WOONSOCKET HEAD START CHILD DEVELOPMENT …whscda.org/images/Woonsocket_Head_Start_Child...Management is responsible for the preparation and fair presentation of these financial statements

WOONSOCKET HEAD START CHILD DEVELOPMENT ASSOCIATION, INC.

Financial Statements

Years Ended August 31, 2013 and 2012

(With Independent Auditors' Report Thereon)

Kahn, Litwin, Renza & Co., Ltd. Boston· Newport· Providence. Waltham

951 Noreh Main Sereee, Providence, Rhode Island 0290 4

Phone: 401-274-200) • Fax: 4°1-831-4°18

Email: [email protected] • www.KahnLitwin.com


FINANCIAL STATEMENTS

Years Ended August 31,2013 and 2012

INDEPENDENT AUDITORS' REPORT

FINANCIAL STATEMENTS:

Statements of Financial Position Statements of Activities Statements of Cash Flows Notes to the Financial Statements

REPORTS REQUIRED BY GOVERNMENT AUDITING STANDARDS AND OMB CIRCULARA-133 - AUDITS OF STATES, LOCAL GOVERNMENTS, AND NON-PROFIT ORGANIZATIONS:

Schedule of Expenditures of F ederal Awards Notes to the Schedule of Expenditures of Federal Awards

Independent Auditors' Report On Intemal Control Over Financial Reporting And On Compliance And Other Matters Based On An Audit Of Financial Statements Performed In Accordance With Government Auditing Standards

Independent Auditors' Report On Compliance For Each Major Program And On Internal Control Over Compliance Required By OMB Circular A-133

Schedule of Findings And Questioned Costs

Member of The Leading Edge Alliance

KLR Certified Public Accountants

and Business Consultants

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Kahn, Litwin, Renza & Co., Ltd. Boston· Newport· Providence • Waltham

951 North Main Street, Providence, Rhode Island 02904

Phone: 4°1-274-2001 • Fax: 401-831-4018

Email: [email protected] • www.KahnLirwin.com

INDEPENDENT AUDITORS' REPORT

To the Board of Directors of Woonsocket Head Start Child Development Association, Inc.:

Report on the Financial Statements



We have audited the accompanying financial statements of Woonsocket Head Start Child Development Association, Inc. (a non-profit organization) (the As ociation) which comprise the statements of financial position as of August 31, 2013 and 2012, and the related statements of activities and cash flows for the years then ended, and the related notes to the financial statements.

Management's Respollsibili(V fo/' the 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' Respollsibility OUf responsibility is to express an opinion on these financial statements based on ow' 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 audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of mater.ial misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Association'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 th effectiveness of the Association'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.

Member of The Leading Edge Alliance

OpiniOit 1J1 our opinion the financial statem nts referred to above present fairly, in all material respects the fmancial p sition of the Association as of August 31, 2013 and 2012, and the cbange in its net assets and its casb flows for t.he years then ended in accordance with accollnting principle generally accepted in the United States of America.

Other Matters

Other Information

Our audit was 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 the U.S. Office of Management and Budget Circular A-133, Audits o.lStates, Local Governments, and Nonprofit Organizations, 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 otb. r records used to prepare the financial statements. The information has been subjected t 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 accowltiug and other records used to prepare the financial statements or the financial statements themselves and oth r additional procedures in accordance with auditing standards generally accepted in tb United States of America. In OUf opinion., tile information is fairly stated in all material respects in relation to the financial statements as a whole.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated February 3, 2014 on our consideration of the Association'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 repol1 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 internal control over financial reporting or on compliance. The report is an integral part of an audit performed in accordance with Government Auditing Standards In

considering the Association's internal control over financial reporting and compliance.

February 3, 2014

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WOONSOCKET HEAD START CHILD DEVELOPMENT ASSOCIATION, INC. STATEMENTS OF FINANCIAL POSITION

August 31, 2013 and 2012

Assets 2013

Cash $ 157,100 Accounts receivable 44,453 Grants receivable 88,024 Prepaid expenses 25,252 Certificates of deposit 431,629 Restricted cash 19,910 Deferred financing costs, net 5,596 Property and equipment, net 2 264,631

Total Assets $ 3,036,595

Liabilities and Net Assets

Liabilities: Accounts payable and accrued expenses $ 99,608 Advances 2,464 Child care deposits 11,675 Mortgages payable 640,649

Total liabilities 754,396

Net Assets: Unrestricted:

Undesignated 132,711 Invested in property and equipment 741,238 Board designated for program development 500,000

Total unrestricted net assets 1,373,949

Temporarily restricted: Enrichment activities fund 19,910 Federally funded property and equipment, net 888,340

Total temporarily restricted net assets 908,250 Total net assets 2,282,199

Total Liabilities and Net Assets $ 3,036,595

See accompanying notes to the financial statements and independent auditors' report.

2012

$ 172,870 41,015 62,631 66,637

547,471 18,120

1,562,102

$ 2,470,846

$ 94,816 6,696

15,017 133,438 249,967

274 095 5247 18 500,000

1,298,813

18,120 903,946 922,066

2,220,879

$ 2,470,846

KIR

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WOONSOCKET HEAD START CHILD DEVELOPMENT ASSOCIATION, INC. STATEMENTS OF ACTIVITIES


Change in Unrestricted Net Assets: Revenue and support:

Federal and State Head Start program $ Department of Human Services USDA food program Parent and employer fees Pre-school demonstration project Contributed facilities, services and program supplies Interest income Other program revenue and contributions

Net assets released from restrictions

Total revenue and support

Expenses: Program expenses:

Head Start program Day Care program

Total program expenses

Supporting services: Management and general

Total expenses

Change in unrestricted net assets

Changc in Temporarily Restricted Net Assets: Contributions Federal support for property and equipment Net assets released from restrictions

Change in temporarily restricted net assets

Change in net assets

Net assets, beginning of year

Net assets, end of year $

2013

1,702,172 202,973 168,199 692,492 169,957 365,911

2,150 34,313

3,338,167

38,377

3,376,544

2,007,580 913,111

2,920,691

380,717 3,301,408

75,136

4,161 20,400

(38,377) (13,816)

61,320

2,220,879

2,282,199


2012

$ 1,731,527 163,800 154,317 706,842

641 319,461

3,355 33,505

3,113,448

57,524

3,170,972

1,983,402 899,961

2,883,363

333,272 3,216,635

(45,663)

2,460

(57,524) (55,064)

(100,727)

2,321,606

$ 2,220,879

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WOONSOCKET HEAD START CHILD DEVELOPMENT ASSOCIATION, INC. STATEMENTS OF CASH FLOWS


Cash Flows from Operating Activities: Change in net assets $ Adjustments to reconcile change in net assets to

net cash provided by operating activities: Depreciation Amortization Federal support for long-term needs

Changes in operating assets and liabilities: Accounts receivable Grants receivable Prepaid expenses Accounts payable and accrued expenses Advances Deferred compensation Child care deposits

Net cash provided by operating activities

Cash Flows from Investing Activities: (Increase) decrease in restricted cash Redemption (purchase) of certificates of deposit Purchase of property and equipment

Net cash provided (used) by investing activities

Cash Flows from Financing Activities: Federal support for long-term needs Payments of deferred financing costs Payments on mortgages payable

Net cash used by financing activities

Net Increase (Decrease) in Cash

Cash, beginning of year

Cash, end of year $

2013

61,320

67,978 4

(20,400)

(3,438) (25,393) 41,385

4,792 (4,232)

(3,342) 118,674

(1,790) 115,842

(220,507) (106,455)

20,400 (5,600)

(42 789) (27,989)

(15,770)

172,870

157,100


2012

$ (100,727)

75,802

13,194 152,982

(508) (12,925)

(2,998) (104,150)

3,941 24,611

93,103 (2,286) (6,479) 84,338

(26,501 ) (26,501)

82,448

90,422

$ 172,870

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WOONSOCKET HEAD START CHILD DEVELOPMENT ASSOCIATION, INC. NOTES TO THE FINANCIAL STATEMENTS KIR


1. Nature of Operations

Woonsocket Head Start Child Development Association, Inc. (the Association) was incorporated on May 13, 1974 to serve the children and their families of the Woonsocket and greater Woonsocket areas.

The Association's purpose is to provide programs that promote the s cia! emotional intellectual, and physical development of the pruticipating children and families, and to assist them to make their fullest contributioll to soci.ety. The Association ilirollgh the Federal Head Start program, provides comprehensive early childho d education and family support services to eligible children and families. The Association's Child Care program provides year-round, full-time child care to children so that parents may work or become involved in economic self-sufficiency programs.

2. Summary of Significant Accounting Policies

This summary of significant accounting policies is presented to assist the reader in understanding the Association's financial statements. The fl11ancial statements and notes are representations of the A sociation's management, who is responsible for their integrity and objectivity. Thes accounting policies confoon to accounting principles generally accepted in the United States of America and have been consi tently applied in the preparation ofthe financial statements.

Basis of Presentation The Association prepares its financial statements on the accrual basis of accounting and, in accordance with authoritative guidance, reports information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets.

The Association had no permanently restricted net assets as of August 31, 2013 and 2012.

Accounts and Grants Receivable The Association carries its accounts and grants receivable at net realizable value. On a periodic basis, the Association evaluates its receivables and establishes an allowance for doubtful accounts based on a history of past bad debt expense and collections and current credit conditions.

A receivable is considered past due if payment has not been received within stated terms. Once all practical resources to collect the receivable have been utilized without success, the receivable is deemed uncollectable and charged against the allowance. At August 31, 2013 and 2012, management has determined that no allowance for doubtful accounts is deemed necessary.

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WOONSOCKET HEAD START CHILD DEVELOPMENT ASSOCIATION, INC. NOTES TO THE FINANCIAL STATEMENTS


Certificates of Deposit On August 31, 2013, the Association had four certificates of deposit yielding 0.25% to 0.60%, and maturing at various dates through 2014. Certificates of deposit are reported at the original investment plus accrued interest on the accompanying statements of financial position and approximate fair value because of the short-telID nature of the certificates of deposit.

Restricted Cash Restricted cash includes cash balances which are board designated or donor restricted for the long-term needs of the Association.

Deferred Financing Costs Deferred financing costs are recorded at cost and amortized on a straight-line basis over the term of the related debt.

Property and Equipment All expenditures for property and equipment in excess of $5,000 are capitalized at cost. Depreciation is provided using the straight-line method over the estimated useful lives of the assets which range from 3 to 5 years for equipment and 10 to 40 years for building and improvements.

Advances From time to time during the year, the Association may receive reimbursement funds in excess of current program expenditures. These advanced funds are recorded in the accounting records as advances until such time that the Association incurs expenditures related to the specific program for which the funds have been received.

Revenue Recognition

Federal and State Contracts - The Association recognizes cost reimbursement contract revenue as expenditures are incurred. The Association recognizes fee for service contract revenue when contractual obligations have been met.

Parent and Employer Fees and Other Revenue - The Association recognizes parent and employer fees and other revenue when services to clients have been rendered and/or contractual obligations have been met.

Contributions - The Association recognizes contributions in the fiscal year in which the contribution is made. Contributions are recorded either as, unrestricted, temporarily restricted, or permanently restricted depending on the existence andlor nature of any donor imposed restrictions. However, it is the policy of the Association to recognize temporarily restricted contributions that are both received and expended during the current fiscal year as unrestricted contributions.

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Contributed Facilities, Services and Program Sllpplies - Contributions of donated noncash assets are recorded at their faLl' values in the p rioel received. Contributions of donated services that create or enhance non-financi.aJ asset or that require specialized skills and are provided by individuals possessing those skills, and that would typically need to be purchased if not provided by donation are recorded at their fair values in the period received. Donated use of faciJities is recorded at the fair market value that would otherwise be paid to rent the facititics based on an independent appraisal.

Allocation of Expenses Certain costs of the Association benefit more than one function. Accordingly, these costs have been allocated in a systematic and rational manner among the functions benefited.

Income Taxes The Association is exempt from income taxes as a public charity under Section 501(c)(3) of the Internal Revenue Code. Management believes that the Association operates in a manner consistent with their tax-exempt status at both the state and federal levels.

The Association annually files IRS Form 990 - Return o/Organization Exempt/rom Income Tax, reporting various information that the IRS uses to monitor the activities of tax-exempt entities. These tax returns are subject to review by the taxing authorities generally for a period of three years after they were filed. The tax returns for 2010, 2011 , and 2012 are subject to examination by the IRS. The Association currently has no tax examinations in progress.

Estimates and Assumptions The preparation of financial statements in conformity with accOllllting pdnciples generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of ass ts and liabilities and disclosure of contingent assets and liabilities at th date 0 f the financial statements and the reported amounts of revenues and exp nse' dur ing the reporting period. Accordingly, actual results could differ from those estimates.

Reclassification Certain 2012 balances were reclassified to conform to 2013 financial statement presentation.

S ubsequellt Evellts Management bas evaluated subsequent events through February 3, 2014, which is the date the e fi nancial statements were available to be issued.

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3. Deferred Financing Costs

Deferred financing costs consist of the following:

Legal and closing costs Accumulated amortization

$ 5,600 (4)

$ 5,596

Estimated amortization expense during the next five years and thereafter is as follows :

Year Ending

August 31, 2014 August 31, 2015 August 31, 2016 August 31, 2017 August 31 , 2018 Thereafter

Total

$

$

280 280 280 280 280

4,196

5,596

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4.



Property and Equipment

Property and equipment consists of the following:

2013 Federally purchased assets:

Building and improvements $ 1,236,597 Land and land improvements 78,388 Equipment and furnishings 402,110

1,717,095 Less accumulated depreciation 828,755

Total federally purchased assets, net 888,340

Non-federally purchased assets: Building and improvements 1,436,398 Land and land improvements 210,212 Equipment and furnishings 101 ,021

1,747,631 Less accumulated depreciation 371,340

Total non-federally purchased assets, net 1,376,291

Total property and equipment, net $ 2,264,631

2012

$ 1,236,597 57,988

402,110 1,696,695

792,749

903,946

837,391 59,112

101,021 997,524 339,368

658,156

$ 1,562,102

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Mortgages Payable

Mortgages payable consisted of the following:

2013

The Association has a mortgage payable to a local bank with monthly payments of $3,172 including interest at 7.8% through 2016. The mortgage is secured by the building located at 204 Warwick A venue, Woonsocket, Rhode Island. The Rhode Island Health and Educational Building Corporation are subsidizing the monthly mortgage payment in the amount of $167 a month, which is netted against the monthly payment. $ 104,899

The Association has a mortgage payable to a local bank with monthly payments of $3,260 including interest at 3.99% through 2033. The mortgage is secured by the building located at 2390 Mendon Road, Woonsocket, Rhode Island. 535,750

Total mortgages payable $ 640,649

Maturities of mortgages payable are as follows:

Year Ending

August 31,2014 August 31,2015 August 31, 2016 August 31, 2017 August 31, 2018 Thereafter

Total

2012

$ 133,438

$ 133,438

$ 49,201 52,474 58,722 20,062 20,889

439,301

$ 640,649

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Temporarily Restricted Net Assets

Temporarily restricted net assets consisted of the following:

2013

Federally funded property and equipment net of accumulated depreciation of$828,755 and $792,749, respectively $ 888,340

Enrichment Activities Fund Head Start Enrichment Fund 2,590 Childcare Enrichment Fund 3,061 Health Care Initiative 9,738 Technology 490 Teacher Fund 986 Highland Park Playground 910 Bright Stars Repairs 1,135 Bright Stars Participation Grant 1,000

Total enrichment activities fund 19,910

Total $ 908,250

2012

$ 903,946

2,717 997

10,372 490

1,072 910

1,562

18,120

$ 922,066

7. Contributed Facilities, Services and Program Supplies

The Association's Head Start program relies on the contributed facilities, services and program supplies received from various local organizations and corporations. These contributions enable the program to provide qual ity services to fam ilies in need. The fair value of contributed facilities, services and program supplie for the years ended August 3 1 2013 and 2012 are recorded in the accompanying statem nts of activities as follows:

Facilities Supplies Services

Total

$

$

2013

185,050 2,800

178,061

365,911

$

$

2012

185,050 6,180

128,231

319,461

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In addition, a substantial number of volunteers make significant contributions of their time to assist in providing quality services to the Association' s Head Start program. These services have not been recorded in the statements of activities as they do not meet the criteria for recognition in accordance with accounting principles generally accepted in the United States of America.

The unrecorded contributed services consisted primarily of classroom and other program aides. The estimated fair value of the actual contributed time is valued at the rate paid for other similar activities being performed by the Association. For the years ended August 31, 2013 and 2012, approximately $44,000 and $34,800, respectively, were provided to the program in volunteer services.

8. Pension Plan

The Association has established a defined contribution retirement plan under Section 403(b) of the Internal Revenue Code. Employer contributions are made on behalf of eligible employees in the amount of 4% of their annual wages. In addition, the Association contributes a matching contribution of one-half of the first 6% of wages contributed by the employee. Pension plan expense for the years ended August 31, 2013 and 2012 was approximately $80,000 and $78,000, respectively.

The Association has also established an employee-funded tax-deferred annuity plan under Section 403(b) of the Internal Revenue ode. All employees who meet the eligibility requirements of the plan may elect to contribute to the plan through a salary reduction.

9. Commitments and Contingencies

Operating Lease During 2013, the Association purchased its facility on Mendon road. Prior to the purchase, the Association had leased the facility from another not.-for-profit corporation, Woonsocket Industrial Development Corporation (WID C), under a five-year operating lease originaliy expiring in January 2014. In accordance with the lease agreement, the Association paid rent to WIDC in an amount equal to 100% of all sponsorsru p fee received from Local businesses who provided daycare slots for use by their employee . h orn August 1 201 2 thro ugh the date of the building purchase, the Association had not received any sponsorship fees and was not subject to rent expense. For the year ended August 31, 2012, rent expense was approximately $86,600.

During 2013, the Association entered into a non-cancelable operating lease for certain office equipment that requires monthly payments of $445 expiring January 2018. Lease expense on the equipment was approximately $3,600 for the year ended August 31, 2013.

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Approximate future mmnllum lease payments under the Association's non-cancelable operating lease are summarized as follows:

Year Ending

August 31, 2014 August 31, 2015 August 31,2016 August 31, 2017 August 31, 2018

Total

Legal Contingencies

$

$

5,400 5,400 5,400 5,400 1,800

23,400

There are certain legal proceedings and claims pending against the Association. While it is not possible to determine the ultimate outcome of these matters, it is the opinion of management that any possible awards as a result of these claims will not have an aggregate material adverse effect on the Association's financial statements.

10. Concentrations of Credit Risk

The financial instruments that potentially subject the Association to concentrations of credit risk consist principally of cash, certificates of deposit and receivables.

The Association maintains its cash and certificates of deposit in four finan ial institutions insured by the Federal Deposit InsLu·ance Company up to specifi.ed \jmits and one financial institution is insured by the N ational Credit Union Administration up to specified limits. The account balances, at times, may exceed the federally insured limits, but management believes that the Association is not exposed to any significant credit risk related to these accounts.

Receivable balances consist of program funding amounts due from federal and state government agencies and local corporations. At year-end, management has performed an analysis of those receivables and does not believe that there is a significant credit risk related to those receivables.

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11. Concentration of Business Risk

During the years ended August 31 , 2013 and 201 2 the As oeiation received approximately $1,671,000 (50%) and $1,659,000 (53%), re pectively througb grants pro idcd by Ule Federal Head Start contracts. In general either pruty may terminate a c ntract with thirtydays notice. At August 31, 2013, management doe n t believe that significal1t busines risk exists with respect to the continuation of this funding.

12. Supplemental Cash Flow Information

Cash paid for interest for the year ended August 31, 2013 and 2012 was $25,542 and $9,553, respectively.

During Ole year ended August 31 2013, the Association financed the purchase of a new building. At the closing, the Association received financing of $550,000 that directly paid building acquisition costs. In August 20l3, the Association refinanced the outstanding balance on its $550 000 mortgage payable with a new lender in the amount of $535,750.

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Reports Required by Government Auditing Standards and

OMB Circular A-i33 - Audits o/States, Local Governments and Non-profit Organizations

Year Ended August 31, 2013

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WOONSOCKET HEAD START CHILD DEVELOPMENT ASSOCIATION, INC. SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS


Federal Grantor/Pass-through efDA Award Grantor/Program Title Number Number

U.S. De12artment of AgricuJlure: Passed through the tate of Rhode Island

Department of Education Child and Adult Care Food Program 10.558 39831

U.S. De12artment of Health and Human Services: Direct Funding

Head Start 93.600 01CH0021/39

Total Expenditures of Federal Awards

See accompanying notes to the schedule of expenditures of federal awards.

Expenditures

$ 168,199

1,670,724

$ 1,838,923

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WOONSOCKET HEAD START CHILD DEVELOPMENT ASSOCIATION, INC. NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS


1. Basis of Presentation

The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal grant activity of Woonsocket Head Start Child Development Association, Inc. (the Association) under programs of the federal government for the year ended August 31, 2013. The information in the Schedule is presented in accordance with the requirements of OMB Circular A-133, Audits 0/ States, Local Governments and Non-profit Organizations. Because the Schedule presents only a selected portion of the operations of the Association, it is not intended to and does not present the financial position, statement of activities and change in net assets or cash flows for Woonsocket Head Start Child Development Association, Inc.

2. Summary of Significant Accounting Policies

xpenditul'es reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principl s contained in OMB Circular A-122 Cost Principles/or Non-profit Organizations wherein certain types of expendjhlres are not allowable or are limited as to reimbursement.

Pass-through entity identifying numbers are presented where available.

For cost reimbur ernent awards revenues are recognized to the extent of expenditures. Expenditure have b en recognized to the extent the related obligation was incurred within the applicable grant period and liquidated within 90 days after the end of the grant period.

3. Head Start

In accordance with the terms of the grant, during the year ended August 31, 2013, the Association expended matching contributions of $486,812, which includes state funding of $51,849.

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Kahn, Litwin, Renza & Co., Ltd. Boston· Newport· Providence • Waltham

951 Noreh Main Street, Providence, Rhode Island 02904

Phone: 401-274-200[ • Fax: 401-831-40r8

Email: [email protected] • wW\v.KahnLitwin.colll



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


We have audited, in accordance with the 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, the financial statements of Woonsocket Head tart Child Development Association, Inc. (the Association), which comprise the statement of financial positi n as of August 31, 2013, and the related statements of activities, and cash flows for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated February 3, 2014.

Internal Control over Financial Reporting

In planning and performing our audit of the financial statem 11tS, we considered the Association s internal control over financial reporting (internal conu"ol) to dete.rmin the audit procedures that are appropriate in the circumstances for the purp se of expressing our opinion on the .financi,al statements, but not for the purpose of expressing an opinion on the effectiveness of the Association's internal control. Accordingly, we do not express an opinio.D on the effectiveness of the Association'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 combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the Association'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.

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, as defined above. However, material weaknesses may exist that have not been identified.

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I Member of The Leading Edge Alliance

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, (Continued)

Compliance and Other Matters

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

Purpose of this Report

The purpose of this rep rt is solely to describe the scope of our testing of internal control and complianee and. the results of that testing, and not to provide an opinion on the effectiveness of the Association s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Association's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

February 3, 2014

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Kahn, Litwin, Renza & Co., Ltd.

Boston • Newport • Providence • Waltham

95) North Main Street, Providence, Rhode Island 02904

Phone: 401-274-2001 • Fax: 401-831-40J8

Email: [email protected] • www.KahnLitwin.col1l



INDEPENDENT AUDITORS' REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE

REQUIRED BY OMB CIRCULAR A-133


Report on Compliance for Each Major Federal Program

We have audited Woonsocket Head Start Child Development Association, Inc.'s (the Association) compliance with the types of compliance requirements described in the OMB Circular A-J33 Compliance Supplement that could have a direct and material effect on each of the Association's major federal programs for the year ended August 31, 2013. The Association's major federal programs are identified in the summary of auditors' results section of the accompanying schedule of findings and questioned costs.

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 the Association'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 OMB Circular A-133, Audits o/States, Local Governments and Non-profit Organizations. Those standards and OMB Circular A-133 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 the Association'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 on the Association's compliance.

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Member o/The Leading Edge Alliance

INDEPENDENT AUDITORS' REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE

REQUIRED BY OMB CIRCULAR A-133, (Continued)

Opi1lion on Each Major Federal Program In our opinlon the Association complied, in aU 111aterial 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 August 31,2013.

Report on Internal Control over Compliance

Management of the Association is responsible for establi rung and maintaining effective internal contro l over compliance wjth the types of compliance requirements referred to above. [11 planning and performing our audit, we considered the Association s internal control over compliance wilb the type o[requirements that could have a direct and material effect on each major federal program to determine the auditing procedure that are appropriate in the circumstance 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 Circulru: A-l33, but not for th purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Association's internal control over compliance.

A deficiency in internal control over compliq.nce exists when the design or operation of a control over compliance doe not allow management or employees, in the nOlmal 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 rnateriai weakness in internal control over complian ·e is a deficiency, or combination of deficiencies in internal control over compliance, such that there is a reasonable possibility that a material noncompliance with a type of compliance requirement of a fi deral 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 a combination of deficiencies, in internal control over comp] iance with a type f compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit aU ntion by those charged with governance.

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

ver compliance that might be material weaknesses or signi"ficant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. l-Iowever, material weal<J1esses may exist that have not been identified.

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 of OMB Circular A-I33. Accordingly, this report is not suitable for any other purpose.

February 3, 2014

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KLR

WOONSOCKET HEAD START CHILD DEVELOPMENT ASSOCIATION, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS


SECTION I - SUMMARY OF AUDITOR RESULTS

Financial Statements:

Type of auditors' report issued:

Internal control over financial reporting: • Material weaknesses identified?

•

•

Significant deficiencies identified that are not considered to be material weaknesses?

Noncompliance material to financial statements noted?

Federal Awards:

Internal control over major programs: • Material weaknesses identified?

• Significant deficiencies identified that are not considered to be material weaknesses?

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

Any audit findings disclosed that are required to be reported in accordance with Section 510(a) of Circular A-133?

Identification of major program:

CFDANumber 93.600

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

Auditee qualified as low-risk auditee

Unmodified

yes X none reported

yes X none reported

yes ~ none reported

yes X none reported

yes ~ none reported

Unmodified

yes X no

Name of Federal Program Head Start

$ 300,000

X yes no

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KLR --

WOONSOCKET HEAD START CHILD DEVELOPMENT ASSOCIATION, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS

Year Ended August 31,2013

SECTION II - FINANCIAL STATEMENT FINDINGS

None noted.

SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

None noted.

SECTION IV - SUMMARY OF PRIOR AUDIT FINDINGS

None noted.

KLR --

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Documents

WOONSOCKET HEAD START CHILD DEVELOPMENT …whscda.org/images/Woonsocket_Head_Start_Child...Management is responsible for the preparation and fair presentation of these financial statements