Collaborative For Children Financial Statements and Single Audit Reports for the year ended December 31, 2009
B lazek & Vetterling CERTIFIED PUBLIC ACCOUNTANTS
Independent Auditors’ Report
To the Board of Directors of Collaborative For Children: We have audited the accompanying statements of financial position of Collaborative For Children as of December 31, 2009 and 2008 and the related statements of activities, of functional expenses, and of cash flows for the years then ended. These financial statements are the responsibility of the management of Collaborative For Children. 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 our audits 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 significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Collaborative For Children as of December 31, 2009 and 2008 and the changes in its net assets and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we also have issued a report dated July 27, 2010 on our consideration of Collaborative For Children’s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is 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. Our audit was performed for the purpose of forming an opinion on the basic financial statements of Collaborative For Children taken as a whole. The accompanying schedule of expenditures of federal awards for the year ended December 31, 2009, is presented for purposes of additional analysis as required by U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the basic financial statements. The information in this schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
July 27, 2010
2900 Weslayan, Suite 200
Houston, Texas 77027-5132
(713) 439-5757
Fax (713) 439-5758
Collaborative For Children Statements of Financial Position as of December 31, 2009 and 2008
2009
2008
Cash and cash equivalents (Notes 2 and 3) Certificate of deposit (Note 6) U.S. Treasury securities (Note 3) Receivables: Government agencies Pledges (Note 4) United Way service contracts Other Prepaid expenses and other assets Property, net (Note 5)
$ 2,279,822 206,768
$ 1,687,230
218,392 40,000 21,428 141 12,043 75,611
97,707 1,314,028 57,320 96,972 96,426 110,565
TOTAL ASSETS
$ 2,854,205
$ 3,666,240
$
$
ASSETS
205,992
LIABILITIES AND NET ASSETS Liabilities: Accounts payable and accrued expenses Line of credit payable (Note 6) Deferred revenue Total liabilities Net assets: Unrestricted Temporarily restricted (Note 7) Total net assets TOTAL LIABILITIES AND NET ASSETS
See accompanying notes to financial statements.
–2–
368,044 100,000 502,574
848,879 4,630
970,618
853,509
249,353 1,634,234
319,412 2,493,319
1,883,587
2,812,731
$ 2,854,205
$ 3,666,240
Collaborative For Children Statement of Activities for the year ended December 31, 2009
UNRESTRICTED
TEMPORARILY RESTRICTED
TOTAL
REVENUE: Contributions Government grants (Note 8) United Way service contracts Special events Cost of direct donor benefits Program service fees Investment return Other income
$
Total revenue Net assets released from restrictions: Expenditure for program purposes Expiration of time restrictions Total
221,926 1,257,669 825,640 186,190 (38,284) 74,853 1,648 1,008
$ 1,677,878
2,530,650
1,677,878
2,186,963 350,000
(2,186,963) (350,000)
5,067,613
(859,085)
$ 1,899,804 1,257,669 825,640 186,190 (38,284) 74,853 1,648 1,008 4,208,528
4,208,528
EXPENSES: Program services: Provider Engagement Community Engagement Family Engagement Total program services Management and general Fundraising Total expenses
2,565,797 812,905 626,107
2,565,797 812,905 626,107
4,004,809
4,004,809
861,756 271,107
861,756 271,107
5,137,672
5,137,672
CHANGES IN NET ASSETS
(70,059)
Net assets, beginning of year
319,412
2,493,319
2,812,731
249,353
$ 1,634,234
$ 1,883,587
Net assets, end of year
$
See accompanying notes to financial statements.
–3–
(859,085)
(929,144)
Collaborative For Children Statement of Activities for the year ended December 31, 2008
UNRESTRICTED
TEMPORARILY RESTRICTED
TOTAL
REVENUE: Contributions Government grants (Note 8) United Way service contracts Special events Cost of direct donor benefits Program service fees Investment return Other income
$
Total revenue Net assets released from restrictions: Expenditure for program purposes Expiration of time restrictions Total
476,104 991,154 748,839 186,652 (20,583) 208,193 19,264 2,852
$ 3,549,005
2,612,475
3,549,005
1,863,361 275,163
(1,863,361) (275,163)
4,750,999
1,410,481
$ 4,025,109 991,154 748,839 186,652 (20,583) 208,193 19,264 2,852 6,161,480
6,161,480
EXPENSES: Program services: Provider Engagement Community Engagement Family Engagement Total program services Management and general Fundraising Total expenses CHANGES IN NET ASSETS Net assets, beginning of year Net assets, end of year
$
See accompanying notes to financial statements.
–4–
2,826,326 385,980 676,271
2,826,326 385,980 676,271
3,888,577
3,888,577
788,374 239,574
788,374 239,574
4,916,525
4,916,525
(165,526)
1,410,481
1,244,955
484,938
1,082,838
1,567,776
319,412
$ 2,493,319
$ 2,812,731
Collaborative For Children Statement of Functional Expenses for the year ended December 31, 2009
EXPENSES
PROVIDER ENGAGEMENT
COMMUNITY ENGAGEMENT
Salaries, related taxes and benefits Equipment and incentive grants Professional and contract services Occupancy College tuition, continuing education, and awards to caregivers Travel Computer technology expense Conferences, meetings, and workshops Advertising Staff development Office supplies Depreciation Printing Postage and shipping Telephone Internet service fees Telephone lease interest expense Equipment rental and maintenance Other
$ 1,026,569 $ 850,195 160,638 115,794 151,195 111,713 20,911 26,591
Total expenses
$ 2,565,797 $
27,631 18,298 13,090 8,907 5,341 8,550 4,202 3,208 2,865 10,099
See accompanying notes to financial statements.
–5–
FAMILY ENGAGEMENT
240,806 $ 501,353 33,600 5,350 2,979 75 8,150 4,600 2,778 4,068 3,088 164 1,320 1,213 927 732 1,702 812,905 $
MANAGEMENT AND GENERAL
474,394 $ 231 6,615 67,411 3,513 12,452 16,591 4,605 5,370 6,299 6,922 4,934 7,241 1,828 2,311 1,806 1,479 2,105 626,107 $
656,126 $ 22,324 88,339 167 7,794 9,455 50 36,319 2,944 9,137 10,694 4,115 1,339 1,796 3,536 2,478 2,033 3,110 861,756 $
FUNDRAISING
TOTAL EXPENSES
196,812 $ 2,594,707 850,426 4,354 695,284 27,078 332,222 154,875 292 137,601 5,833 55,769 23,978 55,299 74 44,543 441 40,986 2,771 39,283 2,917 37,691 2,568 23,612 1,192 15,277 408 13,902 992 12,254 773 9,192 624 7,733 17,016 271,107 $ 5,137,672
Collaborative For Children Statement of Functional Expenses for the year ended December 31, 2008
EXPENSES
PROVIDER ENGAGEMENT
COMMUNITY ENGAGEMENT
Salaries, related taxes and benefits Equipment and incentive grants Professional and contract services Occupancy College tuition, continuing education, and awards to caregivers Travel Computer technology expense Conferences, meetings, and workshops Advertising Staff development Office supplies Depreciation Printing Postage and shipping Telephone Internet service fees Telephone lease interest expense Equipment rental and maintenance Other
$
825,406 $ 1,540,981 113,919 110,870 48,320 49,162 10,168 42,566
Total expenses
$ 2,826,326 $
7,800 19,263 13,852 7,015 6,138 6,946 2,841 4,523 4,683 11,873
See accompanying notes to financial statements.
–6–
FAMILY ENGAGEMENT
MANAGEMENT AND GENERAL
254,061 $ 106 67,858 31,384 615 4,949 2,367 1,805 1,633 119 3,835 5,035 2,163 2,586 1,268 832 1,330 1,181 2,853
468,381 $ 1,221 79,657 69,425 125 5,682 7,590 5,648 425 653 4,987 7,273 6,084 7,197 2,152 1,668 2,540 2,598 2,965
557,998 $
385,980 $
676,271 $
788,374 $
14,151 71,420 116 11,322 7,513 3,204 67,986 13,925 7,257 12,221 3,818 1,102 2,705 1,948 3,667 3,029 4,992
FUNDRAISING
TOTAL EXPENSES
138,586 $ 2,244,432 1,542,308 33,857 309,442 17,666 300,765 49,176 806 71,921 6,196 33,834 28,371 81,594 2,265 72,309 357 22,854 2,351 37,693 2,130 40,511 515 19,595 2,796 19,819 412 13,483 440 7,729 726 12,786 763 12,254 1,337 24,020 239,574 $ 4,916,525
Collaborative For Children Statements of Cash Flows for the years ended December 31, 2009 and 2008
2009
2008
CASH FLOWS FROM OPERATING ACTIVITIES: Changes in net assets Adjustments to reconcile changes in net assets to net cash provided by operating activities: Unrealized gain on U.S. Treasury securities Depreciation Changes in operating assets and liabilities: Receivables Prepaid expenses and other assets Accounts payable and accrued expenses Space contraction liability Deferred revenue Net cash provided by operating activities
$
(929,144)
$ 1,244,955
(8) 37,691
(5,201) 40,511
1,286,066 84,383 (480,835) 497,944
(746,983) (79,429) 631,216 (149,337) (3,245)
496,097
932,487
206,000
412,000 (409,483)
CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from maturities of U.S. Treasury securities Purchases of U.S. Treasury securities Purchase of certificate of deposit Purchases of property Net cash used by investing activities
(206,768) (2,737)
(9,646)
(3,505)
(7,129)
CASH FLOWS FROM FINANCING ACTIVITIES: Advances (payments) on line of credit
100,000
(39,855)
Net cash provided (used) by financing activities
100,000
(39,855)
NET CHANGE IN CASH AND CASH EQUIVALENTS
592,592
885,503
1,687,230
801,727
$ 2,279,822
$ 1,687,230
Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year
See accompanying notes to financial statements.
–7–
Collaborative For Children Notes to Financial Statements for the years ended December 31, 2009 and 2008
NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization – Collaborative For Children (CFC) is located in Houston, Texas and was formed in 2004 through a merger of the Greater Houston Collaborative For Children (GHCC) and Initiatives for Children, Inc. (IFC), two nonprofit organizations with more than 20 years of combined experience in serving the community. CFC works with families and those that deliver educational and other support services to children to positively impact the care and education of young children. CFC works to fulfill its mission of building a strong educational foundation for young children to succeed in school and life by focusing its programs and services on the following goal areas: • Provider Engagement programs support and develop child care and early education professionals through oneon-one consulting, training and mentoring for teachers and directors in early care and education centers, scholarships for professional development conferences, and wage enhancement programs to reward teachers for obtaining higher educational credentials. • Community Engagement programs provide partnerships to promote healthy child development and strengthen policy and regulations impacting young children. Early childhood education is promoted as a high priority public policy issue in our region with adequate support necessary to deliver quality programs for parents, children, and teachers. • Family Engagement programs provide families with information, resources and support to launch their children toward academic and life success by providing parent education, printed parenting tips, resource materials, and referrals for early education, after-school programs and children with special needs. Federal income tax status – CFC is exempt from federal income taxes under §501(c)(3) of the Internal Revenue Code and is classified as a public charity under §509(a)(2). Net asset classification – Contributions and the related net assets are classified based on the existence or absence of donor-imposed restrictions, as follows: • •
Unrestricted net assets include those net assets whose use is not restricted by donor-imposed stipulations even though their use may be limited in other respects such as by contract or board designation. Temporarily restricted net assets include contributions restricted by the donor for specific purposes or time periods. When a purpose restriction is accomplished or a time restriction ends temporarily restricted net assets are released to unrestricted net assets.
Cash equivalents include highly liquid financial instruments with original maturities of three months or less. U.S. Treasury securities are recorded at fair value. Investment return includes interest and realized and unrealized gains and losses. Investment return is reported in the statement of activities as an increase in unrestricted net assets unless the use of the income is limited by donorimposed restrictions. Investment return whose use is restricted by the donor is reported as an increase in temporarily restricted net assets. Pledges receivable that are expected to be collected within one year are recorded at net realizable value. Amounts expected to be collected in future years are discounted to the present value of their estimated future cash flows. Discounts are computed using interest rates applicable to the years in which the promises are received. Amortization of discounts is included in contribution revenue. Property is recorded at cost if purchased or at fair value at the date of gift if donated. Depreciation is calculated using the straight-line method over estimated useful lives of 5 years. Additions and improvements that have a cost of more than $500 are capitalized.
–8–
Contributions are recorded as revenue at fair value when an unconditional commitment is received from the donor. Contributions received with donor stipulations that limit their use are recorded as restricted support. Conditional contributions are recognized in the same manner when the conditions are substantially met. In-kind contributions – Donated materials and services are recorded at fair value as contributions when an unconditional commitment is received from the donor. The related expense is recorded as the item is used. Contributions of services are recognized when services received (a) create or enhance nonfinancial assets or (b) require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation. Government grants, service contracts, and program service fees are recognized when the related services are provided. Amounts billed or received but unearned are included in the statement of financial position as deferred revenue. Equipment and incentive grants are awarded to child care providers for equipment and facilities renovation and expansion. Grants awarded are recorded as expense at their fair value when a commitment is made to a recipient. Estimates – Management must make estimates and assumptions to prepare financial statements in accordance with generally accepted accounting principles. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, the amounts reported as revenue and expenses, and the allocation of expenses among various functions. Actual results could vary from the estimates that were used. Reclassifications – Certain reclassifications have been made to previously reported amounts to conform with the current year presentation.
NOTE 2 – CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of the following: 2009
2008
Demand deposits Money market mutual funds
$
2,166,215 113,607
$
6,944 1,680,286
Total cash and cash equivalents
$
2,279,822
$
1,687,230
CFC maintains cash for daily operations at several banking institutions. Bank deposits exceed the federally insured limit per depositor per institution. CFC has entered into a collateral agreement with one of its depository institutions to collateralize deposits in excess of the federally-insured limit with U. S. government debt securities with a fair value of $2,103,940 at December 31, 2009.
NOTE 3 – FAIR VALUE MEASUREMENTS Generally accepted accounting principles require that certain assets and liabilities be reported at fair value and establish a hierarchy that prioritizes inputs used to measure fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three levels of the fair value hierarchy are as follows: • • •
Level 1 – Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the reporting date. Level 2 – Inputs are other than quoted prices included in Level 1, which are either directly observable or can be derived from or corroborated by observable market data at the reporting date. Level 3 – Inputs are not observable and are based on the reporting entity’s assumptions about the inputs market participants would use in pricing the asset or liability.
–9–
Assets measured at fair value at December 31, 2009 are as follows: LEVEL 1
Money market mutual funds
$
113,607
Total assets measured at fair value
$
113,607
LEVEL 2
$
LEVEL 3
0
$
TOTAL
0
$
113,607
$
113,607
Assets measured at fair value at December 31, 2008 are as follows: LEVEL 1
Money market mutual funds U.S. Treasury securities
$
Total assets measured at fair value
$
LEVEL 2
LEVEL 3
TOTAL
1,680,286 1,680,286
$
205,992
$
205,992
$
0
$
1,680,286 205,992
$
1,886,278
Valuation methods used for assets measured at fair value are as follows: • •
Money market mutual funds are valued at the reported net asset value. U.S. Treasury securities are valued using prices obtained from independent quotation bureaus that use computerized valuation formulas to calculate fair values.
These valuation methods may produce a fair value that may not be indicative of the net realizable value or reflective of future fair values. Furthermore, while CFC believes its valuation methods are appropriate, the use of different methods or assumptions could result in a different fair value measurement at the reporting date.
NOTE 4 – PLEDGES RECEIVABLE Pledges receivable are as follows: 2009
2008
Pledges receivable Discount to present value at 3%
$
40,000
$
1,315,750 (1,722)
Pledges receivable, net
$
40,000
$
1,314,028
At December 31, 2009, all pledges are expected to be collected within one year. Conditional pledge – During 2009, CFC received a $3,487,034 grant from the Hogg Foundation payable over three years. As of December 31, 2009, CFC has received and recognized as contributions $1,178,978 of the grant. Further payments are conditional upon satisfactory compliance with all program requirements. Additional amounts will be recognized as contributions when the conditions are substantially met.
NOTE 5 – PROPERTY Property consists of the following: 2009 Furniture and equipment Leasehold improvements
$
Total property at cost Accumulated depreciation
189,184 27,414
2008 $
216,598 (140,987)
Property, net
$
– 10 –
75,611
187,390 25,710 213,100 (102,535)
$
110,565
NOTE 6 – LINE OF CREDIT CFC has a $200,000 revolving line of credit with a bank that is collateralized by a certificate of deposit with a face value of $206,000. The line expires in May 2011. Draws on the line bear interest at 2% above the bank’s prime lending rate, which was 3.25% at December 31, 2009. There is a balance of $100,000 outstanding on the line of credit at December 31, 2009.
NOTE 7 – TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets are available for the following purposes: 2009 Mental health Neighborhood Initiative Hurricane Ike Childcare Recovery Project Early Childhood Education Corporate H. A. N. D. S. projects Community Engagement Baby Basics Use in future periods Parents as Partners in Preschool
$
791,690 416,128 206,880 74,000 71,833 38,703 35,000
Total temporarily restricted net assets
$ 1,634,234
2008 $ 1,270,242 464,345 93,085 250,000 57,462 350,000 8,185 $ 2,493,319
NOTE 8 – GOVERNMENT GRANTS CFC is a party to contracts with federal, state, and local governmental agencies. Should these contracts not be renewed, a replacement for this source of support may not be forthcoming and related expenses would not be incurred. Sources of government grants are as follows: 2009 U. S. Department of Health and Human Services: Child Care Mandatory and Matching Funds Child Care Quality Improvement U. S. Department of Labor: National Emergency Grant U. S. Department of Education: Quality Assessment System Corporation for National and Community Service Other
$
658,871 255,541
2008 $
761,495
165,854 120,632 9,407 99,620
177,403
Total
$ 1,257,669
$
991,154
CFC receives grants from federal and state funding sources that require fulfillment of certain conditions as set forth in the grant contracts and are subject to review and audit by the awarding agencies. Such reviews and audits could result in the discovery of unallowable activities and unallowable costs. Consequently, any of the funding sources may, at their discretion, request reimbursement for expenses or return of funds as a result of non-compliance by CFC with the terms of the contracts. Management believes such disallowances, if any, would not be material to CFC’s financial position or changes in net assets.
– 11 –
NOTE 9 – EMPLOYEE BENEFIT PLAN Substantially all employees are eligible to participate in a §403(b) tax deferred annuity plan. Employees may elect to participate upon employment by contributing up to 15% of their salary. After three months of employment, the employee is eligible to receive an employer matching contribution, which is determined annually as a percentage of the employee’s base salary. CFC’s contribution to this plan totaled approximately $35,000 and $29,000 during 2009 and 2008, respectively.
NOTE 10 – COMMITMENTS CFC leases office space and office equipment under noncancelable operating leases. payments are payable as follows:
Future minimum lease
2010 2011 2012
$
363,007 262,361 217,337
Total
$
842,705
Lease expense for office space and equipment was approximately $306,000 in 2009 and $263,000 in 2008.
NOTE 11 – SUBSEQUENT EVENTS Management has evaluated subsequent events through July 27, 2010, which is the date that the financial statements were available for issuance. As a result of this evaluation, no events were identified that are required to be disclosed or would have a material impact on reported net assets or changes in net assets.
– 12 –
Collaborative For Children Schedule of Expenditures of Federal Awards for the year ended December 31, 2009
FEDERAL GRANTOR Pass-through Grantor Program Title & Period
CFDA Number
Pass-through Contract Number
Award Amount
Revenue
Expenditures
U. S. DEPARTMENT OF HEALTH AND HUMAN SERVICES Passed through Houston-Galveston Area Council: Child Care Mandatory and Matching Funds of the Child Care and Development Fund #1 11/01/08 – 10/31/09 93.596* 301-09 $778,433 $ 656,369 #2 11/01/09 – 09/30/10 93.596* 301-09 $24,555 2,502 ARRA Child Care Quality Improvement #3 11/01/09 – 09/30/10 93.713* 301-10 $5,365,436 255,541 Total U. S. Department of Health and Human Services
$
656,369 2,502 255,541
914,412
914,412
151,655 14,199
151,655 14,199
165,854
165,854
$ 1,080,266
$ 1,080,266
U. S. DEPARTMENT OF LABOR Passed through Houston-Galveston Area Council: National Emergency Grant #4 01/06/09 – 10/31/09 17.260 #5 11/01/09 – 09/30/10 17.260
301-09 301-10
$258,503 $31,160
Total U. S. Department of Labor TOTAL FEDERAL AWARDS
*Denotes a major program
See accompanying note to schedule of expenditures of federal awards.
– 13 –
Collaborative For Children Note to Schedule of Expenditures of Federal Awards for the year ended December 31, 2009
SIGNIFICANT ACCOUNTING POLICIES Basis of presentation – The schedule of expenditures of federal awards includes the government grant activity of CFC and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Allowable expenses are determined according to the standards of OMB circular A-122, Cost Principles for NonProfit Organizations and are expensed in the statement of activities in conformity with generally accepted accounting principles.
– 14 –
B lazek & Vetterling CERTIFIED PUBLIC ACCOUNTANTS
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 of Collaborative For Children: We have audited the financial statements of Collaborative For Children (CFC) for the year ended December 31, 2009, and have issued our report thereon dated July 27, 2010. 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 Reporting – In planning and performing our audit, we considered CFC’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 CFC’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of CFC’s internal control over financial reporting. 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, such that there is a reasonable possibility that a material misstatement of the financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of 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 internal control that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. Compliance and Other Matters – As part of obtaining reasonable assurance about whether CFC’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. This report is intended solely for the information and use of management, the board of directors, others within the entity, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
July 27, 2010
2900 Weslayan, Suite 200
Houston, Texas 77027-5132
– 15 –
(713) 439-5757
Fax (713) 439-5758
B lazek & Vetterling CERTIFIED PUBLIC ACCOUNTANTS
Report on Compliance with Requirements Applicable to Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133
To the Board of Directors of Collaborative For Children: Compliance – We have audited the compliance of Collaborative For Children (CFC) with the types of compliance requirements described in the U. S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of its major federal programs for the year ended December 31, 2009. CFC’s major federal program is identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of CFC’s management. Our responsibility is to express an opinion on CFC’s compliance 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-133, Audits of States, Local Governments, and NonProfit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about CFC’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 of CFC’s compliance with those requirements. In our opinion, CFC 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 December 31, 2009. Internal Control Over Compliance – The management of CFC 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 CFC’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 our opinion on compliance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of CFC’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal and state program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. Our consideration of internal control over compliance was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies, or material weaknesses, and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above.
2900 Weslayan, Suite 200
Houston, Texas 77027-5132
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(713) 439-5757
Fax (713) 439-5758
This report is intended solely for the information and use of management, the board of directors, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
July 27, 2010
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Collaborative For Children Schedule of Findings and Questioned Costs for the year ended December 31, 2009
Section I – Summary of Auditor’s Results Financial Statements Type of auditor’s report issued:
unqualified
qualified
Internal control over financial reporting: • Material weakness(es) identified? • Significant deficiencies identified that are not considered to be material weakness(es)? Noncompliance material to the financial statements noted?
adverse
disclaimer
yes
no
yes
none reported
yes
no
yes
no
yes
none reported
adverse
disclaimer
yes
no
Federal Awards Internal control over major programs: • Material weakness(es) identified? • Significant deficiencies identified that are not considered to be material weakness(es)? Type of auditor’s report issued on compliance for major programs:
unqualified
qualified
Any audit findings disclosed that are required to be reported in accordance with §510(a) of Circular A-133? Identification of major programs: CFDA Number(s)
Name of Federal Program or Cluster
93.596 93.713
Child Care Mandatory and Matching Funds of the Child Care and Development Fund ARRA Child Care Quality Improvement
Dollar threshold used to distinguish between Type A and Type B programs: Auditee qualified as a low-risk auditee?
$300,000 yes
no
Section II – Financial Statement Findings There were no findings related to the financial statements which are required to be reported in accordance with Government Auditing Standards.
Section III – Federal Award Findings and Questioned Costs There were no findings for federal awards required to be reported in accordance with section .510(a) of Circular A133.
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