JEFFERSON COUNTY CHILD DEVELOPMENT … Jefferson County...JEFFERSON COUNTY CHILD DEVELOPMENT COUNCIL, INC. FINANCIAL STATEMENTS FOR THE YEARS ENDED MAY 31,2017 AND 2016 PEARCE, BEVILL,

JEFFERSON COUNTY CHILD DEVELOPMENT COUNCIL, INC.

FINANCIAL STATEMENTS FOR THE YEARS ENDED MAY 31,2017 AND 2016

PEARCE, BEVILL, LEESBURG, MOORE, P.C. CERTIFIED PUBLIC ACCOUNTANTS

TABLE OF CONTENTS

PAGE

INDEPENDENT AUDITORS' REPORT ................................................................................... 3

FINANCIAL STATEMENTS

Statements of Financial Position ............................................................................................... 6

Statements of Activities ............................................................................................................ 7

Statements of Functional Expenses .......................................................................................... 9

Statements of Cash Flows ....................................................................................................... 11

Notes to Financial Statements ................................................................................................. 12

SUPPLEMENTARY INFORMATION

Schedule of Expenditures ofFederal Awards ......................................................................... 19

Note to Schedule of Expenditures of Federal Awards ........................................................... .20

INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS .................................. .21

INDEPENDENT AUDITORS' REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE ............................................................................................... 23

SCHEDULE OF FINDINGS AND QUESTIONED COSTS ................................................... 26

SCHEDULE OF PRIOR AUDIT FINDINGS ........................................................................... 27


J. Wray Pearce, CPA Harold L. Bevill, CPA (1946-1992) Charles W. Leesburg, CPA, MBA Stephen L. Moore, CPA Tommy B. Beam, CPA W. Glenn Bridges, Jr.., CPA, MBA Hal (Buu) Coons, ill, CPA Stephen B. Jones, JD, CPA, CVA Joseph M. Lassiter, CPA David T. Williams, CPA Jeffrey R. Thornton, CPA W. Robert! Cook, CPA/ABV Michael B. Hawkins, CPA/ABV Carlos G. McDonald, CPA Robin A. Waldrup, CPA Justin K. Berry, CPA James R. (Rob) Shirley, CPA James Norris, CPA Sarah B. Propper, CPA Douglas K. Uhler, CPA, CVA, DABFA

To the Board of Directors


110 Office Park Drive, Suite 100

Birmingham, Alabama 35223-2402

205-323-5440 I fax 205-328-8523

www.pearcebevill.com

INDEPENDENT AUDITORS' REPORT

Jefferson County Child Development Council, Inc.

Report on Financial Statements

Matt Andrews, CPA Kelly Bartko, CPA Brittany Bingel, CPA Shannon D. Browne, CPA Daisy B. Buck, CPA Chase Campbell, CPA Samantha Crabtree, CPA Spencer D. Davis, CPA Patrick L. Dodd, CPA James W. Ezell, Jr., CPA Delphine E. Ford, CPA Tyler E. Jenkins, CPA, CFE Donna Jordan, CPA Jacob F. Julian, IV; CPA Andrea E. Lee, CPA Emily L. McEuen, CPA Heather Melson, CPA Karen A. Moore, CPA Glover Graham Pope, CPA, CITP Tony L. Raycraft, CPA, CGMA Blake N. Senn, CPA JefferyS. Smith, CPA Emily E. Stein, CPA Jenna B. Stricklen, CPA Candice P. Walker, CPA Anna Katherine Weathington, CPA Thomas C. Zoebelein, CPA, MBA, CGMA

We have audited the accompanying financial statements of Jefferson County Child Development Council, Inc. (a nonprofit organization), which comprise the statements of financial position as of May 31, 201 7 and 2016, and the related statements of activities, functional expenses and cash flows for the years then ended and the related notes to the financial statements.

Members:

Management's Responsibility for tlte Financial Statements

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

Auditors' Responsibility

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 the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement.

- 3-The American Institute of Certified Public Accountants The Alabama Society of Certified Public Accountants PCPS- The AICPA Alliance for CPA Firms National CPA Health Care Advisors Association

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

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

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Jefferson County Child Development Council as of May 31, 2017 and 2016, and the changes in net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters

Other Information

Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principle and Audit Requirements for Federal Awards, is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the 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 financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole.

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Other Reporting Required by Governntent Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated November 15, 2017, on our consideration of Jefferson County Child Development Council, 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 internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Jefferson County Child Development Council, Inc.'s internal control over financial reporting and compliance.

November 15,2017

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Statements of Financial Position May 31,2017 and 2016

ASSETS

Current Assets: Cash and cash equivalents Restricted cash Accounts receivable

Total Current Assets

Property and equipment, net

Total Assets

LIABILITIES AND NET ASSETS

Current Liabilities: Accounts payable Accrued liabilities

Total Current Liabilities

Net Assets: Unrestricted Temporarily restricted

Total Net Assets

Total Liabilities and Net Assets

$

$

$

$

2017

17,923 57,045

158,471

233,439

401,089

634,528

161,727

161,727

415,756 57,045

472,801

634,528

See auditors' report and accompanying notes to fmancial statements. - 6-


2016

$ 19,271 54,939 77,744

151,954

416,083

$ 568,037

$ 79,502 174

79,676

433,422 54,939

488,361

$ 568,037


Statement of Activities For the Year Ended May 31, 2017

Temporarily Unrestricted Restricted

SUPPORT AND REVENUE

Grants from governmental agencies $ $ 3,572,571 In-kind contributions 635,108 Other 1,407

1,407 4,207,679

Net assets released from restrictions: Satisfaction of program restrictions 4,205,573 (4,205,573)

Total support and revenue 4,206,980 2,106

EXPENSES

Program expenses: Early Head Start program 459,966 Early Head Start in-kind expenses 111,656 Head Start program 2,080,461 Head Start in-kind expenses 523,452 Child Nutrition program 1,030,815

Total program expenses 4,206,350

Management and general 18,296

Total expenses 4,224,646

Change in net assets (17,666) 2,106

Net assets- beginning of year 433,422 54,939

Net assets - end of year $ 415,756 $ 57,045



Total

$ 3,572,571 635,108

1,407 4,209,086

4,209,086

459,966 111,656

2,080,461 523,452

1,030,815 4,206,350

18,296

4,224,646

(15,560)

488,361

$ 472,801


Statement of Activities For the Year Ended May 31,2016

Temporarily Unrestricted Restricted

SUPPORT AND REVENUE

Grants from governmental agencies $ $ 3,572,085 In-kind contributions 624,043 Other 11,126

11,126 4,196,128

Net assets released from restrictions: Satisfaction of program restrictions 4,181,075 (4,181,075)

Total support and revenue 4,192,201 15,053

EXPENSES

Program expenses: Early Head Start program 449,182 Early Head Start in-kind expenses 87,025 Head Start program 2,046,989 Head Start in-kind expenses 537,018 Child Nutrition program 1,062,307

Total program expenses 4,182,521

Management and general 16,890

Total expenses 4,199,411

Change in net assets (7,210) 15,053

Net assets - beginning of year 440,632 39,886

Net assets - end of year $ 433,422 $ 54,939



Total

$ 3,572,085 624,043

11,126 4,207,254

4,207,254

449,182 87,025

2,046,989 537,018

1,062,307 4,182,521

16,890

4,199,411

7,843

480,518

$ 488,361


Statement of Functional Expenses For the Year Ended May 31, 2017

Accounting and legal services Auto insurance Automobile repair and maintenance Bank charges Board and policy council meetings Building maintenance and repair Equipment leases Equipment maintenance Health services In-kind board time In-kind goods and services In-kind policy council time In-kind home space In-kind volunteer hours Insurance Memberships and subscriptions Parent services Payroll expenses Payroll processing services Postage Printing and advertising Professional fees Provider contractual agreements Rent Retirement Salaries Supplies- educational Supplies - office Taxes and licenses Telephone Training - staff and providers Training and technical assistance Travel Utilities Depreciation

Pro~am Services

Total Early Program

Head Start Head Start Child Nutrition Services

$ 12,384 $ 52,973 $ 10,897 $ 76,254 1,723 9,761 11,484

846 4,772 5,618 1 11 572 584

358 1,866 202 2,426 6,098 42,462 3,730 52,290 1,191 5,881 3,237 10,309 3,165 17,990 2 21,157 3,296 11,273 14,569

13,199 54,118 67,317 11,011 62,398 73,409

853 4,836 5,689 74,157 314,465 388,622 12,436 87,635 100,071 13,708 88,615 14,198 116,521

322 1,844 392 2,558 2,332 9,574 11,906 5,910 38,858 5,895 50,663

808 3,885 332 5,025 141 873 1,000 2,014 967 4,451 2,274 7,692

24,702 76,675 9,859 111,236 284,485 1,059,878 885,119 2,229,482

825 3,675 4,500 668 5,738 206 6,612

70,287 463,832 73,615 607,734 12,326 109,543 121,869 3,920 11,552 4,181 19,653

11 79 8 98 956 5,389 1,764 8,109

6,657 6,657 5,871 31,651 37,522

884 4,243 5,374 10,501 1,781 13,117 1,301 16,199

$ 571,622 $ 2,603,913 $ 1,030,815 $4,206,350

See auditors' report and accompanying notes to financial statements. -9-

Supporting Services

Management and

General

$

9 425

2,664

45 159

14,994

$ 18,296


Total

$ 76,254 11,484 5,618

593 2,851

52,290 10,309 21,157 14,569 67,317 73,409

5,689 388,622 100,071 116,521

2,558 11,906 50,663

5,025 2,014 7,692

111,236 2,229,482

4,500 6,612

607,734 124,533

19,653 98

8,109 6,657

37,567 10,660 16,199 14,994

$4,224,646


Statement of Functional Expenses For the Year Ended May 31,2016

Accounting and legal services Auto insurance Automobile repair and maintenance Bank charges Board and policy council meetings Building maintenance and repair Equipment leases Equipment maintenance Health services In-kind board time In-kind goods and services In-kind policy council time In-kind home space In-kind volunteer hours Insurance Meal expense Memberships and subscriptions Parent services Payroll expenses Payroll processing services Postage Printing and advertising Professional fees Provider contractual agreements Rent Retirement Salaries Supplies - educational Supplies - office Taxes and licenses Telephone Training - staff and providers Training and technical assistance Travel Utilities Other Depreciation

Pro~am Services

Total Early Program

Head Start Head Start Child Nutrition Services

$ 14,438 $ 35,156 $ 6,073 $ 55,667 2,171 12,301 14,472

418 1,982 2,400 6 45 269 320

398 1,640 77 2,115 3,479 24,878 3,820 32,177 1,592 7,498 3,429 12,519

38 278 28 344 3,387 14,557 17,944 8,567 17,557 26,124

10,254 59,737 69,991 318 1,798 2,116

54,632 350,886 405,518 13,254 107,040 120,294 13,632 97,056 13,977 124,665

1,710 1,710 1,192 6,754 234 8,180 1,962 6,215 8,177 6,024 39,885 5,703 51,612

573 3,105 855 4,533 346 3,018 2,237 5,601

1,688 7,967 3,062 12,717 18,314 78,597 7,150 104,061

263,838 1,067,173 924,186 2,255,197 3,750 15,750 19,500 1,009 6,396 238 7,643

78,135 497,349 72,228 647,712 3,449 35,291 100 38,840 2,268 13,827 3,813 19,908

2 12 1 15 3,691 20,255 5,944 29,890 1,311 7,358 517 9,186

12,612 26,230 38,842 7,014 4,692 5,207 16,913 2,445 11,724 1,449 15,618

$ 536,207 $ 2,584,007 $ 1,062,307 $ 4,182,521


Supporting Services

Management and

General

$

12

1,432

451 14,995

$ 16,890


Total

$ 55,667 14,472 2,400

332 2,115

32,177 12,519

344 17,944 26,124 69,991

2,116 405,518 120,294 124,665

1,710 8,180 9,609

51,612 4,533 5,601

12,717 104,061

2,255,197 19,500 7,643

647,712 38,840 19,908

15 29,890

9,186 38,842 16,913 15,618

451 14,995

$ 4,199,411


Statements of Cash Flows For the Years Ended May 31,2017 and 2016

2017 CASH FLOWS FROM OPERATING ACTIVITIES

Change in net assets $ (15,560) Adjustments to reconcile change in net assets to net cash

provided by (used for) operating activities: Depreciation expense 14,994 (Increase) decrease in assets:

Restricted cash (2,106) Accounts receivable (80,727)

Increase (decrease) in liabilities: Accounts payable 82,225 Accrued liabilities (174)

Net cash provided by (used for) operating activities {1,348)

Net increase (decrease) in cash and cash equivalents (1,348)

Cash and cash equivalents - beginning of year 19,271

Cash and cash equivalents - end of year $ 17,923

See auditors' report and accompanying notes to financial statements. - 11 -


2016

$ 7,843

14,995

(15,053) 125,915

(124,157) (4,058)

5,485

5,485

13,786

$ 19,271


Notes to Financial Statements For the Years Ended May 31, 2017 and 2016

1. DESCRIPTION OF THE ORGANIZATION

Jefferson County Child Development Council, Inc. ("the Council") was founded in 1973 and operates based on the concept that quality education cannot be separated from the health, nutrition and mental health status of children. The Council researches these areas to determine what related need can be satisfied within the child care community. In addition, the Council continually seeks to be informed about and involved in all issues dealing with the well-being of children within Jefferson County.

The Council's purpose is to maintain and expand programs toward the goal of enriching the educational, cultural and developmental environment for all children in the Jefferson County child care community. The achievement of this goal includes the efforts of staff, volunteers, Council members and interested professionals and laymen in conjunction with financial support provided by Federal and State governments.

On a daily basis, the Council sponsors and administers community-based child care and nutrition programs in and around the Birmingham, Alabama area.

2. SUMMARY OF ACCOUNTING POLICIES

Basis of Presentation

The Council records its activities on the accrual basis, recognizing grant revenue when earned and expenses as incurred.

Net assets, revenues and expenses are classified based on the existence or absence of imposed restrictions. Accordingly, the net assets of the Council and changes therein are classified and reported as follows:

• Unrestricted net assets represent revenues and expenses related to the operation and management of the Council's primary programs and supporting services.

• Temporarily restricted net assets represent resources available for use, but expendable only for the purposes specifically stated by the grantor or donor.

• There are no permanently restricted net assets.

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Donations

The Council reports gifts of cash and other assets as restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the Statements of Activities as net assets released from restrictions.

In-kind Contributions and Contributed Services

The Council recognizes the fair value of contributed services received if such services a) create or enhance nonfinancial assets or b) require specialized skills that are provided by individuals possessing those skills and would typically need to be purchased if not contributed. The Council receives services from a large number of volunteers who give significant amounts of their time to the Council's programs, but which do not meet the criteria for financial statement recognition.

The Council benefited from in-kind contributed services valued by the customary amount charged for similar services at $635,108 and $624,043 during the years ended May 31, 2017 and 2016, respectively. These amounts have been reported as both in-kind contribution revenue and in-kind expense in the Statements of Activities. The revenue is shown as temporarily restricted contributions that are then reclassified to unrestricted as the restrictions are satisfied during the same period in which they are recognized. The expenses are solely related to the Head Start and Early Head Start programs and they are reflected as such on the Statements of Functional Expenses.

The Head Start and Early Head Start programs, funded by the Department of Health and Human Services, require that entities conducting the programs receive nonfederal matching of at least twenty percent of total expenditures. The amount of in-kind contributed services above satisfies this requirement.

Functional Allocation of Expenses

The costs of providing Council programs and the administration of the Council have been summarized on a functional basis in the Statements of Functional Expenses. Accordingly, certain costs have been allocated based on estimates among the programs and supporting services benefited.

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Cash and Cash Equivalents

Restricted cash is limited in use to expenditures for the federal program from which the Council receives the corresponding awarded funds. Single audit compliance guidelines require that restricted funds received are to be kept in separate bank accounts. The Council was in full compliance with this requirement at May 31, 2017 and 2016.

Fair Value of Financial Instruments

The carrying value of the Council's accounts receivable, accounts payable and accrued liabilities approximates fair value because of the short-term maturity of those instruments.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Donated property and equipment are stated at fair market value at the date of the gift. Depreciation is provided on the straight-line method over the useful life of each asset. Repairs and maintenance are expensed as incurred. The Council capitalizes all expenditures for property and equipment in excess of $5,000 in cost per Head Start program guidelines with whose federal award funds the Council makes the majority of its capital purchases.

Income Taxes

The Council is a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code. Accordingly, no provision for income taxes is reflected in the financial statements. The Council adopted accounting standards relating to uncertainty of income tax positions. As a result of this adoption, management assessed whether there were any uncertain tax positions that may give rise to income tax liabilities and determined that there were no such matters requiring recognition in the accompanying financial statements. The Council files income tax returns in the U.S. federal jurisdiction. With few exceptions, the Council is no longer subject to U.S. federal, state and local or non-U.S. income tax examinations for years before June 1, 2014.

Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the use of estimates made by the Council. These estimates affect the reported amounts of assets and liabilities at the reporting date and revenue and expenses, during the reporting period. Actual results could differ from those estimates.

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Recently Issued Accounting Standards

In August 2016, FASB issued Accounting Standards Update ("ASU") No. 2016-14, Presentation of Financial Statements of Not-for-Profit Entities, with the objective of improving not-for-profit entity ("NFP") financial statements to better provide useful information to grantors, creditors, donors, and other financial statement users. The ASU, which amends the requirements for financial statements and notes in ASC Topic 958, Not-for-Profit Entities, changes how NFPs present net assets and changes in net assets in the financial statements, in addition to requiring additional disclosures for expenses by nature and function and for the liquidity and availability of resources. The new guidance will be effective for annual financial statements for fiscal years beginning after December 15, 2017, and for interim periods within fiscal years beginning after December 15,2018. Early adoption is permitted. The Council is currently assessing the potential impact the guidance will have upon adoption.

In May 2014, the F ASB issued authoritative guidance to change the criteria for revenue recognition. The core principle of the new standard is that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, several new revenue recognition disclosures will be required. This guidance is effective for reporting periods beginning after December 15, 2017. The Council is currently assessing the potential impact the guidance will have upon adoption.

3. PROPERTY AND EQUIPMENT

As of May 31, 2017 and 2016, property and equipment consisted of the following:

2017 2016

Building $ 584,766 $ 584,766 Automobiles 110~232 110~232

694,998 694,998

Less accumulated depreciation (293,909) (278,915)

Property and equipment, net $ 401~089 $ 416~083

Depreciation expense amounted to $14,994 and $14,995 for the years ended May 31, 2017 and 2016, respectfully.

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Certain property and equipment with a net carrying amount of$401,089 and $416,083 at May 31, 2017 and 2016, respectively, was acquired with grant funds received from the Head Start program. Under terms of the grant agreement with the Federal-awarding agency (the "agency"), title to real property vests in the Council subject to the condition that the Council uses the property for the authorized purpose of the program as long as it is needed and the Council shall not encumber the property without the approval of the agency. Use of the property in other federally sponsored projects is allowed upon the written approval by the agency. When no longer needed for the aforementioned purposes, the agency must then be consulted as to the appropriate disposition of the property.

4. COMMITMENTS

The Council entered into an operating lease agreement for the use of a building for certain program services. Total rental expense for the years ended May 31, 2017 and 2016 amounted to $4,500 and $19,500, respectively. The lease ended during 2017 and was not renewed.

5. GRANT SUPPORT FROM GOVERNMENTAL AGENCIES AND OTHER SUPPORT

The Council relies upon grant funding for the majority of its operations. For the years ended May 31, 2017 and 2016, the Council received grant support as follows:

Government Support:

Temporarily Restricted Support:

United States Department of Health and Human Services:

Head Start Program Early Head Start Program

United States Department of Agriculture, as a sub recipient through the State of Alabama Department of Education:

Child Nutrition Program

Total Federal Support

Total temporarily restricted governmental support

- 16-

2017

$ 2,076,636 463,791

1,032,144

3,572,571

3,572,571


2016

$ 2,053,025 443,146

1,075,914

3,572,085

3,572,085

Private Support and Revenue:

Temporarily Restricted:

In-kind contributions

Total temporarily restricted private support

Unrestricted:

Miscellaneous contributions

Total unrestricted private support and revenue

Total private support and revenue

Total support and revenue

635,108

635,108

1 407

1 407

636,515

$ 4.209.086

624,043

624,043

11,126

11,126

635,169

$ 4.207.254

All grant funds of the Council and certain contributions are restiicted to use in accordance with the terms of the related grant, governing laws and regulations and approved budgets.

6. RETIREMENT PLAN

The Council sponsors a tax-deferred annuity plan covering all regular employees who have completed one year of service. For the years ended May 31, 2017 and 2016 the plan allows for a match by the Council on contributions by eligible employees up to 5% ($6,612 and $7,643 for 2017 and 2016, respectively). Vesting occurs at a rate of 20 percent per year. An individual employee may contribute up to 100 percent of their salary up to a maximum of$18,000 per year for the years ended May 31, 2017 and 2016. For those aged fifty and above, the maximum for both years ended May 31, 2017 and 2016 was $24,000.

7. TEMPORARILY RESTRICTED NET ASSETS

At May 31, 2017 and 2016, there were temporarily restricted net assets available for uses related to the Head Start and Child Nutrition programs in the amount of $57,045 and $54,939, respectively. Restricted cash in those amounts can be seen on the Statements of Financial Position.

8. SUBSEQUENT EVENTS

The Council has evaluated subsequent events through the date of the Independent Auditors' Report, which is the date the financial statements were available to be issued and concluded that no events or transactions occurred during that period requiring recognition or disclosure.

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SUPPLEMENTARY INFORMATION



Schedule of Expenditures ofF ederal A wards For the Year Ended May 31,2017

Federal Grantor/Pass-Through Grantor/Program Title

Department of Health and Human Services

Head Start and Early Head Start Programs 2017 Award

Total Department of Health and Human Services

Department of Agriculture

Pass Through the State of Alabama Department of Education:

Child Nutrition Program 2016 Award

2017 Award

Total Department of Agriculture

Total Expenditures of Federal Awards

Federal Grant/Contract CFDA

Period Number

06/01/16-05/31117 93.600

10/01115-09/30116 10.558

10/01/16-09/30/17 10.558

Amount Expended

2017

$ 2,540,427

2,540,427

341,064

689,751

1,030,815

$ 3 571 242

See independent auditors' report and note to schedule of expenditures of federal awards.

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Note to Schedule of Expenditures of Federal Awards For the Year Ended May 31, 2017

NOTE I-BASIS OF PRESENTATION

The accompanying schedule of expenditures of federal awards includes the federal grant activity of Jefferson County Child Development Council, Inc. and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments and Non-Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements.

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J. Wray Pearce, CPA Harold L. Bevill, CPA (1946-1992) Chatles W. Leesburg, CPA, MBA Stephen L. Moore, CPA Tommy B. Beam, CPA W. Glenn Bridges, Jr., CPA, MBA Hal (Bun) Coons, ill, CPA Stephen B. Jones, JD, CPA, CVA Joseph M. Lassiter, CPA David T. Williams, CPA Jeffrey R. Thornton, CPA W. Robert Cook, CPNABV Michael B. Hawkins, CPNABV Carlos G. McDonald, CPA Robin A. Waldrup, CPA Justin K. Berry, CPA James R. (Rob) Shirley, CPA James Norris, CPA Sarah B. Propper, CPA Douglas K. Uhler, CPA, CVA, DABFA

PEARCE, BEVILL, LEESBURG, MOORE, P.C. CERTlFIED PUBLIC ACCOUNTANTS



205-323-5440 I fax 205-328-8523


INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL

REORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

To the Board of Directors Jefferson County Child Development Council, Inc.

Matt Andrews, CPA Kelly Bartko, CPA Brittany Bingel, CPA Shannon D. Browne, CPA Daisy B. Buck, CPA Chase Campbell, CPA Samantha Crabtree, CPA Spencer D. Davis, CPA Patrick L. Dodd, CPA James W. Ezell, Jr., CPA Delphine E. Ford, CPA Tyler E. Jenkins, CPA, CFE Donna Jordan, CPA JacobE Julian, I\7, CPA Andrea E. Lee, CPA Emily L. McEuen, CPA Heather Melson, CPA Karen A. Moore, CPA Glover Graham Pope, CPA, CITP Tony L. Raycraft, CPA, CGMA Blake N. Senn, CPA Jeffery S. Smith, CPA Emily E. Stein, CPA Jenna B. Stricklen, CPA Candice P. Walker, CPA Anna Katherine Weathington, CPA Thomas C. Zoebelein, CPA, MBA, CGMA

We have audited, in accordance with the auditing standards generally accepted in the United States of America and standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of Jefferson County Child Development Council, Inc. (a nonprofit organization), which comprise the statement of financial position as of May 31, 2017, and the related statements of activities, functional expenses and cash flows for the year then ended, and related notes to the financial statements, and have issued our report thereon dated November 15, 2017.

Internal Control over Financial Reporting

In planning and performing our audit, we considered Jefferson County Child Development Council, Inc.'s internal control over financial reporting ("internal control") to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Jefferson County Child Development Council, Inc.'s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Council's internal control.

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

Members: The American Institute of Certified Public Accountants The Alabama Society of Certified Public Accountants PCPS. The AICPA Alliance for CPA Firms National CPA Health Care Advisors Association

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

Compliance and Other Matters

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

Purpose of the 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 of the effectiveness of the organization's internal control or compliance. This report is an integral part of the audit performed in accordance with Government Auditing Standards in considering the Council'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, others within the Council, the United States Department of Health and Human Services and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.

November 15, 2017

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J. Wray Pearce, CPA Harold L. Bevill, CPA (1946-1992) Charles W. Leesburg, CPA, MBA Stephen L. Moore, CPA Tommy B. Beam, CPA W. Glenn Bridges, Jr., CPA, MBA Hal (Buu) Coons, DI, CPA Stephen B. Jones, JD, CPA, CVA Joseph M. Lassiter, CPA David T. Williams, CPA Jeffrey R. Thornton, CPA W. Robert Cook, CPA/ABV Michael B. Hawkins, CPA/ABV Carlos G. McDonald, CPA Robin A. Waldrup, CPA Justin K. Berry, CPA James R. (Rob) Shirley, CPA James Norris, CPA Sarah B. Propper, CPA Douglas K. Uhler, CPA, CVA, DABFA




205-323-5440 I fax 205-328-8523


INDEPENDENT AUDITORS' REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM

AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY

THE UNIFORM GUIDANCE

To the Board of Directors Jefferson County Child Development Council, Inc.

Report on Compliance for Each Major Federal Program

Matt Andrews, CPA Kelly Bartko, CPA Brittany Bingel, CPA Shannon D. Browne, CPA Daisy B. Buck, CPA Chase Campbell, CPA Samantha Crabtree, CPA Spencer D. Davis, CPA Patrick L. Dodd, CPA James W. Ezell, Jr., CPA Delphine E. Ford, CPA Tyler E. Jenkins, CPA, CFE Donna Jordan, CPA Jacob F. Julian, :rv, CPA Andrea E. Lee, CPA Emily L. McEuen, CPA Heather Melson, CPA Karen A. Moore, CPA Glover Graham Pope, CPA, CITP Tony L. Raycraft, CPA, CGMA Blake N. Senn, CPA JefferyS. Smith, CPA Emily E. Stein, CPA Jenna B. Stricklen, CPA Candice P. Walker, CPA Anna Katherine Weathington, CPA Thomas C. Zoebelein, CPA, MBA, CGMA

We have audited Jefferson County Child Development Council, Inc.'s (a non-profit organization) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of Jefferson County Child Development Council, Inc.'s major federal programs for the year ended May 31, 201 7. Jefferson County Child Development Council, Inc.'s major federal programs are identified in the summary of auditors' results section of the accompanying Schedule of Findings and Questioned Costs.

Members:

Management's Responsibility

Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs.

Auditors' Responsibility

Our responsibility is to express an opinion on compliance for each of Jefferson County Child Development Council's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance).

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The American Institute of Certified Public Accountants The Alabama Society of Certified Public Accountants PCPS. The AICPA Alliance for CPA Finns National CPA Health Care Advisors Association

Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Jefferson County Child Development Council, Inc.'s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of Jefferson County Child Development Council, Inc.'s compliance.

Opinion on Each Major Federal Program

In our opinion, Jefferson County Child Development Council, Inc. complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended May 31, 2017.

Reporting on Internal Control over Compliance

Management of Jefferson County Child Development Council, Inc. is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Jefferson County Child Development Council, Inc.'s internal control over compliance with types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Jefferson County Child Development Council, Inc.'s internal control over compliance.

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

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Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. We did ·not identify any deficiencies in internal control over compliance that we consider to be material weaknesses.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements the Uniform Guidance. Accordingly, this report is not suitable for any other purposes.

November 15,2017

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Schedule of Findings and Questioned Costs For the Year Ended May 31, 2017 and 2016

Section I- Summary of Auditors' Results

Financial Statements

Type of auditors' report issued:

Internal control over financial reporting: Material weakness( es) identified? Control deficiency identified not

considered to be material weakness?

Non compliance material to financial statements noted?

Federal Awards

Internal control over major programs:

Unmodified

No

No

No

Material weakness(es) identified? No Control deficiency identified not

considered to be material weakness? No

Type of auditors' report issued on compliance for major programs: Unmodified

Any audit findings disclosed that are required to be reported in accordance with Circular A-133, Section .510(a)? No

Identification of major programs:

CFDANumber

93.600

93.600

N arne of Federal Program or Cluster

U.S. Department of Health and Human Services - Head Start Program

U.S. Department of Health and Human Services- Early Head Start Program

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CFDANumber

10.558

Dollar threshold used to distinguish between Type A and Type B programs:

Auditee qualified as low-risk auditee?

Section II - Financial Statement Findings

None

N arne of Federal Program or Cluster

U.S. Department of Agriculture- Child Nutrition Program

$300,000

No

Section III - Federal Award Findings and Questioned Costs

None

Section IV - Summary Schedule for Prior Audit Findings

None

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Documents

JEFFERSON COUNTY CHILD DEVELOPMENT … Jefferson County...JEFFERSON COUNTY CHILD DEVELOPMENT COUNCIL, INC. FINANCIAL STATEMENTS FOR THE YEARS ENDED MAY 31,2017 AND 2016 PEARCE, BEVILL,