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f Presentation to those Charged with Governance March 10, 2017 INTRODUCTIONS K NOWLEDGE Q UALITY C LIENT S ERVICE Engagement Team Leadership C LIENT S ERVICE SB & Company, LLC Cynthia Borders-Byrd, Audit Principal Q UALITY Chris

  1. f Presentation to those Charged with Governance March 10, 2017

  2. INTRODUCTIONS K NOWLEDGE Q UALITY C LIENT S ERVICE

  3. Engagement Team Leadership C LIENT S ERVICE SB & Company, LLC  Cynthia Borders-Byrd, Audit Principal Q UALITY  Chris Lehman, Audit Partner K NOWLEDGE 3

  4. EXECUTIVE SUMMARY K NOWLEDGE Q UALITY C LIENT S ERVICE

  5. Scope of Services C LIENT S ERVICE  Audit of the June 30, 2016, financial statements  Uniform Guidance Single Audit; Florida Single Audit; Chapter 10.650, Rules of the Auditor General; and Special Guidance Q UALITY Provided by the Florida Office of Early Learning  Preparation of the 2015 Federal Form 990  Available for year-round consultation K NOWLEDGE 5

  6. C LIENT S ERVICE Summary of the Results • Planning to issue an unmodified opinion on the financial statements • No material weaknesses noted • We did not discover any instances of fraud • Received full cooperation from management • Results: Q UALITY 2016 2015 2014 Change in Net Assets $ (12,354) $ (28,421) $ 43,124 Net Assets $ 261,602 $ 273,956 $ 302,377 • Audit journal entries • One proposed journal entry for compensated absences liability (restatement to beginning net assets) • No single audit findings K NOWLEDGE 6

  7. K NOWLEDGE Q UALITY C LIENT S ERVICE

  8. FORCAM Audit Approach C LIENT S ERVICE “Focus on Risk, Controls and Misstatement” Q UALITY K NOWLEDGE 8

  9. Assessment of Control Environment C LIENT S ERVICE Area Points to Consider Our Assessment  Key executive integrity, ethics, and behavior  Control consciousness and operating style  Commitment to competence Control  Exercise oversee responsibility Environment  Organizational structure, responsibility, and authority  Enforce accountability  HR policies and procedures  Define objectives and risk tolerances  Identify, analyze, and respond to risk  Assess fraud risk Q UALITY  Identify, analyze, and respond to change Risk Assessment  Mechanisms to anticipate, identify, and react to significant events  Processes and procedures to identify changes in GAAP, business practices, and internal control  Design control activities  Design activities for the information system  Implement control activities  Existence of necessary policies and procedures  Clear financial objectives with active monitoring Control Activities  Logical segregation of duties  Periodic comparisons of book-to-actual and physical count-to-books  Adequate safeguards of documents, records, and assets K NOWLEDGE  Assess controls in place Not effective Suggested improvements Effective 9

  10. Assessment of Control Environment C LIENT S ERVICE (continued) Area Points to Consider Our Assessment  Use quality information  Communicate internally  Communicate externally  Adequate performance reports produced from information systems  Information systems are connected with business strategy  Commitment of HR and finance to develop, test, and monitor IT Information and systems and programs Communication  Business continuity and disaster plan for IT Q UALITY  Established communication channels for employees to fulfill responsibilities  Adequate communication across organization  Perform monitoring activities  Remediate deficiencies Monitoring  Periodic evaluations of internal controls  Implementation of improvement recommendations Not effective K NOWLEDGE Suggested improvements Effective 10

  11. Significant Accounts and Processes C LIENT S ERVICE Q UALITY K NOWLEDGE 11

  12. Evaluation of Key Processes C LIENT S ERVICE Process Function A B C D Design Operation  Cash Management  Investment Accounting  Investment Monitoring    Treasury  Investment Valuation  Investment Policy  Reconciliation  Methodology     Information Estimation Q UALITY  Calculation  Accounting Principles and Disclosure  Closing the Books  Report Preparation Financial     General Ledger and Journal Entry Reporting Processing  Verification and Review of Results Not effective A Understand the Process C What Can Go Wrong Suggested improvements B Walk-Through D Test of Control K NOWLEDGE Effective 12

  13. Evaluation of Key Processes C LIENT S ERVICE (continued) Process Function A B C D Design Operation  Purchasing  Receiving      Accounts Payable and Cash Expenditures Disbursement  Purchase Card Transactions  Hiring  Attendance Reporting Q UALITY  Payroll Accounting and Processing     Payroll  Payroll Disbursements  Separation  Billing  Cash Receipts     Revenue  Revenue Recognition  Cutoff Not effective A Understand the Process C What Can Go Wrong Suggested improvements B Walk-Through D Test of Control K NOWLEDGE Effective 13

  14. Evaluation of Key Processes C LIENT S ERVICE (continued) Process Function A B C D Design Operation  Physical Custody    Fixed Assets  Asset Accounting  Assess Internal and External Risk  Regulatory Compliance     Compliance  Monitor Compliance Q UALITY  Grant Compliance  Program Integrity and Change Management  Information Security and Transaction Information    Authorization Technology  Segregation of Duties and Management Oversight  Computer Operations K NOWLEDGE Not effective A Understand the Process C What Can Go Wrong Suggested improvements B Walk-Through D Test of Controls Effective 14

  15. Key Accounts Assertions C LIENT S ERVICE and Audit Results Key Accounts Assertions Results Cash Existence Grants receivable Existence, Valuation Accounts payable and accrued expenses Completeness Due to providers Completeness Q UALITY Revenue and support Occurrence Expenses Completeness Material adjustments Immaterial adjustments No adjustments K NOWLEDGE 15

  16. K NOWLEDGE Q UALITY C LIENT S ERVICE

  17. Financial Statement Highlights C LIENT S ERVICE STATEMENT OF NET ASSETS JUNE 30, 2016, 2015 and 2014 2016 2015 2014 ASSETS Cash $ 385,408 $ 416,358 $ 225,273 Grants receivable 7,373,496 6,693,130 6,769,242 Advance to providers 13,626 14,659 13,837 Prepaid expenses 36,990 27,744 28,008 Furniture and equipment, net 10,758 22,090 33,259 Total Assets $ 7,820,278 $ 7,173,981 $ 7,069,619 Q UALITY LIABILITIES AND NET ASSETS $ 182,358 Accounts payable and accrued expenses $ 353,633 $ 259,894 38,061 Advances from OEL 16,974 13,370 Due to providers: Family Central 161,757 6,057,878 5,906,740 School Board of Broward 174,198 189,497 325,946 Nova Southeastern University 170,863 170,702 170,776 Children's Forum 10,634 111,341 90,516 Broward Regional Health Planning Commission 6,693,914 - - 211 Broward 126,891 - - K NOWLEDGE Total Liabilities 7,558,676 6,900,025 6,767,242 Net Assets Unrestricted 261,602 273,956 302,377 Total Liabilities and Net Assets $ 7,820,278 $ 7,173,981 $ 7,069,619 17

  18. Financial Statement Highlights (continued) C LIENT S ERVICE STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS FOR THE YEARS ENDED JUNE 30, 2016, 2015 and 2014 2016 2015 2014 Revenue and Support Federal grants $ 46,586,840 $ 44,699,749 $ 43,728,739 State grants 39,065,527 38,232,900 37,381,831 Children's Services Council of Broward County 7,028,509 4,395,576 6,012,827 Other income 85,848 57,625 26,515 Total Revenue and Support 92,766,724 87,385,850 87,149,912 Q UALITY Expenses Program Services School Readiness (SR) 44,591,310 39,410,957 41,881,079 Voluntary Pre-kindergarten (VPK) 37,471,489 36,715,668 34,443,335 Entrance/Refugees 74,117 - - Program support and administration 8,780,679 9,645,901 9,105,040 Total Program Services 90,917,595 85,772,526 85,429,454 1,861,483 General and administrative 1,615,055 1,627,715 - Fundraising 26,690 49,619 Total Expenses 92,779,078 87,414,271 87,106,788 K NOWLEDGE Change in unrestricted net assets (12,354) (28,421) 43,124 Net assets, beginning of year 273,956 302,377 259,253 Net Assets, End of Year $ 261,602 $ 273,956 $ 302,377 18

  19. Single Audit Results C LIENT S ERVICE CFDA Federal Major Federal Program Number Expenditures Temporary Assistance for Needy Families (TANF) 93.558 $ 7,994,928 Temporary Assistance for Needy Families 5,648,389 Maintenance of Effort Funds 93.558 Total TANF $ 13,643,317 Total Expenditures of Federal Awards $ 46,586,840 Q UALITY Percentage Coverage 29% CFDA Federal Major Florida State Program Number Expenditures Florida Office of Early Learning Voluntary Pre-Kindergarten Services 48.108 $ 38,969,526 Voluntary Pre-Kindergarten Services 48.108 96,001 Total Florida Office of Early Learning $ 39,065,527 Total Expenditures of State Financial Assistance $ 39,065,527 Percentage Coverage 100% K NOWLEDGE 19

  20. K NOWLEDGE Q UALITY C LIENT S ERVICE

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