Loading...
HomeMy WebLinkAboutThe Neighborhood Centers of Johnson County - Audit Financial Review Report NEIGHBORHOOD CENTERS OF JOHNSON COUNTY Financial Statements June 30, 2021 and 2020 NEIGHBORHOOD CENTERS OF JOHNSON COUNTY Contents Page(s) Independent Auditors’ Report 1-2 Financial Statements: Statements of Financial Position 3 Statements of Activities and Changes in Net Assets 4 Statements of Cash Flows 5 Statement of Functional Expenses - 2021 6 Statement of Functional Expenses - 2020 7 Notes to Financial Statements 8-14 Supplementary Information: Schedules of Program Revenue and Support 15 Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 16-17 Schedule of Findings and Response and Prior Audit Findings 18 tdtpc.com Oskaloosa 641.672.2523 Pella 641.628.9411 West Des Moines 515.657.5800 Burlington 319.753.9877 Cedar Rapids 319.393.2374 Centerville 641.437.4296 Fairfield 641.472.6171 Mt. Pleasant 319.385.9718 Independent Auditors’ Report To the Board of Directors of Neighborhood Centers of Johnson County Iowa City, Iowa Report on the Financial Statements We have audited the accompanying financial statements of Neighborhood Centers of Johnson County as of and for the years ended June 30, 2021 and 2020, which comprise the statements of financial position, the related statements of activities and changes in net assets, cash flows, and functional expenses for the years then ended, and the related notes to 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. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Neighborhood Centers of Johnson County as of June 30, 2021 and 2020, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Our audits were conducted for the purpose of forming an opinion on the financial statements of Neighborhood Centers of Johnson County taken as a whole. The supplementary information on page 15 is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 13, 2022, on our consideration of Neighborhood Centers of Johnson County’s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on 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 Neighborhood Centers of Johnson County’s internal control over financial reporting and compliance. TDT CPAs and Advisors, P.C. West Des Moines, Iowa January 13, 2022 2 2021 2020 Assets: Cash and cash equivalents $ 948,552 855,300 Certificate of deposit 198,133 195,803 Program receivables 242,831 126,400 Unconditional promises to give - United Way 127,500 127,500 Unconditional promises to give - Johnson County 88,622 86,800 Property and equipment, net of accumulated depreciation 529,438 576,232 Total assets $ 2,135,076 1,968,035 2021 2020 Liabilities: Accounts payable $ 50,111 26,840 Accrued wages 98,629 71,606 Accrued and withheld payroll taxes 7,341 7,512 Accrued compensated absences 111,515 118,898 Deferred revenue 9,078 9,000 Refundable advance (PPP loan) - 351,400 Other liabilities 6,544 - Long-term debt 408,649 460,487 Total liabilities 691,867 1,045,743 Net assets: Without donor restrictions 1,097,152 590,163 With donor restrictions 346,057 332,129 Total net assets 1,443,209 922,292 Total liabilities and net assets $ 2,135,076 1,968,035 See accompanying notes to financial statements. NEIGHBORHOOD CENTERS OF JOHNSON COUNTY Statements of Financial Position June 30, 2021 and 2020 Liabilities and Net Assets Assets 3 Without Donor With Donor Without Donor With DonorRestrictions Restrictions Total Restrictions Restrictions TotalRevenue:Service fees $ 1,594,382 - 1,594,382 2,085,171 - 2,085,171 Interest revenue 3,770 - 3,770 3,131 - 3,131 COVID stipends 197,250 - 197,250 - - - Other 41,723 - 41,723 14,943 - 14,943 Total revenue 1,837,125 - 1,837,125 2,103,245 - 2,103,245 Support:Contributions 31,582 17,461 49,043 34,314 22,625 56,939 General support 8,316 216,122 224,438 4,471 214,300 218,771 Grants and awards 101,412 22,500 123,912 148,381 - 148,381 Forgiveness of debt 50,000 - 50,000 - - - PPP loan forgiveness 351,400 - 351,400 - - - Provider relief funds 58,180 - 58,180 - - - Total support 600,890 256,083 856,973 187,166 236,925 424,091 Net assets released from restrictions 242,155 (242,155) - 241,465 (241,465) - Total revenue and support 2,680,170 13,928 2,694,098 2,531,876 (4,540) 2,527,336 Expenses:Program services: Education and support 1,495,894 - 1,495,894 1,889,593 - 1,889,593 Prevention 184,093 - 184,093 181,348 - 181,348 Total program services 1,679,987 - 1,679,987 2,070,941 - 2,070,941 Supporting activities: Management and general 471,566 - 471,566 468,062 - 468,062 Fundraising 21,628 - 21,628 34,793 - 34,793 Total supporting activities 493,194 - 493,194 502,855 - 502,855 Total expenses 2,173,181 - 2,173,181 2,573,796 - 2,573,796 Change in net assets506,989 13,928 520,917 (41,920) (4,540) (46,460) Beginning net assets590,163 332,129 922,292 632,083 336,669 968,752 Ending net assets$ 1,097,152 346,057 1,443,209 590,163 332,129 922,292 See accompanying notes to financial statements.2020NEIGHBORHOOD CENTERS OF JOHNSON COUNTYStatements of Activities and Changes in Net AssetsFor the Years Ended June 30, 2021 and 20202021 4 2021 2020 Operating activities: Change in net assets $ 520,917 (46,460) Adjustments to reconcile change in net assets to net cash provided (used) by operating activities: Depreciation 65,587 71,823 Forgiveness of PPP loan (351,400) - Forgiveness of debt (50,000) - (Increase) decrease in assets: Program receivables and unconditional promises to give (118,253) 146,079 Other assets - 2,705 Increase (decrease) in liabilities: Accounts payable 23,271 (5,997) Accrued expenses 19,469 22,078 Deferred revenue 78 3,000 Refundable advance (PPP loan) - 351,400 Other liabilities 6,544 - Net cash provided by operating activities 116,213 544,628 Investing activities: Purchase of property, furniture and equipment (18,793) - Interest reinvested from certificate of deposit (2,330) (2,830) Net cash provided (used) by investing activities (21,123) (2,830) Financing activity: Payments on long-term debt (1,838) (1,838) Net cash provided (used) by financing activity (1,838) (1,838) Net increase in cash 93,252 539,960 Cash, beginning of year 855,300 315,340 Cash, end of year $ 948,552 855,300 See accompanying notes to financial statements. NEIGHBORHOOD CENTERS OF JOHNSON COUNTY Statements of Cash Flows For the Years Ended June 30, 2021 and 2020 5 Education and Support Prevention Total Management and General Fundraising Total Total Expenses Salaries and wages $ 1,105,312 137,452 1,242,764 271,281 14,644 285,925 1,528,689 Payroll taxes and benefits 169,246 20,738 189,984 38,931 3,177 42,108 232,092 Payroll fees 44,211 5,498 49,709 15,038 586 15,624 65,333 Food and supplies 39,868 2,355 42,223 362 - 362 42,585 Program expenses (lic. fee/rec./other) 7,058 25 7,083 810 - 810 7,893 Vehicle expenses 1,146 1,610 2,756 2,523 - 2,523 5,279 Transportation - bus 1,318 - 1,318 - - - 1,318 Mileage and parking 1,629 229 1,858 - - - 1,858 Utilities and occupancy 10,323 - 10,323 3,617 - 3,617 13,940 Job recruitment 298 186 484 447 1,030 1,477 1,961 Staff appreciation - - - 1,902 - 1,902 1,902 Fundraising - - - - 750 750 750 Insurance - - - 26,295 - 26,295 26,295 Educational materials and program supplies 57,939 5,324 63,263 2,019 - 2,019 65,282 Telephone 5,003 261 5,264 1,089 - 1,089 6,353 Office expenses 7,659 382 8,041 952 436 1,388 9,429 Postage 10 - 10 977 615 1,592 1,602 Stipends and incentives - 3,144 3,144 13,600 - 13,600 16,744 Staff development and training 9,436 1,965 11,401 150 60 210 11,611 Dues and subscriptions 5,994 187 6,181 1,896 330 2,226 8,407 Internet 3,022 - 3,022 1,101 - 1,101 4,123 Audit expense 8,750 - 8,750 8,750 - 8,750 17,500 Other expenses 1,913 4,737 6,650 9,750 - 9,750 16,400 Bad debt expense 502 - 502 - - - 502 Equipment service expense 383 - 383 173 - 173 556 Space rental - - - 1,200 - 1,200 1,200 Depreciation - - - 65,587 - 65,587 65,587 Maintenance 14,874 - 14,874 3,041 - 3,041 17,915 Interest expense - - - 75 - 75 75 Total expenses$ 1,495,894 184,093 1,679,987 471,566 21,628 493,194 2,173,181 See accompanying notes to financial statements.Supporting ActivitiesProgram ServicesNEIGHBORHOOD CENTERS OF JOHNSON COUNTYStatement of Functional ExpensesFor the Year Ended June 30, 2021 6 Education and Support Prevention Total Management and General Fundraising Total Total ExpensesSalaries and wages $ 1,412,991 130,175 1,543,166 252,014 24,257 276,271 1,819,437 Work study 21 - 21 - - - 21 Payroll taxes and benefits 209,535 22,298 231,833 36,981 5,293 42,274 274,107 Payroll fees 54,953 5,121 60,074 14,377 948 15,325 75,399 Food and supplies 66,358 2,753 69,111 2,378 100 2,478 71,589 Program expenses (lic. fee/rec./other) 19,347 2,438 21,785 110 26 136 21,921 Vehicle expenses 814 3,435 4,249 1,866 - 1,866 6,115 Transportation - bus 11,565 810 12,375 - - - 12,375 Conference travel 325 - 325 - - - 325 Mileage and parking 4,790 597 5,387 - - - 5,387 Utilities and occupancy 13,603 46 13,649 4,254 - 4,254 17,903 Job recruitment 725 394 1,119 858 309 1,167 2,286 Staff appreciation - - - 1,862 - 1,862 1,862 Fundraising - - - - 2,037 2,037 2,037 Insurance - - - 26,220 - 26,220 26,220 Educational materials and program supplies 38,646 4,507 43,153 3,462 - 3,462 46,615 Telephone 5,649 478 6,127 1,128 - 1,128 7,255 Office expenses 12,834 201 13,035 3,659 1,187 4,846 17,881 Postage - 118 118 716 535 1,251 1,369 Stipends and incentives 850 4,402 5,252 7,200 - 7,200 12,452 Staff development and training 12,405 243 12,648 (229) - (229) 12,419 Dues and subscriptions 4,079 3,332 7,411 1,935 95 2,030 9,441 Internet 2,441 - 2,441 761 - 761 3,202 Audit expense - - - 17,248 - 17,248 17,248 Other expenses 218 - 218 10,887 6 10,893 11,111 Bad debt expense 7,202 - 7,202 - - - 7,202 Equipment service expense 1,489 - 1,489 66 - 66 1,555 Space rental - - - 1,200 - 1,200 1,200 Depreciation - - - 71,823 - 71,823 71,823 Maintenance 8,753 - 8,753 7,098 - 7,098 15,851 Interest expense - - - 188 - 188 188 Total expenses$ 1,889,593 181,348 2,070,941 468,062 34,793 502,855 2,573,796 See accompanying notes to financial statements.Program Services Supporting ActivitiesFor the Year Ended June 30, 2020NEIGHBORHOOD CENTERS OF JOHNSON COUNTYStatement of Functional Expenses 7 NEIGHBORHOOD CENTERS OF JOHNSON COUNTY Notes to Financial Statements June 30, 2021 and 2020 Note 1 - Summary of Significant Accounting Policies Nature of Activities - Neighborhood Centers of Johnson County (the Organization) is a publicly supported organization that provides activity services to low-income residents of the Iowa City, Iowa area. Neighborhood Centers of Johnson County is dedicated to creating a better future for people and neighborhoods through programs that educate, strengthen families, and create a sense of community. The Organization is supported primarily by grants, awards, and general governmental allocations. The Organization’s fiscal year ends June 30. Significant accounting policies followed by the Organization are presented below. Basis of Accounting - The financial statements of the Organization have been prepared on the accrual basis of accounting and accordingly reflect significant receivables, payables and other liabilities. Basis of Presentation - The financial statements of the Organization have been prepared to report information regarding its financial position and activities according to the following net asset classifications: Net assets without donor restrictions - Net assets that are not subject to donor-imposed restrictions and may be expended for any purpose in performing the primary objectives of the organization. These net assets may be used at the discretion of the Organization’s management and the board of directors. Net assets with donor restrictions - Net assets subject to stipulations imposed by donors and grantors. All donor restrictions are temporary in nature; those restrictions will be met by actions of the Organization or by the passage of time. Revenues are reported as increases in net assets without donor restrictions unless use of the related assets is limited by donor-imposed restrictions. Expenses are reported as decreases in net assets without donor restrictions. Expirations of donor restrictions on net assets (i.e., the donor-stipulated purpose has been fulfilled and/or the stipulated time period has elapsed) are reported as reclassifications between the applicable classes of net assets. Contributions, including unconditional promises to give, are recognized as revenue in the period received. Conditional promises to give are not recognized until they become unconditional; that is, when the conditions on which they depend are substantially met. Contributions of assets other than cash are recorded at their estimated fair value. Contributions with donor-imposed restrictions that are met within the same reporting period are reported as donor restricted revenues, and a reclassification to net assets without donor restrictions is made to reflect the expiration of such restrictions. Contributions of land, buildings, and equipment without donor restrictions concerning the use of such long-lived assets are reported as revenues without donor restrictions. Contributions of cash or other assets to be used to acquire land, buildings, and equipment are reported as revenues with donor restrictions; the restrictions are considered to be released at the time of acquisition of such long-lived assets. 8 NEIGHBORHOOD CENTERS OF JOHNSON COUNTY Notes to Financial Statements June 30, 2021 and 2020 Note 1 - Summary of Significant Accounting Policies (Continued) Contributions of donated goods are recorded at their fair values in the period received. Contributions of donated services that create or enhance nonfinancial assets or that require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation, are recorded at their fair values in the period received. Community Development Block Grants (CDBG) received with terms that are forgivable as long as the entity does not sell, assign or transfer its interest are recorded as long-term debt. Revenue is recognized upon completion of the agreement terms as debt payments are not required to be made as long as the agreement is honored. Conditional occupancy loans are recorded as long-term debt until the end of the agreements, at which time the Organization will recognize revenue for the full amount. 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 certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Cash and Cash Equivalents - Cash and cash equivalents include all monies in banks and highly liquid investments with an original maturity date of less than three months. The carrying value of cash and cash equivalents approximates fair value because of the short maturities of those financial instruments. Income Taxes - The Organization is a nonprofit organization as described in Section 501(c)(3) of the Internal Revenue Code and is exempt from federal and state income taxes. The Organization is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. Program Receivables and Unconditional Promises to Give - The Organization carries its program receivables and unconditional promises at cost less an allowance for doubtful accounts, when necessary. On a periodic basis, the Organization evaluates its program receivables and unconditional promises and determines if an allowance is necessary based on history of past write-offs and collections and current credit conditions. Currently there is no allowance deemed necessary. Unconditional promises to give are receivable within one year. Impairment of Long-Lived Assets - The Organization reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount of which the carrying amount of the asset exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. Revenue Recognition - Revenue from client service grants and contracts are recognized as the performance obligations are completed. 9 NEIGHBORHOOD CENTERS OF JOHNSON COUNTY Notes to Financial Statements June 30, 2021 and 2020 Note 1 - Summary of Significant Accounting Policies (Continued) Functional Expenses - The costs of providing various program and supporting activities have been summarized on a functional basis in the statement of functional expenses. Expenses that can be identified with a specific program or supporting activity are allocated directly according to their natural expenditure classification. Other expenses that are common to several functions are allocated based on time estimates made by management. Date of Management’s Review - Management has evaluated subsequent events through January 13, 2022, the date which the financial statements were available to be issued. Note 2 - Availability and Liquidity The following represents the Organization’s financial assets at June 30, 2021: Financial assets at year end: 2021 2020 Cash and cash equivalents $ 948,552 855,300 Certificates of deposit 198,133 195,803 Program receivables 242,831 126,400 Unconditional promises to give 216,122 214,300 Total financial assets 1,605,638 1,391,803 Less amounts not available to be used within one year: Net assets with donor restrictions (uncertainty as to whether released in next fiscal year) (129,935) (32,829) Financial assets available to meet general expenditures Over the next twelve months $ 1,475,703 1,358,974 The Organization has a policy to build and maintain an adequate level of net assets without donor restrictions to support the Organization’s day-to-day operations in the event of unforeseen shortfalls. There is an operating reserve set aside as a designated fund to maintain ongoing operations and programs, with a target minimum equal to one month of average recurring operating costs. The Organization also maintains a line of credit (Note 4) to cover an additional two weeks of average recurring operating costs. Note 3 - Property and Equipment Acquisitions of property and equipment in excess of $500 and a useful life of more than one year are capitalized. Property and equipment are carried at cost or, if donated, at the approximate fair value at the date of donation. Depreciation is computed using the straight-line method over the useful lives of the assets which range from 3 to 31.5 years. 10 NEIGHBORHOOD CENTERS OF JOHNSON COUNTY Notes to Financial Statements June 30, 2021 and 2020 Note 3 - Property and Equipment (Continued) 2021 2020 Land improvements $ 79,617 79,617 Buildings and improvements 1,468,795 1,456,951 Office equipment 105,535 99,180 Vehicles 116,147 116,147 1,770,094 1,751,895 Less: accumulated depreciation 1,240,656 1,175,663 Net property and equipment $ 529,438 576,232 Depreciation expense for the years ended June 30, 2021 and 2020 was $65,587 and $71,823, respectively. Note 4 - Line of Credit The Organization has a line of credit with a local bank of $100,000. It has a variable interest rate based on the Wall Street Journal Prime Rate. There was no balance on the line of credit at June 30, 2021 and 2020. There is a blanket security agreement. The line of credit expires in January 2022. Note 5 - Long-Term Debt The Organization received CDBG funding of $185,000 through the City of Iowa City to complete the construction of the Pheasant Ridge location on the west side of Iowa City in 1997. The funding was in the form of a grant of $85,000 and a loan of $100,000. In the event that the Organization sells, assigns, or transfers its interest in the property prior to November 1, 2032, the Organization is required to pay back to the City of Iowa City the outstanding balance of the loan and an amount based on the fair market value of the property less any portion attributable to non-CDBG funds. In the event that the Organization ceases its services and/or programs at this location, all real and personal property secured by CDBG funds shall revert to the City of Iowa City. The loan agreement provides that the loan will be repaid in annual installments of $1,838, with interest at a rate of 1% per annum. The final payment is due November 1, 2032. The total amount payable at June 30, 2021 and 2020 was $19,701 and $21,539, respectively. A portion of the loan will not need to be repaid if the Organization does not sell the property or cease services prior to November 1, 2032. This amount is recorded as a conditional occupancy loan and will be forgiven at the end of the agreement. The total amount payable at June 30, 2021 and 2020 was $47,439. The Organization received a CDBG loan of $50,000 through the City of Iowa City to remodel the Broadway Street location in 2006. The loan is considered a conditional occupancy loan. The entire amount of the loan was forgiven during the year ended June 30, 2021. The Organization received a CDBG loan of $87,355 through the City of Iowa City to remodel the kitchen of the Pheasant Ridge location in 2009. The loan is considered a conditional occupancy loan. If the Organization does not sell the property or cease operations prior to June 30, 2036, the entire amount will be forgiven. 11 NEIGHBORHOOD CENTERS OF JOHNSON COUNTY Notes to Financial Statements June 30, 2021 and 2020 Note 5 - Long-Term Debt (Continued) The Organization received a CDBG loan of $29,600 through the City of Iowa City to replace the roof at the Pheasant Ridge center in 2012. The loan is considered a conditional occupancy loan. If the Organization does not sell the property or cease operations prior to September 1, 2023, the entire amount will be forgiven. The Organization received a CDBG loan of $74,547 through the City of Iowa City during the year ended June 30, 2014 to remodel the basement at the Broadway Center. The loan is considered a conditional occupancy loan. If the Organization does not sell the property or cease operations prior to September 1, 2023, the entire amount will be forgiven. The Organization received $2,340 through the City of Iowa City during the year ended June 30, 2016 as part of a $108,307 CDBG loan for parking lot construction and building improvements at the Broadway Street location. The remaining $105,967 was received as construction was completed during fiscal year 2017. The loan is considered a conditional occupancy loan. If the Organization does not sell the property or cease operations prior to September 30, 2026, the entire amount will be forgiven. The Organization received a CDBG loan of $41,700 through the City of Iowa City during the year ended June 30, 2019 for parking lot construction and building improvements at the Broadway Street location. The loan is considered a conditional occupancy loan. If the Organization does not sell the property or cease operations prior to June, 2024, the entire amount will be forgiven. Future maturities of long-term debt are as follows: 2022 $ 1,614 2023 1,630 2024 147,493 2025 1,663 2026 1,679 Thereafter 254,570 Total $ 408,649 Note 6 - Economic Dependency The Organization is dependent upon federal, state and local monies to maintain its operations. In the event that grant monies are not available from such sources, Neighborhood Centers of Johnson County may not continue as a going concern. Note 7 - Contingent Liability The Organization is contingently liable to grantors for monies received until each grant has been closed by the grantor. 12 NEIGHBORHOOD CENTERS OF JOHNSON COUNTY Notes to Financial Statements June 30, 2021 and 2020 Note 8 - Restrictions on Net Assets Net assets with donor restrictions consist of the following for the years ended June 30, 2021 and 2020: 2021 2020 Time restriction: United Way allocation $ 127,500 127,500 Johnson County allocation 88,622 86,800 Purpose restrictions: Community Development Block Grant 85,000 85,000 Youth sports contributions 25,734 25,634 GWorld program donation 2,239 2,239 Opportunity funds - 4,956 Other grants 16,962 - Total $ 346,057 332,129 The Community Development Block Grant of $85,000 states that the property purchased with the funds must be operated as a Neighborhood Center facility until 2032, at which time the restriction will be released. Net assets released from restrictions during the years ended June 30, 2021 and 2020 are as follows: 2021 2020 United Way allocation $ 127,500 127,500 Johnson County allocation 86,800 86,800 Summer camp contributions Youth sports contributions 17,261 - 12,495 11,785 GWorld program donations - 761 Opportunity fund 5,056 2,124 Other grants 5,538 - Total $ 242,155 241,465 Note 9 - Major Revenue and Support Sources For the years ended June 30, 2021 and 2020, the major revenue and support sources consisted of the following percentages: 2021 2020 Grants and Awards: Johnson County Empowerment 12% 11% Iowa City School District 11% 17% Iowa Department of Education 18% 17% Program Services: Iowa Department of Human Services 6% 19% 13 NEIGHBORHOOD CENTERS OF JOHNSON COUNTY Notes to Financial Statements June 30, 2021 and 2020 Note 10 - Cash Flow Disclosures Cash paid for interest for the years ended June 30, 2021 and 2020 was $75 and $188, respectively. Note 11 - Simple Plan The Organization initiated an elective SIMPLE IRA plan in 2007 covering substantially all employees. The Organization will match employee contributions up to 3% of gross income. The expense charged to operations for the plan was $22,836 and $22,745, for the years ended June 30, 2021 and 2020, respectively. Note 12 - Concentration of Credit Risk Cash in excess of daily requirements is invested in interest bearing accounts of qualified financial institutions in amounts that may exceed federal insured limits. The Organization believes the credit risk related to these deposits is minimal; however, the amount over the limit at June 30, 2021 was $732,759. Note 13 - Refundable Loan Advance (PPP Loan) During the year ended June 30, 2020, the Organization received government assistance under the CARES Act in the form of a Paycheck Protection Program (PPP) loan. The Organization applied FASB ASC 958- 605 to initially record the loan as a refundable advance. Under ASC 958-505-25-13, the loan is to be treated as a refundable advance until the condition on which it depends are substantially met. During the year ended June 30, 2021, the Organization had incurred eligible costs to qualify for complete forgiveness of the loan and received notice of full forgiveness of the loan. As such, the full amount of the PPP loan is recognized as revenue in the statement of activities and changes in net assets. 14 NEIGHBORHOOD CENTERS OF JOHNSON COUNTY Supplementary Information June 30, 2021 and 2020 2021 2020 Service fees: Parent fees $ 50,233 261,084 Other 14,852 25,968 Iowa Department of Education at Risk Grants 490,292 416,670 Johnson County Empowerment Projects 328,726 282,545 Iowa Department of Human Services 160,082 471,776 Iowa City School District 309,751 440,630 State of Iowa Income-WRAP/PASS funding 100,800 36,000 VOCA Grant 110,129 102,749 Juvenile Crime Prevention Grants 29,517 47,749 Total service fees $ 1,594,382 2,085,171 General support: City of Coralville 1,628 1,581 Johnson County 90,444 86,800 United Way allocations 132,366 130,390 Total general support $ 224,438 218,771 Grants and awards: Child Care Food Program $ 51,793 93,381 Community Development Block Grant 72,119 55,000 Total grants and awards $ 123,912 148,381 For the Years Ended June 30, 2021 and 2020 Schedules of Program Revenue and Support NEIGHBORHOOD CENTERS OF JOHNSON COUNTY 15 tdtpc.com Oskaloosa 641.672.2523 Pella 641.628.9411 West Des Moines 515.657.5800 Burlington 319.753.9877 Cedar Rapids 319.393.2374 Centerville 641.437.4296 Fairfield 641.472.6171 Mt. Pleasant 319.385.9718 Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards To the Board of Directors of Neighborhood Centers of Johnson County Iowa City, Iowa We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of Neighborhood Centers of Johnson County, which comprise the financial statements as listed in the table of contents as of and for the year ended June 30, 2021, and have issued our report thereon dated January 13, 2022. Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered Neighborhood Centers of Johnson County’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 Neighborhood Centers of Johnson County’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 combination of deficiencies in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. 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. We did identify a certain deficiency in internal control, described as 2021-001 in the accompanying schedule of findings and response that we consider to be a material weakness in internal control. Compliance and Other Matters As part of obtaining reasonable assurance about whether Neighborhood Centers of Johnson County’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Neighborhood Centers of Johnson County’s Response to Finding Neighborhood Centers of Johnson County’s response to the finding identified in our audit is described in the accompanying schedule of findings and response. Neighborhood Centers of Johnson County’s response was not subjected to the auditing procedures applied in the audit of the financial statements and accordingly, we express no opinion on it. 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. TDT CPAs and Advisors, P.C. West Des Moines, Iowa January 13, 2022 17 NEIGHBORHOOD CENTERS OF JOHNSON COUNTY Schedule of Findings and Response and Prior Audit Findings For the Year Ended June 30, 2021 Part I: Summary of independent auditors’ results 1. An unmodified opinion was issued on the financial statements 2. The audit of the financial statements uncovered one material weakness in internal control over financial reporting. Additional material weaknesses may exist that have not been uncovered. 3. The audit did not disclose any non-compliance that is material to the financial statements. Part II: Finding(s) related to the financial statements Material Weakness: Finding 2021-001: Material Audit Adjustments Condition: A key element of financial reporting is the ability of management to select and apply the appropriate accounting principles to prepare financial statements in accordance with accounting principles generally accepted in the United States of America. Material audit adjustments were necessary during this year’s audit in order for the financial statements to be in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). Criteria: Internal controls should be in place that provide reasonable assurance that the financial statements are prepared in accordance with U.S. GAAP. Recommendation – We recommend that management have proper procedures in place so that all material entries are made in QuickBooks to be in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). Response – Management will review material audit adjustments and will ensure that future adjustments are made or identified prior to the audit. Accounting personnel will request assistance from the auditor in cases of non-routine transactions. Conclusion – Response accepted. Summary Schedule of Prior Audit Findings Findings Status 2020-001 Repeated as 2021-001 18