www.cliftnlarsnallen.cm Bard f Directrs First Nnprfit Fundatin Chicag, Illinis We have audited the financial statements f First Nnprfit Fundatin (the Fundatin ) fr the year ended December 31, 2012, and have issued ur reprt theren dated March 29, 2013. We have previusly cmmunicated t yu infrmatin abut ur respnsibilities under auditing standards generally accepted in the United States f America, as well as certain infrmatin related t the planned scpe and timing f ur audit. Prfessinal standards als require that we cmmunicate t yu the fllwing infrmatin related t ur audit. Significant audit findings Qualitative aspects f accunting practices Accunting plicies Management is respnsible fr the selectin and use f apprpriate accunting plicies. The significant accunting plicies used by the Fundatin are described in Nte 1 t the financial statements. N new accunting plicies were adpted and the applicatin f existing plicies was nt changed during 2012. We nted n transactins entered int by the entity during the year fr which there is a lack f authritative guidance r cnsensus. All significant transactins have been recgnized in the financial statements in the prper perid. Accunting estimates Accunting estimates are an integral part f the financial statements prepared by management and are based n management s knwledge and experience abut past and current events and assumptins abut future events. Certain accunting estimates are particularly sensitive because f their significance t the financial statements and because f the pssibility that future events affecting them may differ significantly frm thse expected. There were n accunting estimates affecting the financial statements which were particularly sensitive r required substantial judgments by management. Financial statement disclsures Certain financial statement disclsures are particularly sensitive because f their significance t financial statement users. There were n particularly sensitive financial statement disclsures. The financial statement disclsures are neutral, cnsistent, and clear. Difficulties encuntered in perfrming the audit We encuntered n significant difficulties in dealing with management in perfrming and cmpleting ur audit. Uncrrected misstatements Prfessinal standards require us t accumulate all misstatements identified during the audit, ther than thse that are clearly trivial, and cmmunicate them t the apprpriate level f management. The attached Exhibit A An independent member f Nexia Internatinal
March 29, 2013 First Nnprfit Fundatin Page 2 summarizes uncrrected misstatements f the financial statements. Management has determined that their effects are immaterial, bth individually and in the aggregate, t the financial statements taken as a whle. Crrected misstatements Nne f the misstatements detected as a result f audit prcedures and crrected by management were material, either individually r in the aggregate, t the financial statements taken as a whle. The attached Exhibit B summarizes all misstatements (material and immaterial) detected as a result f audit prcedures that were crrected by management. Disagreements with management Fr purpses f this letter, a disagreement with management is a financial accunting, reprting, r auditing matter, whether r nt reslved t ur satisfactin, that culd be significant t the financial statements r the auditrs reprt. N such disagreements arse during ur audit. Management representatins We have requested certain representatins frm management that are included in the attached management representatin letter (Exhibit C) dated March 29, 2013. Management cnsultatins with ther independent accuntants In sme cases, management may decide t cnsult with ther accuntants abut auditing and accunting matters, similar t btaining a secnd pinin n certain situatins. If a cnsultatin invlves applicatin f an accunting principle t the entity s financial statements r a determinatin f the type f auditrs pinin that may be expressed n thse statements, ur prfessinal standards require the cnsulting accuntant t check with us t determine that the cnsultant has all the relevant facts. T ur knwledge, there were n such cnsultatins with ther accuntants. Significant issues discussed with management prir t engagement We generally discuss a variety f matters, including the applicatin f accunting principles and auditing standards, with management each year prir t engagement as the entity s auditrs. Hwever, these discussins ccurred in the nrmal curse f ur prfessinal relatinship and ur respnses were nt a cnditin t ur engagement. This infrmatin is intended slely fr the use f the bard f directrs and management f the Fundatin and is nt intended t be and shuld nt be used by anyne ther than these specified parties. a Oak Brk, Illinis March 29, 2013
PASSED ADJUSTMENT SUMMARY First Nnprfit Fundatin Year Ended December 31, 2012 Effect f misstatements n: Descriptin Assets Liabilities Net Assets Change in Net Assets T crrect prir perid errr in accrual fr cntribtuins frm FNIC fr audit fees. $ $ $ 5,500 $ (5,500) T prperly accrue fr 2012 expense paid in 2013. (1,790) 1,790 T accrue fr the deferred tax liability n excise tax. (1,770) 662 (1,108) T accrue fr the CY excise tax liability (779) 779 Subttals (4,339) 6,162 (4,039) Net current year misstatements (4,339) 6,162 (4,039) Net prir year misstatements Ttal misstatements $ $ (4,339) $ 6,162 $ (4,039) Financial statement ttals $ 1,542,440 $ (13,122) $ (1,600,755) $ 71,437
Exhibit B Client: First Nnprfit Fundatin Perid Ending: 12/31/2012 Wrkpaper: Adjusting Jurnal Entries Reprt Accunt Descriptin W/P Ref Debit Credit Adjusting Jurnal Entries JE # 1 3000.01 T adjust beginning retained earnings 35100 UNREALIZED GAINS/LOSSES 33,082.00 35000 SURPLUS 33,082.00 Ttal 33,082.00 33,082.00 Adjusting Jurnal Entries JE # 2 1200.10 T recrd trades pending settlement at year end per investment statements and cnfirmatin, and t separately classify cash included in 11670 Cash - Bank f America - 72-01-101-6488224 541,700.00 35100 UNREALIZED GAINS/LOSSES 25,602.00 11700 INVESTMENTS - SHORT TERM 524,174.00 11710 UNREALIZED GAIN/LOSS - #102807 25,602.00 46000 REALIZED GAINS/LOSSES 17,526.00 Ttal 567,302.00 567,302.00 Adjusting Jurnal Entries JE # 3 2300.01 T remve accrual fr excise taxes frm 2009 23000 ACCOUNTS PAYABLE 865.00 65900 ADVERTISING 865.00 Ttal 865.00 865.00 Adjusting Jurnal Entries JE # 4 4100.01 T crrect accunts receivable fr cntributins frm FNIC 40000 CONTRIBUTIONS RECEIVED 2,700.00 12000 ACCOUNTS RECEIVABLE 2,700.00 Ttal 2,700.00 2,700.00
Exhibit C March 29,2013 1301 West 220d Street, Suite 1100 Oak Brk, Illinis 60523 This representatin letter is prvided in cnnectin with yur audit f the financial statements f First Nnprfit Fundatin (the "Fundatin"), which cmprise the statements f financial psitin as f December 31 2012 and 2011, and the related statements f activities and cash flws fr the years then ended, and the related ntes t the financial statements, fr the purpse f expressing an pinin n whether the financial statements are presented fairly, in all material respects, in accrdance with accunting principles generally accepted in the United States f America (US. GAAP). Certain representatins in this letter are described as being limited t matters that are material. Items are cnsidered material, regardless f size, if they invlve an missin r misstatement f accunting infrmatin that, in light f surrunding circumstances, makes it prbable that the judgment f a reasnable persn relying n the infrmatin wuld be changed r influenced by the missin r misstatement. We cnfirm, t the best f ur knwledge and belief, as f March 29, 2013, the fllwing representatins made t yu during yur audlt. Financial Statements We have fulfilled ur respnsibilities, as set ut in the terms f the audit engagement letter dated Nvember 27, 2012, fr the preparatin and fair presentatin f the financial statements in accrdance with U.S. GAAP. We acknwledge and have fulfilled ur respnsibility fr the design, implementatin, and maintenance f internal cntrl relevant t the preparatin and fair presentatin f financial statements that are free frm material misstatement, whether due t fraud r errr. We acknwledge ur respnsibility fr the design, ~mplementatin, and maintenance f internal cntrl t prevent and detect fraud. We acknwledge ur respnsibility fr the des~gn, implementatin, and maintenance f internal cntrl ver the receipt and recrding f cntributins. Significant assumptins used by us in maklng accunting estimates, including thse measured at fair value, are reasnable. Significant estimates have been apprpriately accunted fr and disclsed in accrdance with the requirements f U.S. GAAP. Significant estimates are estimates at the financial statement date that culd change materially wlthin the next year. 1 Sufh We& Me W e 2380 Ch-, lnms @Wti 800.525.4352 Fax 312.9m.mfS www.llmfnnpmm.~
March 29,2013 Page 2 Related party relatinships and transactins, including, but nt limited t, accunts receivable r payable, and guarantees, have been apprpriately accunted fr and disclsed in accrdance with the requirements f U.S. GAAP. All events ccurring subsequent t the date f the financial statements and fr which U.S GAAP requires adjustment r disclsure have been adjusted r disclsed. N events have ccurred subsequent t the financial statement date and thrugh the date f this letter that wuld requlre adjustment t, r disclsure in, the financial statements. 8 The effects f uncrrected misstatements are immaterial, bth individually and in the aggregate, t the financial statements as a whle. A list f the uncrrected misstatements is attached t the representatin letter. In additin, yu have prpsed adjusting jurnal entries that have been psted t the Fundatin's accunts. We have reviewed and apprved thse adjusting jurnal entrles and understand the nature f the changes and their impact n the financial statements. We are in agreement with thse adjustments and accept respnsibility fr them. The effects f all knwn actval r pssible litigatin, claims, and assessments have been accunted fr and disclsed in accrdance with U.S. GAAP. We are nt aware f any pending r threatened litigatin, claims, r assessments r unasserted clalms r assessments that are required t be accrued r disclsed in the financial statements in accrdance with U.S. GAAP, and we have nt cnsulted a lawyer cncerning l~tigatin, cla~ms, r assessments. Receivables recrded in the financial statements represent valid cla~ms against debtrs fr sales r ther charges arising n r befre the financial statement date and have been reduced t their estimated net realizable value. There are n: Guarantees, whether written r ral, under which the Fundatin is cntingently liable, have been prperly recrded r disclsed in accrdance with U.S. GAAP. Arrangements with financial institutins invlving cmpensating balances r ther arrangements invlving restrictins n cash balances, lines f credit, r similar arrangements. Agreements t repurchase assets previusly sld. We have n plans r intentins that may materially affect the carrying value r classificatin f assets, liabilities, r net asset balances. 8 The Fundatin's federal excise tax returns fr 2009, 2010 and 2011 are subject t examinatin by the IRS, generally fr three years after they were filed. The Fundatin recgnizes tax benefits nly t the extent that the Fundatin believes it is "mre likely than nt" that its tax psitins will be sustained upn 1% examinatin. Designatins f net assets, r reclassificatins f net assets, have been prperly authrized, apprved, and reflected in the f~nanc~al statements.
March 29,2013 Page 3 Infrmatin Prvided We have prvided yu with: Access t all infrmatin, f which we are aware, that is relevant t the preparatin and fair presentatin f the financial statements such as recrds, dcumentatin, and ther matters. Additinal infrmatin that yu have requested frm us fr the purpse f the audit. Unrestricted access t persns within the Fundatin frm whm yu determined it necessary t btain audit evidence. Cmplete minutes f the meetings f the gverning bard and related cmmittees, r summaries f actins f recent meetingsfr which minutes have nt yet been prepared. There have been n cmmunicatins frm regulatry agencies cncerning nncmpliance with, r deficiencies in, financial reprting practices. All material transactins have been recrded in the accunting recrds and are reflected in the financial statements. We have disclsed t yu the results f ur assessment f the risk that the financial statements may be materially misstated asa result f fraud. We have n knwledge f any fraud r suspected fraud that affects the Fundatin and invlves: Management; a Emplyees wh have significant rles in internal cntrl; r Others when the fraud culd have a material effect n the financial statements We have n knwledge f any allegatins f fraud, r suspected fraud, affecting the Fundat~n's f~nancial statements cmmun~cated by emplyees, frmer emplyees, grantrs, regulatrs, r thers. We have n knwledge f any instances f nncmpliance r suspected nncmpliance with laws and regulatins and prvisins f cntracts and grant agreements, r abuse whse effects shuld be cnsidered when preparing financial statements. There are n ther material liabil~ties r gain r lss cntingencies that are required t be accrued r disclsed in accrdance with U.S. GAAP. We have disclsed t yu the identity f the Fundatin's related parties and all the related party relatinships and transactins f which we are aware. The Fundatin has satisfactry title t all wned assets, and there are n liens r encumbrances n such assets, nr has any asset been pledged as cllateral, except as made knwn t yu and disclsed in the financial statements.
March 29,2013 Page 4 We are respnsible fr cmpliance with the laws, regulatins, and prvisins f cntracts and grant agreements applicable t the Fundatin; and we have identified and disclsed t yu all laws, regulatins, and prvisins f cntracts and grant agreements that we believe have a direct and material effect n the determinatin f financial statement amunts r ther financial data significant t the audit bjectives. We have cmplied with all restrictins n resurces (including dnr restrictins) and all aspects f cntractual and grant agreements that wuld have a material effect n the financial statements in the event f nncmpliance. This includes cmplying with dnr requirements t maintain a specific asset cmpsitin necessary t satisfy their restrictins. The Fundatin is an exempt rganizatin under Sectin 501(c)(3) f the Internal Revenue Cde. Any activities f which we are aware that wuld jepardize the Fundatin's tax-exempt status, and all activities subject t tax n unrelated business incme r excise r ther tax, have been disclsed t yu. All required filings with tax authrities are up-t-date. We are respnsible fr determining whether we have received, expended, r therwise been the beneficiary f any federal awards during the perid f this audit. N federal award, received directly frm federal agencies r indirectly as a subrecipient, was expended in an amunt that cumulatively ttals frm all surces S500.000 r mre. Fr this representatin, "award" means financial assistance and federal cst-reimbursement cntracts that nn-federal entities receive directly frm federal awarding agencies r indirectly frm pass-thrugh entities. It des nt include prcurement cntracts, user grants, r cntracts used t buy gds r services frm vendrs. As pan f yur audit, yu prepared the draft financial statements and related ntes. We have designated an individual wh pssesses suitable skill, knwledge, and/r experience t understand and versee yur services; have made all management judgments and decisins; and have assumed all management respnsibilities. We have evaluated the adequacy and results f the service. We have reviewed, apprved, and accepted respnsibility fr thse financial statements and related ntes. Signature: Title: Secretarv & Chief Financial Officer Signature: Title: Chairman &Chief Executive Officer