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ANNUAL REPORT 2006 - 2007 eliminating racism empowering women ywca tampa bay January 23, 2008 Sharon K. Jackson President YWCA Board of Directors Ms. Deb Richter Department of Finance Clearwater Police Dept. 645 Pierce St. Clearwater, FL 33756 Juli Kempner, Esq., L.M.S.W. Chief Executive Officer Charles "Chuck" Nylander Chair YWCA Board of Trustees Dear Ms. Richter; Anita Treiser Bernstein President YWCA Foundation Enclosed please find a copy of our Financial Statements, Supplementary Financial Information and Reports, and the Management Letter for the Fiscal of the YWCA of Tampa Bay for fiscal year ending September 30, 2007 from PDR Certified Public Accountants. If I can be of any further service please call me at 727-896-4629 Extension 17. Sincerely, ~~ Joseph P. Hecker Director of Finance YWCA of Tampa Bay 655 Second Avenue South. St. Petersburg, FL 33701. Ph: (727) 896-4629. Fax: (727) 821-3478 Child Abuse Prevention . Child Care . Hispanic Services . Homeless Families . Teen Pregnancy . Youth Development Please consider including the YWCA Foundation in your will or trust. www.ywcaoftampabay.org United Way of Tampa Bay (j Q......r 29750 U.S. Hwy. 19 North, Suite 101 Clearwater, Florida 33761 CERTIFIED PUBLIC accountants January 11,2008 Board of Directors and Management Young Women's Christian Association of Tampa Bay and Affiliate In planning and performing our audit of the combined financial statements of Young Women's Christian Association of Tampa Bay, Inc. and Affiliate (the Organization) as of and for the year ended September 30,2007, in accordance with auditing standards generally accepted in the United States of America, we considered the Organization's internal control over financial reporting (internal control) as a basis for designing our auditing procedures for the purpose of expressing our opinion on the [mancial 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. Our consideration of internal control was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. However, as discussed below, we identified certain deficiencies in internal control that we consider to be significant deficiencies and other deficiencies that we consider to be material weaknesses. A control deficiency 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 misstatements on a timely basis. A significant deficiency is a control deficiency, or a combination of control deficiencies, that adversely affects the organization's ability to initiate, authorize, record, process or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the organization's financial statements that is more than inconsequential will not be prevented or detected by the organization's internal control. We consider the following deficiencies to be significant deficiencies in internal control: CURRENT YEAR Documented Processes in Accountine for Certain Conditions of Aereement During our review of the procedures in place over the JWB agreement, it was noted that there are no documented, formal procedures over administration of the JWB contract as it relates to changes of personnel in each of the related programs. This lack of documentation of procedures made it difficult to understand the process in place when there is a change in approved personnel working in a program. Certain documentation related to personnel was unavailable or missing in our attempts to review these programs within the JWB agreement. -2- We recommend that the Organization clearly document the appropriate procedures over the administration of personnel within the JWB agreement. Management Response Management acknowledges the lack of documentation of internal procedures over the administration of contracts. We would like to note that we have followed the procedures as outlined in the JWB manual as it relates to changes in key personnel and related cost reimbursements and we do appropriately notify JWB as to those changes. JWB has implemented new procedures that address these concerns more comprehensively. These procedures will make it easier for the YWCA to make changes and to document those changes. We have also put into place additional internal procedures for notifying the agency of changes. Vacation and Time-off Policv During our internal control review, we noted that vacations are not mandatory for key accounting personnel and jobs are not performed by another person when someone is out. This lack of cross-training personnel in order to perform a job function when an employee is out may contribute to theft or accounting errors that may go unnoticed. We recommend that upper management develop, document and implement a policy whereby employees are cross-trained in critical administrative areas of the Organization. Day-to-day administrative tasks within the accounting department should be covered by another individual when that employee is out. Management Response Management acknowledges the issue of cross-training; we propose the immediate implementation of the following policy: The structure of the accounting department is the following: a Director of Finance and one other full time person (financial assistant). In order to ensure smooth functioning of the finance tasks the following must occur: both staff persons need to be trained and competent to perform all administrative day-to-day tasks of the department, including, but not limited to, reimbursement, billing, check entries, all other data entries, bank deposits, payroll support to Ceridian, etc. Therefore, if one person is away from the office for any period of time, any administrative, payroll related or accounting task can be performed. The agency will provide for whatever cross-training is necessary to ensure this occurs, both in terms of on-the-job training and off-site training. In addition, JWB has instructed this agency that in the future the Director of Finance Position must be filled by someone who has a degree in accounting. -3- A material weakness is a significant deficiency, or a combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the entity's internal control. We believe that the following deficiency constitutes a material weakness: CURRENT YEAR Pavroll - Approval of Pav Chanlles As part of our internal control testing, we selected 25 employees from three different pay periods and traced their pay rate per the payroll register to the pay authorization form in the personnel files. It was noted for one employee that the pay rate per the payroll records did not match the approved payroll amount in the personnel file. It was noted that this employee prepared and processed payroll and she had authorized herself to be paid an additional amount. She has since been terminated. It was also noted that no individual independent of the accounting department was reviewing the payroll register. Use of an outside payroll service can help to mitigate the risk of fraud occurring. An outside payroll service has been approved and management is in the process of making the change. Even with a payroll service, it is still necessary to segregate the duties related to payroll. Payroll is a likely area for numerous errors and possible irregularities to occur due to the number of calculations involved. Better segregation of duties will enhance controls to detect errors and irregularities and provide for much greater safeguarding of assets. Management Response The implementation of an outside payroll service assists in addressing the concern of the ability of changing payroll amounts and input errors. We have also implemented certain other procedures. Status changes for pay increases are submitted by the requesting supervisor to the Director of Human Resources who reviews and signs the approval. This document is then given to the Human Resource Assistant for input into the personnel data base. A copy of this status change is made and is given to Finance so that they can make changes to their payroll data. The finance assistant making the changes in the payroll data base initials this document and returns it to Human Resources. The original status change is placed in a payroll back up file until the copy is received back from Finance. Once the copy is returned from Finance, the original is placed in the employees' personnel file and another copy is kept in a binder as proof of submission to Finance. The payroll reports received from the outside payroll company will be reviewed independently by both the Director of Finance and the Director of Human Resources after each payroll period and compared to the previous payroll period to check for any changes. In addition, during our audit, we noted a matter involving the internal control and other operational matters that are presented for your consideration. This letter does not affect our report dated January 11, 2008 on the financial statements of the Organization. -, -4- We will review the status of these comments during our next audit engagement. Our comments and recommendations, which have been discussed with appropriate members of management, are intended to improve the internal control or result in other operating efficiencies. We will be pleased to discuss these comments in further detail at your convenience, perform any additional study of these matters, or assist you in implementing the recommendations. Our additional comment is listed below: AccountinJ! Staff In performing our audit, we noted that it was difficult at times to receive correct and timely information. We have observed that this is mainly due to an understaffed accounting department. This, we believe, is a situation that breeds inefficiency and can weaken internal controls. Lack of appropriate staffing can cause problems in receiving timely and current financial information and can significantly impact senior management's abilities, such as providing relevant oversight and budgetary control. We recommend that the Organization review the current accounting staff and determine appropriate staffing. Management Response Management is currently reviewing the necessary number of accounting staff needed. As noted in the management representation letter dated January 11, 2008, you have agreed to post all adjusting journal entries as proposed by us and understand that there are no uncorrected financial statement misstatements noted by us during our engagement. This communication is intended solely for the information and use of management and the board of directors of Young Women's Christian Association of Tampa Bay, Inc. and Affiliate and is not intended to be and should not be used by anyone other than these specified parties. We believe that the implementation of these recommendations will provide Young Women's Christian Association of Tampa Bay, Inc. and Affiliate with a stronger system of internal control while also making its operations more efficient. We will be happy to discuss the details of these recommendations with you and assist in any possible with their implementation. We will review the status of these comments during our next audit engagement. Sincerely, PDR Certified Public Accountants N~:;\\\~ Certified Public Accountant NMR:de .; YOUNG WOMEN'S CHRISTIAN ASSOCIATION OF TAMPA BA~ INC. AND AFFILIATE AUDIT COMMUNICATION MEMORANDUM JANUARY 11,2008 or r\. ~............................................... 29750 u.s. Hwy. 19 North, Suite 101 Clearwater, Florida 33761 CERTIFIED PUBLIC accountants January 11,2008 To the Board of Directors Young Women's Christian Association of Tampa Bay, Inc. and Affiliate We have audited the financial statements of Young Women's Christian Association of Tampa Bay, Inc. (YWCA) and its affiliate, YWCA of Tampa Bay Foundation, Inc. (Foundation), (collectively, the Organization) for the year ended September 30, 2007, and have issued our report thereon dated January 11, 2008. Professional standards require that we provide you with the following information related to our audit. Our Responsibility under U.S. Generallv Accepted Auditing Standards As stated in our engagement letter dated May 24, 2007, our responsibility, as described by professional standards, is to plan and perform our audit to obtain reasonable, but not absolute, assurance that the financial statements are free of material misstatement and are fairly presented in accordance with U.S. generally accepted accounting principles. Because an audit is designed to provide reasonable, but not absolute, assurance and because we did not perform a detailed examination of all transactions, there is a risk that material misstatements may exist and not be detected by us. As part of our audit, we considered the internal control of the Organization. Such considerations were solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. Significant Accounting Policies Management has the responsibility for selection and use of appropriate accounting policies. In accordance with the terms of our engagement letter, we will advise management about the appropriateness of accounting policies and their application. The significant accounting policies used by the Organization are described in Note A to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during 2007. We noted no transactions entered into by the Organization during the year that were both significant and unusual, and of which, under professional standards, we are required to inform you, or transactions for which there is a lack of authoritative guidance or consensus. Accounting Estimates Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The YWCA's management estimates the value of receivables from a remainder trust and a beneficial interest in a perpetual trust. Those amounts are based on estimated values at year-end and are subject to change due to changes in market conditions. Significant Audit Adjustments For purposes of this letter, professional standards define a significant audit adjustment as a proposed correction of the financial statements that, in our judgment, may not have been detected except through our auditing procedures. An audit adjustment mayor may not indicate matters that could have a significant effect on the Organization's financial reporting process (that is, cause future financial statements to be materially misstated). In our judgment, none of the adjustments we proposed, whether recorded or unrecorded by the Organization, either individually or in the aggregate, indicate matters that could have a significant effect on the Organization's financial reporting process. All proposed audit adjustments were accepted and will be posted by the Organization. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter that could be significant to the financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the Organization's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Issues Discussed Prior to Retention of Independent Auditors We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the Organization's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition or our retention. Difficulties Encountered in Performing the Audit We encountered no difficulties in dealing with management III performing and completing our audit. It was a pleasure to work with the staff of YWCA and the Foundation. This information is intended solely for the use of the Board of Directors and management of YWCA and the Foundation and is not intended to be and should not be used by anyone other than these specified parties. ?D\\~~?~.\\~ PDR CERTIFIED PUBLIC ACCOUNTANTS eliminating racism , empowering women --,yWeIi-- , - , - - Young Women's Christian Association of Tampa Bay, Inc. and Affiliate 2007 Financial Highlights Prepared by: PDR Certified Public Accountants 29750 U.S. Highway 19 North, Suite 101 * Clearwater, FL 33761 Tel (727) 785-4447 * Fax (727) 784-5491 * www.pdr-cpa.com pdr CERTlFIED PUBUC accountants Reports of Independent Certified Public Accountants Auditors' Report - Combined Financial Statements Unqualified Opinion Report on Internal Control - Two Significant Deficiencies and One Material Weakness Report on Compliance with Requirements Applicable to Each Major Program - Unqualified Opinion -1- pdr CERTIFIED PUBUC accountants Young Women's Christian Association of Tampa Bay, Inc. YWCA of Tampa Bay Foundation, Inc. Combining Balance Sheets Assets Cash Promises to give Investments Other assets Property and equipment, net Total Assets Liabilities and Net Assets Liabilities Accounts payable Accrued payroll costs and refundable advances Notes payable and LaC Total liabilities Net Assets Total Liabilities and Net Assets September 30.2007 September 30. 2006 YWCA Foundation Total YWCA Foundation Total $ 4,299 $ 16,880 $ 21,179 $ 41,025 $ 16,100 $ 57,125 42,252 4,391 46,643 40,866 21,884 62,750 398,437 36,956 435,393 331,344 135,127 466,471 1,312,605 -0- 1,312,605 906,572 -0- 906,572 1.773.059 660.027 2.433.086 1.882.567 614.952 2.497 .519 $3,530,652 $ 718,254 $4,248,906 $3,202,374 $ 788,063 $3,990,437 $ 29,267 $ -0- $ 29,267 $ 104,892 $ 440 $ 105,332 359,753 -0- 359,753 379,337 -0- 379,337 369.000 151.266 520.266 300.000 162.984 462.984 758,020 151,266 909,286 784,229 163,424 947,653 2.772.632 566.988 3.339.620 2.418.145 624.639 3.042.784 $3,530,652 $ 718,254 $4,248,906 $3,202,374 $ 788,063 $3,990,437 -2- pcjr CERTIFIED PUBUC accountants 'F'_:_"lC,.~,: Young Women's Christian Association of Tampa Bay, Inc. YWCA of Tampa Bay Foundation, Inc. Combining Statements of Activities Public Support and Revenue Public Support Revenue Total public support and revenue Expenses Program Services Supporting Services Total expenses Excess (Deficiency) of Revenues over Expenses Year Ended September 30,2007 Ended September 30, 2006 YWCA Foundation Totals YWCA Foundation Totals $1,026,520 $ 8,318 $1,034,838 $ 608,224 $ 6,828 $ 615,052 5.299.1 08 9.043 5.308.151 4.814.727 14.728 4.829.455 6,325,628 17,361 6,342,989 5,422,951 21,556 5,444,507 5,163,018 -0- 5,163,018 4,669,572 -0- 4,669,572 712.123 171.012 883.135 747.941 85.544 833.485 5.875.141 171.012 6.046.153 5.417.513 85.544 5.503.057 $ 450,487 $ (153,651) $ 296,836 $ 5,438 $ (63,988) $ (58,550) -3- pdr CERTIFIED PUBUC accountants Young Women's Christian Association of Tampa Bay, Inc. and Affiliate Financial Highlights Revenues: '" Total revenues of $6,343,000 increased by $898,500 or 17% in comparison to prior year. '" Public support revenue of$I,034,800 increased $ 419,800 or 68% over prior year- due to recording of in-kind revenue for renewal of land lease contract with the City of Clearwater for the Hispanic Outreach Center. · Juvenile Welfare Board revenues of $1 ,402,200 increased over $244,900 or 21 % over prior year. Coordinated child care revenues of $456,000 decreased $24,000 or 5% from the prior year while child care revenues of $679,000 decreased $57,000 or 8% from prior year. ,#, Revenue from wills and bequests was received in the current year for $206,700. Expenses: ." Total program and supporting services expenses of $6,046,200 increased $543,100 or 10% over prior year. ~ Total salaries and related expenses of $4,094,400 increased $62,700 or 1.6%. .~ Total program expenses of$5,163,000 are 85% of the total program and supporting services, the same percentage as the prior year. 4 Child care expenses of$I,313,000 increased $141,000 or 12% over prior year. Net Assets: A Net Assets of$3,339,600 increased $296,800 in the current year. Cash Flow: For 2007, operating activities used approximately $86,000 in cash while operating activities in 2006 produced approximately $195,000 of cash. This was funded in the current year by drawing $69,000 on the line-of-credit. -4- pdr CERTIFIED PUBUC accountants Young Women's Christian Association of Tampa Bay, Inc. and Affiliate Cash and Investment Comparison 600,000 500,000 400,000 300,000 200,000 100,000 o 2007 2006 2005 2004 -5- . Cash . Investments par CERTIFIED PUBUC accountants to ["~,1 f~i,~;,~ L'~("' ~~,:-.,:,. . -%,':~,~ Young Women's Christian Association of Tampa Bay, Inc. and Affiliate Revenue/Expense/Net Asset Comparison 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 ( 1,000,000) -6- . Support & Revenue . Expenses C Change in Net Assets pdr CERTIFIED PUBUC accountants Young Women's Christian Association of Tampa Bay, Inc. and Affiliate Revenue Analysis 2007 Revenues 2006 Revenues Coordinated child care 7"A. Investment income 1% Wlls and bequests OIherincome 3% fA. Coordinated child care 9% Investment income fA. OIherincome 2% -7- pcIr CERTIFIED PUBUC accountants I I, ., l.,..,.'"..-....~.j f":Wf i;,- ~:;..~ !.,.- ,y- .~_..',<-';,:: Young Women's Christian Association of Tampa Bay, Inc. and Affiliate Expense Comparison 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 c::=:::::::J Paymentstoaffiliates c:::=:::J Fundraisingexpenses - Management and general - Program costs --- Salariesand related expenses 2007 2006 2005 2004 -8- pdr CERTlFIED PUBUC accountants ~" ..,; ,.' :~.~.., : , , ~, i ,t;;, 1 r,. '~. f-~--.;:,,:o f~~t~ ~--:t;*:~ Young Women's Christian Association of Tamp3, Bay, Inc. and Affiliate Child Care Revenue/Expense Analysis 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 o 2007 2006 2005 2004 -9- - Coordinated child care revenue - Child care revenues Chi Id care expenses pdr CERTIFIED PUBUC accountants r~, ";/''; Young Women's Christian Association of Tampa Bay, Inc. and Affiliate Management Letter Comments + Significant Deficiencies in Internal Control 1. Documented Processes in Accounting for Certain Conditions of JWB Agreement - issues related to approval process in place when there is a change in approved personnel working in a program - auditors were not able to track a documented process in place when performing tests of the JWB programs. Management acknowledges this lack of documentation of internal procedures. It was also noted that the YWCA has followed the procedures as outlined in the JWB manual. JWB has also implemented new procedures that address these concerns more comprehensively. These procedures will make it easier for the YWCA to make changes and to document those changes. , ., " . t:;fJ 2. Vacation and Time-off Policy -lack of mandatory vacation policy for accounting personnel and jobs ~~ of these personnel are not performed by another person when someone is out. f~~ii;~ Management acknowledges this issue of cross-training and has effectively implemented a plan for cross-training of individuals in the accounting department. -10- pgr CERTIFIED PUBUC accountants , I I.:.... ,; -r:.:,_y ~ i ~::"i !:,'<".'~ ~j~J ::~--"-::" Young Women's Christian Association of Tampa Bay, Inc. and Affiliate Management Letter Comments - continued . Material Weakness in Internal Control 1. Approval of Pay Changes - As part of our internal control testing, we reviewed certain paYroll processes. It was noted for one employee that the pay rate per the paYroll records did not match the approved paYroll amount in the personnel file. There was lack of segregation of preparation and authorization of paYroll as well as no independent review of the paYroll register. Management acknowledges this lack of segregation of duties in the payroll area and has taken the appropriate steps to mitigate this, including implementation of an outside payroll service. Internal processes have also been implemented segregating the preparation of payroll and authorization of pay changes. The payroll reports prepared by the outside payroll company will be reviewed independently by both the Director of Finance and the Director of Human Resources after each payroll period and compared to the previous payroll period to check for any changes. + Additional Observation 1. Appropriate Staffing of the Accounting Department - in performing our audit, we noted that it was difficult at times to receive correct and timely information. Lack of appropriate staffing can cause problems in receiving timely and current information. Management is currently reviewing the necessary number of accounting staff needed. -11- Pdr CERTIFIED PUBUC accountants Young Women's Christian Association of Tampa Bay, Inc. and Affiliate Required Communications ... Responsibility Under Auditing Standards ... Significant Accounting Policies - Summarized in Note A ~ Accounting Estimates - value of receivables from a remainder trust and a beneficial interest in a perpetual trust + Audit Adjustments - see attached · Disagreements with Management - none .. Consultations with Other Accountants - none ... Issues Discussed Prior to Our Engagement as the Independent Auditors - none + Difficulties Encountered Dl!ring Audit - none -12- Pdr CERTIFIED PUBUC accountants Summary of Audit Adjustments Increase (Decrease) Assets Liabilities/N et Assets Expenses Revenues Net Adjustments $ 161,518 $ - 0- $ 114,453 $ (47,065) We proposed 15 adjusting entries related to reclassifications and accruals. The client has agreed to post all of our proposed entries. -13- pctr CERTIFIED PUBUC accountants Young Women's Christian Association of Tampa Bay, Inc. and Affiliate New Auditing Standard SAS 112 - Communicating Internal Control Related Matters Identified in an Audit SAS 112 was created in response to the Sarbanes-Oxley Act of 2002 and the PCAOB addressing management's responsibility for internal control and the auditor's responsibility for bringing certain internal control related matters to management's attention in an audit of financial statements. The intent ofthis SAS was to help close the gap between the reporting standards for public and nonpublic (for-profit and not-for-profit) entities. o Effective for audits with year ends after December 15, 2006. o Requires all significant deficiencies and material weaknesses must be communicated to management in writing. o Recommended that written communications be completed by the report release date. o Auditors should not issue letters stating that no significant deficiencies were identified. -14- pdr CERTIFIED PUBUC accountants Risk Assessment Standards Steps to consider for next year: We will be testing internal controls in next year's audit to ensure that controls are adequate - consider the following: .... Ensure that all internal controls are operating effectively - and appropriate sign-off and dating is utilized to prove that what you say is being done is actually being done. ^ Ensure appropriate accounting for all grant income. Ensure appropriate oversight and control related to compliance over all programs. ,,- Closely monitor restricted receipts and their subsequent disbursements. ... Monitor growth and expenditures closely against the operating budget to maintain cash flow and viability. -16- Pdr CERTIFIED PUBUC accountants YOUNG WOMEN'S CHRISTIAN ASSOCIATION OF TAMPA BA~ INC. AND AFFILIATE COMBINED FINANCIAL STATEMENTS SEPTEMBER 30, 2007 AND 2006 AND REPORTS OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Rdr CERTIFIED PUBLIC accountants CLEARWATER, FLORIDA TABLE OF CONTENTS INDEPENDENT AUDITORS' REPORT Financial Statements for the Years Ended September 30, 2007 and 2006: Combined Statements of Financial Position Combined Statements of Activities and Change in Net Assets Combined Statements of Functional Expenses Combined Statements of Cash Flows Notes to Combined Financial Statements INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTARY INFORMATION Combined Schedules of Revenue and Expenses by Program Schedule of Expenditures of Federal Awards Notes to Schedule of Expenditures of Federal Awards REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-i33 Schedule of Findings and Questioned Costs Page 1 2 3-4 5-6 7 8 -17 18 19 - 20 21 22 23 - 24 25 - 26 27 - 30 pCJr CERTIFIED PUBLIC accountants 29750 U.S. Hwy. 19 North, Suite 101 Clearwater, Florida 33761 INDEPENDENT AUDITORS' REPORT To the Board of Directors Young Woman's Christian Association of Tampa Bay, Inc. and Affiliate St. Petersburg, Florida We have audited the accompanying combined statement of financial position of Young Woman's Christian Association of Tampa Bay, Inc. and its affiliate, YWCA of Tampa Bay Foundation, Inc. (Foundation), (collectively, the Organization) as of September 30,2007 and the related combined statements of activities and change in net assets, functional expenses, and cash flows for the year then ended. These combined financial statements are the responsibility of the Organization's management. Our responsibility is to express an opinion on these combined financial statements based on our audit. The combined financial statements of the Organization as of September 30,2006 were audited by other auditors whose report, dated December 28, 2006, expressed an unqualified opinion on those statements. 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position ofthe Organization as of September 30,2007 and the change in its net assets and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United State of America. In accordance with Government Auditing Standards, we have also issued a report dated January 11, 2008 on our consideration of the Organization's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. ?t)~~~?~~ Clearwater, Florida January 11,2008 1 YOUNG WOMEN'S CHRISTIAN ASSOCIATION OF TAMPA BAY, INC. AND AFFILIATE COMBINED STATEMENTS OF FINANCIAL POSITION SEPTEMBER 30, 2007 AND 2006 ASSETS 2007 2006 Cash $ 21,179 $ 57,125 Grants and fees receivable 483,550 375,394 Unconditional promises to give 46,643 62,750 Prepaid expenses and other 35,018 31,102 Investments 435,393 466,471 Receivable from remainder trust 56,096 56,096 Land lease receivable 592,689 309,328 Property and equipment, net 2,433,086 2,497,519 Beneficial interest in perpetual trust 145,252 134,652 TotaL Assets $ 4,248,906 $ 3,990,437 LIABILITIES AND NET ASSETS Liabilities Accounts payable $ 29,267 $ 105,332 Accrued salaries and related expenses 292,788 271,853 Refundable advance 66,965 107,484 Notes payable 451,266 462,984 Line-of-credit 69,000 TotaL Liabilities 909,286 947,653 Net Assets Unrestricted 136,905 65,208 Net investment in property and equipment 2,281,820 2,334,535 2,418,725 2,399,743 Temporarily restricted 695,428 428,174 Permanently restricted 225,467 214,867 TotaL net assets 3,339,620 3,042,784 TotaL Liabilities and Net Assets $ 4,248,906 $ 3,990,437 See accompanying notes to financiaL statements 2 YOUNG WOMEN'S CHRISTIAN ASSOCIATION OF TAMPA BAY, INC. AND AFFILIATE COMBINED STATEMENT OF ACTIVITIES AND CHANGE IN NET ASSETS YEAR ENDED SEPTEMBER 30, 2007 Temporarily Permanently Unrestricted Restricted Restricted Total Public Support and Revenue Public Support Contributions $ 141,270 $ 1,500 $ $ 142,770 In-kind contributions - services and other 250,830 445,991 696,821 United Way 135,221 135,221 Special events, net 60,026 60,026 Net assets released from restriction 180,237 (180,237) Total public support 767,584' 267,254 1,034,838 Revenue Grants and fees 2,426,790 2,426,790 Coordinated Child Care 455,827 455,827 ~~. Juvenile Welfare Board 1,402,167 1,402,167 Child care revenues 678,859 678,859 Wills and bequests 206,693 206,693 Investment income 77 ,693 10,600 88,293 Miscellaneous 49,522 49,522 Total revenue 5,297,551 10,600 5,308,151 Total public support and revenue 6,065,135 267,254 10,600 6,342,989 Expenses Program Services Adolescent Pregnancy and Parenting 616,008 616,008 Family Village 1,080,922 1,080,922 Community Outreach 2,152,775 2,152,775 Child Care 1,313,313 1,313,313 Total program services 5,163,018 5,163,018 Support Services Management and general 734,166 734,166 Fundraising 117,319 117,319 Payments to affiliated organizations 31,650 31,650 Total support services 883,135 883,135 Total expenses 6,046,153 6,046,153 Change in Net Assets 18,982 267,254 10,600 296,836 Net Assets at Beginning of Year 2,399,743 428,174 214,867 3,042,784 Net Assets at End of Year $ 2,418,725 $ 695,428 $ 225,467 $ 3,339,620 See accompanying notes to financial statements 3 YOUNG WOMEN'S CHRISTIAN ASSOCIATION OF TAMPA BA Y, INC. AND AFFILIATE COMBINED STATEMENT OF ACTIVITIES AND CHANGE IN NET ASSETS YEAR ENDED SEPTEMBER 30, 2006 Temporarily Permanently Unrestricted Restricted Restricted Total Public Support and Revenue Public Support Contributions $ 108,515 $ 29,802 $ $ 138,317 In-kind contributions - services and other 289,913 289,913 United Way 133,987 32,500 166,487 Special events, net 20,335 20,335 Net assets released from restriction 185,376 (185,376) Total public support 738,126 (123,074) 615,052 Revenue Grants and fees 2,302,397 2,302,397 Coordinated Child Care 480,623 480,623 Juvenile Welfare Board 1,157,298 1,157,298 Child care revenues 735,996 735,996 Change in value of split-interest agreement 5,674 5,674 Investment income 58,261 1,200 59,461 Miscellaneous 88,006 88,006 Total revenue 4,822,581 5,674 1,200 4,829,455 Total public support and revenue 5,560,707 (117,400) 1,200 5,444,507 Expenses Program Services Adolescent Pregnancy and Parenting 623,024 623,024 Family Village 1,046,670 1,046,670 Community Outreach 1,827,547 1,827,547 Child Care 1,172,331 1,172,331 Total program services 4,669,572 4,669,572 Support Services Management and general 668,517 668,517 Fundraising 133,968 133,968 Payments to affiliated organization 31,000 31,000 Total support services 833,485 833,485 Total expenses 5,503,057 5,503,057 Change in Net Assets 57,650 (117,400) 1,200 (58,550) Net Assets at Beginning of Year 2,342,093 545,574 213,667 3,101,334 Net Assets at End of Year $ 2,399,743 $ 428,174 $ 214,867 $ 3,042,784 See accompanying notes to financial statements 4 YOUNG WOMEN'S CHRISTIAN ASSOCIATION OF TAMPA BAY, lNe ANDAFFILlATE COMBINED STATEMENT OF FUNCTIONAL EXPENSES YEAR ENDED SEPTEMBER 30, 1007 Program Services Support Services Adolescent Total Payments to Total Pregnancy Family Community Child Program Management and General Affiliated Support and Parenting Village Outreach Care Services YWC4 Foundation Fundraising Organization Services Total Salaries $ 197,347 $ 610,291 $ 1,321,740 $ 924,498 $ 3,053,876 $ 379,030 $ $ 72,908 $ $ 451,938 $ 3,505,814 Employee health and retirement benefits 21,773 49,568 119,746 83,834 274,921 32,661 8,971 41,632 316,553 Payroll taxes 14,567 47,905 102,454 74,872 239,798 26,328 5,884 32,212 272,010 Total Salaries and Related Expenses 233,687 707,764 1,543,940 1,083,204 3,568,595 438,019 87,763 525,782 4,094,377 Advertising and public relations 1,028 3,394 2,492 6,914 3,091 2,560 5,651 12,565 Professional fees and contract services 31,422 1,857 186,858 57 220,194 30,318 10,925 41,243 261,437 Supplies 21,900 32,884 43,803 41,186 139,773 17,682 273 5,397 23,352 163,125 Food 4,956 36,781 13,945 50,967 106,649 108 108 106,757 Telephone 7,446 8,151 9,533 3,814 28,944 4,822 1,187 6,009 34,953 Utilities 4,538 50,581 12,930 11,011 79,060 17,601 623 18,224 97,284 Taxes and licenses 208 410 188 871 1,677 1,597 107 1,704 3,381 Occupancy 29,199 16,804 19,622 50,159 115,784 1,786 9,112 10,898 126.682 Travel 6,535 1,273 62,488 142 70,438 287 4,011 1,084 5,382 75,820 Meetings 5,780 831 5,333 493 12,437 4,576 173 4,749 17,186 Repairs, maintenance, and small equipment 7,125 37,918 17,256 8,162 70,461 15,993 80,048 2,387 98,428 168,889 Insurance 13,591 63,512 65,786 53,425 196,314 17,893 27,647 6,188 51,728 248,042 Use of contributed land 247,723 19,515 143,112 410,350 410,350 National support 31,650 31,650 31,650 Depreciation 1,763 98,221 22,458 1,898 124,340 3,111 17,236 807 21,154 145,494 Miscellaneous 135 3,392 2,129 5,432 11,088 19,807 1,923 38 21,768 32,856 Interest 4,065 11,240 15,305 15,305 Total Functional Expenses $ 616,008 $ 1,080,922 $ 2,152,775 $ 1,313,313 $ 5,163,018 $ 563,155 $ 171,011 $ 117,319 $ 31,650 $ 883,135 $ 6,046,153 See accompanying notes to financial statements 5 YOUNG WOMEN'S CHRISTIAN ASSOCIA110N OF TAMPA BAY, INC ANDAFFlLIATE COMBINED STATEMENT OF FUNCTIONAL EXPENSES YEAR ENDED SEPTEMBER 30, 2006 Program Services Support Services Adolescent Total Payments to Total Pregnancy Family Community Child Program Management and General Affiliated Support and Part!ntlng Vi/lagt! Outreach Care Services YWCA Foundation Fundraising Organization Services Total Salaries $ 360,141 $ 574,872 $ 1,225,782 $ 802,021 $ 2,962,816 $ 381,571 $ $ 88,974 $ $ 470,545 $ 3,433,361 Employee health and retirement benefits 57,146 54,272 101,976 70,386 283,780 39,788 9,130 48,918 332,698 Payroll taxes 31,336 46,447 93,637 58,614 230,034 28,958 6,668 35,626 265,660 Total Salaries and Related Expenses 448,623 675,591 1,421,395 931,021 3,476,630 450,317 104,772 555,089 4,031,719 Advertising and public relations 95 782 4,420 1,521 6,818 6,286 2,452 8,738 15,556 Professional fees and contract services 18,820 2,171 107,120 128,111 22,792 10,129 32,921 161,032 Supplies 24,061 27,685 37,275 31,626 120,647 16,947 540 7,358 24,845 145,492 Food 3,977 32,222 16,801 47,851 100,851 100,851 Telephone 6,964 8,374 6,338 3,100 24,776 5,441 890 6,331 31,107 Utilities 4,888 52,773 12,090 9,884 79,635 521 15,952 1,170 17,643 97,278 Taxes and licenses 25 335 25 625 1,010 4,204 115 4,319 5,329 Occupancy 36,376 15,573 13,332 40,082 105,363 651 6,265 6,916 112,279 Travel 4,501 449 49,355 333 54,638 2,952 168 1,749 4,869 59,507 Meetings 3,116 1,093 5,780 1,224 11,213 6,063 58 6,121 17,334 Repairs, maintenance, and small equipment 55,612 63,401 17,368 14,292 150,673 10,753 20,743 1,343 32,839 183,512 Insurance 13,753 40,697 64,132 53,091 171,673 16,476 5,814 7,479 29,769 201,442 Use of contributed land 19,515 49,197 32,799 101,511 101,511 National support 31,000 31,000 31,000 Depreciation 2,060 103,327 19,148 2,458 126,993 5,681 19,490 432 25,603 152,596 Miscellaneous 153 2,682 3,771 2,424 9,030 32,052 608 32,660 41,690 Interest 1,837 11,985 13,822 13,822 Total Functional Expenses $ 623,024 $ 1,046,670 $ 1,827,547 $ 1,172,331 $ 4,669,572 $ 582,973 $ 85,544 $ 133,968 $ 31,000 $ 833,485 $ 5,503,057 See accompanying notes to financial statements 6 YOUNG WOMEN'S CHRISTIAN ASSOCIATION OF TAMPA BAY, INC. AND AFFILIATE COMBINED STATEMENTS OF CASH FLOWS YEARS ENDED SEPTEMBER 30, 2007 AND 2006 2007 2006 Cash Flows from Operating Activities: Change in net assets $ 296,836 $ (58,550) Adjustments to reconcile change in net assets to net cash provided by (used in) operating activities: Loss (gain) on sale of investments (53,692) (16,722) Change in value of split interest agreement (5,674) Depreciation 145,494 152,596 (Increase) decrease in operating assets: Grants and fees receivable (108,156) (92,296) Unconditional promises to give 16,107 21,563 Prepaid expenses and other (3,916) (13,885) Land lease receivable (283,361) 101,511 Increase (decrease) in operating liabilities: Accounts payable (76,065) 56,528 Accrued salaries and related expenses 20,935 (12,241 ) Refundable advance (40,519) 62,650 Net cash provided by (used in) operating activities (86,337) 195,480 Cash Flows from Investing Activities: Purchases of investments (40,000) (398,606) Proceeds from sale of investments 114,170 22,657 Purchases of property and equipment (81,061) (64,509) Net cash used in investing activities (6,891) (440,458) Cash Flows from Financing Activities: Proceeds (repayments) from borrowing on line-of-credit 69,000 (50,000) Payments on note payable (11,718) (12,536) Net cash provided by (used in) financing activities 57,282 (62,536) Decrease in Cash (35,946) (307,514) Cash at Beginning of Year 57,125 364,639 Cash at End of Year $ 21,179 $ 57,125 Supplemental Disclosure Cash paid for interest $ 15,305 $ 13,822 See accompanying notes to financial statements 7 YOUNG WOMAN'S CHRISTIAN ASSOCIATION OF TAMPA BA.Y, INC. AND AFFILIATE NOTES TO COMBINED FINANCIAL STATEMENTS SEPTEMBER 30, 2007 AND 2006 Young Woman's Christian Association of Tampa Bay, Inc. (the YWCA) and its affiliate, YWCA of Tampa Bay Foundation, Inc. (the Foundation), (collectively, the Organization) are organized for the purpose of providing charitable education and services, childcare, and housing assistance to individuals within Pinellas County, Florida. NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1. Princivles of Combination The accompanying combined fmancial statements include the financial statements of the YWCA and the Foundation. All significant inter-organization accounts and transactions have been eliminated in combination. 2. Income Taxes The YWCA is exempt from federal income tax under Section 50l(c)(3) of the Internal Revenue Code and state income tax under Chapter 220.13 of the Florida Statutes. The Internal Revenue Service has determined the YWCA not to be a private foundation and contributions to it qualify as charitable contribution deductions. The Foundation is a Florida not-for-profit corporation organized to support the Organization. The YWCA and Foundation are financially interrelated. The Foundation is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code and has been determined not to be a private foundation. 3. ProJ!rams Adolescent Pregnancy and Parenting - Enhances self-sufficiency by providing community-wide, comprehensive services in the areas of health, education, prevention, life skills and counseling to adolescents, young adults, and their children. Family Village - Provides short-term, temporary affordable housing, counseling and support services for homeless families, and a child development center to serve the needs of the families in the housing program. Community Outreach - Assists targeted families through a comprehensive healthy families support initiative. Child Care - Provides public and teen parent childcare. 8 YOUNG WOMAN'S CHRISTIAN ASSOCIATION OF TAMPA BAr. INC. AND AFFILIATE NOTES TO COMBINED FINANCIAL STATEMENTS SEPTEMBER 30, 2007 AND 2006 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED 4. Financial Statement Presentation The Organization reports information regarding its financial position and activities based on the existence or absence of donor-imposed restrictions in accordance with Financial Accounting Standards Board Statement of Financial Accounting Standards (SFAS) No. 117, Financial Statements of Not -for-Profit Organizations. Accordingly, the Organization has classified its net assets and changes therein as unrestricted (net assets that are not subject to donor-imposed stipulations) and permanently or temporarily restricted net assets, as required. In accordance with SF AS No. 117, special event revenue is shown net of the cost of the direct benefit to donors. 5. Restricted and Unrestricted Contributions The Organization accounts for contributions in accordance with SF AS No. 116, Accounting for Contributions Received and Contributions Made. Accordingly, contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support depending on the existence and/or nature of any donor restrictions. Contributions that are restricted by the donor are reported as an increase in unrestricted net assets if the restriction expires in the reporting period in which the contributions are received. All other donor-restricted contributions are reported as an increase in temporarily or permanently restricted net assets, depending on the nature of the restriction. When a restriction expires (that is, when a stipulated time restriction ends or the purpose of the restriction is accomplished), temporarily restricted contributions are reclassified and reported in the statements of activities as net assets released from restrictions. Contributions are recognized at their present value when a donor makes a contribution. In accordance with SF AS No. 116, unconditional promises to give are recognized as revenues in the period received. Conditional promises to give are recognized when the conditions on which they depend are substantially met. Federal, state, and local government and other public grants are recognized as support when performance occurs pursuant to the contract agreement. 9 YOUNG WOMAN'S CHRISTIAN ASSOCIATION OF TAMPA BAY, INC AND AFFILIATE NOTES TO COMBINED FINANCIAL STATEMENTS SEPTEMBER 30, 2007 AND 2006 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED 6. Cash Accounts The Organization classifies all short-term investments with a maturity of three months or less as cash equivalents. 7. Investments The Organization adopted SF AS No. 124, Accounting for Certain Investments Held by Not-For-Profit Organizations. In accordance with SFAS No. 124, investments in equity securities with readily determinable fair values and all investments in debt securities are carried at their fair values in the Organization's statements of financial position. Unrealized gains and losses are included in the statements of activities and change in net assets. Restrictions on investment earnings are reported as increases in unrestricted net assets if the restrictions expire in the fiscal year in which the earnings are recognized. Investment return for the years ended September 30, 2007 and 2006 is presented in the accompanying combined statements of activities and change in net assets as either unrestricted or permanently restricted. Permanently restricted investment income represents the change in value of a beneficial interest in a perpetual trust. All other investment income includes unrestricted amounts generated from the YWCA and Foundation investment accounts. 8. Receivables Grants and fees receivable represent amounts due from various federal, state, and local agencies for purposes specified by each grant. Promises to give are recorded at net realizable value and represent amounts due from United Way allocations and unconditional pledges to the Organization. Management considers all receivables to be collectible. As such, an allowance for doubtful accounts is not recorded in the accompanying combined financial statements. 9. Propertv and Equipment Property and equipment are stated at cost if purchased or at estimated fair value at date of receipt if contributed. Depreciation is calculated using the straight-line method over the estimated useful lives of the respective assets, which range from 3 to 40 years. 10 YOUNG WOMAN'S CHRISTIAN ASSOCIATION OF TAMPA BAY, INC. AND AFFILIATE NOTES TO COMBINED FINANCIAL STATEMENTS SEPTEMBER 30, 2007 AND 2006 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED 9. PropertJ; and Equipment - Continued Expenditures in excess of $750 with estimated useful lives in excess of one year are capitalized. Gifts of long-lived assets are reported as unrestricted support unless the donor has restricted the asset for a specific purpose. Repairs and maintenance of property and equipment are charged to operations and major improvements are capitalized. Upon retirement, sale, or other disposition of property and equipment, costs and accumulated depreciation are eliminated from the accounts and any resulting gain or loss is included in operations. Property acquired with grant funds is considered owned by the Organization while used in the program for which it is purchased or in future authorized programs; however, its disposition as well as the ownership of any proceeds therefrom is subject to applicable regulations. 10. Noncash Contributions Contributions of materials and securities are recorded as support at their fair value at the date of donation. Contributions of services are recorded as support at their estimated fair value if the services received create or enhance non-financial assets or require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation. 11. Reclassifications Certain amounts in the 2006 financial statements were reclassified to conform to the 2007 presentation. These reclassifications had no effect on the previously reported change in net assets. 12. Expense Allocation Costs of providing services have been detailed in the statements of functional expenses and summarized on a functional basis in the statements of activities and change in net assets. Expenses that can be identified with a specific program or support service are allocated directly according to their natural expenditure classification. 11 YOUNG WOMAN'S CHRISTIAN ASSOCIATION OF TAMPA BA~ INC. AND AFFILIATE NOTES TO COMBINED FINANCIAL STATEMENTS SEPTEMBER 30, 2007 AND 2006 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED 13. UseofEstinwres The preparation of combined 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. At September 30, 2007 and 2006, investment return consists of interest and dividend income of $34,164 and $42,739 (net of fees of $150 each year), respectively, and net realized and unrealized gains of$53,692 and $16,722, respectively. NOTE D - LAND LEASE RECEIVABLE The YWCA leases its Family Village facility land from the City of St. Petersburg, Florida under a 25-year lease agreement commencing April 1997 for a onetime payment of $300. The lease requires the YWCA to use the land for certain restricted purposes or the agreement can be terminated. 12 YOUNG WOMAN'S CHRISTIAN ASSOCIATION OF TAMPABA~INC. ANDAFFILIATE NOTES TO COMBINED FINANCIAL STATEMENTS SEPTEMBER 30, 2007 AND 2006 NOTE D - LAND LEASE RECEIVABLE - CONTINUED The YWCA leases its Hispanic Outreach Center under a three-year lease agreement commencing November 2006 for a onetime payment of $1. The lease requires the YWCA to use the property to implement the Latin Outreach program. The YWCA records these leasing transactions as land lease receivable and in-kind contribution, Amounts recorded are based on the fair value of the leased property. The land lease receivable is recognized as an in-kind expense over the lease term, which is expected to be realized as follows: Year ending September 30. 2007 One year or less One to five years Over five years $ 168,179 $ 239,112 185398 $ 592.689 NOTE E - PROPERTY AND EQUIPMENT Property and equipment consist of the following at September 30: 2006 26,352 78,060 204.916 309.328 2007 2006 Building and improvements Leasehold improvements Furniture and equipment Vehicles $3,038,201 201,938 290,696 77.938 3,608,773 (1.1 75.687) Less accumulated depreciation $ 2,971,832 197,583 276,856 77.652 3,523,923 (1.026.404) $2.433.086 $ 2.497.519 NOTE F -SPLIT INTEREST AGREEMENTS Charitable Remainder Trust The YWCA is beneficiary of a charitable remainder trust held by a third party. The YWCA has recorded a receivable based on the present value of the estimated future benefit to be received when the trust assets are distributed, based on the life expectancy of the beneficiary named in the trust. 13 YOUNG WOMAN'S CHRISTIAN ASSOCIATION OF TAMPA BA~ INC. AND AFFILIATE NOTES TO COMBINED FINANCIAL STATEMENTS SEPTEMBER 30, 2007 AND 2006 NOTE F - SPLIT INTEREST AGREEMENTS - CONTINUED Beneficial Interest in Perpetual Trust Held by Third Party The YWCA is an income beneficiary of a perpetual trust held by a third party that is measured based on the fair value of the trust assets. Change in the fair value of the trust assets is reported as permanently restricted gains or losses. Income distributions from the trust are reported as unrestricted investment income. NOTE G-NOTES PAYABLE Notes payable consist of the following at September 30: 2007 2006 Promissory note payable for fimds received pursuant to a Community Development Block Grant from the City of St. Petersburg, Florida. Compliance with all provisions set forth in the note shall defer payment of the principal amount through January 1, 2022, and all sums due and payable shall be forgiven as of that date. Interest will not accrue while payment of the principal is deferred. The note is secured by real property. $ 300,000 $ 300,000 Promissory note payable to a bank, bearing interest at 6.95% (7.5% through September 30, 2004), principal and interest due in monthly payments of $1,480 ($1,625 through September 30, 2004), maturing in September 2023, collateralized by real property owned by the Foundation. 151,266 162,984 $ 451.266 $ 462.984 Aggregate maturities of notes payable are as follows at September 30: 2008 2009 2010 2011 2012 Thereafter $ 7,535 8,032 8,608 9,227 9,887 407,977 $ 451.266 Interest expense for the years ending September 30, 2007 and 2006 was $15,305 and $13,822, respectively. 14 YOUNG WOMAN'S CHRISTIAN ASSOCIATION OF TAMPA BA:Y, INC. AND AFFILIATE NOTES TO COMBINED FINANCIAL STATEMENTS SEPTEMBER 30, 2007 AND 2006 NOTE H - LINE-OF-CREDIT During 2005, the YWCA opened a line-of-credit with a local bank with a limit of $50,000. During 2006, the limit was increased to $100,000. The interest rate on the line-of-credit changes monthly and is equal to the bank's prime rate plus .0525% in 2007 and 2006. The interest rate at September 30, 2007 and 2006 was 7.75% and 8.25%, respectively. The balance at September 30, 2007 and 2006 was $69,000 and $-0-, respectively. NOTE I-IN-KIND CONTRIBUTIONS The Pinellas County School Board provides teachers and supplies for the Adolescent Pregnancy and Parenting program. A total of $247,723 was contributed during fiscal year 2007, consisting of $247,723 for salaries and related fringe benefits. A total of $242,803 was contributed during fiscal year 2006, consisting of $232,403 for salaries and related fringe benefits and $10,400 for miscellaneous support. A local organization selected the Organization to receive certain improvements and furnishings to benefit the Adolescent Pregnancy and Parenting Program. A total of $47,11 0 was contributed during fiscal year 2006. NOTE J- CONTINGENCIES AND COMMITMENTS The YWCA receives a substantial amount of support from grantor agencies for its programs. If this support were to be reduced or eliminated, it could affect the operation of the supported programs. In addition, the YWCA is subject to audit examination by the grantor agencies. In the event that reimbursed expenditures were disallowed, repayment would be required. It is the opinion of management that no grant expenditures would be disallowed for the September 30, 2007 and 2006 fiscal years. NOTEK-LEASES The YWCA leases various facilities and office equipment under operating leases. The leases expire beginning in 2007 through 2012. Future lease commitments under noncancelable leases with terms in excess of one year are as follows: 2008 2009 2010 2011 2012 Thereafter $ 57,671 48,141 720 720 720 -0- $ 107.972 15 YOUNG WOMAN'S CHRISTIAN ASSOCIATION OF TAMPA BAY, INC. AND AFFILIATE NOTES TO COMBINED FINANCIAL STATEMENTS SEPTEMBER 30, 2007 AND 2006 NOTE K - LEASES- CONTINUED Lease expense associated with the noncancelable leases for the years ended September 30, 2007 and 2006 was $73,046 and $63,984, respectively. NOTE L - DEFINED BENEFIT PLAN The YWCA participates in the national YWCA Retirement Fund, Inc., which is a defined benefit plan for employees who have completed two years of service and at least 1,000 hours of service during each of those two years. Participants are immediately 100% vested. The YWCA contributes 7.5% of eligible employee salaries. Contributions paid to the plan during the fiscal years 2007 and 2006 were $172,133 and $143,851, respectively. NOTE M - TEMPORARILY AND PERMANENTLY RESTRICTED NET ASSETS At September 30, net assets were temporarily restricted for the following purposes: 2007 2006 Time Restricted Promises to give $ 46,643 $ 62,750 Land leases 592,689 309,328 Remainder trust 56,096 56,096 $ 695.428 $ 428.174 Net assets released from time restrictions amounted to $180,237 and $185,376 for the years ended September 30, 2007 and 2006, respectively. At September 30, permanently restricted net assets consisted of the following: 2007 2006 Endowment Beneficial interest in perpetual trust $ 80,215 $ 145,252 80,215 134.652 $ 225.467 $ 214.867 16 YOUNG WOMAN'S CHRISTIAN ASSOCIATION OF TAMPA BAY, INC. AND AFFILIATE NOTES TO COMBINED FINANCIAL STATEMENTS SEPTEMBER 30, 2007 AND 2006 NOTE N - CONCENTRATION OF RISK The Organization maintains its cash balances in financial institutions and those balances are insured by the Federal Deposit Insurance Corporation up to $100,000. Cash may have exceeded the federally insured limit at various times throughout the years ended September 30, 2007 and 2006. NOTE 0 - RELATED PARTY TRANSACTIONS The YWCA began leasing a building from the Foundation in September 2003. The lease term is for six years through August 31, 2009. Payments of $8,000 per month are recorded as rent expense for the YWCA and as rental income for the Foundation. Accordingly, rent expense and income recorded by the entities for fiscal years ending September 30, 2007 and 2006 related to this lease totaled $96,000 per year. During fiscal year 2005, the Foundation began sharing the cost of one employee with the YWCA. During 2006, the Foundation stopped the cost sharing. Payments of approximately $12,000 were recorded as salary and benefits expense for the Foundation and as miscellaneous income for the YWCA during 2006. These amounts have been eliminated in the accompanying combined financial statements for the 2007 and 2006 fiscal years. From time to time, the Foundation receives contributions from members of the board of directors and staff of the YWCA, in addition to contributions it receives from the public at large. As of September 30, 2007 and 2006, promises to give include amounts due from the board and staff members in the amounts of$8,870 and $26,059, respectively. 17 .........~ pur 29750 U.S. Hwy. 19 North, Suite 101 Clearwater, Florida 33761 CERTIFIED PUBLIC accountants INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTARY INFORMATION To the Bo'ard of Directors Young Woman's Christian Association of Tampa Bay, Inc. and Affiliate St. Petersburg, Florida Our report on our audit of the combined financial statements of Young Woman's Christian Association of Tampa Bay, Inc. and Affiliate for 2007 appears on page one. Our audit was performed for the purpose of forming an opinion on the basic combined financial statements taken as a whole. The accompanying combined schedule of revenue and expenses by program for the year ended September 30, 2007 and the schedule of expenditures of federal awards for the year ended September 30, 2007 are presented for purposes of additional analysis or as required by U.S. Office of Management and Budget Circular A-B3, Audits of States, Local Governments, and Non- Profit Organizations, and are not a required part of the basic combined financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic combined financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic combined financial statements taken as a whole. The supplementary information of Young Woman's Christian Association of Tampa Bay, Inc. and Affiliate as of September 30, 2006 was audited by other auditors whose report, dated December 28, 2006, expressed an unqualified opinion on the supplementary information for September 30, 2006. PDf\ ~~ \J~ ~~ Clearwater, Florida January 11,2008 18 YOUNG WOMEN'S CHRIST/AN ASSOCIA TION OF TAMPA BA.Y, INC AND AFFILIA TE COMBINED SCHEDULE OF REVENUE AND EXPENSES BY PROGRAM FOR THE YEAR ENDED SEPTEMBER 30, 2007 Pro1fram Services Support Serl1ices Adolescent Total Payments to ToW Pregnancy Family CommuniJy Child Program Management and General Affrliated Support and Parenting Village Outreach Care Services YWCA F DUMaJion FundrairinJl Organization Services Totu.l Revenue Contributions 2,830 34,561 70,878 $ 616 108,885 $ 12,782 8,318 12,785 33,885 142,770 In-kind contribution - services and other 247,723 445,673 693,396 3,425 3,425 696,821 United Way 57,000 9,639 68,582 135,221 135,221 Special events, net of direct benefit to donors 3,559 6,838 557 10,954 1,135 47,937 49,072 60,026 Grants and fees 55,073 391,853 1,424,313 555,551 2,426,790 2,426,790 Coordinated Child Care 127,834 327,993 455,827 455,827 Juvenile Welfare Board 373,320 272,961 646,009 109,877 1,402,167 1,402,167 Child Care Revenues 316,318 362,541 678,859 678,859 Change in value of split- interest agreement 206,693 206,693 206,693 Investment income 79,250 9,043 88,293 88,293 Miscellaneous 207 2,381 2,588 45,080 1,854 46,934 49,522 T otaJ Revenue 735,946 1,147,293 2,605,731 1,425,717 5,914,687 344,940 17,361 66,001 428,302 6,342,989 Expenses Salaries 197,347 610,291 1,321,740 924,498 3,053,876 379,030 72,908 451,938 3,505,814 Employee health and retirement benefits 21,773 49,568 119,746 83,834 274,921 32,661 8,971 41,632 316,553 Payroll taxes 14,567 47,905 102,454 74,872 239,798 26,328 5,884 32,212 272,010 T oIJll Salaries und Reluted Expenses 233,687 707,764 1,543,940 1,083,204 3,568,595 438,019 87,763 525,782 4,094,377 Advertising & public relations 1,028 3,394 2,492 6,914 3,091 2,560 5,651 12,565 Professional fees & contract services 31,422 1,857 186,858 57 220,194 30,318 10,925 41,243 261,437 Supplies 21,900 32,884 43,803 41,186 139,773 17,682 273 5,397 23,352 163,125 Food 4,956 36,781 13,945 50,967 106,649 108 108 106,757 Telephone 7,446 8,151 9,533 3,814 28,944 4,822 1,187 6,009 34,953 Utilities 4,538 50,581 12,930 11,011 79,060 17,601 623 18,224 97,284 Taxes and licenses 208 410 188 871 1,677 1,597 107 1,704 3,381 Occupancy 29,199 16,804 19,622 50,159 115,784 1,786 9,112 10,898 126,682 Travel 6,535 1,273 62,488 142 70,438 287 4,011 1,084 5,382 75,820 Meetings 5,780 831 5,333 493 12,437 4,576 173 4.749 17,186 Repairs. maintenance. and small equipment 7,125 37,918 17,256 8,162 70,461 15,993 80,048 2,387 98,428 168,889 Insurance 13,591 63,512 65,786 53,425 196,314 17,893 27,647 6,188 51,728 248,042 Use of contributed land 247,723 19,515 143,112 410,350 410,350 National support 31,650 31,650 31,650 Depreciation 1,763 98,221 22,458 1,898 124,340 3,111 17,236 807 21,154 145,494 Miscellaneous 135 3,392 2,129 5,432 11,088 19,807 1,923 38 21.768 32,856 Interest expense 4,065 11,240 15,305 15,305 Total Expenses 616,008 1,080,922 2,152,775 1,313,313 5,163,018 563,155 171,011 117,319 31,650 883,135 6,046,153 Excess (Defu:it) of Reo'enoes Over Expenses Before Allocation of Support Services 119,938 66,371 452,956 112,404 751,669 (218,215) (153,650) (51,318) (31,650) (454,833) 296,836 Allocation of Support Services 43,382 76,123 151,608 92,489 363,603 (218,215) (153,650) 8,262 (363,603) Excess {Defu:it} of Revenues Over Expenses 76,556 (9,752) 301,348 19,915 388,066 (59,580) (31,650) (91,230) 296,836 See auditors' report report on supplementary infor1lliltion 19 YOUNG WOMEN'S CHRISTIAN ASSOCIATION OF TAMPA BAY, INC. AND AFFILIATE COMBINED SCHEDULE OF REVENUE AND EXPENSES BY PROGRAM FOR THE YEAR ENDED SEPTEMBER 10, 2006 Prqgram Services Support Services Adolescent Total Pu...V111t!nts to Total Pregnancy Family Community Child Program ManUlfement and General AjJiliuled Support and Pur~nting Village Outr<ach Con Services YWC4 Foundation Fundraising Organiz.alion Services Total Revenue Contributions 538 32,325 64,331 3,010 100,204 29,573 6,808 1,732 38,113 138,317 In-kind contribution - services and other 288,913 288,913 1,000 1,000 289,913 Unil<d Way 47,632 22,099 87,388 157,119 9.368 9,368 166,487 Special events. net of direct benefit to donors 4,135 8,317 1,163 13,615 4,056 20 2,644 6,720 20,335 Grants and fees 36,173 429,382 1,455,963 1,921,518 10,000 10,000 1,931,518 Coordinat<d Child Care 155,591 325,032 480,623 480,623 luvenile Welfare Board 365,292 265,502 429,644 96,860 1,157,298 1,157,298 Child Care Revenues 291,429 444,567 735,996 735,996 Change in value of split- interest agreement 5,674 5,674 5,674 Investment Income 54,733 4,728 59,461 59,461 Miscellaneous 701 19,437 850 20,988 60,174 6,844 67,018 88,006 T Dial Rf!Vt!n"~ 739,249 1,219,900 1,959,105 958,020 4,876,274 163,578 21,556 12,220 197,354 5,073,628 Expenses Salaries 360,141 574,872 1,225,782 802,021 2,962,816 381,571 88,974 470,545 3,433,361 Employee health and retirement benefits 57,146 54.272 101,976 70,385 283,780 39,788 9,130 48,918 332,698 Payroll taxes 31,336 46,447 93,637 58,614 230,034 28,958 6,668 35,626 265,660 Total Sfllariu and Related Expenses 448,623 675,591 1,421,395 931,020 3,476,630 450,317 104,772 555,089 4,031,719 Advertising & public relations 95 782 4,420 1,521 6,818 6,286 2,452 8,738 15,556 Professional fees & contract services 18,820 2,171 107,120 128,111 22,792 10,129 32,921 161,032 Supplies 24,061 27,685 37,275 31,626 120,647 16,947 539 7,358 24,845 145,492 Food 3,977 32,222 16,801 47,851 100,851 100,851 Telephone 6,964 8,374 6,338 3,100 24,776 5,441 890 6,331 31,107 Utilities 4,888 52,773 12,090 9,884 79,635 521 15,952 1,170 17,643 97,278 Taxes and licenses 25 335 25 625 1,010 4,204 115 4,319 5,329 Occupancy 36,376 15,573 13,332 40,082 105,363 651 6,265 6,916 112,279 Travel 4,501 449 49,355 333 54,638 2,952 168 1,749 4,869 59,507 Meetings 3,116 1,093 5,780 1,224 11,213 6,063 58 6,121 17,334 Repairs. maintenance, and small equipment 55,612 63,401 17,368 14,292 150,673 10,753 20,743 1,343 32,839 183,512 Insurance 13,753 40,697 64,132 53,091 171,673 16,476 5,814 7,479 29,769 201,442 Use of contribut<d land 19,515 49,197 32,799 101,511 101,5/1 National support 31,000 31,000 31,000 Depreciation 2,060 103,327 19,148 2,459 126,993 5,681 19,490 432 25,603 152,596 Miscellaneous 153 2,682 3,771 2,424 9,030 32,052 609 32,660 41,690 Interest expense 1,837 11,985 13,822 13,822 Total Exp~nses 623,024 1,046,670 1,827,547 1,172,331 4,669,572 582,973 85,544 133,968 31,000 833,485 5,503,057 Excess (Deficit) of R""e"ues O,'er Expenses Before Allocation of Support Services 116,225 173,230 131,558 (214,311) 206,702 (419,395) (63,988) (121,748) (31,000) (636,131) (429,429) Allocation of Support Services 66,716 112,082 195,701 125,538 500,037 (419,395) (63,988) 14,346 (31,000) (500,037) Excess (DefICit) of Revenues Over Expenses 49,509 61,148 (64,143) 31,030 77,544 (l36,094) (136,094) $ (58,550) See auditors' report on supplementary inforltliltion 20 YOUNG WOMEN'S CHRISTIAN ASSOCIATION OF TAMPA BA~ INC. AND AFFILIATE SCHEDULE OF EXPENDITURES OF FEDERAL A WARDS YEAR ENDED SEPTEMBER 30,2007 Federal Agency Pass-through Entity CFDA Contract/Grant Federal Prof!ram/State Proiect Number Number{s} Expenditures U.S. Department of Agriculture Passed through Florida Department of Health Child and Adult Care Food Program 10.558 S-0437 $ 84,386 U.S. Department of Housing and Urban Development Direct Program Supportive Housing Program 14.235 FL29B94-062 176,730 Passed through City of St. Petersburg Community Development Block Grant 14.218 YWC-95-CDBG-29 * 300,000 Community Development Block Grant 14.218 B-05-MC-12-0017 47,772 Passed through City of Clearwater Community Development Block Grant 14.218 N/A 12,000 Total U.S. Department of Housing and Urban Development 620,888 U.S. Department of Justice Passed through the City of Clearwater Byrne Formula Grant Program 16.738 205-F1346-FL-DT 39,584 U.S. Department of Health and Human Services Passed through Pinel/as County Health Department Healthy Start 93.926 H49MC0054 36,218 U.S. Department of Homeland Security Passed through United Way of Pinel/as County Emergency Food and Shelter National Board Program 97.024 1694-007 20,000 Total Expenditures of Federal Awards $ 716.690 * This represents the balance of a loan from a previous year for which the federal government imposes continuing compliance requirements. 21 YOUNG WOMEN'S CHRISTIAN ASSOCIATION OF TAMPA BAY, INC. AND AFFILIATE NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL A WARDS YEAR ENDED SEPTEMBER 30,2007 BASIS OF PRESENTATION The accompanying schedule of expenditures of federal awards includes the federal grant activity of the Young Women's Christian Association of Tampa Bay, Inc. (YWCA) and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with accounting principles generally accepted in the United States of America as applicable to non-profit organizations and the requirements ofOMB Circular A-l33, Audits of States, Local Governments, and Non-Profit Organizations. CONTINGENCIES Expenditures incurred by the YWCA are subject to audit and possible disallowance by the grantor agency. Management believes that if audited, any adjustments for disallowed expenses would be immaterial in amount. SUPPORT REQUIRING MATCHING FUNDS The YWCA receives funding from various sources that require the YWCA to provide matching funds. During the year ended September 30, 2007, the YWCA provided matching funds equal to or in excess of the required match amounts. 22 pCtr 29750 U.S. Hwy. 19 North, Suite 101 Clearwater, Florida 33761 CERTIFIED PUBLIC ace 0 U n tan t 5 REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Board of Directors Young Woman's Christian Association of Tampa Bay, Inc. and Affiliate St. Petersburg, Florida We have audited the combined financial statements of Young Woman's Christian Association of Tampa Bay, Inc. and Affiliate (the Organization) as of and for the year ended September 30, 2007 and have issued our report thereon dated January 11, 2008. 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. Internal Control over Financial ReDortinf! In planning and performing our audit, we considered the Organization's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Organization's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Organization's internal control over financial reporting. Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses. However, as discussed below, we identified certain deficiencies in internal control over financial reporting that we consider to be significant deficiencies and material weaknesses. A control deficiency 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 misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the entity's financial statements that is more than inconsequential will not be prevented or detected by the entity's internal control. We consider the deficiencies described in the accompanying schedule of findings and questioned costs, and listed as items 2007-1 and 2007-2, to be significant deficiencies in internal control over financial reporting. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the entity's internal control. 23 REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS - CONTINUED Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in the internal control that might be significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses. We consider the deficiency described in the accompanying schedule of findings and questions costs, and listed as item 2007-3, to be a material weakness. Comvliance 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. We noted certain matters that we reported to management of the Organization in a separate letter dated January 11,2008. The Organization's response to the findings identified in our audit is described in the accompanying schedule of findings and questioned costs. We did not audit the Organization's response and, accordingly, we express no opinion on it. This report is intended for the information and use of the board of directors and management, others within the Organization, and federal awarding agencies and pass-through entities. However, this report is a matter of public record and its distribution is not limited. PDf\ ~~le~~a ~ January 11,2008 \ 24 .....................~......................~.......... u R~r 29750 U.S. Hwy.19 North, Suite 101 Clearwater, Florida 33761 CERTIFIED PUBLIC accountants REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULARA-133 To the Board of Directors Young Woman's Christian Association of Tampa Bay, Inc. and Affiliate St. Petersburg, Florida Comvliance We have audited the compliance of Young Woman's Christian Association of Tampa Bay, Inc. and Affiliate (the Organization) with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-I33 Compliance Supplement that are applicable to each of its major federal programs for the year ended September 30,2007. The Organization's major federal programs are identified in the summary of audit results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to its major federal programs is the responsibility of the Organization's management. Our responsibility is to express an opinion on the Organization's compliance with those requirements based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-B3, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-B3 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the Organization's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the Organization's compliance with those requirements. In our opinion, the Organization complied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the year ended September 30, 2007. Internal Control over Comvliance The Organization's management is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered the Organization's internal control over compliance with the requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing an opinion on compliance and to test and report on internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Organization's internal control over compliance. 25 REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-I33 - CONTINUED A control deficiency in an entity's 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 noncompliance with a type of compliance requirement of a federal program on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity's ability to administer a federal program such that there is more than a remote likelihood that a noncompliance with a type of compliance requirement of a federal program that is more than inconsequential will not be prevented or detected by the entity's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected by the entity's internal control. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph. of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. This report is intended for the information and use of the board of directors and management, others within the Organization, and federal awarding agencies and pass-through entities. However, this report is a matter of public record and its distribution is not limited. PD\\ ~~P<<9&~~ Clearwater, Florida January 11,2008 26 YOUNG WOMEN'S CHRISTIAN ASSOCIATION OF TAMPA BAY, INC. AND AFFILIATE SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED SEPTEMBER 30, 2007 A. Summary of Audit Results I. The auditor's report expresses an unqualified opinion on the combined financial statements. 2. One material weakness and two significant deficiencies were identified during the audit of the combined financial statements. 3. No instances of noncompliance material to the combined financial statements were disclosed during the audit. 4. No deficiencies relating to the audit of the major federal award programs are reported. 5. The auditor's report on compliance for the major federal award program expresses an unqualified opinion. 6. There are no audit findings that are required to be reported in accordance with Section 51O(a) of OMB Circular A-133. 7. The federal programs tested as major programs include the following: Federal Proeram U.S. Department of Housing and Urban Development- Supportive Housing Program CFDA No. 14.235 U.S. Department of Homeland Security- Emergency Food and Shelter National Board Program 97.024 8. The threshold used for distinguishing between Type A and Type B programs was $300,000. 9. The auditee did qualify as a low risk auditee pursuant to OMB Circular A-133. 27 YOUNG WOMEN'S CHRISTIAN ASSOCIATION OF TAMPA BAY, INC. AND AFFILIATE SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED SEPTEMBER 30, 2007 B. Findings - Financial Statement Audit Significant Deficiencies 2007-1 Documented Processes in Accounting for Agreement Condition: Lack of documentation of procedures as it relates to personnel changes in programs within the Juvenile Welfare Board (JWB) agreement. Criteria: Internal controls should be in place and documented that provide adequate oversight of procedures in order to ensure compliance with all of the provisions of agreements and contracts. Effect: Because of this lack of documentation of procedures as it relates to changes over personnel in programs within the JWB agreement, certain documentation was unavailable or missing in our review of these programs. Lack of formal procedures can result in failure to comply with a designated agreement or contract. Response from Management: Management acknowledges the lack of documentation of internal procedures over the administration of contracts. We would like to note that we have followed the procedures as outlined in the JWB manual as it relates to changes in key personnel and related cost reimbursements and we do appropriately notify JWB as to those changes. JWB has implemented new procedures that address these concerns more comprehensively. These procedures will make it easier for the YWCA to make changes and to document those changes. We have also put into place additional internal procedures for notifying the agency of changes. 2007-2 Vacation and Time-off Policy Condition: Vacations are not mandatory for key accounting personnel and tasks are not performed by another individual when someone is out. Criteria: Critical day-to-day administrative and accounting tasks should be performed by another individual when key employees are out. This individual should be adequately trained in the performance of these tasks. Effect: The lack of cross-training personnel in order to perform critical job functions when an employee is out may contribute to theft or accounting errors that may go unnoticed. Response from Management: Management acknowledges the issue of cross-training, we propose the immediate implementation of the following policy: 28 YOUNG WOMEN'S CHRISTIAN ASSOCIATION OF TAMPA BA~ INC. AND AFFILIATE SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED SEPTEMBER 30, 2007 B. Findings - Financial Statement Audit - Continued The structure of the accounting department is the following: a Director of Finance and one other full-time person (financial assistant). In order to ensure smooth functioning of the finance tasks the following must occur: both staff persons need to be trained and competent to perform all administrative day-to-day tasks of the department, including, but not limited to, reimbursement, billing, check entries, all other data entries, bank deposits, payroll support to Ceridian, etc. Therefore, if one person is away from the office for any period of time, any administrative, payroll related or accounting task can be performed. The agency will provide for whatever cross- training is necessary to ensure this occurs, both in terms of on-the-job training and off-site training. In addition, JWB has instructed this agency that, in the future, the Director of Finance Position must be filled by someone who has a degree in accounting. Material Weakness 2007-3 Approval of Pay Changes Condition: A lack of segregation of duties in processing payroll was noted. One employee prepared and processed payroll without proper authorization and segregation of duties. Criteria: Internal controls should be in place that segregate preparation of payroll, review of payroll reports, and authorization of pay increases. Effect: This lack of segregation and supervision resulted in the employee taking additional pay without proper authorization. Lack of segregation of duties and proper authorization can result in additional fraudulent actions as well as undetected errors. 29 YOUNG WOMEN'S CHRISTIAN ASSOCIATION OF TAMPA BAY, INC. AND AFFILIATE SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED SEPTEMBER 30, 2007 B. Findings - Financial Statement Audit - Continued Response from Management: The implementation of an outside payroll service assists in addressing the concern of the ability of changing payroll amounts and input errors. We have also implemented certain other procedures. Status changes for pay increases are submitted by the requesting supervisor to the Director of Human Resources who reviews and signs the approval. This document is then given to the Human Resource Assistant for input into the personnel data base. A copy of this status change is made and is given to Finance so that they can make changes to their payroll data. The finance assistant making. the changes in the payroll data base initials this document and returns it to Human Resources. The original status change is placed in a payroll back up file until the copy is received back from Finance. Once the copy is returned from Finance, the original is placed in the employees' personnel file and another copy is kept in a binder as proof of' submission to Finance. The payroll reports received from the outside payroll company will be reviewed independently by both the Director of Finance and the Director of Human Resources after each payroll period and compared to the previous payroll period to check for any changes. C. Findings and Questioned Costs - Major Federal A ward Program None D. Other Issues 1. No Corrective Action Plan is required because there were no findings required to be reported related to the federal program. 2. No summary schedule of prior audit findings is required because there were no prior audit findings related to the federal program. 30