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

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A PRESENTATION TO THE AUDIT COMMITEE

2O1 B Audit Results AAR tzof{As

VcHILDRL,N

BeochFleischmon

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

• ur 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

• n 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'

• pinion 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

• Unmodified opinion on financial

statements

• Unmodified opinion on Single Audit
• No material weaknesses in internal

control identified

• No compliance findings

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Summary of Posted

Adjustments

Descri 0n Pre-audit Balances Adjusting Journal Entries prepared by Client Reclassifying Journal Entries Prepared by Client Adjusting Journal Entries prepared by Auditor Assets

Liabilities Net assets Revenue

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5 L5,500,356 $ 7,550,947

42g,o3t (652,582)

$ 9,949,409 5 48,977,526 5 50,272,74r

702,763 (377,850)

2,147,889 2,193,943

46,054

r,242,r79

2,7L5,619 (2,7t5,6t91 2,806,375 37s)

r29,35r

(129,351)

(r,242,t:gl

Reclass ifyi ng Journal Entries

prepared by Auditor Total Adjustments Net asset effect Audited Balances

5 2,575,920 S 1,541,361 5 5

702,763 S (331,796)

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5 L9,076,276 59,092,308S 9

$ 49,680,289 s

49,940,945

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Summary of Unposted Adiustments

Description

Assets Liabilities

Net assets Revenue ExPense

2OI7 turnaround effect S

To reverse accrual of

audit fees

To capitalize vans that

were expensed

To record depreciation expense on vans To record RBHA payable To correct double

booked billings

Reclass between TRNA & Unrestricted s

S 29,7ro S

S 29,710

(43,300) 45,513 (36,410) 9,103 (43,100)

(66,900) 66,900

31,000 (31,000) 45,513 (45,513)

s (43,300)

43,!O0 (2oo) (28,087) 28,287

23,800

(4,487) Net asset effect Totals s

s (2oo) s

2Oo 5 23,800 S

(4,4871 The individual adjustments passed and the aggregate of adjustments passed have been determined to be qualitatively immaterial.

AARIZONAS

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ASSOCIATION BeochFleischmqn

Financial Highlights -Consolidated

Statement of Financial Position

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current assets Property and equipment Other noncurrent assets Total assets Current liabilities Long-term liabilities

Net assets:

U n restricted:

Undesignated and board designated Net invested in propertY and equipment

Tem porarily restricted Perma nently restricted

Total net assets Total liabilities and net

assets

Working Capital

Days in working capital

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ASSOCIATION

st'J,,773,OO0

937,000 2,156,000 s14366-000 Ss,tz3,ooo 755.000 5,928,000 805,000 5,go1,0oo 381,000 1,655,000 8,938,000 $L4,24z,ooo 666,000 2,403,000

s1211p00

S5,525,000 940.000 6,465,000 389,000 9,713,000 472,O00 L,661.000 10,846,000 512,863,000 S584,ooo 2,2Ls,OOO

s15.06a000

S4,825,000 s93.000 5,4L8,000 448,000 s8,317,000 261,000 1,666,000

LO,244,OOO

513,900,000 s2,663,000 2,613,000

s19p76J00

s6,og9,0oo 3.003.000 9,092,000 2,630,000 S7,845,000 469,000 1,570,000 9,984,000 6,096,000 g,324,ooo 7,869,000 5,215,000

sx4ii6-000 s12.3rl000 sfsi62-000 s19076-000

s6.600.000 s!J17J00 58J38-000 s2J1L000 BeochFleischmon

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Financial Hiehliehts -Consolidated

Statement of Activities

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Revenues and support Operating expenses

Other income (expense) lncrease (decrease) in net

assets

Expenses 20tB

S48,508,ooo S5o,903,ooo S49,5oo,ooo 47,058,000 S51,766,000 S49,94o,ooo

4s8,000 261,000 L80.000

539,957,000 42,834,0OO 1,445.000 s11132-000

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sff0s-000 1ss02Jo0t Is260p0!)

9.4%

8.O% LO.5% LA.8%

I Program Management and general I Fundraising

2017 2016 2015

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ASSOCIATION

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Statement of Cash Flow Summary

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20L6 lncrease (decrease) in net assets S (L,432,000) S 1,908,000 2017 20L8

5 {5o2,ooo) s

(260,000)

Net cash provided by (used in): Operating activities lnvesting activities Financing activities Net increase (decrease) in cash Beginning cash

Ending cash

S 6,255,000 S 6,002,000 S 3,993,000 S 6,

I,216,000

t,t67,000

(109,000) 1,259,000 (r,672,000], L60,000 (L,671,000) (245,000) (93,ooo) 3,074,000 (216,000) (122,00o) 2,274,000 3,99L,000 (253,000) 6,255,000 (2,oo9,ooo) 6 002,000 2,736,000 3,993,000 729,000

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BeochFleischmon

Recent Pronouncements

ASU 201,6-14 Presentation of FinancialStatements for Not-

for-Profit Entities. Changes include:

. Reduces net asset classes from three to two . Statement of functional expenses required for all not-

for-profits (tVo i m pa ct)

• \ew required disclosures of qualitative and quantitative

information a bout how the not-for-profit ma nages

liq u id ity

. Effective for AzC A's 9l30ll9 financial statement

• a

ASU 201"6-02 Leases. Changes include:

. Leases with terms greater tha n one yea r a re recorded

as a n asset (right to use) a nd lia bility (lease paya ble)

. Effective for AzCA's 9/30/21 financial statement

ASU 2014-09 Revenue from Contracts with Customers and ASU 2018-08 Accounting for Grants and Contributions

. Could impact revenue recognition of grant contracts

with milestones (ASU 201'4-09)

• fnhanced guidance on grants and contracts (ASU 2018-

08)

. Effective for AzC A's 9130120 financial statement

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ASSOCIATION BeochFleischmon