BeochFleischmon January 28,2019 Audit Committee Arizona's Children - PDF document

'f : j : "t I ] 2O1 B Audit Results A PRESENTATION TO THE AUDIT COMMITEE AAR tzof{As BeochFleischmon VcHILDRL,N collaborate forword ASSOCIAI'ION

BeochFleischmon January 28,2019 Audit Committee Arizona's Children Association and Arizona's Children Foundation Tucson, Arizona We have audited the consolidated financial statements of Arizona's Children Association and Arizona's Children Foundation (AzCA) for the year ended September 30, 2078, and have issued our report thereon dated January 28, 20L9. Professional standards require that we provide you with information about our responsibilities under auditing standards generally accepted in the United States of America, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated October 8, 2018. Professional standards also require that we communicate to you the following information related to our audit. Sienificant Audit Findinss Quolitative Aspects of Accounting Proctices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by AzCA are described in Note 1 to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during the year. We noted no transactions entered into by the Company during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. 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 most sensitive estimates affecting the financial statements were: Management's estimate of the allowance for doubtful accounts receivable is based on prior experience and management's assessment of the collectability of existing specific accounts. Management provides depreciation on equipment and other capital assets using the straight- line method over the estimated lives of the assets. Management's estimate of accrued unemployment insurance is based on the Organization's claim experience and pending claims. Management's estimate of deferred revenue and payables to RBHAs is based on management's estimate of available encounter data, historical experience and other assumptions. BeochFleischmon PC o beochfleischmon.com 1985 E. River Rd., Suite 201, Tucson, AZ 85718-7176 . 520.521.4600 2201 E. Comelbock Rd., Suite 200, Phoenix , AZ 85016-3431 . 602.265.7011

Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The most sensitive disclosure affecting the financial statements related to endowments and contingencies. The financial statement disclosures are neutral, consistent and clear. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Co rre cte d a n d U n co rre cte d M i sstote m e nts Professional standards require us to accumulate all misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. The attached schedule summarizes uncorrected misstatements of the financial statements. Management has determined that their effects are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. ln addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to the financial statements taken as a whole. Disag ree ments with M a nage ment For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditors' report. We are pleased to report that no such disagreements arose during the course of our audit. M a n a ge m e nt Re pre se ntotio ns We have requested certain representations from management that are included in the management representation letter. Management Consultotions with Other lndependent Accountants ln some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. lf a consultation involves application of an accounting principle to the Company's financial statements or a determination of the type of auditors' 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. Other Audit Findings or lssues 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 Company's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.

Other Matters With respect to the supplementary information accompanying the financial statements, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. This information is intended solely for the use of the Audit Committee, Board of Directors and management of Arizona's Children Association and Arizona's Children Foundation and is not intended to be, and should not be, used by anyone other than these specified parties. Very truly yours, %r^17/,;,1-,-, PC

Audit Results . Scope of work Fina ncia I a ud it Compliance audit o Unmodified opinion on financial statements o Unmodified opinion on Single Audit o No material weaknesses in internal control identified o No compliance findings m ffi

Summary of Posted Adjustments Liabilities Net assets Revenue nse Assets E Descri 0n $ 9,949,409 5 48,977,526 5 50,272,74r 5 L5,500,356 $ 7,550,947 Pre-audit Balances 702,763 (377,850) 42g,o3t (652,582) Adjusting Journal Entries prepared by Client Reclassifying Journal Entries Prepared by Client 2,147,889 2,193,943 46,054 Adjusting Journal Entries prepared by Auditor r29,35r r,242,r79 2,7L5,619 2,806,375 Reclass ifyi ng Journal Entries (r,242, t:gl (2,7t5,6t91 (129,351) 37s) prepared by Auditor 702,763 S (331,796) 5 5 2,575,920 S 1,541,361 5 Total Adjustments s59 Net asset effect $ 49,680,289 s 5 L9,076, 276 59,092,308S 9 49,940,945 Audited Balances &*xrsil$ii ASSOCIATION BeochFleischmon

Summary of Unposted Adiustments Assets Liabilities Net assets Revenue ExPense Description S 29,7ro S S 29,710 2OI7 turnaround effect S s To reverse accrual of s (43,300) (43,300) audit fees To capitalize vans that 45,513 45,513 were expensed To record depreciation (36,410) 9,103 (45,513) expense on vans To record RBHA (43,100) 43,!O0 payable (66,900) 66,900 To correct double booked billings 31,000 Reclass between (31,000) TRNA & Unrestricted 23,800 (4,487) (2oo) (28,087) 28,287 Net asset effect s (2oo) s 2Oo 5 23,800 S (4,4871 Totals s The individual adjustments passed and the aggregate of adjustments passed have been determined to be qualitatively immaterial. AARIZONAS WcHTLDREN ASSOCIATION BeochFleischmqn

Financial Highlights -Consolidated Statement of Financial Position zins znrIg 2I|IE 'Ifl'/ 512,863,000 513,900,000 current assets $L4,24z,ooo st'J,,773,OO0 937,000 666,000 S584,ooo s2,663,000 Property and equipment 2,613,000 2,2Ls,OOO 2,156,000 2,403,000 Other noncurrent assets s1211p00 s19p76J00 s14366-000 s15.06a000 Total assets s6,og9,0oo Current liabilities Ss,tz3,ooo S5,525,000 S4,825,000 s93.000 3.003.000 755.000 940.000 Long-term liabilities 5,4L8,000 9,092,000 5,928,000 6,465,000 Net assets: U n restricted: g,324,ooo 7,869,000 5,215,000 Undesignated and board 6,096,000 designated Net invested in propertY 448,000 2,630,000 805,000 389,000 and equipment 5,go1,0oo 9,713,000 s8,317,000 S7,845,000 469,000 261,000 381,000 472,O00 Tem porarily restricted 1,570,000 1,666,000 1,655,000 L,661.000 Perma nently restricted 9,984,000 8,938,000 10,846,000 LO,244,OOO Total net assets sx4ii6-000 s12.3rl000 sfsi62-000 s19076-000 Total liabilities and net assets s6.600.000 s!J17J00 58J38-000 s2J1L000 Working Capital il_ fl, 56 68 Days in working capital rXr ARrzoNAs WCUTLDREN BeochFleischmon ASSOCIATION