Serenity 67 Programs - Louisianaapp1.lla.la.gov/PublicReports.nsf/9E6F2273ACBE...Serenity 67 Baton Rouge, Louisiana I have audited the accompanying financial statements of Serenity

SERENITY 67Baton Rouge, Louisiana

FINANCIAL STATEMENTSFor the Year Ended June 30, 2007

Under provisions of state taw, this repo'lisapuolicdocument A copy of the report has been submitted tothe 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,

Release Date

TABLE OF CONTENTS

Statement Page

Independent Auditor's Report 1

Financial Statements:

Statement of Financial Position A 2

Statement of Activities B 3

Statement of Cash Flows C 4

Statement of Functional Expenses D 5

Notes to the Financial Statements 6

Independent Auditor's Report on Compliance and onInternal Control over Financial Reporting Based onAn Audit of Financial Statements Performed inAccordance with Government Auditing Standards 11

Summary Schedule of Findings and Questioned Costs 14

Summary Schedule of Prior Audit Findings 18

Letter to Management 21

Melvin L. DavisCertified Pnblic Accountant

(A Limited Liability Company)P. O. Box 73360 • Baton Rouge, Louisiana 70874

Phone (225) 774-4703 • Fax (225) 774-4509

INDEPENDENT AUDITOR'S REPORT

The Board of Directors and ManagementSerenity 67Baton Rouge, Louisiana

I have audited the accompanying financial statements of Serenity 67 (a nonprofit organization) asof and for the year ended June 30, 2007, which collectively comprise Serenity 67's basic financialstatements as listed in the table of contents. These financial statements are the responsibility ofSerenity 67's management. My responsibility is to express opinions on these financial statementsbased on my audit.

I conducted my audit in accordance with auditing standards generally accepted in the UnitedStates of America and the standards applicable to financial audits contained in GovernmentAuditing Standards, issued by the Comptroller General of the United States. Those standardsrequire that I plan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. An audit includes consideration of internalcontrol over financial reporting as a basis for designing audit procedures that are appropriate inthe circumstances, but not for the purpose of expressing an opinion on the effectiveness of theOrganization's internal control over financial reporting. Accordingly, I express no such opinion.An audit includes examining, on a test basis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessing the accounting principles used and thesignificant estimates made by management, as well as evaluating the overall financial statementpresentation. I believe that my audit provides a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all material respects,the financial position of the Serenity 67 as of June 30, 2007, and the results of its operations andits cash flows for the year then ended in conformity with accounting principles generally acceptedin the United States of America.

In accordance with Government Auditing Standards, I have also issued my report dated April 14,2008, on my consideration of Organization's internal control over financial reporting and my testsof its compliance with certain provisions of laws, regulations, contracts, grants, agreements, andother matters. The purpose of that report is to describe the scope of my testing of internal controlover financial reporting and compliance and the results of that testing, and not to provide anopinion on the internal control over financial reporting and on compliance. That report is anintegral part of an audit performed in accordance with Government Auditing Standards andshould be read in conjunction with this report in considering the results of my audit.

Baton Rouge, LouisianaApril 14, 2008

1-MEMBER-

American Institute of Certified Public Accountants • Society of Louisiana Certified Public Accountants


Statement of Financial PositionJune 30, 2007

Statement A

ASSETSCash in bankGrants receivableOther assetsProperty and equipment, net (note 3)

TOTAL ASSETS

15,78244,452

187111,791

$ 172,212

LIABILITIESAccrued and withheld payroll taxesNotes payable (note 4)

TOTAL LIABILITIES

NET ASSETSUnrestricted

TOTAL NET ASSETS

$ 94,0015,490

99,491

72,721

$ 172,212

The notes to the financial statements are an integral part of this statement.

Statement B


Statement of ActivitiesYear Ended June 30, 2007

SUPPORT AND REVENUEPublic support $ 4,721Miscellaneous 249Grants from governmental agencies 359,136In-kind support (note 5) 7,440

TOTAL SUPPORT AND REVENUE 371,546

EXPENSESProgram Services:

Drug-free and tutorial services 48,309Elderly and youth services 83,200Strengthening Family 104,631

Supporting Services:General and administrative 25,967

TOTAL EXPENSES 262,107

INCREASE (DECREASE) IN UNRESTRICTED NET ASSETS 109,439

NET ASSETS AT BEGINNING OF YEAR (36,718)

NET ASSETS AT END OF YEAR $ 72,721



Statement of Cash FlowsYears Ended June 30, 2007

Statement C

CASH FLOWS FROM OPERATING ACTIVITIESChange in net assetsAdjustments to reconcile change in net assets to cashprovided (used) by operating activities

Depreciation and amortization(Increase) decrease in operating assets:

Accounts receivableOther assets

Increase (decrease) in operating liabilities:Accounts, salaries, and other payablesOther liabilities

Net cash provided (used) by operating activities

CASH FLOWS FROM INVESTING ACTIVITIESCapital expenditures

Net cash provided (used) by investing activities

Net increase in cash

CASH AT BEGINNING OF YEAR

CASH AT END OF YEAR

$ 109,439

2,132

(11,484)(187)

37,396(14,000)123,296

(109,565)(109,565)

13,731

2,051

$ 15,782



Statement of Functional ExpensesYears Ended June 30, 2007

Statement D

EXPENSESAccountingAdvertisingAuto expensesBank chargesContributionsContract laborFood and snacksInsuranceMiscellaneousPayroll taxesPostagePrintingRentSalariesSuppliesTelephoneTravelUtilitiesDepreciation

Drug-Freeand

TutorialYouth

Services

-----

$ 898

-

-

4,075---

41,8801,456

-

-

--

$ 48,309

Elderly andYouth

Services

$ 500

6381,220

-

-405

3,7053,164

37

4,872103

3931,721

55,67066

3,2736,813

620-

$ 83,200

StrengtheningFamily

$ 4,9651,890

65-

1,000

16,385682

1,264

1,699

19,1188,013

1,4692,386

30,8437,527

-

7,29233

-

$ 104,631

TotalProgramServices

$ 5,4652,5281,285

-1,000

16,7905,2854,4281,736

28,0658,1161,8624,107

128,3939,0493,273

14,105653

-

$ 236,140

Generaland

Adminstrative

$ 465 :--

1,333

5001,341

634

836

-

405-

487,9275,3003,184

-1,788

742,132

$ 25,967

Total

$ 5,9302,5281,285

1,333

1,500

18,1315,919

5,2641,736

28,4708,1161,910

12,034133,693

12,2333,273

15,893727

2,132

$ 262,107



Notes to the Financial StatementsFor the Year Ended June 30, 2007

Note 1 - Summary of Significant Accounting Policies

A. Organization

Serenity 67 (the Organization) was organized in Louisiana in 1993 as a non-profitcorporation for the purpose of providing human services to the residents of LouisianaHouse of Representatives District 67 and surrounding areas. Services provided includemedical transportation services for the elderly, a day program for senior citizens, campsfor youth, tutoring, self-esteem programs, personal hygiene programs, and drug abuseprevention/awareness counseling for the youth of the District.

B. Basis of Accounting

The financial statements are prepared on the accrual basis in accounting. Accordingly,revenues are recognized when earned and expenses are recognized when incurred.

C. Financial Statement Presentation

Financial statement presentation follows the recommendation of the FinancialAccounting Standards Board on its Statement of Financial Accounting Standards (SFAS)No. 117, Financial Statements of Not-for-Proflts Organization. Under SFAS No. 117,the Organization is required to report information regarding its financial position andactivities according to three classes of net assets; unrestricted net assets, temporarilyrestricted net assets, and permanently restricted net assets, as applicable.

Unrestricted Net Assets - Support, revenues, and expenses for the generaloperation of the Organization.

Temporarily Restricted Net Assets - Contributions specifically authorized by thegrantor or donor to be used for a certain purpose or to benefit a specific accountingperiod.

Permanently Restricted Net Assets - Contributions subject to donor-imposedrestrictions and that are to be held in perpetuity by the Organization. Generally, thedonors of these assets permit the Organization to use all or part of the incomederived from the investment of these contributions.

D. Cash and Cash Equivalents

For purposes of reporting the statement of cash flows, the Organization considers cashaccounts, which are not subject to withdrawal restrictions or penalties, and highly liquiddebt instruments with a maturity of three months or less to be cash equivalents.

Serenity 67Notes to the Financial StatementsFor the Year Ended June 30, 2007

E. Grants Receivable

The grants receivable are stated at the amount management expects to collect fromoutstanding balances. The financial statements do not include an estimate for allowancefor doubtful accounts. Management believes that all receivables are collectible.

F. Property and Equipment

The Organization's policy is to capitalize property and equipment over $200. Lesseramounts are expensed. Purchased property and equipment is capitalized at cost.Donations of property and equipment are recorded as contributions at their estimated fairvalue.

Depreciation is provided utilizing the straight-line method over estimated useful lives ofthe asset. Depreciation expense totaled $2,132 for the year ended June 30, 2007. Usefullives vary from 3 to 7 years for office furniture and equipment, office machinery andequipment, and vehicles.

The Organization began construction in 2006 of a Multi-purpose Center. Total costs ofrelated modifications and alterations and construction of the facility incurred as of June30, 2007 on these assets that were not yet placed in service were $109,565. TheOrganization will begin depreciating these assets when they are placed in service.

G. Use of Estimates

The preparation of financial statements in conformity with generally accepted accountingprinciples requires management to make estimates and assumptions that affect thereported amounts of assets and liabilities at the date of the financial statements and thereported amounts of revenues and expenses during the reporting period. Actual resultscould differ from those estimates.

H. Income Taxes

Income taxes are not provided for in the financial statements since the Organization isexempt from federal and state income taxes under Section 501(c)(3) of the InternalRevenue Code and similar state provisions. In addition, the Organization has beendetermined by the Internal Revenue Service not to be a private foundation within themeaning of Section 501(9) of the code.

I. Contributions

Contributions are generally recorded only upon receipt, unless evidence or anunconditional promise to give has been received. Unconditional promises to give that areexpected to be collected in future years are recorded at the present value for the amountsexpected to be collected. Conditional promises to give are not included as support untilsuch time as the conditions are substantially met. All contributions are consideredavailable for unrestricted use unless specifically restricted by the donor.


J. Functional Allocation of Expenses

The costs of providing the various programs and other activities have been summarizedon a functional basis in the statement of activities. Accordingly, certain costs have beenallocated among the programs and supporting services benefited.

Note 2 - Concentration of Credit Risk

The Organization maintains cash balances in two financial institutions located in Louisiana whichis insured by the Federal Deposit Insurance Corporation (FDIC) up to $100,000. TheOrganization had no uninsured balances at June 30, 2007.

Note 3 - Property and Equipment

Property and equipment consist of the following at June 30, 2007:

Cost at June 30, 2006AdditionsDeletionsCost at June 30, 2007

Accumulated depreciation,June 30, 2006

AdditionsDeductionsAccumulated depreciation,

June 30, 2007

Capital assets, net of accumulateddepreciation, at June 30, 2007

OfficeFurniture

andFixtures

$ 7,145

7,145

4,406

989

5,395

OfficeMachinery Construction

and InEquipment Vehicles Progress

$ 14,434 $ 20,836 $109,565

14,434 20,836 109,565

12,815 20,836

1,143

13,958 20,836

Total

$ 42,415109,565

151,980

38,057

2,132

40,189

$ 1,750 $ 476 $ $ 109,565 $ 111,791

Depreciation expense for the year ended June 30, 2007, totaled $2,132.

Note 4 - Long Term Debt

Note payable in the amount of $5,490 represents a miscellaneous loan of $490 and a $5,000 loanfrom The Harmony Center, Inc. The loan from The Harmony Center, Inc. was made to alleviatethe Organization's cash flow problem and no formal loan agreement or note was signed.


Note 5 - In-Kind Support

The Organization records the in-kind value of goods and services contributed to support variousactivities as support and related expenses. In-kind support was $7,440 for the year ended June30, 2007, for donation of rent-free office space.

The above item is included in the supporting services expenses on the statement of activities.

INDEPENDENT AUDITOR'S REPORT ONINTERNAL CONTROL OVER FINANCIAL

REPORTING AND ON COMPLIANCE AND OTHERMATTERS BASED ON AN AUDIT PERFORMED IN

ACCORDANCE WITHGOVERNMENT AUDITING STANDARDS

10

Melvin L. DavisCertified Public Accountant


Phone (225) 774-4703 • Fax (225) 774-4509

REPORT ON INTERNAL CONTROL OVER FINANCIALREPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON

AN AUDIT OF FINANCIAL STATEMENTS PERFORMEDIN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS


I have audited the financial statements of Serenity 67 (a nonprofit organization), as of and for theyear ended June 30, 2007, and have issued my report thereon dated April 14, 2008. I conductedmy audit in accordance with auditing standards generally accepted in the United States ofAmerica 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 my audit, I considered Serenity 67's internal control over financialreporting as a basis for designing my auditing procedures for the purpose of expressing myopinion on the financial statements, but not for the purpose of expressing an opinion on theeffectiveness of Serenity 67's internal control over financial reporting. Accordingly, I do notexpress an opinion on the effectiveness of Serenity 67's internal control over financial reporting.

My consideration of internal control over financial reporting was for the limited purposedescribed in the preceding paragraph and would not necessarily identify all deficiencies ininternal control over financial reporting that might be significant deficiencies or materialweaknesses. However, as discussed below, I identified certain deficiencies in internal controlover financial reporting that I consider to be significant deficiencies.

A control deficiency exists when the design or operation of a control does not allow managementor employees, in the normal course of performing their assigned functions, to prevent or detectmisstatements on a timely basis. A significant deficiency is a control deficiency, or combinationof control deficiencies, that adversely affects Serenity 67's ability to initiate, authorize, record,process, or report financial data reliably in accordance with generally accepted accountingprinciples, such that there is more than a remote likelihood that a misstatement of Serenity 67'sfinancial statements that is more than inconsequential will not be prevented or detected by theSerenity 67's internal control. I consider items 2007-1 through 2007-4 to be significantdeficiencies.

A material weakness is a significant deficiency, or combination of significant deficiencies, thatresults in more than a remote likelihood that a material misstatement of the financial statementswill not be prevented or detected by Serenity 67's internal control.

11

-MEMBER-American Institute of Certified Public Accountants • Society of Louisiana Certified Public Accountants

SERENITY 67Report on Internal Control Over Financial Reporting

and on Compliance and Other Matters Based on anAudit of Financial Statement Performed in AccordanceWith Government Auditing Standards

My consideration of the internal control over financial reporting was for the limited purposedescribed in the first paragraph of this section and would not necessarily identify all deficienciesin internal control that might be significant deficiencies or material weaknesses. However, of thesignificant deficiencies described above, I consider items 2007-3 and 2007-4 described above arematerial weaknesses.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether Serenity 67's financial statements arefree of material misstatement, I performed tests of its compliance with certain provisions of laws,regulations, contracts and grant agreements, noncompliance with which could have a direct andmaterial effect on the determination of financial statement amounts. However, providing anopinion on compliance with those provisions was not an objective of my audit, and accordingly, Ido not express such an opinion. The results of my tests disclosed instances of noncompliancethat are required to be reported under Government Auditing Standards and which are described inthe accompanying schedule of findings and questioned costs as items 2007-2 and 2007-5.

I noted certain matters that I reported to management of Serenity 67 in a separate letter datedApril 14, 2008.

This report is intended solely for the information and use of the management of Serenity 67,Board of Directors, the Legislative Auditor for the State of Louisiana, state and federal awardingagencies, and pass-through entities and is not intended to be and should not be used by anyoneother than these specific parties. Under Louisiana Revised Statute 24:513, this report isdistributed by the Office of the Legislative Auditor as a public document.

Baton Rouge, LouisianaApril 14,2008

12 llelvin L. DavisCertified Public Accountant

(A Limited Liability Company)

SERENITY 67SCHEDULE OF FINDINGS AND QUESTIONED COSTS

YEAR ENDED JUNE 30, 2007

A. SUMMARY OF AUDITOR'S RESULTS

Financial Statement Audit

• Type of auditor's report issued: Unqualified

• Material weakness(es) identified?

• Significant deficiency(ies) identified that are notconsidered to be material weaknesses?

• Noncompliance material to financialstatements noted?

x Yes

x Yes

Yes

No

No

x No

13

SERENITY 67SCHEDULE OE FINDINGS AND QUESTIONED COSTS


B. FINDINGS - FINANCIAL STATEMENT AUDIT

Finding 2007-1 Bank Reconciliations

Condition:Timely preparation of complete and accurate bank reconciliations is a key to maintainingadequate control over both cash receipts and disbursements. During the year ended June 30,2007, my review the bank reconciliations disclosed the following:

• The bank reconciliations were not prepared until February 2008, and were not reviewedor approved by appropriate supervisory personnel.

• At June 30, 2007, Serenity's cash balance per the bank reconciliation differed from thegeneral ledger cash balance by $113.60. In addition, throughout the year, all of the bankreconciliations reflected immaterial unreconciled differences.

Criteria:An adequate internal control structure would require the complete, accurate, and timelyreconciliation of all cash accounts to the general ledger on a monthly basis to ensure that alltransactions are properly recorded and that the accounts do not contain errors.

Cause:Due to the absence of written procedures and inadequate management supervision, theOrganization does not have an adequate control environment to ensure that all cash accounts arereconciled to the general ledger on a monthly basis.

Effect:The failure to prepare bank reconciliations in a complete, accurate, and timely manner couldallow errors and/or irregularities to exist without being identified and corrected.

Recommendation:The Organization should implement an adequate control environment that includes writtenprocedures and management monitoring to ensure that all bank accounts are reconciled in atimely manner and reviewed and approved by an appropriate supervisor. In addition, Irecommend that management appraise the need for the existing bank accounts and close any thatare no longer deemed necessary.

Management's Response and Correction Action Plan:We concur with the recommendation. During the year ended June 30, 2007, management closedall accounts deemed unnecessary. The Organization is in the process of bringing all bankreconciliations current and intends to have all accounts reconciled in a timely manner in thefuture.

14

Serenity 67Schedule of Findings and Questioned CostsFinancial Statement Audit

Year Ended June 30, 2007

Finding 2007-2 Human Resources and Payroll Transactions

Condition:My review of the Serenity 67's procedures relating to the payroll function disclosed the followingweaknesses:

• The organization prepared Internal Revenue Service form 941 "Employer's QuarterlyFederal Tax Return", however, I was unable to verify whether the returns were submitted.In addition, no tax payments for the year ended June 30, 2007 were made. The requiredpayments totaled $19,535.

• The organization did not remit state withholding taxes totaling approximately $2,515 tothe Louisiana Department of Revenue.

Criteria:Adequate internal controls relating to human resources and payroll require that specificprocedures be in place to ensure that payroll expenses are properly documented, recorded, andpayment of taxes be made in a timely manner in accordance with federal and state regulations.

Effect:Due to the organization's failure to make tax payments, such could subject the organization toadditional liabilities such as late fees, penalties, and interest.

Recommendation:Serenity 67 should also develop procedures to ensure that all payroll transactions are properlyrecorded and taxes are paid in a timely manner.

Management's Response and Correction Action Plan:Management is aware of this issue and has plans to work with the taxing authorities to insure thatall delinquent taxes are paid in full and that future tax liabilities are paid in a timely manner.

Finding 2007-3 Lack of Adequate and Timely Accounting Procedures

Condition:The majority of the accounting for the entire fiscal year was performed after the end of the fiscalyear. Therefore for most of the year, there were no account reconciliations, nor was the generalledger maintained, and monthly financial statements were not prepared.

Criteria:Adequate internal controls in relation to financial reporting require that specific procedures be inplace to ensure that transactions are properly supported and recorded on a timely basis. Inaddition, controls should be in place to ensure the integrity of the monthly financial statementsand to ensure the appropriate oversight of funds and monthly transactions from those chargedwith governance.

15

Serenity 67Schedule of Findings and Questioned CostsFinancial Statement Audit


Cause:Serenity 67 did not maintain an adequate control environment due to lack of monitoring andoversight by those charged with governance.

Effect:The lack of adequate internal controls relating to general ledger maintenance significantlyincreases the risk that material error and irregularities could exist and not be detected. The lackof oversight significantly increases the risk of the misappropriation of assets.

Recommendation:Serenity 67 should maintain the general ledger on a timely basis including posting transactions,completing account reconciliations, and preparing monthly financial statements. Serenity 67should develop a written accounting policy manual which includes month-end procedures alongwith formal approvals and other control procedures. Those in charge of governance shouldmonitor the process to ensure compliance with the policies established.

Management's Response and Correction Action Plan:Management is aware that the processing of accounting data has not been made in a timelymanner. The Organization is in the process of bringing all accounting, including bankreconciliations, posting of transactions, and all generation of monthly financial statements,current. It is management's intent to have all accounting procedures performed in a timelymanner once the backlog is cleared.

Finding 2007-4 Controls over Financial Reporting

Condition:In my judgment, Serenity 67's accounting personnel and those charged with governance, in thecourse of their assigned duties, lack the capable skills to prepare the financial statements andrelated footnotes in accordance with generally accepted accounting principles and to detect andcorrect a material misstatement, if present.

Criteria:The Auditing Standards Board recently issued guidance to auditors related to entity's internalcontrols over financial reporting. Many small organizations rely on their auditor to generate theannual financial statements including footnotes, SAS No. 112 emphasizes that the auditor cannotbe part of your system of internal control over financial reporting.

Effect:Material misstatements in financial statements could go undetected.

Recommendation:In my judgment, due to the lack of resources available to management to correct this materialweakness in financial reporting, I recommend management mitigate this weakness by having aheightened awareness of all transactions being reported.

16

Serenity 67Schedule of Findings and Questioned Costs -Financial Statement Audit


Management's Response and Correction Action Plan:Management agrees with the auditor's comment and the CPA will endeavor to alleviate thisweakness by preparing more timely financial statements.

Finding 2007-5 Late Submission of the Audit ReportCondition:The audit of the Serenity 67's financial statements was not completed and filed with the Office ofLegislative Auditor within six months of the close of Serenity 67's fiscal year.

Criteria:In accordance with Louisiana Revised Statute §24:513A(5)(a)... audits shall be completed withinsix months of the close of the entity's fiscal year.

Cause:Serenity 67 did not close its books for the year ended June 30, 2007, until February 2008.

Effect:The audit report was not filed within the time period required by state law.

Recommendation:Management needs to place emphasis on providing audit related data in a timely manner andestablish financial reporting procedures that will ensure the complete, accurate, and timelyrecording to transactions. In addition, management should develop and adhere to year-endclosing procedures.

Management's Response and Correction Action Plan:Management agrees with the finding and is committed to having the audit for the year ended June30, 2008, conducted in a timely manner and all reports submitted prior to December 31, 2008, inaccordance with Louisiana Revised Statute §24:513A(5)(a).

17

SERENITY 67SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS


FINDINGS - FINANCIAL STATEMENT AUDIT

Finding 2006-1 Bank Reconciliations

Recommendation:The Organization should implement an adequate control environment that includeswritten procedures and management monitoring to ensure that all bank accounts arereconciled in a timely manner and reviewed and approved by an appropriate supervisor.In addition, I recommend that management appraise the need for the existing bankaccounts and close any that are no longer deemed necessary.

Response: Unresolved - See Finding 2007-1

Finding 2006-2 Procurement Procedures and Cash Disbursement Function

Recommendation:I recommend that the Organization adopt written policies and procedures related toprocurement and cash disbursements that will require adequate supporting docu-mentation, proper maintenance of files, and timely payment and recording oftransactions.

Response: Resolved

Finding 2006-3 Human Resources and Payroll Transactions

Recommendation:Serenity 67 should develop written internal control procedures that require current and completepersonnel files are maintained for all employees. Serenity 67 should also develop procedures toensure that all payroll transactions are properly recorded and taxes are paid in a timely manner.


Finding 2006-4 Failure to Prepare and Document Journal Entries

Recommendation:I recommend the adoption of procedures whereby all journal entries will be accompaniedby full explanation, adequately documented, and reviewed and approval by a responsiblemember of management.

Response: Resolved

SERENITY 67Schedule of Prior Year Findings and Questioned Costs -Financial Statement Audit

For the Year ended June 30, 2007

Finding 2006-5 Late Submission of the Audit Report

Recommendation:Management needs to place emphasis on providing audit related data in a timely mannerand establish financial reporting procedures that will ensure the complete, accurate, andtimely recording to transactions. In addition, management should develop and adhere toyear-end closing procedures.


MANAGEMENT LETTER COMMENTS:

ML 2006-1 Board of Directors Meetings

Response: Resolved

ML 2006-2 Fixed Assets

Response: Unresolved - See Management Letter Comment ML 2007-2

19

LETTER TO MANAGEMENT

20

Melvin L. DavisCertified Public Accountant


Phone (225) 774-4703 • Fax (225) 774-4509

MANAGEMENT LETTER


In planning and performing my audit of the financial statements of the Serenity 67 for the yearended June 30, 2007, I considered the Organization's internal controls to determine my auditingprocedures for the purpose of expressing an opinion on the financial statements and not toprovide assurance on internal control.

However, during my audit, I became aware of certain matters that are opportunities forstrengthening internal controls and operating efficiency. I previously reported on theOrganization's internal control in my report dated April 14, 2008. This letter does not affect my•eport dated April 14, 2008, on the financial statements of Serenity 67.r

I will review the status of these comments during my next engagement. I have already discussedmany of these comments and suggestions with various Organization personnel, and I will bepleased to discuss these comments in further detail at your convenience, to perform anyadditional study of these matters, or to assist you in implementing the recommendations. Thefollowing paragraphs summarize my comments and suggestions regarding those matters. Mycomments are summarized as follows:

ML 2007-1 Cash Management

I noted during the audit process that supporting documentation for cash receipts and cashdisbursements was frequently lost or misplaced. This documentation is an important partof the books and records, and effective internal control procedures should not allow forthis to occur. I strongly suggest that Serenity 67 establish and consistently maintain aregular, systematic filing system.

Management's Response and Correction Action Plan:Management acknowledges that some documentation could not be located during theaudit. Every effort is made to properly maintain records of all cash receipts anddisbursements. Management will continue its efforts to improve in this area.

ML 2007-2 Fixed Assets

As reported in my prior audit, detailed property records lack such information asadequate description of the fixed assets, serial number, make, model, location, etc. Somefixed asset items are combined with other items and in some instances, appear to beimmaterial in amount and should be expensed as supplies.

21

-MEMBER-American Institute of Certified Public Accountants • Society of Louisiana Certified Public Accountants

SERENITY 67Management Letter

Serenity 67 should establish adequate written policies and procedures related to theaccountability of fixed assets. In addition, Serenity 67 should consider increasing itscapitalization threshold, to eliminate immaterial fixed asset items.

Management's Response and Correction Action Plan:Currently, management does maintain a detailed property list of assets owned by theOrganization. However, it does not include the serial number, make, or model of theasset, if appropriate. Management will add these details to the existing fixed asset ledger,where appropriate, and will record the same information for future additions.

My audit procedures are designed primarily to enable me to form an opinion on the financialstatements and, therefore, may not reveal all weaknesses in policies and procedures that mayexist.

This report is intended solely for the information and use of the Board of Directors, management,and other within the Organization and is not intended to be and should not be used by anyoneother than these specific parties. Although the intended use of these reports may be limited,under Louisiana Revised Statute 24:513, this report is distributed by the Office of the LegislativeAuditor as a public document.

Baton Rouge, LouisianaApril 14, 2008

llelvin L. Davis22 Certified Public Accountant

(A Limited Liability Company)

Documents

Serenity 67 Programs - Louisianaapp1.lla.la.gov/PublicReports.nsf/9E6F2273ACBE...Serenity 67 Baton Rouge, Louisiana I have audited the accompanying financial statements of Serenity