holy Angels Residenfial Facilily, Inc. (a nonprofit organization), as of and for the year ended June 30, 2010, and have issued our repori thereon dated Sepiember 13, 2010. We conducted our audit in accordance with audifing standards generally accepted in the United Stales of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of ihc United Slates.

Internal Control Over Financial Reporfing

In planning and perfonning otir audit, we considered Holy .A.i"igels Residential Facilily, Inc.'s intemal control over financial reporting as a basis for designing our auditing procedures for the purpose o\' expressing our opinion on the financial staiements, but no: for the purpose of expressing an opinion on the effectiveness of Ploly Angels Residential Facility, Inc.'s internal control over financial reporting. Accordingly, we do noi express an opinion on the effectiveness of Holy Angels Residential Facility, Inc.'s inicnuil control overfinanclal reporting.

Our consideration of internal control over financial reporting was ibr the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over fmancial reporting that might be significant deficiencies or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies or material weaknesses have been identified, yiowever, as described in the accompanying Schedule of Audit Findings and Responses, we idenfified certain deficiencies in internal control over financial reporting that we consider to be material weaknesses and other deficiencies ihat we consider to be significant deficiencies.

A deficiency in internal control exists when the design or operation of a control docs 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 combinafion 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 fimcly basis. We consider the deficiencies described in the accompanying Schedule of Audit Findings and Responses to be material weal^esses. See Findings 2010-1 and 2010-2.

14, Phone 318-869-1055 • Fax 318-869-4736 • 470 Ashley Ridge Blvd. • ShrcvcpcHt. LA 71106 • www.spcpa.com

http://www.spcpa.com

A significant deficiency is a deficiency or a combination of deficiencies in internal control thai is less severe than a material weakness, yet important enough to merit attention by those charged with govemance. We consider the deficiencies described in the aeeoinpanying Schedule of Audit Findings and Responses to be significant deficiencies. Sec Findings 2010-3 and 2010-4.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether Holy Angels Residential Facility, Inc.'s financial statements arc free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulafions, contracts and grant agreements, noncompliance with which could have a direct and material effect on the delenninafion of financial statement amounts. However, providing an opinion on compliance wilh 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.

We noted certain matters that we reported to managemeni of Holy Angels Residential Facility, Inc. in a separate letter dated September ] 3, 2010.

Holy Angels Residential Facility, Inc.'s responses to ihc findings idenfified in our audii are described in the accompanying Schedule of Audit Findings and Responses. We did not audit Holy Angels Residenfial Facilily, Inc.'s response and, accordingly, we express no opinion on them.

lliis repon is intended solely for the infomiation and use of managemem, the Board of Directors, and the Office ofthe Legislative Auditor and is not intended to be and should noi be used by anyone other than these specified parties.

W^M&^L^r^^^'^^' L'-*' Shreveport, L.ouisiana September 13,2010

IS

SCHEDULE OF AUDIT FINDINGS AND RESPONSES

HOLY ANGELS RESIDEN JIAL FACIEI lY, INC.

Schedule ol Audit Findings and Responses June 30, 2010

2010-1 Finding: An aged accounts receivable trial balance thai agrees to the general ledger was not available at the time of our audit fieldwork.

Cause: Unknown.

Recommendation: A reconciliation of accounts receivable from fiie general ledger to the accounts receivable detail ledger should be prepared to cheek that the recording of transactions is accurate and proper, and that any adjustments io, or write-offs of, accounts receivable have been approved. We recommend that this reconciliation be performed al each month end to ensure that the general ledger balance, and thus the monthly financial siaiemeiits, refiects the proper accounts receivable amount. In addition, management should develop procedures to ensure that differences are idenfified, researched, and resolved on a timely basis.

Response: The Board of Directors and managemeni concur with the recommendation.

2010-2 Finding: An aged accounts payable trial balance thai agrees to the general ledger was not available at the time of our audit fieldwork.

Cause: Unknown.

Recommendation: A reconciliation of accounts payable from ihc general ledger io the outstanding accotmls payable register should be pret')ared to determine that all additions to, and payments of accounts payable are eorrecily recorded and to determine whether there are an>' disputed items. We recommend that this reconciliation be performed at each month end lo ensure that the general ledger balance, and thus the monthly financial statements, refiects the proper accounts payable amouni.

Response: The L ôard of Directors and managemeni concur wilh the recommendafion.

2010-3 Finding: A significant deficiency in internal control over financial reporting exists in the Organization's financial statement close proeCoS for preparing its year-end financial statements, including ineffective controls to ensure timely review oi'all account reconciliations and significant financial statement accounts, and ineffective controls over the review of the year-end financial statements. This significant deficiency could result in a material misslalemenl to the Organization's financial stalemenls that would not be prevented or detected on a timely basis. During the audit, we recommended more than 30 adjusfing joumal entries. The effect of such entries was to decrease the nel loss by approximately $70,000. Substanfially all of the entries were to correct bookkeeping errors or to make accruals and other adjustments thai should have been made by the accounting department.

Cause: Unknown.

16

HOLY ANGELS RESIDENTIAL FACRTTY, INC.

Schedule of Audit Findings and Responses June 30, 2010

Recommendation: To miprove the financial statement close process, we recommend that the Organizalitm establish a more efficient and effective responsibilities matrix for its close process to provide timely and accurate completion of financial reporting as well as timely review and approval by someone who has sufficient skill, knowledge and expertise.


2010-4 Finding: Management has chosen to engage the auditor to propose certain adjusting joumal entries and to prepare the annual financial statements

Cause: This condition is intentional by managemeni based upon the Organization's financial complexity, along with the cost effccfiveness of acquiring the ability to prepare fmancial statements in accordance with generally accepted accounting principles. Consistent wilh this decision, intemal controls over the preparafion of adjusfing entries and armual financial staiements, complete with notes, in accordance with generally accepted accounting principles, have noi been established.

Recommendation: None


17

SMITH PUGH A N D C O M P A N Y . LLP

Certified Puhlic Accountants • Management Consultants • Business Advisors

The Board of Directors Holy Angels Residential Facility, Inc. Shreveport. Louisiana

In planning and performing our audit of the financial statements of Holy Angels Residential Facility, Inc. for the year ended June 30, 2010, in accordance with auditing standards generally accepted in the United States of America, we considered the Facility's internal control over financial reporting (internal control) as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness ofthe facility's internal control. Accordingly, we do not express an opinion on the effectiveness ofthe Facility's internal control.

However, during our audit, we became aware ofthe following matters that are opportunities for strengthening internal controls and operating etficieney. A separate letter dated September 13, 2010 contains our communication of significant deficiencies or material weaknesses in the Facility's internal control. This letter does not affect our report dated September 13, 2010, on the financial statements of Holy Angels Residential Facility, Inc..

We will review the status of these comments during our next audit engagement. We have already disctissed some of these comments and suggestions with various Facilit\' personnel, and we will be pleased to discuss them in further detail at your convenience, to perform any additional study of these matters, or lo assist you in implementing the recommendations. Our comments are summarized as follows:

Cash Accounts

The operating account bank reconciliation at June 30, 2010 had an unreconciled variance of $4,942. Unresolved variances on the operating account bank reconciliations were noted on reconciliations dating back to November 2009. Bank reconciliations for certain other cash accounts also had unreconciled variances. In addition, bank reconciliations had not been prepared for the LXmations and Taste of Shreveport cash accounts. Wc recommend that a cash reconciliation that reconciles the bank balance lo the general ledger balance be prepared to determine that all cash transactions have been recorded properly. These reconciliations should be prepared on all cash accounts within two weeks of month end with all variances researched and resolved.

At the lime of our audit fieldwork, the subledgers for the Church Fund and Work Activity Center cash accounts were not current. The recordkeeping for these accounts should be maintained in a fimely and proper manner but no less than monthly including reconciliation ofthe respective bank accounts.

Phone 318-869-1055 • Fa.\ 318-869-4736 • 470 Ashley Ridge Blvd. • Shreveport. LA 71106 • www.spcpa.coni

http://www.spcpa.coni

r-)uring our audit tests, we noted two instances in which several manual checks were issued but not recorded on die general ledger in a timely manner. We recommend that manual cheeks be recorded on the general ledger as soon as they are written rather than when they have cleared the bank slalemenl and are discovered during the bank reconciliation process.

During the year ended June 30, 2010, cash in the Donations account was transferred to the operating account; however, there was no subledgcr maintained separating unrestricted and restricted cash lo document the release of restriction by the donor or throtigh oxpenditure.s for the restricted purpose. We recommend that restricted fiinds not be commingled with unrestricted ftinds without a proper accounling ofthe segregation.

Donation Revenue

'fhere is no record of checks received prepared prior to submitting the checks to the employee who is responsible for preparing the daily bank deposit. We recommend that all cheeks be restrictively endorsed by the person opening the mail. In addition, a listing of checks or an adding machine tape with totals should be prepared prior to submitting the checks lo the employee who is responsible for preparing the daily bank deposit. This listing should be used for verification by someone not involved in the receipt and deposit process that ail checks were properly and timely deposited to a Holy Angels Residential Facilily, Inc. account.

We wish to thank the controller and her department for their support and assistance during our audit.

This report is intended solely for the information and use of management, the Board of Directors, and others within the facility and is not intended to be and should not be used by anyone other than these specified parties.

i!a^&t-A'^Lp'N''^-n> i-̂ ^ Certified Public Accountants September 13,2010

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Documents

Holy Angels Residential Facility, Inc.app1.lla.la.gov/PublicReports.nsf/55A2BD0985548AAA862578770079E… · /o^ff^ HOLY ANGELS RESIDENTIAL I ACILITV, INC. SHREVEPORT, LOUISIANA FINANCIAL