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/ o ^ f f ^
HOLY ANGELS RESIDENTIAL I ACILITV, INC.
SHREVEPORT, LOUISIANA
FINANCIAL STATEMENTS
JUNE 30, 2010
Under provisions of state law. tliis report is a public
document. A ccpy of ths report .has been siJi:f'nftted to the
entity and other appropriate public officials. The report is
available for public inspection at the Baton Rouge office of the
LegisiativeAuditor and. where appropriate, at the ofnce of ihe
pansh clerk cf court.
Release Date 'f- / ^ ^ / / / '/ Uo I
SMITH PUGH AND COMPANY. LLP
Cenified Puhlic Accountants • Managemeni Consultants • Business
Advisors
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HOLY ANGELS RESmENTJAL FACILITY, INC,
Table ol Contents
Page
Independent Auditor's Report 1
Financial Statements:
Statements of Financial Position 2
Statements of Activities 3
Statements of Functional Expenses 5
Statements of Cash Flows 7
Notes to Financial Staiements 8
Other Report:
Report on Inlcfnal ConlroJ Over Financial Reporting and on
Compliance and Other Matters Based on an Audit of Financial
Staiements Perlbrmed in Accordance with Govemment Audiiing
Standards 14
Schedule of Audit Findings and Responses ] 6
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SMITH PUGH A N D C O M P A N Y . LLP
Certified Public Accountants • Manai^ement C-onsultants •
Business Advisors
INDEPENDENT AUDITOR'S REPORT
Board of Directors Holy Angels Residential Facility, Inc.
Shreveport. Louisiana
We have audited the accompanying statements ol' financial
position of Ploly Angels Residential Facility, Inc. (a
not-for-profit corporation) as of June 30, 2010 and 2009, and the
related statements of activities, functional expenses, and cash
flows for the years then ended. These fmancial statements are the
responsibility of Holy Angels Residential Facility, Inc.'s
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States of America, and fnc
standards applicable lo fmancial audits contained in Govemment
Auditing Standards, issued by the Controller General ofthe United
Stales. Those standards require that we plan and perfonTi the audit
to obtain reasonable assurance about whether the fmancial
slatemenis are free of material misstatement. Ais audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the fmancial statements. An audii also includes
assessing the accounting principles used and signiilcant estimates
made by managemeni, as well as evaluating the overall financial
slalement presentation. We believe thai otir audii provides a
reasonable basis for our opinion.
In our opinion, the fmanctal statements referred to above
present fairly, in all material res]")ecls. the financial position
of Floly Angels Residential Facility, Inc. as of June 30, 2010 and
2009, and the changes in its nei assets and its cash Dows for the
years then ended in conformiiy with accounling principles generally
accepted in the United Slates of America.
In accordance wilh Government Auditing Standards, we have also
issued our report dated September 13, 2010, on our consideration of
Holy Angels Residential Facility, Inc.'s internal control over
financial reporting and on our tests of its compliance with certain
provisions of laws, regulations, contracts, and grant agreements
and other matters. The purpose of that report is to describe the
scope of our testing of intemal control over fmancial reporting and
compliance and the results of that testing, and not provide an
opinion on intemal control over fmancial reporting or on
compliance. That report is an integral part of an audit performed
in accordance with Government Auditing Slandards and should be
considered in assessinu the results of our audit.
rmith'Pugh < '̂Con
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FINANCIAL STATEMENTS
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HOLY ANGELS RESIDENTIAL FACILITY, INC.
Statements of Financial Position As of June 30, 2010 and
2009
ASSESS
2010
LIABILITIES AND NET ASSETS
2009 Current Assets
Cash and cash equivalents Accounts receivable Prepaid items
Total current assets Cash and cash equivalents - temporarily
restricted Property and equipment, net Total Assets
$
$
222,302 1,032,318
9.362 1,263,982
953,518 1,176,953 3,394.453
S
s
421,302 1,002,155
7,538 1,430,995 1,093,319 1,022,499 3,546.813
Current Liabilities Accrued salaries Accrued payroll taxes and
employee withholdings Accounts payable .Accrued compensated
absences Due to residents fi"om temporarily restricted assets
Provider fees payable
Total currenl liabilities
Net Assets Unrestricted Temporarily restricted
Total Net Assets Total Liabilities and Net Assets
335,718 25,847 98,117
182,614 222,647
80,080
S 332,027 37,866
158.769 212,910 229309
76,692 945,023
1,681,469 767,961
2,449,430 $ 3.394,453
1.047,573
1,598,139 901.101
2,499.240 $ 3.546,813
The accompanying notes are an integral part of these financial
statements. 2
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IJOLY ANGELS RESIDENTIAL FACILITY, INC.
Statement of .Activities For the Year Ended June 30, 2010
Public Support, Revenue! Reclassification Client care:
Title XIX Funds Private tuition:
Private pay Medicaid Social security VA Tolal private
tuition
Total client care Ijitcresl Contributions Grants Fund raisinu
aciivities Work activitv center Rovaliies Miscellaneous Nel assets
released from i
satisfaction of program 'fotal public support.
and reclassiilcation
< a n d
-esirictions m expenditures revenues
Unrestricted
S 10,055,237
309,831 104,996
1,061,612 11.927
1,488,366 11,543,603
6.493 253,223
-228,731
-84.661 38,854
656.330
12.811.895
'lemporarily Restricted
$ - :
--' ---
50 94,438
344,477 3,148
81.077 --
(656,330)
(133.140)
Total
S 10,055,237
309,831 104,996
1,061,612 11,927
1,488,366 11,543,603
6,543 347,661 344,477 231.879
81.077 84.661 38.854
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12,678,755
Expenses Program services:
Client care Work activity center
Supporting services: General and administrative
Total expenses
Change in Net Assets Net Assets at July 1,2009 Net Assets at
June 30, 2010
11,105,718 44,326
1.578.521 12,728.565
83,330 .1.598,139
S 1.681,469 S
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(133,140) 901,101 767.961
11,105,718 44,326
1,578.521 12,728,565
(49,810) 2,499.240
S 2.449.430
The accompanying notes are an integral part of these financial
statements. 3
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HOLY ANGELS RESIDENTIAL FACILITY, INC.
Statement of Activities For the Year Ended June 30, 2009
PubUc Support, Revenues Reclassification Client care:
Title XLX Funds Private tuition:
Private pay Medicaid Social sectirity VA Total private
tuition
Total client care Interest Contributions Grants Fund raising
activities Work activitv center Rovalties Miscellaneous
; and
Nei assets released from restrictions in SLU is faction of
program
Total public support, i and reclassification
expenditures revenues
Unrestricted
$ 10,201,444
275,728 125,684 905,015
5.343 1.311.770
11,513,214 14,654
238,648 -
2,120 -
69.804 9,071
()54.647
12.502.158
Temporarily Restricted
S
------
164 519.541 227,980 205,657
60,102 --
• (654.647)
358.797
Total
S 10,201.444
275,728 125,684 905,015
5,343 1.311,770
11,513,214 14,818
758.189 227,980 207,777
60,102 69,804 9.071
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12.860.955
Expenses Program services:
Client care Work activity center
Supporting services: General and adminLstrative
Total expenses
Change in Net Assets Net Assets at July 1,2008 Net Assets at
June 30. 2009
11,442,555 48,199
1,604.064 13.094,818
(592,660) 2,190,799
S 1.598.139 S
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358,797 542.304 901,101
11,442,555 48,199
1.604.064 13.094.818
(233,863) 2,733.103
S 2.499,240
The accompanying notes arc an integral part of these financial
statements. 4
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HOLY ANGELS RESIDENTIAL. FACILITY, INC.
Statement of Functional Expenses For the Year Ended June 30,
2010
Program Services
Salaries Payroll taxes and benefits Workers' compensation
insurance Dietary supplies Medical supplies Flabilitative supplies
Flousekeeping supplies WAC materials and supplies Provider fees
Automobile expense Building and occupancy Church aciivities Client
needs and assistive devices Consultants and professional fees Dues
and sub.scriptions Insurance - propcriy Miscellaneous Office
expense Postage Taxes - Uncmpioymenl Telephone expenses Travel
expenses Total expenses before deprecialion Depreciation Tolal
program and supporting services expenses
Client Care $ 6,567,247
1,213,514 162,353 353,160 161,795 38,459 48,333
-975,060
-1,117,189
-139,063 149.065
-----
48,855 --
10.974.093 131,625
S 1L105.71S
Work Activity Center
S -' -----
44,326
44,.-
$ 44.:
--------------
526 -
i26
General and Administrative $ 690,466
133,738 17,069
------
56,511 124,132
6,958 -
96.306 6,680
261,371 42.339 52,750 5,906 5,136
26,991 1.826
1,528,179 50.342
S 1,578,521
Total S 7,257,713
1,347,252 179,422 353,160 161,795 38,459 48,333 44,326
975,060 56,511
1,241,321 6,958
139,063 245,371
6,680 261,371
42,339 52,750
5.906 53,991 26,991
1.826 12,546,598
181.967
S 12.728.565
The accompanying notes arc an integral pari of these financial
statements. 5
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HOLY ANGELS I^SIDENTIAL FACILITY, INC.
Statement of Functional Expenses For the Year Ended June
30,2009
Salaries Payroll taxes and benefits Workers' compcnsalion
insurance Dietary supplies Medical supplies Habilitative supplies
Housekeeping supplies WAC materials and supplies Provider fees
Automobile expense Building and occupancy Church activities Client
needs and assistive devices Consultants and professional fees Dues
and subscriptions Insurance - property Miscellaneous Ofl"ice
expense Postage Taxes - Unemployment Telephone expenses Travel
expenses Total expenses before depreciation Depreciation Total
program and supporting services expenses
Program
Client Care $ 6,773,717
1,281,590 222,499 366,111 115,731 35,056 49,499
-956J56
-1,254,166
-103,006 147.553
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30,184 --
11.335,868 106.687
S 11.442.555
Services
Work Activily Center
S ------
48,199 --------~ -----
48,199 -
$ 48.199
General and Administrative S 685,204
142,988 22,507
------
62,529 139,352
1.576 -
79,550 9,168
274,858 31.70] 87,704 5,121 3,053
23,294 35
1,568,t̂ 40 35.424
$ 1,604,064
Total $ 7,458,921
1,424,578 245,006 366,111 115,731 35,056 49,499 48,199
956,756 62,529
1,393,518 1,576
103,006 227,103
9,168 274,858
31,701 87,704 5,121
33,237 23,294
35 12,952,707
142.111
$ ]3,094,SIS
The accompanying notes are an integral part of these financial
staiements. 6
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HOLY ANGELS RESIDENTIAL FAC1LH Y, INC.
Statements of Cash Flows For the Years Ended June 30, 2010 and
2009
2010 2009
Supplemental Disclosure of Cash Flow Information Noncash
transactions -
Equipment $ 96,594
Cash Flows From Operating Activities: Decrease in net assels $
(49,810) % (233,863) .Adjustments lo reconcile change in net assels
lo net cash provided by operating activities: Depreciation 181,967
142,111 Equipment procured directly from the Slate of Louisiana
included in grant revenue Donated vehicle included in contributions
(Increase) decrease in operating assets:
Accounis receivable Prepaid items
Increase (decrease) in operating liabilities: Accrued salaries
Accrued payroll taxes and employee withholdings Accounts payable
Accrued compensated absences Due lo residents Provider fees payable
Total Adjustments
Net Cash Provided (Used) by Operating .Activities Ciash Flows
From Investing Activities:
Proceeds from maturity of ceriiilcaie of deposit Purchase of
fixed assets
Net Cash Used by Investing Activities Net Decrease in Cash Cash
and cash equivalents al the beginning of the year Cash and cash
equivalents at the end ofthe year
(83,994)
(12,600)
(30,163)
(L824)
3,691
02,019) (60,652)
(30,296)
(6,662)
3,388 (49,164)
(98,974)
(239,827)
(239.827)
(338,801)
1.514,621 $ 1,175,820
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84 5,413
102.426
35,918
10,216 33,423
14,852
(99)
344.344
110.48!
100,000
(607.227)
(507,227) (396,746)
1.911,367 S 1,514.621
The accompanying notes are an integral pari of these financial
statements. 7
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HOLY ANGELS RESIDENTIAL FACILITY, INC.
Notes to Financial Statements June 30,2010
1. Summary of Significant Accounting Policies
Nature of Organization
Holy Angels Residential Facility, Inc. (the Facility) is a
Louisiana noi-for-profit corporation chartered on August 8, 1986.
The Facility is a private, residential training facility whose
purpose is to provide health and habilitative services lo
developmentally disabled individuals that maximize their dignity
and future potential. The Facility is supported primarily through
the Louisiana Medical Assistance Program and private tuition
payments.
For the year ended June 30, 2010, the Facility was exempt fi"om
income taxes as an organization described in Section 501(c)(3)
ofthe Internal Revenue Code. The Facility was classified as an
organization Ihat was not a private foundation under Section
509(a). Accordingly, there is no provision for income taxes in
these financial staiements.
Basis of Accounting
The accompanying fmancial statements have been prepared on the
accrual basis of accounting in accordance with generally accepted
accounting principles.
Financial Statement Presentation
The Facility is required lo report inlbrniaiion regarding its
iinancial position and acri^'ities according to Ihe following three
classes of nel assets;
Unrestricted nel assels Nel assets thai are not subject to
donor-imposed stipulations. Unrestricted net assets may be
designated for specific purposes by action of the Board of
Directors.
Temporarily restricted net assets - "Net assets subject lo
donor-imposed stipulations that will be mel either by actions of
ihe Board of Directors and/or the passage of time.
Permanently restricted net assels •- Nei assels subject to
donor-imposed stipulations that they be inaintained permanently by
the Facility.
No permanently restricted assets were held during fiscal years
2010 or 2009 tind accordingly, these financial statements do not
reflect any activity related to this class of nel assets for the
years ended .Tune 30, 2010 and 2009.
As permitted by the statement, the Facility does not use lund
accounting.
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HOLY ANGELS RESIDENTIAL- FACILITY, INC.
Notes to Financial Statements June 30, 2010
/, Summary of Significant Accounfing Policies (continued)
Cash Equivalents
For purposes ofthe statements of cash Hows, the Facility
considers all highly liquid investments available ibr current use
with an initial maturity of three months or less to be cash
equivalents.
Cash and Cash Equivalents - Temporarily Restricted
Cash and cash equivalents - temporarily restricted primarily
include cash accounts set aside for future capital improvements,
client fiinds, and other donor-imposed stipulations.
Promises to Give
Conlribulioiis are recognized when the donor makes a promise to
give to the Facility that is, in substance, unconditional. All
donor-restricted contributions are reported as increases in
temporarily or permanently restricted nel assets depending on the
nattire ofthe restrictions. When a restriction expires, temporarily
restricted net assets are reclassified to unrestricted nel
assets.
Accounts Receivable
The Facility carries its accounts receivable al cost. The
Facility considers all receivables to be fully eolleciible:
accordingly, no allowance for doubtful accounis is required.
Property and Equipment
Donations of property and equipment are recorded as support at
their estimated fair value. Such donations are reported as
unrestricted support unless the donor has restricted the donated
asset to a specific purpose. Assets donated with explicit
restrictions regarding their use and contributions of cash thai
must be used to acquire property and equipment are reported as
restricted suppoit. Absent donor stipulations regarding how long
those donated assets tnusi be maintained, the Facility repons
expirations of donor restrictions when the donated or acquired
assets are placed in service as in.structed by the donor. The
Facility reclassifies temporarily restricted net assets to
unrestricted nei assets at that time.
The Facility follows the practice of capitalizing, at cost, all
expendilures for property and equipment in excess of $500. Gains or
losses on dispositions of properly are included in the Statement of
Activities. r.)eprecialion is computed on a straight-line basis
over the estimated useful lives oflhc assets.
Contributions
Contributions received are recorded as unrestricted, temporarily
restricted, or permanently restricted support depending on the
existence or nature of any donor restrictions.
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HOLY ANGELS RESIDENHAL FACH^ITY, INC.
Notes to Financial Statements June 30, 2010
1. Summary of Significant Accounting Policies (continued)
Contributed Services
During the years ended June 30, 2010 and 2009, the value of
contributed services meeting the requireinents for recognition in
the financial statements was not material and, accordingly, has not
been recorded.
Functional Allocation of Expenses
The costs of providing the Facility's various programs and
supporting ser\dces have been summarized on a functional basis in
the Statement of Activities. Accordingly, certain costs have been
allocated among the programs and supporting ser\Mces benefited.
Use of Estimates
The preparation of fmancial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions thai afiect certain reported amounts
and disclosures. Accordingly, actual results could differ from
those estimates.
Subsequent Events
Managemeni has evaiuaicd stibsequen: events througli September
13, 20'. (), the date the financial statements were available to be
issued.
Reclassifications
Certain amounts for the year ended .lune 30, 2009 have been
reclassified in these comparative financial staiements. These
reclassifications had no effect on the total change in nei assets
for that year.
2. Cash and Cash Equivalents
The Facihly maintains a master repurchase agreement (repo
account) with .IP Morgan Chase Bank. The St. Michael Flome cash
account retains enough money to pay daily operating expenses while
the balance is used to purchase securities. The St. Michael Home
repo account is currently yielding A5%. As of .lune 30, 2010 and
2009, the St. Michael Home repo account balances were $31,000 and
$35,000, respecfivcly.
10
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HOLY ANGELS RESU)EN TIAL FACILMY, INC.
Notes to Financial Statements June 30, 2010
3. A ccounts Receivable
Accounts receivable al .lunc 30 consist ofthe following:
2010 2009
Government programs Patient Zita Trust Other
Total accounts receivable
$ 953,813 8,210
53,5^0 16,715
S 1,032,318
$
S
941,402 3,955
54,468 2.330
L00^,155
4. Property and Equipment
Property and equipment at .lune 30 consist ofthe following:
2010 2009
Equipmeni Land improveinents Leasehold improvemenis Vehicles
Work activitv center
Less accumulated depreciation Property and equipment, nei
%
%
1.611,463 73,495
676,559 601.442 53,451
3,016.410 1.839-457 IJ 76.953
S
S
1.518,797 53,551
587,903 483.848
35.891 2,679,990 1.657.491 1.022.499
5. Temporarily Restricted Net Assets
Temporarily restricted net assets are available for the
following purposes:
2010 2009
Work Acfivity Center $ 46,362 $ 17,172 Lquipment and
construction projects 721,599 883,929
S 767,961 S 901,101
11
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HOLY ANGELS RESIDENTIAL FACILITY, INC.
Notes to Financial Statements June 30, 2010
5. Temporarily Restricted Net Assets (continued)
Net assets were released from donor restricfions by incurring
expenses satisfying the purpose or time restrictions specified by
donor as follows:
2010 2009
Work activity expenses Wages Strategic planning and funding of
operafions Lquipment purchases and building additions
$
S
44,326 104,701
100,000
407-303 656,330
$
S
48,199 46,968
78,750
480.730 654.647
(5. Lease Agreement i n "
Holy Angels Residential Facility leases its premises from Zita
Residential Facility, LLC. The lease is ibr a period of ten years,
ending on .lune 30, 2016. The terms of ihe lease require rental
payments of $20,000 per month. Lease expense paid lo Zita
Residential Facility. LLC was $2'40,()00 for each ofthe years ended
.lune 30, 2010 and 2009.
Floiy Angels Residenfial Facility leases five of its group homes
from Zila Homes, LLC. These leases are for periods ranging from
five to ten years with tolal monthly rental payments of S7,880.
Lease expense paid to Zita Homes, LLC was $94,559 and $87,812 for
the years ended .June 30, 2010 and 2009. respecfivcly.
Miniinuni lease payments on long-temi leases by year are as
follows:
Year Endin
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HOLY ANGELS RESIDENTIAL FACILITY, INC.
Notes to Financial Statements June 30, 2010
8, Federal and State Funds
1'hc Facility is participating in Federal and State funded
government programs. For the fiscal years ending Jtmc 30, 2010 and
2009 the percentages of client care received by the Facility from
Federal and State funded Title XIX Funds were 87.1% and 88.6%,
respecfiveiy.
9. Retirement Plan
The Facility has a 403(b) retirement plan for the benefit of
eligible employees, as defined by the plan, who meet certain
minimum service requirements. Eligible employees may defer a
portion of their salai;>\ up to the elective deferral limit set
by the Intemal Revenue Service. The Facility contributes up to five
percent oflhc eligible employees' compensafion based on years of
service. Employees are immediately vested in both employee and
employer contribution amounts. Refirement plan costs for the year
ended .lune 30, 2010 and 2009 were $220,595 and $218,882
respectively.
1(K Concentrations of Credit Risk
'fhe Facility has coneeritraied its credit risk for ca.sh by
maintaining deposits in fmancial institutions, which may ai times
exceed amounts covered by insurance provided by the U.S. Federal
Deposit Insurance Coqioralion (FDIC) or provided by the Securities
Investor Protection Corjx)rafion (SIPC). Ai .lune 30, 2010, the
maximum loss that would have resulted from i\vd\ risk totaled
approximately S990,O00 for the excess of deposit liabiUties
repoiied by the finarieiai institutions over the amounts thai would
have been covered by insurance. The Facility has noi experienced
any losses in such accounts and believes il is not exposed lo any
significant credit risk to cash and cash equivalents.
The Facility's operations are located in Shreveport, Louisiana
and its clients come primarily from northwest Louisiana, 'fhe
Facility's major source of revenue is derived fi-om tuition and
room and board.
The Facility relies upon Title XIX Funds provided by Medicaid
for a substantial portion of its revenue. Laws and regulations
governing the Medicaid program are extremely complex and subject to
interpretafion. As a result, there is at least a reasonable
possibility that funding through the Medicaid program will change
by a material amouni in the near term.
IL Contingencies
As discussed in Note 6, the Facility is leasing a substantial
porlion of its premises from Zita Residential Facility, LLC. Should
this entity disconfinue the current leasing arrangement, the
Facility's ability to continue as a going concern would be in
jeopardy.
13
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OTHER REPORT
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SMITH PUGH AND COMPANY. LLP
Certified Puhlic Accountants • Management Consultants • Business
Advisors
Report on Internal Control Over Financial Reporting and on
Compliance and Other Matters Based
on an Audit of Financial Statements Performed in Accordance With
Governmental Auditing
Standards
To the Board of Directors Holy Angels Residenfial Facility, Inc.
Shreveport, Louisiana
We have audited the financial statements of Holy Angels
Residenfial Facilily, Inc. (a nonprofit organization), as of and
for the year ended June 30, 2010, and have issued our repori
thereon dated Sepiember 13, 2010. We conducted our audit in
accordance with audifing standards generally accepted in the United
Stales of America and the standards applicable to financial audits
contained in Government Auditing Standards, issued by the
Comptroller General of ihc United Slates.
Internal Control Over Financial Reporfing
In planning and perfonning otir audit, we considered Holy
.A.i"igels Residential Facilily, Inc.'s intemal control over
financial reporting as a basis for designing our auditing
procedures for the purpose o\' expressing our opinion on the
financial staiements, but no: for the purpose of expressing an
opinion on the effectiveness of Ploly Angels Residential Facility,
Inc.'s internal control over financial reporting. Accordingly, we
do noi express an opinion on the effectiveness of Holy Angels
Residential Facility, Inc.'s inicnuil control overfinanclal
reporting.
Our consideration of internal control over financial reporting
was ibr the limited purpose described in the preceding paragraph
and was not designed to identify all deficiencies in internal
control over fmancial reporting that might be significant
deficiencies or material weaknesses and therefore, there can be no
assurance that all deficiencies, significant deficiencies or
material weaknesses have been identified, yiowever, as described in
the accompanying Schedule of Audit Findings and Responses, we
idenfified certain deficiencies in internal control over financial
reporting that we consider to be material weaknesses and other
deficiencies ihat we consider to be significant deficiencies.
A deficiency in internal control exists when the design or
operation of a control docs not allow management or employees, in
the normal course of performing their assigned functions, to
prevent, or detect and correct misstatements on a timely basis. A
material weakness is a deficiency, or a combinafion of
deficiencies, in internal control such that there is a reasonable
possibility that a material misstatement of the entity's financial
statements will not be prevented, or detected and corrected on a
fimcly basis. We consider the deficiencies described in the
accompanying Schedule of Audit Findings and Responses to be
material weal^esses. See Findings 2010-1 and 2010-2.
14, Phone 318-869-1055 • Fax 318-869-4736 • 470 Ashley Ridge
Blvd. • ShrcvcpcHt. LA 71106 • www.spcpa.com
http://www.spcpa.com
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A significant deficiency is a deficiency or a combination of
deficiencies in internal control thai is less severe than a
material weakness, yet important enough to merit attention by those
charged with govemance. We consider the deficiencies described in
the aeeoinpanying Schedule of Audit Findings and Responses to be
significant deficiencies. Sec Findings 2010-3 and 2010-4.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Holy
Angels Residential Facility, Inc.'s financial statements arc free
of material misstatement, we performed tests of its compliance with
certain provisions of laws, regulafions, contracts and grant
agreements, noncompliance with which could have a direct and
material effect on the delenninafion of financial statement
amounts. However, providing an opinion on compliance wilh those
provisions was not an objective of our audit, and accordingly, we
do not express such an opinion. The results of our tests disclosed
no instances of noncompliance or other matters that are required to
be reported under Government Auditing Standards.
We noted certain matters that we reported to managemeni of Holy
Angels Residential Facility, Inc. in a separate letter dated
September ] 3, 2010.
Holy Angels Residential Facility, Inc.'s responses to ihc
findings idenfified in our audii are described in the accompanying
Schedule of Audit Findings and Responses. We did not audit Holy
Angels Residenfial Facilily, Inc.'s response and, accordingly, we
express no opinion on them.
lliis repon is intended solely for the infomiation and use of
managemem, the Board of Directors, and the Office ofthe Legislative
Auditor and is not intended to be and should noi be used by anyone
other than these specified parties.
W^M&^L^r^^^'^^' L'-*' Shreveport, L.ouisiana September
13,2010
IS
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SCHEDULE OF AUDIT FINDINGS AND RESPONSES
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HOLY ANGELS RESIDEN JIAL FACIEI lY, INC.
Schedule ol Audit Findings and Responses June 30, 2010
2010-1 Finding: An aged accounts receivable trial balance thai
agrees to the general ledger was not available at the time of our
audit fieldwork.
Cause: Unknown.
Recommendation: A reconciliation of accounts receivable from
fiie general ledger to the accounts receivable detail ledger should
be prepared to cheek that the recording of transactions is accurate
and proper, and that any adjustments io, or write-offs of, accounts
receivable have been approved. We recommend that this
reconciliation be performed al each month end to ensure that the
general ledger balance, and thus the monthly financial siaiemeiits,
refiects the proper accounts receivable amount. In addition,
management should develop procedures to ensure that differences are
idenfified, researched, and resolved on a timely basis.
Response: The Board of Directors and managemeni concur with the
recommendation.
2010-2 Finding: An aged accounts payable trial balance thai
agrees to the general ledger was not available at the time of our
audit fieldwork.
Cause: Unknown.
Recommendation: A reconciliation of accounts payable from ihc
general ledger io the outstanding accotmls payable register should
be pret')ared to determine that all additions to, and payments of
accounts payable are eorrecily recorded and to determine whether
there are an>' disputed items. We recommend that this
reconciliation be performed at each month end lo ensure that the
general ledger balance, and thus the monthly financial statements,
refiects the proper accounts payable amouni.
Response: The L ôard of Directors and managemeni concur wilh
the recommendafion.
2010-3 Finding: A significant deficiency in internal control
over financial reporting exists in the Organization's financial
statement close proeCoS for preparing its year-end financial
statements, including ineffective controls to ensure timely review
oi'all account reconciliations and significant financial statement
accounts, and ineffective controls over the review of the year-end
financial statements. This significant deficiency could result in a
material misslalemenl to the Organization's financial stalemenls
that would not be prevented or detected on a timely basis. During
the audit, we recommended more than 30 adjusfing joumal entries.
The effect of such entries was to decrease the nel loss by
approximately $70,000. Substanfially all of the entries were to
correct bookkeeping errors or to make accruals and other
adjustments thai should have been made by the accounting
department.
Cause: Unknown.
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HOLY ANGELS RESIDENTIAL FACRTTY, INC.
Schedule of Audit Findings and Responses June 30, 2010
Recommendation: To miprove the financial statement close
process, we recommend that the Organizalitm establish a more
efficient and effective responsibilities matrix for its close
process to provide timely and accurate completion of financial
reporting as well as timely review and approval by someone who has
sufficient skill, knowledge and expertise.
Response: The Board of Directors and managemeni concur with the
recommendation.
2010-4 Finding: Management has chosen to engage the auditor to
propose certain adjusting joumal entries and to prepare the annual
financial statements
Cause: This condition is intentional by managemeni based upon
the Organization's financial complexity, along with the cost
effccfiveness of acquiring the ability to prepare fmancial
statements in accordance with generally accepted accounting
principles. Consistent wilh this decision, intemal controls over
the preparafion of adjusfing entries and armual financial
staiements, complete with notes, in accordance with generally
accepted accounting principles, have noi been established.
Recommendation: None
Response: The Board of Directors and managemeni concur with the
recommendation.
17
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SMITH PUGH A N D C O M P A N Y . LLP
Certified Puhlic Accountants • Management Consultants • Business
Advisors
The Board of Directors Holy Angels Residential Facility, Inc.
Shreveport. Louisiana
In planning and performing our audit of the financial statements
of Holy Angels Residential Facility, Inc. for the year ended June
30, 2010, in accordance with auditing standards generally accepted
in the United States of America, we considered the Facility's
internal control over financial reporting (internal control) as a
basis for designing our auditing procedures for the purpose of
expressing our opinion on the financial statements, but not for the
purpose of expressing an opinion on the effectiveness ofthe
facility's internal control. Accordingly, we do not express an
opinion on the effectiveness ofthe Facility's internal control.
However, during our audit, we became aware ofthe following
matters that are opportunities for strengthening internal controls
and operating etficieney. A separate letter dated September 13,
2010 contains our communication of significant deficiencies or
material weaknesses in the Facility's internal control. This letter
does not affect our report dated September 13, 2010, on the
financial statements of Holy Angels Residential Facility, Inc..
We will review the status of these comments during our next
audit engagement. We have already disctissed some of these comments
and suggestions with various Facilit\' personnel, and we will be
pleased to discuss them in further detail at your convenience, to
perform any additional study of these matters, or lo assist you in
implementing the recommendations. Our comments are summarized as
follows:
Cash Accounts
The operating account bank reconciliation at June 30, 2010 had
an unreconciled variance of $4,942. Unresolved variances on the
operating account bank reconciliations were noted on
reconciliations dating back to November 2009. Bank reconciliations
for certain other cash accounts also had unreconciled variances. In
addition, bank reconciliations had not been prepared for the
LXmations and Taste of Shreveport cash accounts. Wc recommend that
a cash reconciliation that reconciles the bank balance lo the
general ledger balance be prepared to determine that all cash
transactions have been recorded properly. These reconciliations
should be prepared on all cash accounts within two weeks of month
end with all variances researched and resolved.
At the lime of our audit fieldwork, the subledgers for the
Church Fund and Work Activity Center cash accounts were not
current. The recordkeeping for these accounts should be maintained
in a fimely and proper manner but no less than monthly including
reconciliation ofthe respective bank accounts.
Phone 318-869-1055 • Fa.\ 318-869-4736 • 470 Ashley Ridge Blvd.
• Shreveport. LA 71106 • www.spcpa.coni
http://www.spcpa.coni
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r-)uring our audit tests, we noted two instances in which
several manual checks were issued but not recorded on die general
ledger in a timely manner. We recommend that manual cheeks be
recorded on the general ledger as soon as they are written rather
than when they have cleared the bank slalemenl and are discovered
during the bank reconciliation process.
During the year ended June 30, 2010, cash in the Donations
account was transferred to the operating account; however, there
was no subledgcr maintained separating unrestricted and restricted
cash lo document the release of restriction by the donor or
throtigh oxpenditure.s for the restricted purpose. We recommend
that restricted fiinds not be commingled with unrestricted ftinds
without a proper accounling ofthe segregation.
Donation Revenue
'fhere is no record of checks received prepared prior to
submitting the checks to the employee who is responsible for
preparing the daily bank deposit. We recommend that all cheeks be
restrictively endorsed by the person opening the mail. In addition,
a listing of checks or an adding machine tape with totals should be
prepared prior to submitting the checks lo the employee who is
responsible for preparing the daily bank deposit. This listing
should be used for verification by someone not involved in the
receipt and deposit process that ail checks were properly and
timely deposited to a Holy Angels Residential Facilily, Inc.
account.
We wish to thank the controller and her department for their
support and assistance during our audit.
This report is intended solely for the information and use of
management, the Board of Directors, and others within the facility
and is not intended to be and should not be used by anyone other
than these specified parties.
i!a^&t-A'^Lp'N''^-n> i-̂ ^ Certified Public Accountants
September 13,2010
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