Bridges of America - The Orlando Bridge, Inc. Orlando, Florida Financial Statements and Supplemental Information Year Ended June 30, 2011

Transcription

1 Bridges of America - The Orlando Bridge, Inc. Orlando, Florida Financial Statements and Supplemental Information Year Ended June 30, 2011

2 Table of Contents Page Independent Auditor s Report 1 Financial Statements Statement of Financial Position 3 Statement of Activities 4 Statement of Functional Expenses 5 Statement of Cash Flows 6 Notes to Financial Statements 8 Supplemental Information Schedule of Expenditures of State Financial Assistance 15 Independent Auditor s 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 and Chapter , Rules of the Auditor General, of the State of Florida Independent Auditor s Report on Compliance with Requirements Applicable to Contract #C2120, #C2242 and #C2489 and on Internal Control over Compliance in Accordance with Chapter Rules of the Auditor General Schedule of Findings and Questioned Costs State Financial Assistance

3

4

5 Statement of Financial Position June 30, 2011 Assets Current assets Cash and cash equivalents - unrestricted $ 692,279 Receivables from program contracts 368,397 Food stamps 13,818 Prepaid expense 23,322 Total current assets 1,097,816 Property and equipment Leasehold improvements 112,916 Equipment 329,174 Furniture & fixtures 352,153 Accumulated depreciation (613,566) Total property and equipment 180,677 Other assets Due from affliates, net 872,143 Due from trust account, net 2,700 Total other assets 874,843 Total assets $ 2,153,336 Liabilities and Net Assets Current liabilities i Accounts payable $ 24,181 Accrued payroll liability 39,298 Accrued compensated absences 42,908 Other accrued liabilities 13,458 Total current liabilities 119,845 Net assets, unrestricted 2,033,491 Total liabilities and net assets $ 2,153,336 See accompanying notes and independent auditor's report 3

6 Statement of Activities Unrestricted revenues and other support Program contract revenues - non-secure program $ 1,126,300 Program contract revenues - residential work release program 1,129,161 Program contract revenues - therapeutic community program 1,962,920 Resident rent revenues - non-secure program 175,352 Resident rent revenues - residential work release program 841,783 Resident rent revenues - therapeutic community program 330,581 Other program income 81,323 Total unrestricted revenues 5,647,420 Expenses and losses Program contract expenses 3,924,396 Management and general 981,719 Total unrestricted expenses and losses 4,906,115 Increase in unrestricted net assets 741,305 Unrestricted net assets at beginning of year 1,292,186 Unrestricted net assets at end of year $ 2,033,491 See accompanying notes and independent auditor's report 4

7 Statement of Functional Expenses Program/Contract Therapeutic Management Non-Secure Work Release Community and General Total Salaries and wages $ 294,357 $ 563,493 $ 779,122 $ 165,368 $ 1,802,340 Administrative fee , ,400 Facility rental 182, , , ,400 Food expense 72, ,000 52, ,739 Insurance 44,844 86, ,320 25, ,272 Utilities 49,747 61, , ,875 Payroll taxes 25,363 49,141 69,748 14, ,519 Accounting 27,000 27,000 27,000 37, ,780 Consulting expense 36,000 36,000 36, ,000 Depreciation expense 17,950 17,950 30,582-66,482 Vehicle expense 22,841 25,754 14,347-62,942 Supplies 11,100 15,331 18,254 11,776 56,461 Repairs and maintenance 12,091 12,804 18,026-42,921 Client welfare 11,659 7,275 20,920-39,854 Chaplaincy services 9,595 12,000 15,000-36,595 Telephone 6,926 16,049 7,021-29,996 Retirement plan expense 4,560 8,834 12,539 2,565 28,498 Payroll fees 4,158 8,057 11,436 2,339 25,990 Equipment leasing and rental 7,003 10,335 8,470-25,808 Employee education and awards 4,115 5,695 10,613-20,423 Fire and safety 5,723 5,882 7,734-19,339 Miscellaneous 3,145 5,443 4,658-13,246 Inmate banking expense 3,699 5,209 3,755-12,663 Extermination and pest control 2,444 3,490 3,120-9,054 Taxes and licenses 1,447 1,947 1,896-5,290 Travel expenses 2, ,848-5,072 Printing and publications 1, ,587 Legal expenses $ 865,037 $ 1,388,328 $ 1,671,031 $ 981,719 $ 4,906,115 See accompanying notes and independent auditor's report 5

8 Statement of Cash Flows Cash flows from operating activities Cash received from program contracts $ 4,450,088 Cash received from residents rent 1,347,716 Cash received from other program income 100,704 Cash paid to employees (1,867,594) Cash paid to suppliers (2,869,814) Cash paid for taxes (163,809) Net cash provided by operating activities 997,291 Cash flows from investing activities Purchases of equipment and leasehold improvements (2,406) Net cash used in investing activities (2,406) Cash flows from financing activities Net payments to affiliates (624,882) Net cash used in financing activities (624,882) Net increase in cash and cash equivalents 370,003 Cash and cash equivalents at beginning of year 322,276 Cash and cash equivalents at end of year $ 692,279 See accompanying notes and independent auditor's report 6

9 Statement of Cash Flows-Continued Reconciliation of increase in net assets to net cash provided by operating activities Increase in net assets $ 741,305 Adjustments to reconcile increase in net assets to net cash provided by operating activities: Depreciation 66,482 (Increase) decrease in: Receivables from program contracts 231,707 Other receivable (4,659) Food stamps 4,040 Due from trust account 20,000 Prepaid expense (23,322) Increase (decrease) in: Accrued compensated absences 5,546 Accounts payable 13,534 Other accrued liability 13,458 Accrued payroll liabilities (70,800) Net cash provided by operating activities $ 997,291 See accompanying notes and independent auditor's report 7

10 Notes to Financial Statements Note A - General Information and Significant Accounting Policies General Information - Bridges of America - The Orlando Bridge, Inc. (The Orlando Bridge) is a not-for-profit corporation organized to provide a prison work release transitional program, a substance abuse transitional re-entry program, and a comprehensive drug and alcohol counseling and rehabilitation program for criminal offenders in Orange County, Florida. The Orlando Bridge is exempt from income tax under Internal Revenue Code Section 501(c)(3) as a public charity. Donated Services and Materials - The Board of Directors serves without compensation. These services are not recorded in the financial statements since they generally are not susceptible to objective measurement or valuation. Additionally, The Orlando Bridge occasionally receives donated goods for use in its operations. Management has determined that such amounts are not material to the financial statements of The Orlando Bridge. Basis of Presentation - The Orlando Bridge has adopted Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 958. This statement establishes standards for financial reporting by not-for-profit organizations. The Orlando Bridge is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. The Orlando Bridge does not have any temporarily or permanently restricted net assets. Program Contract Revenue and Receivable - Program Contract Revenue represents amounts received for providing program services under the terms of contracts with the State of Florida Department of Corrections. Receivables from these program contracts represent amounts due under the contracts and are considered fully collectible. Under the Department of Corrections program, The Orlando Bridge is authorized to charge those inmates employed through the program a subsistence rental charge, which is 40% of the offender s gross income, not to exceed $25 per day. During the current year, The Orlando Bridge received subsistence charges in the amount of $175,352 from participants who were employed. Under the work release and therapeutic community contracts, The Orlando Bridge is authorized to charge those inmates employed through the program a subsistence rental charge, which is 55% of the inmate s net pay, not to exceed a maximum rate per the contract. During the current year, The Orlando Bridge received subsistence charges in the amount of $841,783 from work release program participants who were employed and $330,581 from therapeutic community program participants who were employed. 8

11 Notes to Financial Statements Note A - General Information and Significant Accounting Policies - Continued Property and Equipment - Purchased assets costing in excess of $1,000 individually or in the aggregate are capitalized and recorded at cost. Donated assets are recorded at their fair market values at the date of the donation. Improvements and betterments are capitalized, while repair and maintenance expenditures are expensed in the statement of activities. Property and equipment are being depreciated over their estimated useful lives of 5 and 7 years using the straight-line method of depreciation. Leasehold improvements are being depreciated over 39 years using the straight-line method of depreciation. Depreciation expense for the year ended June 30, 2011, was $66,482. Cash Equivalents - For purposes of the statement of cash flows, The Orlando Bridge considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Interest Expense The Orlando Bridge incurred no interest expense during the year ended June 30, Income Taxes - The Orlando Bridge adopted FASB ASC Topic 740. The pronouncements clarify the accounting for uncertainty in income tax recognition in financial statements and require the impact of a tax position to be recognized in the financial statements if that position is more likely than not of being sustained by the taxing authority. The Orlando Bridge is a not-forprofit corporation which has obtained tax-exempt status under section 501(c)(3) of the Internal Revenue Code with no unrelated business income and is not subject to income tax. Management has evaluated this tax position and has determined that it is more likely than not to be upheld. The adoption has not had a material effect on The Orlando Bridge. Fair Value of Financial Instruments At June 30, 2011, the carrying values of cash, short term investments, accounts receivable and accounts payable approximate fair value because of the short maturity of these financial instruments. Allocation of Expenses The costs of providing the various programs and supporting activities of The Orlando Bridge have been summarized on a functional basis in the statement of activities. Accordingly, certain costs have been allocated among the program and supporting activities. 9

12 Notes to Financial Statements Note B - Related Party Transactions The Orlando Bridge shares a common Board of Directors and common management with Christian Prison Ministries, Inc., a not-for-profit corporation, and other Bridges of America entities, which provide similar services in other facilities throughout the State of Florida. Christian Prison Ministries, Inc. owns all of the facilities used by The Orlando Bridge in conducting its program activities. Under the terms of a month to month lease, The Orlando Bridge paid rental charges of $662,400 to Christian Prison Ministries, Inc. for the use of these facilities in the current year. In addition, The Orlando Bridge paid administrative fees of $722,400 to Bridges of America, Inc. for management services in the current year. Amounts due from affiliates represent funds The Orlando Bridge has loaned to affiliates to help fund operations and support common missions. During the year ended June 30, 2011, The Orlando Bridge made net payments of $624,882 to affiliates. At June 30, 2011, The Orlando Bridge had a receivable of $872,143 from its affiliates. This amount is not expected to be repaid within the next operating cycle. No interest is being charged on this loan. During the current year, The Orlando Bridge paid $36,595 to Society of St. Dismas, an affiliated entity for chaplaincy services. The Orlando Bridge also made vehicle lease payments of $37,636 directly to Bridges of America, Inc., under the terms of a month to month lease. This amount is included in vehicle expense. Bridges of America The Sanford Bridge, Inc. shares facilities and other resources with The Orlando Bridge. Expenses incurred for programs related to both entities are allocated between the two entities based on each entity s portion of total clients served. At June 30, 2011, The Orlando Bridge had a payable balance of $21,344 due to Bridges of America - The Sanford Bridge related to these transactions. This balance is included in the balance of due from affiliates on the statement of financial position. Note C Commitments and Contingencies During the year ended June 30, 2006, Christian Prison Ministries, Inc., (The Ministry) a related entity, issued Orange County Industrial Development Authority Variable Rate Demand Revenue Bonds, Series 2005, at a par value of $12,565,000. The proceeds from the bond issue went towards refinancing existing long-term debt and financing the expansion of operating facilities. The bonds are secured by an irrevocable standby letter of credit, which is guaranteed by Christian Prison Ministries, Inc. and various related entities, including The Orlando Bridge. The letter of credit expires November 30, 2012 unless terminated or extended. 10

13 Notes to Financial Statements Note C Commitments and Contingencies - Continued As of June 30, 2011, the outstanding indebtedness balance under guarantee is $10,125,000. In order to maintain compliance with the letter of credit agreement, The Ministry and the related Bridges affiliates must maintain, on a consolidated basis, certain financial covenants. The requirements include maintaining a fixed charge coverage ratio of 1.20 to 1.00, as well as maintaining an unrestricted net asset balance of $14,431,225 as of June 30, 2011, to be increased by at least 50% of total positive increase in combined net assets, each fiscal year thereafter. The combined entity is also restricted to a limited amount of capital expenditures in the amount of $750,000 annually. As of June 30, 2011, The Ministry and the related Bridges affiliates met these financial covenants, with the exception of the capital expenditure covenant which was overspent by approximately $86,000. Subsequent to year end, the bank has agreed in principle to the waiving of the covenant. The letter of credit is secured by substantially all corporate assets, and is guaranteed by Christian Prison Ministries, Inc. and various related entities, including The Orlando Bridge. Christian Prison Ministries, Inc. has a commitment from a commercial bank for a line of credit through January 14, 2013, of $1,500,000, of which $1,400,000 was unused at June 30, Interest on the principal amount outstanding is paid monthly in arrears and carries an interest rate equal to the One Month LIBOR Rate plus 2.5% per annum. The credit line is secured by substantially all corporate assets, and is guaranteed by Christian Prison Ministries, Inc. and various related entities, including The Orlando Bridge. Note D - Major Sources of Support Non-Secure Program The Orlando Bridge has a contract with the Florida Department of Corrections to provide comprehensive drug and alcohol counseling, rehabilitation, and employment programs for criminal offenders. The Orlando Bridge earned $1,126,300 under contract #C2120 during the current year. The contract which is terminable by the Florida Department of Corrections under certain conditions, is in its final renewal term. The contract was effective through December 31, From January 1, 2011 through June 30, 2011, The Orlando Bridge was approved to receive funds from the State of Florida with a Contractual Purchase Order under the same requirements of the previous contract. A new contract was signed and approved with the period beginning July 1, 2011 through June 30, The Orlando Bridge provides drug and alcohol counseling, rehabilitation, and employment services to inmates and is compensated for the provision of these services by the Florida Department of Corrections on a monthly basis. As of June 30, 2011, outstanding receivables from the program contract were $103,

14 Notes to Financial Statements Note D - Major Sources of Support Continued Work Release Program The Orlando Bridge has a contract with the Florida Department of Corrections to provide comprehensive drug and alcohol counseling, rehabilitation, and employment programs for criminal offenders. The Orlando Bridge earned $1,129,161 under contract #C2242 during the current year. The contract which is terminable by the Florida Department of Corrections under certain conditions, is renewable on a periodic basis. The current contract is effective through August 31, The Orlando Bridge provides drug and alcohol counseling, rehabilitation and employment services to clients and is compensated for the provision of these services by the Florida Department of Corrections on a monthly basis. As of June 30, 2011, outstanding receivables from the program contract were $92,608. Therapeutic Community Program The Orlando Bridge has a contract with the Florida Department of Corrections to provide a substance abuse treatment/work release program for inmates. The Orlando Bridge earned $1,962,920 under contract #C2489 during the current year. The contract which is terminable by the Florida Department of Corrections under certain conditions is renewable on a periodic basis. The current contract is effective through March 31, The Orlando Bridge provides services to clients and is compensated for the provision of these services by the Florida Department of Corrections on a monthly basis. As of June 30, 2011, outstanding receivables from the program contract were $167,512. Note E - Operating Leases During the year ended June 30, 2011, The Orlando Bridge had several office equipment leases, which are accounted for as operating leases. The total equipment lease expense for the current year was $25,808. Future minimum lease payments under terms of non-cancelable operating leases are not material. Note F Concentration of Credit Risk The Orlando Bridge maintains cash balances at several financial institutions which are insured by the Federal Deposit Insurance Corporation. At various times during the year ended June 30, 2011, the Orlando Bridge may have had balances in these accounts which exceeded insured amounts. 12

15 Notes to Financial Statements Note F Concentration of Credit Risk - Continued Additionally, The Orlando Bridge has a concentration of credit risk for program contract revenues and receivables. If there were a significant decrease or termination of the contracts, there would be an adverse effect on The Orlando Bridge s program services and operations. These revenues and receivables represent amounts earned and collectible, respectively, for providing drug and alcohol counseling and rehabilitation programs for criminal offenders. All of the program contract revenue and receivables are received from the State of Florida Department of Corrections. Note G Employee Benefit Plan The Orlando Bridge participates in a retirement plan pursuant to Section 401(k) which was established by Bridges of America, Inc. To be eligible to participate in the plan, employees must have completed one year of service, be 21 years of age or older and are required to work 1,000 hours or more in 12 consecutive months. Employees are vested over a six year period for the employer s matching contributions into the plan. The plan provides for a matching contribution of up to 8% of the participant s salary contribution and is funded annually. During the year ended June 30, 2011, The Orlando Bridge s expense to the plan was $28,498. Note H Subsequent Events In preparing these financial statements, management has evaluated events and transactions for potential recognition or disclosure through November 8, 2011, the date the financial statements were available to be issued. Subsequent to year end, The Orlando Bridge Non Secure program absorbed 42 beds from The Sanford Bridge. As of July 1, 2011 The Sanford Bridge, Inc. which was sharing a facility with The Orlando Bridge no longer has a contract with the Florida Department of Corrections. Contract #C2656 for The Orlando Bridge Non Secure program which goes into effect July 1, 2011 and runs through June 30, 2016 has been amended to include the additional bed counts. Also, subsequent to year end, Christian Prison Ministries, Inc. has received a commitment letter from the bank offering The Ministry a non-bank qualified tax-exempt loan of approximately $18,000,000 to be used to redeem the outstanding principal amount of The Ministry s Series 2005 Bonds, finance the site acquisition and construction of a new facility in Jacksonville, Florida and to finance the acquisition of an existing building next to the main campus in Orlando, Florida. The terms of the refinancing have not been finalized as of the issuance of these financial statements. 13

16 Notes to Financial Statements Note H Subsequent Events - Continued Also, subsequent to the end of the year, The Orlando Bridge had changes in the Board of Directors. The Orlando Bridge is currently in a search to replace these Board members. No other subsequent events have come to our attention. 14

17 Supplemental Information

18 Bridges of America - The Orlando Bridge, Inc. Schedule of Expenditures of State Financial Assistance For the Year Ended June 30, 2010 Catalog State Federal of State Expenditures - State Through Agency and Contract Financial Grants/ Aids Expenditures - State Total Program Title Number Assistance Appropriations Other Funds Expenditures Expenditures Florida Department of Corrections: Nonsecure Drug Treatment Program C $ - $ 1,115,921 $ - $ 1,115,921 Work Release Program C ,222,339-1,222,339 Work Release Program C , ,459 Therapeutic Community Program C ,703,369-1,703,369 $ - $ 4,450,088 $ - $ 4,450,088 (1) (1) State expenditures are reported on the cash basis of accounting. See accompanying notes and independent auditor's report 15

19

20

21

22

23 A. Summary of Auditor s Results Schedule of Findings and Questioned Costs- State Financial Assistance 1. The auditor s report expresses an unqualified opinion on the basic financial statements of Bridges of America The Orlando Bridge, Inc. 2. There were no significant deficiencies disclosed during the audit of the financial statements of Bridges of America The Orlando Bridge, Inc. 3. No instances of noncompliance material to the financial statements of Bridges of America The Orlando Bridge, Inc. were disclosed during the audit. 4. There were no significant deficiencies relating to the audit of the State project. 5. The auditor s report on compliance with requirements applicable to the major State projects for Bridges of America The Orlando Bridge, Inc. expresses an unqualified opinion. 6. Our audit disclosed no findings required to be reported related to the State projects required to be disclosed under Chapter , Rules of the Auditor General. 7. The programs/projects tested as major programs/ projects included the following: State Project State CSFA No. Non-Secure Drug Treatment Program Contract #C2120 In Orange County, Florida Work Release Program Contract #C2242 In Orange County, Florida Therapeutic Community Program Contract #C2489 In Orange County, Florida 8. The threshold for distinguishing Type A and Type B programs was $100,000 for major State financial assistance projects. 9. No Summary of Schedule of Prior Audit Findings is required because there were no prior audit findings related to the State project listed above. 10. No management letter is required because there were no findings required to be reported to management pursuant to Chapter , Rules of the Auditor General. 20