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HomeMy WebLinkAboutCommunity and Family Resources - Audit Financial Review Report COMMUNITY AND FAMILY RESOURCES AND THE RICHMOND CENTER FINANCIAL REPORT June 30, 2021 i C O N T E N T S INTRODUCTORY SECTION Table of contents Board of Directors i ii FINANCIAL SECTION Independent auditor’s report Combined financial statements: Combined statement of financial position Combined statement of activities Combined statement of functional expenses Combined statement of cash flows Notes to combined financial statements Supplementary information: Combining schedule of statement of financial position Combining schedule of statement of activities Combining schedule of statement of cash flows 1 – 2 3 4 5 6 7 - 14 15 - 16 17 – 18 19 COMPLIANCE SECTION Schedule of expenditures of federal awards Independent auditor’s report on internal control over financial reporting and on compliance and other matters based on an audit of the combined financial statements performed in accordance with government auditing standards Independent auditor’s report on compliance for each major federal program and on internal control over compliance required by the uniform guidance Schedule of findings and questioned costs 20 – 21 22 – 23 24 – 25 26 ii BOARD OF DIRECTORS NAME POSITION Board Members Carl Bergstrom President Lauris Olson Vice President Bob Thode Bill Lusher Associate Vice President Secretary Bruce Reimers Treasurer Scott Becker Member Latifah Faisal Member Louis Stauter Member Gwenda Naylor Member Dean Kluss Member James Gill Member Natasha Terrones Jerry Kloberdanz Member Member Organization Officials Michelle De La Riva Executive Director Pam Barkley Controller 1 SCHNURR & COMPANY, LLP Certified Public Accountants and Consultants INDEPENDENT AUDITOR’S REPORT Board of Directors Community and Family Resources and The Richmond Center Fort Dodge, Iowa Report on the Financial Statements We have audited the accompanying combined financial statements of Community and Family Resources and The Richmond Center, which comprise the combined statement of financial position as of June 30, 2021, the related combined statements of activities, functional expenses and cash flows for the year then ended, and the related notes to combined financial statements (collectively, the financial statements). Management’s Responsibility for 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. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit 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 auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Organization’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Organization’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 the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 2 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Community and Family Resources and The Richmond Center as of June 30, 2021, and the changes in their net assets and their cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements taken as a whole. The supplementary information included in pages 15 through 21, including the Schedule of Expenditures of Federal Awards required by Title 2, U.S. Code of Federal Regulations, Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, is presented for purposes of additional analysis and is not a required part of the basic financial statements. The supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information is fairly stated, in all material respects, in relation to the financial statements taken as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 25, 2021 on our consideration of Community and Family Resources and The Richmond Center’s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the effectiveness of the Organization’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Community and Family Resources and The Richmond Center’s internal control over financial reporting and compliance. Fort Dodge, Iowa October 25, 2021 COMMUNITY AND FAMILY RESOURCES AND THE RICHMOND CENTER COMBINED STATEMENT OF FINANCIAL POSITION June 30, 2021 ASSETS Current Assets: Cash 3,188,817 $ Accounts receivable net 1,576,711 Contributions receivable, current portion 102,512 Prepaid expenses 68,482 Total current assets 4,936,522 Property and Equipment: Land 359,781 Buildings 9,054,369 Equipment 2,047,538 Vehicles 283,468 11,745,156 Less accumulated depreciation 3,208,223 8,536,933 Long-term Receivables and Investments: Contributions receivable, net of current portion 79,831 Investment in IBHN 150,000 229,831 Total assets 13,703,286 $ See Notes to Combined Financial Statements. 3 LIABILITIES AND NET ASSETS Current Liabilities: Current maturities of long-term debt 162,265 $ Accounts payable 171,477 Accrued salaries 135,131 Accrued paid time off 106,611 Accrued payroll taxes and benefits 51,208 Accrued expenses 31,871 Total current liabilities 658,563 Note payable, less current maturities 3,700,879 Total liabilities 4,359,442 Net Assets: Without donor restrictions: Undesignated 9,145,590 With donor restrictions: Purpose restriction 198,254 9,343,844 Total liabilities and net assets 13,703,286 $ 4 COMMUNITY AND FAMILY RESOURCES AND THE RICHMOND CENTER COMBINED STATEMENT OF ACTIVITIES Year Ended June 30, 2021 Without Donor Restrictions With Donor Restrictions Total Revenue and Support: Federal and state grants 3,131,667 $ -$ 3,131,667 $ Medicaid 2,112,860 - 2,112,860 County contributions 51,708 - 51,708 City contributions 2,230 - 2,230 Other contributions 21,850 30,331 52,181 Client private pay 237,149 - 237,149 Client third-party pay 2,065,637 - 2,065,637 Miscellaneous 1,708,003 - 1,708,003 Interest 3,720 2 3,722 Contributed goods and services 25,741 - 25,741 Total revenue and support 9,360,565 30,333 9,390,898 Net Assets Released from Restrictions: Expended in accordance with donors' restrictions 105,220 (105,220) - Total revenue, support and reclassification 9,465,785 (74,887) 9,390,898 Expenditures: Program services expense: Residential 2,386,026 - 2,386,026 Special programs 613,908 - 613,908 Outpatient 1,464,725 - 1,464,725 Psychiatry 243,356 - 243,356 Therapy 507,645 - 507,645 Prevention 436,733 - 436,733 Supporting services expense: General and administrative 1,972,305 - 1,972,305 Total expenditures 7,624,698 - 7,624,698 Increase (decrease) in net assets 1,841,087 (74,887) 1,766,200 Net assets at beginning of year 7,304,503 273,141 7,577,644 Net assets at end of year 9,145,590 $ 198,254 $ 9,343,844 $ See Notes to Combined Financial Statements. COMMUNITY AND FAMILY RESOURCES AND THE RICHMOND CENTER COMBINED STATEMENT OF FUNCTIONAL EXPENSES Year Ended June 30, 2021 Special Adult Residential and Detox Recovery and Transition House STARS Program (Adolescent Treatment) Operating Expenses: Salary 788,262 $ 1,331,083 $ 35,852 $ 315,116 $ FICA/Medicare 59,022 101,223 2,726 23,960 Workers' compensation 13,819 25,254 680 5,979 Unemployment 3,244 4,894 132 1,168 Health insurance 52,814 92,834 2,490 21,830 IPERS 69,256 126,606 3,413 29,968 Dues, fees and memberships 11,602 207 - 98 Subscriptions/publications 2,486 - - - Food/groceries - 167,357 11,608 39,848 Medical supplies - 10,353 60 213 Program supplies 215 15,593 498 3,160 Office supplies 6,344 1,029 130 497 Operating supplies/non-food 31,231 47,891 6,078 10,995 Recreational - - - 391 Postage 2,112 165 3 35 Advertising/promotional items 78,686 - - - Depreciation 137,535 105,970 5,535 39,442 Computer hardware, software, maintenance 147,761 4,682 - 1,187 Building repairs/maintenance 6,445 30,756 3,270 11,501 Office repairs/maintenance 3,339 3,285 - 776 Office/space rental 430 - - - Utilities 11,579 46,509 14,987 14,335 Telephone 10,443 14,067 318 4,535 Insurance 80,633 - - - Property tax - - - - Contracted services 131,850 60,586 3,600 13,718 Recruiting expenses 5,320 6,247 - 3,101 In-state travel 8,700 1,895 82 298 Staff development training 18,004 3,827 16 299 Vehicle expense 742 - - 695 In-kind - - - - Interest 16,621 91,665 - 33,652 Miscellaneous expense 11,354 570 - 91 1,709,849 $ 2,294,548 $ 91,478 $ 576,888 $ See Notes to Combined Financial Statements. Residential General and Administrative 5 Programs Outpatient Gambling (Treatment, Education and Housing)Fort Dodge Ames Boone Webster City Rockwell City Pocahontas Humboldt Clarion Prevention General and Administrative Psychiatry Therapy Total 24,176 $ 463,544 $ 265,204 $ 65,694 $ 30,977 $ 14,409 $ 14,409 $ 14,409 $ 24,385 $ 255,025 $ 1,424 $ 94,326 $ 363,085 $ 4,101,380 $ 1,859 35,316 20,169 4,997 2,356 1,096 1,096 1,096 1,855 19,612 109 7,512 27,776 311,780 469 8,825 5,038 1,245 587 273 273 273 462 3,329 32 2,188 8,120 76,846 351 2,546 979 242 114 53 53 53 90 3,523 7 466 1,682 19,597 2,441 33,789 18,400 4,598 2,288 999 999 1,000 1,725 24,349 63 4,577 16,850 282,046 2,053 43,330 25,252 6,247 2,945 1,372 1,372 1,371 2,319 21,652 128 8,895 32,873 379,052 - 95 86 130 - - - - - 2,105 - - 100 14,423 - - 143 - - - - - - 609 - 37 60 3,335 - - - - - - - - - - - - - 218,813 - 31,613 - - - - - - - - - - - 42,239 - 10,640 8,253 351 1,207 - - - 540 10,229 - - - 50,686 142 972 1,555 517 352 - - 97 86 837 - 24 149 12,731 86 9,427 5,057 2,046 1,068 - - - 230 17,474 5 116 364 132,068 - - - - - - - - - - - - - 391 - 201 418 195 - 2 2 2 2 88 - 56 331 3,612 - 12,499 - - - - - - - 6,543 - - - 97,728 - 30,737 27,287 - - - - - - 758 520 1,834 1,834 351,452 10 4,040 2,877 - 695 - - - 563 753 3,474 52 84 166,178 58 8,865 3,541 - - - - - - 520 - 1,560 2,900 69,416 456 1,805 5,549 885 1,511 - - - - 2,771 - 694 1,463 22,534 2,059 - - 8,400 8,668 1,782 2,100 4,800 4,800 14,853 - - 8,400 56,292 1,819 11,859 14,989 12,920 9,260 - - - 600 11,302 - 5,619 22,220 177,998 339 4,638 6,812 1,837 90 180 180 180 837 2,827 - 15,006 5,927 68,216 - - - - - - - - - - 20,275 - - 100,908 - - - - - - - - - - - - - - - 4,195 8,779 4,362 845 43 40 240 305 66 236,272 93,799 5,866 564,566 72 889 694 - 134 - - - - 1,418 - 620 1,017 19,512 349 1,202 2,131 229 332 865 1 149 155 3,629 - 3,998 2,851 26,866 217 5,182 3,183 - - 70 70 69 3 6,021 147 347 416 37,871 64 - - - - - - - - - - - - 1,501 - - - - - - - - - 25,741 - - - 25,741 - 27,839 - - - - - - - - - 1,630 3,277 174,684 - - 816 706 - - - - - 699 - - - 14,236 37,020 $ 754,048 $ 427,212 $ 115,601 $ 63,429 $ 21,144 $ 20,595 $ 23,739 $ 38,957 $ 436,733 $ 262,456 $ 243,356 $ 507,645 $ 7,624,698 $ The Richmond CenterCommunity and Family Resources 6 COMMUNITY AND FAMILY RESOURCES Exhibit D AND THE RICHMOND CENTER COMBINED STATEMENT OF CASH FLOWS Year Ended June 30, 2021 Cash Flows from Operating Activities Increase in net assets 1,766,200 $ Adjustment to reconcile increase in net assets to net cash provided by operating activities: Depreciation 351,452 (Gain) on sale of property and equipment (1,563) Effect of changes in: Accounts receivable (313,244) Contributions receivable 74,890 Prepaid expenses (23,983) Accounts payable 106,272 Accrued salaries 14,494 Accrued paid time off 9,320 Accrued payroll taxes and benefits 4,493 Accrued expenses (3,582) Net cash provided by operating activities 1,984,749 Cash Flows from Investing Activities Proceeds from sale of property and equipment 8,525 Purchase of property and equipment (83,860) Net cash (used in) investing activities (75,335) Cash Flows from Financing Activities Repayment of note payable (1,002,516) Net cash (used in) financing activities (1,002,516) Net increase in cash 906,898 Cash: Beginning 2,281,919 Ending 3,188,817 $ Supplemental Disclosures of Cash Flow Information: Cash payments for interest 174,684 $ COMMUNITY AND FAMILY RESOURCES AND THE RICHMOND CENTER NOTES TO COMBINED FINANCIAL STATEMENTS 7 Note 1. Nature of Activities and Significant Accounting Policies Nature of activities: Community and Family Resources is a nonprofit corporation that was established in 1968. The purpose of the Organization is to increase understanding, to alleviate the damage, and to reduce the incidence of alcoholism. The Organization operates treatment facilities in northwestern and central Iowa offering outpatient, residential, and detoxification services to persons experiencing problems in living due to alcoholism and other chemical dependencies. Community and Family Resources is funded by federal, state, county, and local governments as well as private payments from patients. The Richmond Center is a non-profit corporation providing mental health services that include outpatient mental health psychiatric services for the residents of Story and Boone counties. The financial statements combine Community and Family Resources and The Richmond Center (collectively the “Organization”), which share the same Board of Directors. In addition, The Richmond Center is financially dependent on Community and Family Resources. Significant accounting policies: A summary of the Organization’s significant accounting policies is as follows: Use of estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Principles of combination: The accompanying combined financial statements include the accounts of Community and Family Resources and The Richmond Center. All material intercompany balances and transactions have been eliminated in combination. Accounts receivable: Accounts receivable, with the exception of private client pay, are recorded on the accrual basis of accounting. Private client pay is recognized as income in the period in which it is received due to the uncertainty of collection. The Organization uses the allowance method of recording bad debts. The allowance for bad debts is $102,000 at June 30, 2021. Contributions receivable: Contributions receivable are recorded at the fair value when pledged, assuming a discount rate of 5% at June 30, 2021. In subsequent years, amortization of the discount is included in contribution revenue in the combined statement of activities. The Organization uses the allowance method to determine uncollectible contributions receivable. The allowance is based on management’s analysis of specific promises made. The balance of the allowance for uncollectible pledges was $16,677 at June 30, 2021. Investments: The Organization has an 18.9% investment in the Iowa Behavioral Health Network. The Organization accounts for this investment by the cost method since the investment is unlisted and the criteria for using the equity method of accounting are not satisfied. NOTES TO COMBINED FINANCIAL STATEMENTS 8 Note 1. Nature of Activities and Significant Accounting Policies (Continued) Significant accounting policies (continued): Property and equipment: Expenditures for the acquisition of property and equipment over $5,000 are capitalized at cost. The fair value of donated furniture and equipment is similarly capitalized. Depreciation is computed using the straight-line method based on the following useful lives: Years Buildings 5-40 Equipment 2-20 Vehicles 5 Net assets: Net assets, revenues, gains and losses are classified based on the existence or absence of donor or grantor imposed restrictions. Accordingly, net assets and changes therein are classified and reported as follows: Net assets without donor restrictions - Net assets available for use in general operations and not subject to donor (or certain grantor) restrictions. Net assets with donor restrictions - Net assets subject to donor (or certain grantor) imposed restrictions. Some donor-imposed restrictions are temporary in nature, such as those that will be met by the passage of time or other events specified by the donor. Other donor-imposed restrictions are perpetual in nature, where the donor stipulates that resources be maintained in perpetuity. The Organization reports contributions restricted by donors as increases in net assets without donor restrictions if the restrictions expire (that is, when a stipulated time restriction ends or purpose restriction is accomplished) in the reporting period in which the revenue is recognized. Donor-imposed restrictions are released when a restriction expires, that is, when the stipulated time has elapsed, when the stipulated purpose for which the resource was restricted has been fulfilled, or both. Revenue and revenue recognition: Client service revenue is reported at the amount that reflects the consideration to which the Organization expects to be entitled in exchange for providing services to the clients. These amounts are due from third-party payors (including health insurers and government programs) and clients. The Organization bills the third-party payors and clients after the services are performed. Revenue is recognized as performance obligations are satisfied. Performance obligations are determined based on the nature of the services provided by the Organization. The performance obligations are satisfied over time as the client simultaneously receives and consumes the benefits of the services. The Organization determines the transaction price based on industry rates for services provided, reduced by contractual adjustments provided to third-party payers and discounts provided to clients in accordance with the Organization’s policy. Clients who are covered by third-party payers are responsible for related deductibles and coinsurance, which vary in amount. The Organization also provides services to uninsured clients, which recognizes revenue as received due to the uncertainty of collection. NOTES TO COMBINED FINANCIAL STATEMENTS 9 Note 1. Nature of Activities and Significant Accounting Policies (Continued) Significant accounting policies (continued): Revenue and revenue recognition (continued): A portion of the Organization’s revenue is derived from cost- reimbursable federal and state contracts and grants, which are conditioned upon certain performance requirements and/or the incurrence of allowable qualifying expenses. Amounts received are recognized as revenue when the Organization has incurred expenditures in compliance with specific contract or grant provisions. Amounts received prior to incurring qualifying expenditures are reported as refundable advances in the statement of financial position. The Organization recognizes contributions when cash, securities or other assets, an unconditional promise to give, or notification of a beneficial interest is received. Conditional promises to give, that is, those with a measurable performance or other barrier, and a right of return, are not recognized until the conditions on which they depend have been substantially met. Contributed goods and services: A large number of volunteers have given significant amounts of their time to the Organization’s programs; however, no amounts have been recognized in the financial statements for volunteer time since no objective basis is available to measure the value of such services. Contributed goods and services are recognized as in-kind revenues at the time the goods and services are received. These in-kind contributions and the corresponding expenses are valued at their fair market value as estimated by management and/or donors and recognized in the financial statements and amounted to $25,741 for the year ended June 30, 2021. Advertising costs: Advertising costs are expensed as incurred. Advertising expense for the year ended June 30, 2021 was $97,728. Functional allocation of expenses: The costs of program and supporting services activities have been summarized on a functional basis in the statements of activities. The statements of functional expenses present the natural classification detail of expenses by function. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Income taxes: Both Organizations are non-profit corporations exempt from income taxes under § 501(c)(3) of the Internal Revenue Code. Accordingly, no provision for income tax has been made in the financial statements. Subsequent events: Subsequent events have been evaluated through October 25, 2021, which is the date the financial statements were available to be issued. Events occurring after that date have not been evaluated to determine whether a change in the financial statements would be required. NOTES TO COMBINED FINANCIAL STATEMENTS 10 Note 2. Liquidity and Availability Financial assets available for general expenditures, that is, without donor or other restrictions limiting their use, within one year of the balance sheet date, comprise the following: Cash 3,172,907 $ Accounts receivable 1,576,711 4,749,618 $ As part of the Organization’s liquidity management plan, cash in excess of daily requirements is invested in money market or sweep accounts. Note 3. Pledges Receivable Pledges receivable as of June 30, 2021 are due as follows: Year ending June 30, 2022 114,211 $ 2023 73,550 2024 19,669 2025 909 2026 120 208,459 Less: Discounts for time value of money (9,439) Allowance for doubtful pledges (16,677) 182,343 $ Note 4. Pledged Assets and Note Payable Long-term debt consists of the following as of June 30, 2021: 3,863,144 $ Less: Current portion 162,265 3,700,879 $ 3.70% note payable to Great Western Bank payable in monthly installments of $25,206, including interest, through May, 2030. Monthly installments of $18,343, including interest, through May, 2035. Monthly installments of $15,559 with a final payment due May, 2040. The interest rate may change every five years with interest calculated at 2.50% plus the Federal reserve five-year treasury constant maturities rate. The note is secured by real estate. NOTES TO COMBINED FINANCIAL STATEMENTS 11 Note 4. Pledged Assets and Note Payable (Continued) Aggregate maturities required on long-term debt as of June 30, 2021 are due in future years as follows: 2022 162,265 $ 2023 168,372 2024 174,708 2025 181,283 2026 188,105 Thereafter 2,988,411 3,863,144 $ Note 5. Leases The Organization leases office space for outpatient facilities in several cities in Central Iowa under noncancelable operating leases, which expire on various dates between December, 2021 and February, 2024. Several leases are cancelable should government funding no longer be available. Total future minimum rental commitment by year as of June 30, 2021 follows: Year ending June 30, 2022 50,442 $ 2023 42,810 2024 15,535 108,787 $ Total rent expense for the year ended June 30, 2021 was $56,292. Note 6. Support From Governmental Units The Organization receives a substantial amount of its support from the federal government and the State of Iowa. A significant reduction in the level of this support, if this were to occur, may have a significant effect on the Organization's programs and activities. Note 7. Risk Management The Organization is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. These risks are covered by commercial insurance purchased from independent third parties. Settled claims from these risks have not exceeded commercial insurance coverage for the past three years. NOTES TO COMBINED FINANCIAL STATEMENTS 12 Note 8. Pension and Retirement Benefits Plan Description – IPERS membership is mandatory for employees of the Organization, except for those covered by another retirement system. Employees of the Organization are provided with pensions through a cost-sharing multiple employer defined benefit pension plan administered by the Iowa Public Employees’ Retirement System (IPERS). IPERS issues a stand-alone financial report which is available to the public by mail at P.O. Box 9117, Des Moines, Iowa 50306-9117 or at www.ipers.org. IPERS benefits are established under Iowa Code Chapter 97B and the administrative rules thereunder. Chapter 97B and the administrative rules are the official plan documents. The following brief description is provided for general informational purposes only. Refer to the plan documents for more information. Pension Benefits – A Regular member may retire at normal retirement age and receive monthly benefits without an early-retirement reduction. Normal retirement age is age 65, any time after reaching age 62 with 20 or more years of covered employment, or when the member’s years of service plus the member’s age at the last birthday equals or exceeds 88, whichever comes first. These qualifications must be met on the member’s first month of entitlement to benefits. Members cannot begin receiving retirement benefits before age 55. The formula used to calculate a Regular member’s monthly IPERS benefit includes: • A multiplier based on years of service. • The member’s highest five-year average salary, except members with service before June 30, 2012 will use the highest three-year average salary as of that date if it is greater than the highest five-year average salary. If a member retires before normal retirement age, the member’s monthly retirement benefit will be permanently reduced by an early-retirement reduction. The early-retirement reduction is calculated differently for service earned before and after July 1, 2012. For service earned before July 1, 2012, the reduction is 0.25% for each month the member receives benefits before the member’s earliest normal retirement age. For service earned on or after July 1, 2012, the reduction is 0.50% for each month that the member receives benefits before age 65. Generally, once a member selects a benefit option, a monthly benefit is calculated and remains the same for the rest of the member’s lifetime. However, to combat the effects of inflation, retirees who began receiving benefits prior to July 1990 receive a guaranteed dividend with their regular November benefit payments. Disability and Death Benefits – A vested member who is awarded federal Social Security disability or Railroad Retirement disability benefits is eligible to claim IPERS benefits regardless of age. Disability benefits are not reduced for early retirement. If a member dies before retirement, the member’s beneficiary will receive a lifetime annuity or a lump-sum payment equal to the present actuarial value of the member’s accrued benefit or calculated with a set formula, whichever is greater. When a member dies after retirement, death benefits depend on the benefit option the member selected at retirement. NOTES TO COMBINED FINANCIAL STATEMENTS 13 Note 8. Pension and Retirement Benefits (Continued) Contributions – Contribution rates are established by IPERS following the annual actuarial valuation which applies IPERS’ Contribution Rate Funding Policy and Actuarial Amortization Method. State statute limits the amount rates can increase or decrease each year to 1 percentage point. IPERS Contribution Rate Funding Policy requires the actuarial contribution rate be determined using the “entry age normal” actuarial cost method and the actuarial assumptions and methods approved by the IPERS Investment Board. The actuarial contribution rate covers normal cost plus the unfunded actuarial liability payment based on a 30-year amortization period. The payment to amortize the unfunded actuarial liability is determined as a level percentage of payroll, based on the Actuarial Amortization Method adopted by the Investment Board. In fiscal year 2021, pursuant to the required rate, regular members contributed 6.29% of covered payroll and the Organization contributed 9.44% of covered payroll for a total rate of 15.73%. The Organization’s contribution to IPERS for the year ended June 30, 2021 was $379,052. At June 30, 2021, the Organization reported payables to IPERS of $0 for legally required Organization contributions and employee contributions withheld from employee wages which had not yet been remitted to IPERS. IPERS Fiduciary Net Position – Detailed information about IPERS’ fiduciary net position is available in the separately issued IPERS financial report which is available on IPERS’ website at www.ipers.org. Note 9. Functional Expenses The financial statements report certain categories of expenses that are attributed to more than one program or supporting function. Therefore, expenses required allocation on a reasonable basis that is consistently applied. Salaries, payroll taxes and employee benefits are allocated on the basis of estimates of time and effort. The additional expenses that are allocated are done so in proportion to the percentage reflected in the Organization’s budget. Note 10. Net Assets With Donor Restrictions Net assets with donor restrictions at June 30, 2021 are available for the following purposes: Special needs programs for clients 15,911$ New facility construction 182,343 198,254$ NOTES TO COMBINED FINANCIAL STATEMENTS 14 Note 10. Net Assets With Donor Restrictions (Continued) At June 30, 2021, net assets with donor restrictions consisted of the following: Cash 15,911$ Contributions receivable 182,343 198,254$ Net assets were released from donor restrictions by incurring expenses related to the new facility construction. Total net assets released from donor restrictions were $105,220 for the year ended June 30, 2021. Note 11. Contingencies On March 5, 2021, the Organization received loan proceeds in the amount of $948,708 under the Paycheck Protection Program (“PPP”). The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act, provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The Financial Accounting Standards Board allowed an alternative treatment of the PPP, which provides for nonprofit organizations to elect the simultaneous release for donor-restricted contributions that were initially conditional contributions independent of any election for other donor-restricted contributions. The Organization has elected the alternative treatment of accounting for the PPP and the forgiven loan amount is included as an unrestricted contribution at June 30, 2021. The PPP, at June 30, 2021, is still subject to approval for forgiveness from the Small Business Administration. Note 12. Significant Uncertainties In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic which continues to spread throughout the United States. Actions taken around the world to help mitigate the spread of COVID-19 include restrictions on travel, and quarantines in certain areas, and forced closures for certain types of public places and businesses. It is unknown how long the adverse conditions associated with COVID-19 will last and what the complete financial effect will be to the Organization. SUPPLEMENTARY INFORMATION COMMUNITY AND FAMILY RESOURCES AND THE RICHMOND CENTER COMBINING SCHEDULE OF STATEMENT OF FINANCIAL POSITION June 30, 2021 Community and Family Resources The Richmond Center Subtotal ASSETS Current Assets: Cash 3,033,111 $ 155,706 $ 3,188,817 $ Accounts receivable, net 4,399,460 121,565 4,521,025 Contributions receivable, current portion 102,512 - 102,512 Prepaid expenses 64,723 3,759 68,482 Total current assets 7,599,806 281,030 7,880,836 Property and Equipment: Land 359,781 - 359,781 Buildings 8,886,037 168,332 9,054,369 Equipment 1,796,975 250,563 2,047,538 Vehicles 283,468 - 283,468 11,326,261 418,895 11,745,156 Less accumulated depreciation 2,906,635 301,588 3,208,223 8,419,626 117,307 8,536,933 Long-term Receivables and Investments: Contributions receivable, net of current portion 79,831 - 79,831 Investment in IBHN 150,000 - 150,000 229,831 - 229,831 Total assets 16,249,263 $ 398,337 $ 16,647,600 $ 15 Eliminations Total -$ 3,188,817 $ (2,944,314) 1,576,711 - 102,512 - 68,482 (2,944,314) 4,936,522 - 359,781 - 9,054,369 - 2,047,538 - 283,468 - 11,745,156 - 3,208,223 - 8,536,933 - 79,831 - 150,000 - 229,831 (2,944,314) $ 13,703,286 $ (Continued on next page) COMMUNITY AND FAMILY RESOURCES AND THE RICHMOND CENTER COMBINING SCHEDULE OF STATEMENT OF FINANCIAL POSITION (CONTINUED) June 30, 2021 Community and Family Resources The Richmond Center Subtotal LIABILITIES AND NET ASSETS Current Liabilities: Current maturities of long-term debt 162,265 $ -$ 162,265 $ Accounts payable 171,477 2,944,314 3,115,791 Accrued salaries 120,242 14,889 135,131 Accrued paid time off 96,251 10,360 106,611 Accrued payroll taxes and benefits 51,208 - 51,208 Accrued expenses 31,871 - 31,871 Total current liabilities 633,314 2,969,563 3,602,877 Note payable, less current maturities 3,700,879 - 3,700,879 Total liabilities 4,334,193 2,969,563 7,303,756 Net Assets: Without donor restrictions: Undesignated 11,729,722 (2,584,132) 9,145,590 With donor restrictions: Purpose restrictions 185,348 12,906 198,254 11,915,070 (2,571,226) 9,343,844 Total liabilities and net assets 16,249,263 $ 398,337 $ 16,647,600 $ 16 Eliminations Total -$ 162,265 $ (2,944,314) 171,477 - 135,131 - 106,611 - 51,208 - 31,871 (2,944,314) 658,563 3,700,879 (2,944,314) 4,359,442 - 9,145,590 - 198,254 - 9,343,844 (2,944,314) $ 13,703,286 $ COMMUNITY AND FAMILY RESOURCES AND THE RICHMOND CENTER COMBINING SCHEDULE OF STATEMENT OF ACTIVITIES Year Ended June 30, 2021 Community and Family Resources The Richmond Center Subtotal Net Assets Without Donor Restrictions: Revenue and Support: Federal and state grants 3,123,007 $ 8,660 $ 3,131,667 $ Medicaid 1,606,468 506,392 2,112,860 County contributions 51,708 - 51,708 City contributions 2,230 - 2,230 Other contributions 21,850 - 21,850 Client private pay 196,172 40,977 237,149 Client third-party pay 1,761,384 304,253 2,065,637 Miscellaneous 1,546,302 161,701 1,708,003 Interest 3,170 550 3,720 Contributed goods and services 25,741 - 25,741 Total revenue and support 8,338,032 1,022,533 9,360,565 Net Assets Released from Restrictions: Expended in accordance with donors' restrictions 105,220 - 105,220 Unrestricted revenue, support and reclassifications 8,443,252 1,022,533 9,465,785 Expenditures: Program services expense: Residential 2,386,026 - 2,386,026 Special programs 613,908 - 613,908 Outpatient 1,464,725 - 1,464,725 Psychiatry - 243,356 243,356 Therapy - 507,645 507,645 Prevention 436,733 - 436,733 Supporting services expense: General and administrative 1,709,849 262,456 1,972,305 Total expenditures 6,611,241 1,013,457 7,624,698 Increase in net assets without donor restrictions 1,832,011 9,076 1,841,087 17 Eliminations Total -$ 3,131,667 $ - 2,112,860 - 51,708 - 2,230 - 21,850 - 237,149 - 2,065,637 - 1,708,003 - 3,720 - 25,741 - 9,360,565 - 105,220 - 9,465,785 - 2,386,026 - 613,908 - 1,464,725 - 243,356 - 507,645 - 436,733 - 1,972,305 - 7,624,698 - 1,841,087 (Continued on next page) COMMUNITY AND FAMILY RESOURCES AND THE RICHMOND CENTER COMBINING SCHEDULE OF STATEMENT OF ACTIVITIES (CONTINUED) Year Ended June 30, 2021 Community and Family Resources The Richmond Center Subtotal Net Assets With Donor Restrictions: Contributions 30,331 $ -$ 30,331 $ Interest income 1 1 2 Net assets released from restrictions: Expended in accordance with donors' restrictions (105,220) - (105,220) Increase (decrease) in net assets with donor restrictions (74,888) 1 (74,887) Increase in net assets 1,757,123 9,077 1,766,200 Net assets at beginning of year 10,157,947 (2,580,303) 7,577,644 Net assets at end of year 11,915,070 $ (2,571,226) $ 9,343,844 $ 18 Eliminations Total -$ 30,331 $ - 2 - (105,220) - (74,887) - 1,766,200 - 7,577,644 -$ 9,343,844 $ COMMUNITY AND FAMILY RESOURCES AND THE RICHMOND CENTER COMBINING SCHEDULE OF STATEMENT OF CASH FLOWS Year Ended June 30, 2021 Community and Family Resources The Richmond Center Subtotal Cash Flows from Operating Activities Increase in net assets 1,757,123 $ 9,077 $ 1,766,200 $ Adjustment to reconcile increase in net assets to net cash provided by (used in) operating activities: Depreciation 347,264 4,188 351,452 (Gain) on sale of property and equipment (1,563) - (1,563) Effect of changes in: Accounts receivable (161,511) 19,323 (142,188) Contributions receivable 74,890 - 74,890 Prepaid expenses (27,280) 3,297 (23,983) Accounts payable 106,273 (171,057) (64,784) Accrued salaries 16,608 (2,114) 14,494 Accrued paid time off 13,186 (3,866) 9,320 Accrued payroll taxes and benefits 4,493 - 4,493 Accrued expenses (3,582) - (3,582) Net cash provided by (used in) operating activities 2,125,901 (141,152) 1,984,749 Cash Flows from Investing Activities: Proceeds from sale of property and equipment 8,525 - 8,525 Purchase of property and equipment (83,860) - (83,860) Net cash (used in) investing activities (75,335) - (75,335) Cash Flows from Financing Activities: Repayment of note payable (1,002,516) - (1,002,516) Net cash (used in) financing activities (1,002,516) - (1,002,516) Net increase (decrease) in cash 1,048,050 (141,152) 906,898 Cash: Beginning 1,985,061 296,858 2,281,919 Ending 3,033,111 $ 155,706 $ 3,188,817 $ 19 Eliminations Total -$ 1,766,200 $ - 351,452 - (1,563) (171,056) (313,244) - 74,890 - (23,983) 171,056 106,272 - 14,494 - 9,320 - 4,493 - (3,582) - 1,984,749 - 8,525 - (83,860) - (75,335) (1,002,516) - (1,002,516) - 906,898 - 2,281,919 -$ 3,188,817 $ COMMUNITY AND FAMILY RESOURCES AND THE RICHMOND CENTER 20 COMMUNITY AND FAMILY RESOURCES AND THE RICHMOND CENTER SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Year Ended June 30, 2021 Federal Grantor/Pass-Through Grantor/ Program Title CFDA Number Contract Number Expenditures Indirect: U.S. Department of the Treasury: Central Iowa Community Services: COVID-19 Coronavirus Relief Fund 21.019 19,136 $ U.S. Department of Health and Human Services: Iowa Department of Public Health: Block Grants for Prevention and Treatment of Substance Abuse: IDPH Substance Use and Problem Gambling Services Integrated Provider Network 93.959 5881PN06 879,179 Iowa State University of Science and Technology: Opioid STRBuilding Capacity for PROSPER Rx Implementation to Address the Opioid Epidemic in Rural Iowa 93.788 4302813A 7,681 Iowa Department of Public Health: Opioid STR State Opioid Response in Iowa 93.788 5880SA93 33,918 State Opioid Response in Iowa 93.788 5881SA93 36,213 State Opioid Response Corrections Liaison 93.788 5880SA142 32,382 State Opioid Response Corrections Liaison 93.788 5881SA142 103,954 Iowa Treatment for Individuals Experiencing Homelessness 93.788 5881SA153 33,563 Iowa Treatment for Individuals Experiencing Homelessness 93.788 5882SA153 15,107 State Opioid Response Corrections Liaison COVID-19 Iowa's Emergency COVID-19 Project 93.788 5881SA162 22,223 285,041 Injury Prevention and Control Research and State and Community Based Programs: Strategic Initiatives to Prevent Drug Overdoses 93.136 5881IP04 64,427 (Continued on next page) 21 COMMUNITY AND FAMILY RESOURCES AND THE RICHMOND CENTER SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (CONTINUED) Year Ended June 30, 2021 Federal Grantor/Pass-Through Grantor/ Program Title CFDA Number Contract Number Expenditures Indirect (Continued): U.S. Department of Health and Human Services (continued): Iowa Department of Public Health (continued): Substance Abuse and Mental Health Services Projects of Regional and National Significance: Zero Suicide Iowa - IPN 93.243 5880SM15 14,000 $ Zero Suicide Iowa - IPN 93.243 5881SM15 20,911 Direct: Department of Health and Human Services: Mental Health Awareness Training 93.243 5H79SM081377-02 35,170 Mental Health Awareness Training 93.243 5H79SM081377-03 69,114 139,195 1,386,978 $ Basis of Presentation – The accompanying Schedule of Expenditures of Federal Awards (Schedule) includes the federal grant activity of Community and Family Resources and The Richmond Center under programs of the federal government for the year ended June 30, 2021. The information in this Schedule is presented in accordance with the requirements of Title 2, U.S. Code of Federal Regulations, Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of Community and Family Resources and The Richmond Center, it is not intended to and does not present the financial position, changes in net assets or cash flows of Community and Family Resources and The Richmond Center. Summary of Significant Accounting Policies – Expenditures reported in the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following, the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Community and Family Resources and The Richmond Center had no grants passed through to subrecipients. Indirect Cost Rate – Community and Family Resources and The Richmond Center has elected not to use the 10% de minimis indirect cost rate as allowed under the Uniform Guidance. 22 SCHNURR & COMPANY, LLP Certified Public Accountants and Consultants INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF THE COMBINED FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Board of Directors Community and Family Resources and The Richmond Center Fort Dodge, Iowa We have audited, 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, the combined financial statements of Community Family Resources and The Richmond Center (the “Organization”), as of and for the year ended June 30, 2021, and the related notes to combined financial statements, and have issued our report thereon dated October 25, 2021. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Organization’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Organization’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Organization’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the Organization’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 and, therefore, material weaknesses or significant deficiencies may exist that were not identified. 23 Compliance and Other Matters As part of obtaining reasonable assurance about whether the Organization’s combined financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing and not to provide an opinion on the effectiveness of the Organization’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 Organization’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Fort Dodge, Iowa October 25, 2021 24 SCHNURR & COMPANY, LLP Certified Public Accountants and Consultants INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE Board of Directors of Community and Family Resources and The Richmond Center Fort Dodge, Iowa Report on Compliance for Each Major Federal Program We have audited Community and Family Resources’ and The Richmond Center’s (the “Organization”) compliance with the types of compliance requirements described in U.S. Office of Management and Budget (OMB) Compliance Supplement that could have a direct and material effect on its major federal program for the year ended June 30, 2021. The Organization’s major federal program is identified in Part I of the accompanying Schedule of Findings and Questioned Costs. Management’s Responsibility Management is responsible for compliance with the federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditor’s Responsibility Our responsibility is to express an opinion on compliance for the Organization’s major federal program based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America, the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, and the audit requirements of Title 2, U.S. Code of Federal Regulations, Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance) Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether non-compliance 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 Organization’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe our audit provides a reasonable basis for our opinion on compliance for its major federal program. However, our audit does not provide a legal determination of the Organization’s compliance. 25 Opinion on the Major Federal Program In our opinion, the Organization complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on its major federal program for the year ended June 30, 2021. Report on Internal Control Over Compliance The management of the Organization is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the Organization’s internal control over compliance with the types of requirements that could have a direct and material effect on the major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for its major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Organization’s internal control over compliance. A deficiency in internal control over compliance 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 noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance such that there is a reasonable possibility material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected and corrected on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies and, therefore, material weaknesses or significant deficiencies may exist that were not identified. 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 the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Fort Dodge, Iowa October 25, 2021 26 COMMUNITY AND FAMILY RESOURCES AND THE RICHMOND CENTER Schedule of Findings and Questioned Costs Year Ended June 30, 2021 Part I: Summary of the Independent Auditor’s Results: a. An unmodified opinion was issued on the combined financial statements, prepared in accordance with accounting principles generally accepted in the United States of America. b. No weaknesses in internal control over financial reporting were disclosed by the audit of the combined financial statements. c. The audit did not disclose any noncompliance that is material to the combined financial statements. d. No reportable conditions in internal control over major programs were disclosed by the audit of combined financial statements. e. An unmodified opinion was issued on compliance with requirements applicable to the major program. f. The audit did not disclose audit findings that are required to be reported in accordance with Uniform Guidance, Section 200.516. g. The major program was CFDA Number 93.959 – Block Grants for Prevention and Treatment of Substance Abuse. h. The dollar threshold used to distinguish between Type A and Type B programs was $750,000. i. Community and Family Resources and The Richmond Center did not qualify as low-risk auditees. Part II: Findings Related to the Financial Statements: Internal Control Deficiencies: No matters were reported. Instances of Non-compliance: No matters were reported. Part III: Findings and Questioned Costs For Federal Awards: Instances of Non-Compliance: No matters were reported. Internal Control Deficiencies: No matters were reported.