FLORIDA PREGNANCY CARE NETWORK, INC. Tallahassee, Florida FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION Years Ended December 31, 2009 and 2008 CONTENTS INDEPENDENT AUDITORS' REPORT.................................................................................. 1 - 2 FINANCIAL STATEMENTS Statements of Financial Position....................................................................................................3 Statements of Activities .................................................................................................................4 Statements of Cash Flows..............................................................................................................5 Notes to Financial Statements.................................................................................................. 6 - 7 SUPPLEMENTARY INFORMATION Schedule of Functional Expenses ..................................................................................................8 ADDITIONAL ELEMENTS OF REPORTS PREPARED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS AND WITH CHAPTER 10.650, RULES OF THE AUDITOR GENERAL Schedule of Expenditure of State Financial Assistance.................................................................9 INDEPENDENT AUDITORS’ 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 ........................................................................ 10 - 11 INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR STATE PROJECT AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH CHAPTER 10.650, RULES OF THE AUDITOR GENERAL ................................ 12 - 13 Schedule of Findings and Questioned Costs.......................................................................... 14 - 15 INDEPENDENT AUDITORS' REPORT Board of Directors Florida Pregnancy Care Network, Inc. Tallahassee, Florida We have audited the accompanying statements of financial position of Florida Pregnancy Care Network, Inc. (a nonprofit organization) as of December 31, 2009 and 2008, and the related statements of activities and cash flows for the years then ended. These financial statements are the responsibility of management of Florida Pregnancy Care Network, Inc. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Florida Pregnancy Care Network, Inc. as of December 31, 2009 and 2008, and the changes in its net assets and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have issued our report dated July 29, 2010 on our consideration of Florida Pregnancy Care Network, Inc.’s internal control over financial reporting and our tests of its compliance with certain provision of laws, regulations, contracts and grant agreements and other matters. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Our audit was performed for the purpose of forming an opinion on the basic financial statements of Florida Pregnancy Care Network, Inc. taken as a whole. The accompanying schedule of functional expenses is presented for purposes of additional analysis and is not a required part of the basic financial statements. The accompanying schedules of expenditures of state financial assistance and findings and questioned costs are presented for purposes of additional analysis as required by Florida Statute 215.97, Florida Single Audit Act, and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the financial statements taken as a whole. July 29, 2010 FLORIDA PREGNANCY CARE NETWORK, INC. STATEMENTS OF FINANCIAL POSITION December 31, 2009 and 2008 2009 2008 ASSETS CURRENT ASSETS Cash Grants receivable Prepaid insurance Security deposit $ TOTAL CURRENT ASSETS 462 150,255 1,547 825 $ 13,623 172,215 2,519 825 153,089 189,182 3,340 4,475 $ 156,429 $ 193,657 $ $ PROPERTY AND EQUIPMENT, net LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable and accrued expenses Service provider payables TOTAL CURRENT LIABILITIES NET ASSETS Unrestricted See accompanying notes. -3- 7,679 120,375 2,033 150,148 128,054 152,181 28,375 41,476 $ 156,429 $ 193,657 FLORIDA PREGNANCY CARE NETWORK, INC. STATEMENTS OF ACTIVITIES Years Ended December 31, 2009 and 2008 2009 UNRESTRICTED REVENUE AND SUPPORT FPSSP Grant/Contract Contributions Other income 2008 $ 961,954 2,275 3 $ 913,663 2,100 303 964,232 916,066 951,317 26,016 891,931 26,343 977,333 918,273 TOTAL UNRESTRICTED REVENUE AND SUPPORT EXPENSES FPSS Program General and administrative TOTAL EXPENSES CHANGE IN UNRESTRICTED NET ASSETS ( NET ASSETS, BEGINNING OF YEAR 13,101) ( 41,476 NET ASSETS, END OF YEAR See accompanying notes. -4- $ 28,375 2,207) 43,683 $ 41,476 FLORIDA PREGNANCY CARE NETWORK, INC. STATEMENTS OF CASH FLOWS Years Ended December 31, 2009 and 2008 2009 CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets Adjustments to reconcile change in net assets to net cash used in operating activities: Depreciation expense (Increase) decrease in: Grants receivable Prepaid expenses Increase (decrease) in: Accounts payable and accrued expenses Service provider payables 2008 $ ( 13,101) $( 1,135 NET CASH USED IN OPERATING ACTIVITIES ( ( 63,830) 171) 5,646 29,773) ( ( 635) 64,977 ( 13,161) ( 974) - ( 1,973) - ( 1,973) ( 2,947) NET CASH USED IN INVESTING ACTIVITIES ( CASH, BEGINNING OF YEAR 892 21,960 972 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of fixed assets NET DECREASE IN CASH 13,161) 13,623 CASH, END OF YEAR $ See accompanying notes. -5- 2,207) 462 16,570 $ 13,623 FLORIDA PREGNANCY CARE NETWORK, INC. NOTES TO FINANCIAL STATEMENTS Years Ended December 31, 2009 and 2008 NOTE 1 – NATURE OF ACTIVITIES AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Activities Florida Pregnancy Care Network, Inc. (“the Network”) was incorporated as a Florida nonprofit corporation on August 25, 2005, for the purpose of increasing the availability, quality and awareness of pregnancy support services across the state of Florida. In 2006, the Network began conducting its social service purpose with funding from a contract titled Florida Pregnancy Support Services Program (“FPSSP”). The Network receives funding from Florida Department of Health, Division of Family Health Services to provide deliverable services that include the development and operation of a statewide toll-free hotline; the development of a plan to identify, qualify and train local pregnancy service providers to participate in the program; and the development of a quality assurance, monitoring and compliance plan to oversee that the providers use the state financial assistance in accordance with applicable laws and regulations. Basis of Accounting The Network’s financial statements have been prepared using the accrual basis of accounting. Accordingly, revenue is recognized when earned and expenses when incurred. Basis of Presentation Net assets and changes in net assets of the Network are classified and reported as unrestricted when net assets are not subject to donor-imposed stipulations. Revenue is reported as increases in unrestricted net assets unless use of the related assets is limited by donorimposed restrictions. Expenses are reported as decreases in unrestricted net assets. Gains and losses on assets or liabilities are reported as increases or decreases in unrestricted net assets unless their use is restricted by explicit donor stipulation or by law. Temporarily restricted revenue in which the restrictions lapse in the same period as the revenue is earned is reported as increases to unrestricted net assets. Cash and Cash Equivalents The Network considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Allowance for Doubtful Accounts The Network’s records an allowance for doubtful accounts when it considers the ability to collect a receivable is questionable. Property and Equipment Property and equipment consists of office furniture and equipment. All property acquired by the organization is capitalized. Purchased assets are recorded at cost or fair value if contributed; depreciation is provided over the estimated useful lives of the respective assets on a straight-line basis. Income Tax Status The Network is a not-for-profit organization that has exempt status from income taxes under Section 501(c)(3) of the Internal Revenue Code. Contributions All contributions including unconditional promises to give, are recognized as revenue in the period the contribution or promise is received. All contributions are available for unrestricted use unless specifically restricted by the donor. All in-kind contributions are recorded at fair value in the period donated. -6- FLORIDA PREGNANCY CARE NETWORK, INC. NOTES TO FINANCIAL STATEMENTS Years Ended December 31, 2009 and 2008 NOTE 1 – NATURE OF ACTIVITIES AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Donated Services Donated services are recognized as contributions in accordance with SFAS No. 116, Accounting for Contributions Received and Contributions Made, if the services (a) create or enhance nonfinancial assets or (b) require specialized skills, are performed by people with those skills, and would otherwise be purchased by the Network. Estimates The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Subsequent Events Management has performed an analysis of the activities and transactions subsequent to December 31, 2009 to determine the need for any adjustments to and/or disclosures within the audited financial statements for the year ended December 31, 2009. Management has performed their analysis through the date of this report. Reclassifications Functional account classifications in the prior-year financial statements have been reclassified for comparative purposes to conform with the presentation in the current –year financial statements. NOTE 2 – PROPERTY AND EQUIPMENT Property and equipment consisted of the following: 2009 $ 6,138 ( 2,798) $ 3,340 Office furniture and equipment Less accumulated depreciation $ ( $ 2008 6,138 1,663) 4,475 Depreciation expense for the years ended December 31, 2009 and 2008 amounted to $1,135 and $892 respectively. NOTE 3 – CONCENTRATIONS The Network’s main source of revenue is derived from funds received from the Florida Department of Health Division of Family Health Services. For the years ended December 31, 2009 and 2008, the Network received funds from one contract that comprised 99% of its total revenue for both years, respectively. NOTE 4 - FUNCTIONAL ALLOCATION OF EXPENSES The costs of providing the various programs and activities have been summarized on a functional basis in the statement of activities. Accordingly, certain costs have been allocated among the programs and supporting services benefited. -7- SUPPLEMENTARY INFORMATION FLORIDA PREGNANCY CARE NETWORK, INC. SCHEDULE OF FUNCTIONAL EXPENSES Year Ended December 31, 2009 (With Comparative Totals for 2008) FPSS Program Direct counseling Salaries & wages Call center Yellow page advertising Accounting & legal Rent Payroll taxes Travel Employee benefit Supplies Telephone & communications Insurance Depreciation IT support Printing Postage & delivery Equipment rental Other expenses $ $ 790,956 $ 84,498 21,918 16,262 9,749 5,258 6,526 6,180 3,058 2,849 1,078 1,055 640 619 566 105 951,317 $ See independent auditors' report. -8- General and Administrative - $ 9,000 12,676 513 1,753 161 150 1,549 57 55 34 33 30 5 26,016 $ 2009 Total 790,956 $ 93,498 21,918 16,262 12,676 10,262 7,011 6,526 6,180 3,219 2,999 1,549 1,135 1,110 674 652 596 110 977,333 $ 2008 Total 729,758 90,103 24,153 19,490 13,027 10,075 7,215 7,299 5,460 1,992 3,331 1,498 892 1,102 462 956 523 937 918,273 ADDITIONAL ELEMENTS OF REPORTS PREPARED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS AND WITH CHAPTER 10.650, RULES OF THE AUDITOR GENERAL FLORIDA PREGNANCY CARE NETWORK, INC. SCHEDULE OF EXPENDITURES OF STATE FINANCIAL ASSISTANCE Year Ended December 31, 2009 Grantor/Program Title CFSA Number Contract Number Transfers to Expenditures Subrecipients STATE Florida Department of Health Pregnancy Support Services Program 64.080 Total expenditures of state financial assistance COSX2/COH5P $ 975,058 829,136 975,058 $ 829,136 Notes to Schedule of Expenditures of State Financial Assistance Basis of Presentation The accompanying schedule of expenditures of state financial assistance includes the state grant activity of Florida Pregnancy Care Network, Inc. and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of Chapter 69I-5, Rules of the Florida Department of Financial Services, Florida Administrative Code, Schedule of Expenditures of State Financial Assistance. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of the financial statements. See independent auditor's report. -9- INDEPENDENT AUDITORS' 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 Board of Directors Florida Pregnancy Care Network, Inc. Tallahassee, Florida We have audited the financial statements of Florida Pregnancy Care Network, Inc. (the Network) as of and for the year ended December 31, 2009, and have issued our report thereon dated July 29, 2010. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered the Network's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Network's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Network's internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. 13 Compliance and Other Matters As part of obtaining reasonable assurance about whether the Network’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. This report is intended solely for the information and use of management, Board of Directors and State awarding agencies and is not intended to be and should not be used by anyone other than these specified parties. July 29, 2010 INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR STATE PROJECT AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH CHAPTER 10.650, RULES OF THE AUDITOR GENERAL Board of Directors Florida Pregnancy Care Network, Inc. Tallahassee, Florida Compliance We have audited the compliance of Florida Pregnancy Care Network, Inc. (the Network) with the types of compliance requirements described in the Department of Financial Services’ State Projects Compliance Supplement, that are applicable to its major State project for the year ended December 31, 2009. The Network’s major State project is identified in the summary of auditors’ results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to its major State project is the responsibility of the Network’s management. Our responsibility is to express an opinion on the Network’s compliance based on our audit. We conducted our audit in accordance with standards generally accepted in the United States of America; the standards applicable to financial statement audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and Chapter 10.650, Rules of the Auditor General. Those standards and the Chapter 10.650, Rules of the Auditor General, require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major State project occurred. An audit includes examining, on a test basis, evidence about the Network’s compliance with these requirements and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of the Network’s compliance with those requirements. In our opinion, the Network complied, in all material respects, with the requirements referred to above that are applicable to its major State project for the year ended December 31, 2009. Internal Control Over Compliance The management of the Network is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to State projects. In planning and performing our audit, we considered the Network’s internal control over compliance with the requirements that could have a direct and material effect on a major State project in order to determine our auditing procedures for the purpose of expressing our opinion on compliance but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Network’s internal control over compliance. A control deficiency in an entity’s internal control over compliance exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect noncompliance with a type of compliance requirement of a State project on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity’s ability to administer a State project such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a State project that is more than inconsequential will not be prevented or detected by the entity’s internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material noncompliance with a type of compliance requirement of a State project will not be prevented or detected by the entity’s internal control. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. This report is intended solely for the information and use of the Network’s management, State awarding agencies and pass-through entities, and is not intended to be and should not be used by anyone other than these specified parties. July 29, 2010 FLORIDA PREGNANCY CARE NETWORK, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ended December 31, 2009 Part A - SUMMARY OF AUDIT RESULTS 1. The independent auditors’ report expresses an unqualified opinion on the basic financial statements of Florida Pregnancy Care Network, Inc. 2. No control deficiencies were disclosed during the audit of the financial statements of Florida Pregnancy Care Network, Inc. 3. No instances of noncompliance material to the financial statements of Florida Pregnancy Care Network, Inc. were disclosed during the audit. 4. No control deficiencies relating to internal control and compliance over major State project were disclosed. 5. The independent auditors’ report on compliance with requirements applicable to each state project for Florida Pregnancy Care Network, Inc. expresses an unqualified opinion. 6. Audit findings relative to the major State projects of Florida Pregnancy Care Network, Inc. are reported on Part C and D of this Schedule. 7. The State project tested as a major program included: Florida Department of Health, CFSA Number 64.080. 8. The threshold used to distinguish between Type A and B State projects was $300,000. See independent auditor’s report. - 14 - FLORIDA PREGNANCY CARE NETWORK, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ended December 31, 2009 Part B - FINDINGS - FINANCIAL STATEMENTS AUDIT 1. No matters were reported. Part C - FINDINGS AND QUESTIONED COSTS – MAJOR STATE PROJECT 1. No matters were reported. Part D - PRIOR YEAR FINDINGS AND QUESTIONED COSTS – MAJOR STATE PROJECT Finding Significant Deficiency Number 2008-1 1. Financial Reporting Condition: A key aspect of effective internal control is the entity’s ability to prepare financial statements in accordance with accounting principles generally accepted in the United States of America, which includes the selection and application of accounting policies affecting the financial statements. For the year ended 6/30/08, management and the contracted accountant of the Organization did not possess the qualifications and training to fulfill this function. Auditors’ Recommendation: Due to the Network’s limited resources, we did not recommend management acquire the necessary expertise to produce financial statements in accordance with generally accepted accounting principles. However, we did recommend the Board consider expanding its membership to include a Certified Public Accountant who is familiar with nonprofit accounting pronouncements and can advise management in the preparation and review of both internally and externally prepared financial statements. Current Status: The finding has been corrected by management with the successful recruitment of a Certified Public Accountant to serve on its Board of Directors. Part E - MANAGEMENT LETTER 1. No matters were reported. See independent auditor’s report. - 15 -