SUNRISE CHILDREN’S FOUNDATION
FINANCIAL STATEMENTS
JUNE 30, 2012
Ellsworth Gilman & Stout, LLC
7881 W. Charleston Blvd., Suite 155
Las Vegas, NV 89117
Tel: (702) 871-2727
Fax: (702) 876-0040
SUNRISE CHILDREN’S FOUNDATION
FINANCIAL STATEMENTS
JUNE 30, 2012
Table of Contents
Independent Auditor’s Report ....................................................................................................................... 1
Financial Statements:
Statement of Financial Position.................................................................................................................... 2
Statement of Activities .................................................................................................................................3
Statement of Functional Expenses ...............................................................................................................4
Statement of Cash Flows ..............................................................................................................................5
Notes to the Financial Statements ...............................................................................................................6-10
Compliance Section:
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 .................................................................................................... 11
Independent Auditors’ Report on Compliance with Requirements That Could Have a
Direct and Material Effect on Each Major Program and on Internal Control over Compliance
Accordance with OMB Circular A-133 ............................................................................................ 12-13
Schedule of Expenditures of Federal Awards ............................................................................................ 14
Schedule of Findings and Questioned Costs ......................................................................................... 15-16
Schedule of Prior Findings and Questioned Costs ................................................................................ 17-21
SUNRISE CHILDREN'S FOUNDATION
STATEMENT OF FINANCIAL POSITION
JUNE 30, 2012
ASSETS
Current Assets:
Cash
Grants receivable
Inventory
Prepaid expenses
Total current assets
$
Property and Equipment, net
998,367
Other Assets:
Refundable deposits
Total Assets
694,989
513,533
52,650
78,617
1,339,789
42,423
$
2,380,579
$
35,625
413,137
15,888
464,650
LIABILITIES AND NET ASSETS
Current Liabilities:
Accounts payable
Accrued expenses
Current portion of lease discount
Total current liabilities
Long-Term Liabilities:
Lease discount, net of current portion
28,681
493,331
Net Assets:
Unrestricted
Temporarily restricted
Total Liabilities and Net Assets
945,388
941,860
1,887,248
$
2,380,579
See accompanying notes to the financial statements.
2
SUNRISE CHILDREN'S FOUNDATION
STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2012
Unrestricted Net Assets
Unrestricted revenue and other support:
Grant income
Donations
In-kind donations
Interest income
Other income
Net assets released from donor restrictions
$
5,960,279
31,606
136,257
644
12,112
425,888
6,566,786
Expenses:
Program
Management and general
5,979,052
301,265
6,280,317
Other decreases:
Loss on disposal of property and equipment
30,820
Increase in unrestricted net assets
255,649
Temporarily Restricted Net Assets
Contributions
Net assets released from donor restrictions
500
(425,888)
Decrease in temporarily restricted net assets
(425,388)
Decrease in Net Assets
(169,739)
Net Assets, Beginning of Year
Net Assets, End of Year
2,056,987
$
1,887,248
See accompanying notes to the financial statements.
3
SUNRISE CHILDREN'S FOUNDATION
STATEMENT OF FUNCTIONAL EXPENSES
YEAR ENDED JUNE 30, 2012
Program
Advertising
Automobile expenses
Bank charges
Depreciation
Dues and subscriptions
Education expenses
Fees and certifications
Insurance
Meals and entertainment
Miscellaneous
Occupancy
Office expenses
Professional fees
Program expenses
Repair and maintenance
Salaries, taxes and related expenses
Training
Travel
Utilities
Management
and General
Total
$
2,000
47,089
1,910
315,326
5,342
34,092
11,807
404,991
2,877
7,514
830,097
83,749
114,229
232,567
32,829
3,748,320
570
22,448
81,295
$
105
2,478
101
16,596
281
1,794
621
21,315
151
395
43,689
4,408
6,012
1,728
197,280
30
4,281
$
2,105
49,567
2,011
331,922
5,623
35,886
12,428
426,306
3,028
7,909
873,786
88,157
120,241
232,567
34,557
3,945,600
600
22,448
85,576
$
5,979,052
$
301,265
$
6,280,317
See accompanying notes to the financial statements.
4
SUNRISE CHILDREN'S FOUNDATION
STATEMENT OF CASH FLOWS
YEAR ENDED JUNE 30, 2012
Cash Flows from Operating Activities
Decrease in Net Assets
Adjustments to reconcile decrease in net assets
to net cash provided by operating activities:
Depreciation
Loss on disposal of property and equipment
Changes in operating assets and liabilities:
(Increase) decrease in grants and accounts receivable
(Increase) decrease in pledges receivable
(Increase) decrease in inventory
(Increase) decrease in prepaid expenses
(Increase) decrease in refundable deposits
Increase (decrease) in accounts payable
Increase (decrease) in grant advance
Increase (decrease) in accrued expenses
$
(169,739)
331,922
30,820
26,402
32,000
(32,285)
43,708
16,325
(24,163)
(37,011)
120,825
Net cash provided by operating activities
338,804
Cash Flows from Investing Activities
Proceeds from sale of property and equipment
Purchase of property and equipment
Net cash used in investing activities
8,500
(7,251)
1,249
Cash Flows from Financing Activities
Net decrease in lease discount
(6,205)
Net Increase in Cash
333,848
Cash, Beginning of Year
361,141
Cash, End of Year
$
694,989
See accompanying notes to the financial statements.
5
SUNRISE CHILDREN’S FOUNDATION
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2012
NOTE 1 – NATURE OF ORGANIZATION
Sunrise Children’s Foundation (the Foundation) is a nonprofit organization, serving residents of Clark County,
Nevada. The Foundation is dedicated to helping children fulfill their potential of safe, healthy and educated lives.
The majority of revenue is obtained through government grants, fees and reimbursements. The activities of the
Foundation are described below:
Early Head Start (EHS) – recognizes the importance of the development that occurs in the first three years of life
and actively works in partnership with families and community to promote the healthy growth and development of
children from low-income families.
Women, Infants and Children (WIC) – is a federally funded program operated by the Nevada State Health Division.
The Foundation currently operates four WIC clinics throughout Clark County. The clinics provide a supplemental
nutrition program for women, infants and children.
Home Instruction Program for Preschool Youngsters (HIPPY) – is a parent involvement, school readiness program
that helps parents prepare their preschool age children for success in school and beyond.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of Sunrise Children’s Foundation is presented to assist in
understanding the Foundation’s financial statements. The financial statements and notes are representations of the
Foundation’s management, which is responsible for their integrity and objectivity. These accounting policies
conform to generally accepted accounting principles and have been consistently applied in the preparation of the
financial statements.
Basis of Accounting
The financial statements of the Foundation have been prepared on the accrual basis of accounting and accordingly
reflect all significant receivables, payables, and other liabilities.
Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United
States requires management to make estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses. Accordingly, actual results could differ from those estimates.
Basis of Presentation
The accompanying financial statements have been presented in accordance with accounting principles generally
accepted in the United States applicable to not-for-profit organizations, principally ASC 958, Not-for-Profit
Entities. Under ASC 958, the Foundation is required to report information regarding its financial position and
changes in financial position according to three classes of net assets; unrestricted net assets, temporarily restricted
net assets and permanently restricted net assets.
Statement of Cash Flows
For the purpose of the statement of cash flows, cash consists of cash on hand and demand deposits.
6
SUNRISE CHILDREN’S FOUNDATION
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
JUNE 30, 2012
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Grants and Accounts Receivable
Revenue and support are recorded when the related amounts are pledged or due. The Foundation does not
anticipate any collection losses with respect to the receivable balances. As a result, a zero allowance for doubtful
accounts has been established as of June 30, 2012. If accounts become uncollectible, the balances will be allowed
for when that determination is made.
Inventory
Inventories, which consists of books to be distributed and furniture and equipment held in storage and not yet
placed in service, are valued at the lower of cost or market value. Donated items are recorded at estimated fair
value at the date of donation.
Property and Equipment
The Foundation adopted an updated Capitalization Policy during the year. The Policy now includes “unit” costs
which is defined as all base stock required to put a classroom or clinic into production as well as material additions,
repairs or maintenance with a per item cost greater than $1,000 after operations in a clinic or classroom has begun.
Items not related to the operation of a clinic or classroom are capitalized at $1,000 per item. Property and
equipment that are contributed to the Foundation are recorded at the approximate fair value at the date of donation.
Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which range
between five to fifteen years. Due to grant restrictions, the Foundation may be required to obtain prior approval
before disposing of any material fixed assets that have been purchased with grant funds.
Contributed Services
Unpaid volunteers have donated their time to the Foundation’s programs. The value of such services has not been
reflected in the accompanying financial statements since the volunteers’ time does not meet the criteria for
recognition as contributed services.
Generally, donated materials, if significant in amount, are recorded at their fair market value, provided the
Foundation has a clearly measurable and objective basis for determining the value. In the case of materials where
such values cannot reasonably be determined, the donation is not recorded. Donated professional services are
recognized if the services received (a) create or enhance long-lived 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.
Revenue Recognition
Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support,
depending on the existence and/or nature of any donor restrictions. All donor-restricted support is reported as an
increase in temporarily or permanently restricted net assets, depending on the nature of the restriction. When a
restriction expires by a stipulated time restriction lapsing or by the purpose of the restriction having been
accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the
statement of activities as net assets released from restrictions. Donor restricted contributions whose restrictions are
met in the same period received are reported as unrestricted support.
7
SUNRISE CHILDREN’S FOUNDATION
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
JUNE 30, 2012
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Functional Expenses
The costs of providing the various programs and other activities have been summarized on a functional basis in the
statements of activities and functional expenses. Accordingly, certain costs have been allocated among the
programs and supporting services benefited, based on management’s estimates.
Income Taxes
In October 1994, the Foundation received notification from the Internal Revenue Service that the Foundation is
exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code and has been classified as a
public charity under Sections 509(a)(1) and 170(b)(1)(A)(vi). As such, the Foundation is exempt from Federal
income tax. Therefore, no provision for income taxes is made in the accompanying financial statements.
Advertising
Advertising costs are expensed as incurred.
NOTE 3 – PROPERTY AND EQUIPMENT
As of June 30, 2012, property and equipment consisted of the following:
Base stock
Computer equipment
Furniture and fixtures
Playground equipment
Leasehold improvements
Vehicles
$
Less: accumulated depreciation
443,235
44,603
34,494
123,728
702,031
345,963
1,694,054
(695,687)
$
998,367
Depreciation expense for the year ended June 30, 2012 was $331,922.
NOTE 4 – LEASE AGREEMENTS
The Foundation has several non-cancelable operating leases for office space for their EHS, WIC and administrative
locations. The monthly rent ranges from $900 to $14,109 per month. Rent expense under these agreements was
$584,580 for the year ended June 30, 2012.
At June 30, 2012, future minimum rental payments due are as follows:
2013
2014
2015
2016
2017
$
$
$
$
$
446,453
408,729
324,997
67,768
43,942
8
SUNRISE CHILDREN’S FOUNDATION
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
JUNE 30, 2012
NOTE 5 – COMMITMENTS
In November 2007, the Foundation signed a lease to rent space for several programs. In March 2010, the first
amendment to the lease agreement was signed. This resulted in the Foundation paying $77,764 in leasehold
improvements and obtaining the equivalent of 5.5 months worth of abated rent, which is recognized as a lease
discount on the Statement of Financial Position in accordance with FASB ASC 840-20-25-6 Lease Incentives.
In September 2010, the Foundation signed a lease to rent space for the Early Head Start program. As an incentive
for leasing the space, the landlord agreed to April and July 2012 of free rent resulting in two months of abated rent
of $5,775. This is recognized as a lease discount on the Statement of Financial Position in accordance with FASB
ASC 840-20-25-6 Lease Incentives.
In April 2012, the Foundation signed a lease to rent space for a WIC Clinic. The Foundation will receive one
month of abated rent of $3,000 in January 2015. This is recognized as a lease discount on the Statement of
Financial Position in accordance with FASB ASC 840-20-25-6 Lease Incentives.
In accordance with the GAAP literature, lease incentives are recognized as a reduction of rent expense on the
straight line basis over the term of the lease, which ends in May 2015, August 2011 and June 30, 2017,
respectively.
NOTE 6 – CONCENTRATION OF CREDIT RISK
The Foundation has concentrated its credit risk for cash by maintaining deposits in financial institutions, which at
times may exceed amounts covered by insurance provided by the U.S. Federal Deposit Insurance Corporation
(FDIC). The Foundation has not experienced any losses in such accounts and believes it is not exposed to any
significant credit risk to cash.
NOTE 7 – CONCENTRATION OF GRANT CONTRIBUTIONS
The Foundation received approximately 94% of grant funding from the Department of Health and Human Services
for the year ended June 30, 2012.
NOTE 8 – IN-KIND DONATIONS
During the year ended June 30, 2012, the Foundation received the following in-kind donations of supplies,
professional services, and free use of facilities that have been reflected in the Statement of Activities of the
Foundation:
Early Head
Start
Free use of facilities
Professional services
Supplies
$
74,750 $
16,480
14,303
$ 105,533 $
WIC
2,647 $
993
483
4,123 $
Other
3
1,028
1,031
Total
Program
Management
and General
$ 77,397 $
17,476
15,814
$ 110,687 $
$
24,527
1,043
25,570 $
Total
77,397
42,003
16,857
136,257
9
SUNRISE CHILDREN’S FOUNDATION
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
JUNE 30, 2012
NOTE 9 – RETIREMENT PLAN
The Foundation has a defined contribution plan (the Plan) that was established in July 2010 and is available to all
employees who normally work more than 20 hours per week. Eligible employees become a participant in the Plan
on his/her first day of employment. Through payroll deduction, plan participants contribute elective deferrals up to
the maximum amount allowed by law and the Plan. Currently, the Foundation is not matching employee
contributions.
NOTE 10 – TEMPORARILY RESTRICTED NET ASSETS
Temporarily restricted net assets have been purchased with monies from grantors and are only to be used for their
related program. If the Foundation ceases to operate the program the assets would be given to the succeeding
organization. Temporarily restricted net assets are made up of program related fixed assets and inventory.
Temporarily restricted net assets are available for the following programs:
Early Head Start
Women, Infants and Children
Home Instruction Program for Preschool Youngsters
$
$
870,365
48,210
23,285
941,860
NOTE 11 – CHANGE IN ACCOUNTING PRINCIPLE
The Foundation changed their Capitalization Policy to be able to more accurately define what is included as a fixed
asset. This will enable the Foundation to analyze the costs that are involved in opening new locations. The new
Capitalization Policy now includes “unit” costs. This is defined as all base stock required to put a classroom or
clinic into production as well as material additions, repairs or maintenance with a per item cost greater than $1,000
after operations in a clinic or classroom has begun. Items not related to the operation of a clinic or classroom are
capitalized at $1,000 per item.
The implementation of the Policy has been applied to the current year. The effect of this change caused
depreciation expense to increase. No prior year balances have been adjusted. The accounting change is not
deemed material in the current year and is not expected to have a material effect in future periods.
NOTE 12 – SUBSEQUENT EVENTS
Subsequent events have been evaluated through November 19, 2012, which is the date the financial statements
were available to be issued.
10
COMPLIANCE SECTION
SUNRISE CHILDREN’S FOUNDATION
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2012
FEDERAL GRANTOR/PASS-THROUGH
GRANTOR/PROGRAM TITLE
U.S. Dept. of Health and Human Services
Early Head Start
Early Head Start ARRA Expansion
PASSTHROUGH
FEDERAL
ENTITY
CFDA
IDENTIFYING
FEDERAL
NUMBER
NUMBER
EXPENDITURES
93.600
93.709
$
Total Head Start Cluster
Passed through the Nevada Department of Health and
Human Services:
Child Care Mandatory and Matching Funds of the Child
Care and Development Fund (CCDP)
U.S. Department of Agriculture
Child and Adult Care Food Program (CACFP)
Passed through the Nevada Department of Health and
Human Services:
Women, Infants and Children (WIC) Program
U.S. Department of Education
Home Instruction for Parents of Pre-School Youngsters (HIPPY)
2,833,672
481,620
3,315,292
93.596
384,300
10.558
105,457
10.557
1,894,826
84.215K
Total Expenditures of Federal Awards
153,322
$
5,853,197
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Basis of Presentation
The accompanying schedule of expenditures of federal awards includes the federal grant activity of Sunrise
Children’s Foundation and is presented on the cash basis of accounting. The information in this schedule is
presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and
Non-Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented
in, or used in the preparation of, the basic financial statements.
14
SCHEDULE OF FINDINGS AND
QUESTIONED COSTS
SUNRISE CHILDREN’S FOUNDATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2012
Section I - Summary of Auditors' Results:
Financial Statements
Type of auditor's report issued:
Internal control over financial reporting:
Material weaknesses identified?
Significant deficiencies identified?
Noncompliance material to financial statements?
Federal Awards
Internal control over major programs:
Material weaknesses identified?
Significant deficiencies identified?
Type of auditor's report issued on compliance
for major programs:
Any audit findings disclosed that are required to
be reported in accordance with section
510(a) of Circular A-133?
Unqualified
yes
yes
yes
x
x
x
no
no
no
yes
yes
x
x
no
none reported
x
none reported
x
no
Unqualified
yes
Identification of major programs:
CFDA Number
Name of Federal Program:
Head Start Cluster:
93.600
93.709
10.557
Early Head Start
Early Head Start ARRA Expansion
Women, Infants and Children (WIC) Program
Dollar threshold used to distinguish between Type A and Type B programs: $300,000
Auditee qualified as a low-risk auditee?
yes
15
SUNRISE CHILDREN’S FOUNDATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS - CONTINUED
YEAR ENDED JUNE 30, 2012
Section II – Findings relating to the financial statements, which are required to be reported
in accordance with auditing standards generally accepted in the United States:
None reported.
Section III – Findings and questioned costs for federal awards, including audit findings as
defined in Circular A-133 Section .510(a):
None reported.
16
SCHEDULE OF PRIOR FINDINGS AND
QUESTIONED COSTS
SUNRISE CHILDREN’S FOUNDATION
SCHEDULE OF PRIOR FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2011
Section I - Summary of Auditors' Results:
Financial Statements
Type of auditor's report issued:
Internal control over financial reporting:
Material weaknesses identified?
Significant deficiencies identified?
Noncompliance material to financial statements?
Federal Awards
Internal control over major programs:
Material weaknesses identified?
Significant deficiencies identified?
Type of auditor's report issued on compliance
for major programs:
Any audit findings disclosed that are required to
be reported in accordance with section
510(a) of Circular A-133?
Unqualified
x
x
yes
yes
yes
yes
yes
x
x
x
no
no
no
no
none reported
Unqualified
x
yes
none reported
Identification of major programs:
CFDA Number
Name of Federal Program:
Head Start Cluster:
93.600
93.709
10.557
Early Head Start
Early Head Start ARRA Expansion
Women, Infants and Children (WIC) Program
Dollar threshold used to distinguish between Type A and Type B programs: $300,000
Auditee qualified as a low-risk auditee?
yes
x
no
17
SUNRISE CHILDREN’S FOUNDATION
SCHEDULE OF PRIOR FINDINGS AND QUESTIONED COSTS - CONTINUED
YEAR ENDED JUNE 30, 2011
Section II – Findings relating to the financial statements, which are required to be reported
in accordance with auditing standards generally accepted in the United States:
11-1
Criteria:
Property and equipment records (including serial number or other identification
number, acquisition date and cost, percentage and source of federal
participation in the costs, location, condition, and disposition data) shall be
accurate and complete.
Condition:
Property and equipment records were not accurate and complete. On a few
occasions the Foundation was recording individual fixed assets as a group of
assets on their fixed asset schedule, which did not allow for appropriate listing
of individual costs, locations, etc.
Effect:
Reasonable assurance that property and equipment records are accurate,
complete and agree to the general ledger, and that property and equipment is
appropriately safeguarded and maintained cannot readily be attained. As a
result, adjustments were necessary to correct property and equipment records.
Cause:
Failure to effectively monitor compliance with policies and procedures
designed to provide reasonable assurance that property and equipment records
are accurate, complete and agree to the general ledger and that property and
equipment is appropriately safeguarded and maintained.
Recommendation:
Management should instruct personnel regarding the importance of maintaining
accurate and complete property and equipment records and ensuring that
property and equipment is appropriately safeguarded and maintained and
should provide additional resources to monitor compliance with all property
and equipment policies and procedures.
Management’s response: The above comment refers to assets that were inappropriately combined when
the Foundation expanded resulting in construction at many of the facilities that
we occupy. The Foundation has instituted additional controls to ensure that
fixed asset costs, regardless if we construct them or purchase them in final
form, are properly identified and capitalized based on our accounting policy and
in such detail as to identify the necessary information for proper tracking and
control.
18
SUNRISE CHILDREN’S FOUNDATION
SCHEDULE OF PRIOR FINDINGS AND QUESTIONED COSTS - CONTINUED
YEAR ENDED JUNE 30, 2011
Section III – Findings and questioned costs for federal awards, including audit findings as
defined in Circular A-133 Section .510(a):
11-2
Program:
Early Head Start, Early Head Start ARRA Expansion and Women, Infants and
Children. CFDA #93.600, #93.709, #10.557.
Specific requirements:
Requests for funds shall be complete and accurate and agree to supporting
records/documentation. Independent review of requests for funds shall be
performed to assure accuracy, completeness of data and information included
therein, and agreement to supporting records/documentation.
Condition/Context:
Individual program expenses and appropriate allocated administrative expenses
could not be traced to the requests for funds. Also, we could not verify an
independent review for accuracy and completeness was conducted at the time
the request for reimbursement was submitted.
Questioned Costs:
Not applicable
Effect:
Reasonable assurance that requests for funds are complete and accurate and
agree to supporting records/documentation cannot readily be attained. As a
result, individual requests for funds could not be traced to related expenses or
reconciled to the general ledger.
Cause:
Failure to adopt and effectively implement and monitor policies and procedures
designed to provide reasonable assurance that requests for funds are complete
and accurate and agree to supporting records/documentation.
Management’s response: The Foundation discovered that prior draws did not agree to supporting
documentation and self-reported this situation to the grantor and our auditors.
Beginning March 2012, as part of the process of remediation and
communication with the grantor, the Foundation has implemented policies and
procedures designed to provide reasonable assurances that request for funds are
complete and accurate, and to include better financial and accounting controls
for the Foundation as whole. Because of our self-reporting, the Foundation is
currently on restricted drawdown of funds from the Early Head Start program,
meaning all supporting documentation must be provided to the grantor prior to
the grantor approving the request for funds. The policies and procedures
implemented for restricted drawdown from Early Head Start are the same
policies and procedures that are in place for unrestricted drawdowns from
Women, Infants and Children, and the same policies and procedures that are
followed for every fund request the Foundation makes from grantors.
19
SUNRISE CHILDREN’S FOUNDATION
SCHEDULE OF PRIOR FINDINGS AND QUESTIONED COSTS - CONTINUED
YEAR ENDED JUNE 30, 2011
Section III – Findings and questioned costs for federal awards, including audit findings as
defined in Circular A-133 Section .510(a)(continued):
11-2 (continued)
Management’s response
(continued):
Additionally, fiscal consultants and monitoring personnel from the Early Head
Start program have reviewed the updated policies and procedures and have
found that the policies and procedures provide appropriate support and
monitoring compliance for fund requests.
11-3
Program:
Early Head Start, Early Head Start ARRA Expansion and Women, Infants and
Children. CFDA #93.600, #93.709, #10.557.
Specific requirements:
Property and equipment records (including serial number or other identification
number, acquisition date and cost, percentage and source of federal
participation in the costs, location, condition, and disposition data) shall be
accurate and complete.
Condition/Context:
Property and equipment records were not accurate and complete. The
Foundation did not include the condition of any of the fixed assets on their
fixed asset schedule.
Questioned Costs:
Not applicable
Effect:
Reasonable assurance that property and equipment records are accurate,
complete cannot readily be attained.
Cause:
Failure to effectively monitor compliance with policies and procedures
designed to provide reasonable assurance that property and equipment records
are accurate and complete.
Management’s response: We have added this tracking item to our overall management and control of
fixed assets as a whole for the Foundation.
11-4
Program:
Women, Infants and Children. CFDA #10.557.
Specific requirements:
The Foundation must account for all food instruments issued within 120 days of
the food instrument’s first valid date for participant use. The Foundation must
identify all food instruments as either issued or voided; and identify issued food
instruments as either redeemed or unredeemed.
20
SUNRISE CHILDREN’S FOUNDATION
SCHEDULE OF PRIOR FINDINGS AND QUESTIONED COSTS - CONTINUED
YEAR ENDED JUNE 30, 2011
Section III – Findings and questioned costs for federal awards, including audit findings as
defined in Circular A-133 Section .510(a)(continued):
11-4 (continued)
Specific requirements
(continued):
Redeemed food instruments must be identified as one of the following: (1)
validly issued, (2) lost or stolen, (3) expired, (4) duplicate, or (5) not matching
valid enrollment and issuance records.
Condition/Context:
The Foundation did not account for all food instruments issued within 120 days
of the food instrument’s first valid date for participant use. The Foundation
discovered that two employees created three fictitious families in the WIC
program and issued three food instruments. All three food instruments had
fraudulent food purchases spanning seven months. The fraudulent activity was
discovered by management of the Foundation after 120 days from issuance of
the food instruments. The Foundation self-reported to the grantor and suspected
employees were terminated.
Questioned Costs:
$1,663.63
Effect:
Reasonable assurance that all food instruments issued within 120 days of the
food instrument’s first valid date for participant use are accounted for cannot
readily be attained.
Cause:
Failure to effectively monitor compliance with policies and procedures
designed to provide reasonable assurance that all food instruments issued
within 120 days of the food instrument’s first valid date for participant use are
accounted for.
Management’s response: We continue to work within the parameters of the program as dictated by the
State funding source for Women, Infants and Children. The Foundation, as the
fiscal agent, is responsible for implementing a control structure which
discourages and prohibits fraud. When this situation same to light, as noted
above, it was self-reported to the funding agency and the Foundation began
working on control changes to deter future reoccurrence. As of the date of this
response, negotiations for revising the control structure parameters with the
funding source are still ongoing.
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