Hamilton Family Center FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS ... · Hamilton Family Center FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT June 30, 2014 with comparative

Hamilton Family Center

FINANCIAL STATEMENTS AND

INDEPENDENT AUDITORS' REPORT

June 30, 2014 with comparative totals for 2013

CONTENTS

Page INDEPENDENT AUDITORS’ REPORT 3 FINANCIAL STATEMENTS

STATEMENT OF FINANCIAL POSITION 5 STATEMENT OF ACTIVITIES 6 STATEMENT OF FUNCTIONAL EXPENSES 7 STATEMENT OF CASH FLOWS 8 NOTES TO FINANCIAL STATEMENTS 9

SUPPLEMENTAL INFORMATION

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 18 NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL 19 AWARDS 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 20 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 22 SCHEDULE OF FINDINGS AND QUESTIONED COSTS 24

DZH Phillips LLP 135 Main Street, 9th Floor San Francisco, CA 94105

P 415 781 2500 F 415 781 2530 E [email protected]

DZH Phillips LLP 1330 Broadway, Suite 630 Oakland, CA 94612

P 510 834 6542 F 510 834 2556 E [email protected]

INDEPENDENT AUDITORS' REPORT Board of Directors Hamilton Family Center Report on the Financial Statements We have audited the accompanying financial statements of Hamilton Family Center (a California non-profit organization), which comprise the statement of financial position as of June 30, 2014, and the related statements of activities, functional expenses and cash flows for the year then ended, and the related notes to the financial statements. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Center’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Center’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Hamilton Family Center as of June 30, 2014, and the change in its net assets and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

INDEPENDENT AUDITORS' REPORT (continued)

Report on Summarized Comparative Information

We have previously audited Hamilton Family Center’s 2013 financial statements, and our report dated October 23, 2013, expressed an unmodified opinion on those audited financial statements. In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2013, is consistent, in all material respects, with the audited financial statements from which it has been derived.

Other Matters Other Information Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying schedule of expenditures of federal awards, as required by Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, is presented for additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 30, 2014, on our consideration of Hamilton Family Center’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Hamilton Family Center’s internal control over financial reporting and compliance.

San Francisco, California December 30, 2014


STATEMENT OF FINANCIAL POSITION June 30, 2014 with comparative totals for 2013

The accompanying notes are an integral part of this statement. 5

2014 2013ASSETS

Cash and cash equivalents 286,594 124,168$ Cash held in trust for residents 34,165 38,439 Contracts receivable 1,201,337 627,395 Pledges receivable 77,360 129,783 Other receivables 13,750 - Prepaid expenses and other assets 12,604 5,020 Property and equipment ‑ net 4,203,386 4,397,213 Other assets

Restricted reserves - transitional housing 539,282 568,268 Restricted cash - program 204,037 346,747 Building maintenance fund 250,000 250,000

6,822,515$ 6,487,033$

LIABILITIESAccounts payable 141,541$ 93,637$ Amounts due to residents 34,165 38,983Accrued wages and benefits 208,648 224,021 Due to other agencies 285,047 89,444

Total liabilities 669,401 446,085

COMMITMENTS - -

NET ASSETSUnrestricted 860,628 1,021,019 Temporarily restricted 5,292,486 5,019,929

Total net assets 6,153,114 6,040,948

6,822,515$ 6,487,033$

LIABILITIES AND NET ASSETS

ASSETS


STATEMENT OF ACTIVITIES

Year ended June 30, 2014 with comparative totals for 2013


2013

UnrestrictedTemporarily Restricted Total Total

Government grants and contracts 4,907,915$ -$ 4,907,915$ 4,934,232$ Grants and contributions 444,542 592,260 1,036,802 706,638 In-kind contributions 369,380 - 369,380 222,339 Fee income 60,327 - 60,327 58,723 Special events - net of direct expenses of $48,452 and $74,020 for 2014 and 2013, respectively 33,684 - 33,684 2,362 Interest income 1,511 - 1,511 2,430 Other income 10,609 - 10,609 22,222

5,827,968 592,260 6,420,228 5,948,946Net assets released from restrictions 319,703 (319,703) - -

Total revenues and support 6,147,671 272,557 6,420,228 5,948,946

Expenditures:Program services 5,450,905 - 5,450,905 5,433,544 Management and general 645,712 - 645,712 636,895 Fundraising 211,445 - 211,445 155,988

Total expenditures 6,308,062 - 6,308,062 6,226,427

CHANGE IN NET ASSETS (160,391) 272,557 112,166 (277,481)

Net assets - beginning of year 1,021,019 5,019,929 6,040,948 6,318,429

Net assets - end of year 860,628$ 5,292,486$ 6,153,114$ 6,040,948$

2014


STATEMENT OF FUNCTIONAL EXPENSES



2013

Transitional Housing

Family Residence First Avenues

Permanent Housing Total

Management & General Fund Raising Total Total

Salaries 437,144$ 1,166,528$ 511,021$ 180,756$ 2,295,449$ 408,031$ 112,375$ 2,815,855$ 2,866,752$ Employee benefits 147,492 390,092 151,057 54,235 742,876 70,780 14,222 827,878 587,178 Payroll taxes 33,718 85,058 38,059 12,801 169,636 28,545 8,820 207,001 210,300

Total personnel costs 618,354 1,641,678 700,137 247,792 3,207,961 507,356 135,417 3,850,734 3,664,230

Building repairs and maintenance 38,943 46,613 2,337 106 87,999 740 - 88,739 109,727 Children's supplies and activities 12,253 9,223 4,690 5,184 31,350 - 2,579 33,929 37,275 Client activities 81,168 155,484 138,252 20,436 395,340 - - 395,340 198,545 Client financial assistance - - 862,226 - 862,226 - - 862,226 1,115,602 Computer supplies/services 16,868 53,708 16,560 6,947 94,083 10,938 7,921 112,942 161,230 Consultants and contractors 27,089 450 780 520 28,839 65,090 39,854 133,783 80,288 Depreciation 113,828 85,103 8,997 638 208,566 15,197 1,927 225,690 242,683 Equipment maintenance

and rental 7,774 13,162 4,523 1,664 27,123 2,028 423 29,574 28,261 Fees and subscriptions 2,786 3,581 2,039 747 9,153 4,542 2,715 16,410 27,393 Food services - 112,593 - 4,186 116,779 - - 116,779 127,803 Hiring expense 1,906 2,852 78 668 5,504 6,469 1,120 13,093 5,751 Insurance 15,096 19,622 7,092 2,556 44,366 3,120 660 48,146 39,627 Laundry services - 8,232 - - 8,232 - - 8,232 6,028 Legal fees - 5,000 - - 5,000 5,000 - 10,000 - Miscellaneous - 1,000 - - 1,000 8 1,714 2,722 2,115 Office supplies 3,224 6,681 4,178 602 14,685 6,450 3,139 24,274 24,601 Payroll service 2,140 5,963 2,149 776 11,028 1,532 201 12,761 12,838 Printing - - - - - - 3,828 3,828 6,225 Program supplies 10,145 49,197 155 - 59,497 - - 59,497 73,224 Public relations expense - - - - - 24 7,273 7,297 7,286 Office rent - - 56,385 - 56,385 - - 56,385 59,516 Staff training and development 2,241 6,448 5,303 820 14,812 9,777 1,671 26,260 31,218 Telephone 5,091 13,421 7,179 532 26,223 5,416 254 31,893 38,877 Transportation expenses 1,228 2,729 4,792 10 8,759 857 457 10,073 15,941 Utilities expense 55,866 67,729 2,400 - 125,995 1,168 292 127,455 110,143

Total expenses 1,016,000$ 2,310,469$ 1,830,252$ 294,184$ 5,450,905$ 645,712$ 211,445$ 6,308,062$ 6,226,427$

Program Services2014

Supportive Services


STATEMENT OF CASH FLOWS



2014 2013Cash flows (used in) provided by operating activities

Change in net assets 112,166$ (277,481)$ Adjustments to reconcile changes in net assets to net cash provided by operating activities:

Depreciation 225,690 242,683 Changes in operating assets and liabilities

Cash held in trust for residents 4,274 (10,600) Contracts receivable (573,942) (244,542) Pledges receivable 52,423 (129,783) Other receivables (13,750) - Prepaid expenses (7,584) 37,038 Accounts payable 47,904 31,549 Amounts due to residents (4,818) 10,847 Accrued wages and benefits (15,373) 17,189 Due to other agencies 195,603 8,932

Net cash provided (used in) by operating activities 22,593 (314,168) Cash flows provided by (used in) investing activities:

Draws from operating and cash reserves - 29,748 Draws from (deposits to) restricted cash 142,710 233,159 Draws from (deposits to) building maintenance fund - 35,870 Net investments in certificates of deposit and money

market funds 28,986 9,084 Purchases of equipment and improvements (31,863) (74,711)

Net cash provided by investing activities 139,833 233,150

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 162,426 (81,018)

Cash and cash equivalents - beginning of year 124,168 205,186

Cash and cash equivalents - end of year 286,594$ 124,168$

Supplemental disclosure of non-cash operating and financing activities:Computer equipment included in accounts payable -$ 17,550$


NOTES TO FINANCIAL STATEMENTS

June 30, 2014

9

NOTE A - NATURE OF ACTIVITIES AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of activities Hamilton Family Center (the Center) is a California non-profit public benefit corporation that has been working to prevent homelessness since 1985, and offers care at every level. The Center is the largest provider of shelter and support services for homeless families in San Francisco, helping hundreds of families a year. The Center's mission is to end homelessness for the families and individuals served by providing a safe, stable home environment that promotes the dignity of each person. The Center offers comprehensive support services, including case management, counseling, educational and recreational programs for children, aftercare services, housing referral, advocacy, and financial assistance. Through these services, the Center enhances the prospect of securing permanent housing and achieving self-sufficiency. Private and corporate donors, governmental agencies, and a dedicated group of volunteers partner with Hamilton staff to help families in San Francisco leave homelessness behind permanently. The Center's programs include: Transitional Housing

Hamilton Family Transitional Program: This program offers 20 families temporary housing in their own apartments and comprehensive support services for up to 18 months. The Transitional Program gives them time to identify and address the causes of their homelessness. Families improve budgeting, parenting, and other life skills while preparing for economic and housing stability.

Family Residence

Hamilton Family Residences: This is the largest homeless family shelter in San Francisco. It offers up to six months of shelter while providing comprehensive support services that include case management, three meals a day, employment and life skills training, referrals, and assistance securing housing. Hamilton Family Emergency Center: This program offers newly homeless families 24-hour access to emergency overnight shelter or a place to stay for 60 days. It provides basic services that include a clean and safe bed, three meals a day and crisis intervention counseling and support. The Center also offers onsite medical services.


NOTES TO FINANCIAL STATEMENTS (continued)

June 30, 2014

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NOTE A - NATURE OF ACTIVITIES AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

First Avenues

First Avenues - Housing Solutions for Families: This program is designed to move families into permanent housing as quickly as possible, and to assist at-risk families to avoid eviction. Some of the core elements of the program include: the allocation of more resources toward the goal of preventing families from entering shelter; enhanced home-based support services; temporary rental subsidies; and rapidly re-housing families who are in shelter programs. The Center's staff works with families to clear eviction and credit problems, follow a savings plan, secure rental units, and access move-in grants. Families continue to benefit from services and support for a full year after they leave the shelter. Case managers make home visits, provide personal direction, and help families access local resources such as counseling, child care, health care, parenting classes, and support groups.

Permanent Housing

The Dudley Apartments: The Center offers onsite social services to formerly homeless families, and extremely low income seniors and single adults living in this 75-unit permanent supportive housing program created in partnership with Mercy Housing California. Staff help residents stabilize their lives and address issues such as mental health, domestic violence, substance abuse, and physical disabilities. The Dudley Apartments is a crucial resource for chronically homeless families and individuals and offers them a permanent housing solution.

Children and Youth Services

Children and Youth services are a crucial element of breaking the homelessness cycle, providing special care for the most vulnerable. The Center offers daily recreational and enrichment activities for children from birth to age 17 in a safe, supportive environment where homelessness carries no stigma. These services are offered within each of the above programs.



June 30, 2014

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Basis of presentation The Center reports information regarding its financial position and activities according to three classes of net assets: unrestricted, temporarily restricted and permanently restricted. Description of net assets Unrestricted Net Assets The portion of net assets that is neither temporarily restricted nor permanently restricted by donor restriction. Temporarily Restricted Net Assets The portion of net assets for which use by the Center is limited by donor-imposed stipulations that either expire by passage of time or can be fulfilled and removed by actions of the Center. Permanently Restricted Net Assets The portion of net assets for which use by the Center is limited by donor-imposed stipulations that neither expire by passage of time nor can otherwise be removed by actions of the Center. At June 30, 2014, the Center did not have any permanently restricted net assets. Basis of accounting The Center maintains its records using the accrual method of accounting. Cash and cash equivalents For purposes of the statement of cash flows, the Center considers all unrestricted, highly liquid investments with an initial maturity of three months or less to be cash equivalents. Unrestricted cash held in certificates of deposit and money market funds intended to be used for long-term purposes is not included in cash and cash equivalents. Financial instruments that potentially subject the Center to concentrations of credit risk consist principally of cash and cash equivalents. Risks associated with cash and cash equivalents are mitigated by banking with creditworthy institutions. Such balances with any one institution may, at times, be in excess of federally insured amounts. The Center has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk.



June 30, 2014

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Other assets Other assets consist of restricted reserves mandated by regulatory requirements (Note D) or donors, held in money market accounts and certificates of deposit held for long term purposes and restricted cash.

Property and equipment Property and equipment purchased with estimated useful lives in excess of one year are capitalized at cost. Donated assets are capitalized at the fair market value on the date of receipt. Depreciation is computed on the straight-line method using estimated useful lives varying between five and forty years. Functional allocation of expenses Expenses are charged to programs and supporting services on the basis of periodic time and expense studies as well as estimates made by management. General and administrative expenses include those expenses that are not directly identifiable with any other specific function but provide for the overall support and direction of the Center. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenditures during the reporting period. Actual results could differ from those estimates.



June 30, 2014

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Income taxes The Center is exempt from paying federal and state income taxes under Internal Revenue Code Section 501(c)(3) and by the California Revenue and Taxation Code under Section 23701d. Accordingly, no provision has been made for such taxes in the accompanying financial statements. Each year, the Board management considers whether any material tax position the Center has taken is more likely than not to be sustained upon examination by the applicable taxing authority. Management believes that any position the Center has taken is supported by substantial authority and hence do not need to be measured or disclosed in these financial statements. Tax returns for years subsequent to June 30, 2010 are subject to examination by the applicable authorities. Recognition of revenue Contributions and grants are recognized when the donor/grantor makes an unconditional promise to give to the Center. Amounts that are restricted by the donor/grantor are reported as increases in temporarily restricted net assets or permanently restricted net assets depending on the nature of the restrictions. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets. Contributions and pledges receivable are reviewed for collectability, and reserves for uncollectible amounts are established when needed. Contracts receivable represent balances due from the City and County of San Francisco for contract services and are stated at the amount management expects to collect from outstanding balances. Should it become necessary, management will provide for probable uncollectible amounts through a provision for bad debt expense based on its assessment of the current status of individual accounts. Balances remaining after management used reasonable collection efforts would be written off through a charge to bad debt expense.

Subsequent events Management has evaluated events and transactions for potential recognition or disclosure through December 30, 2014, which represents the date the financial statements were available to be issued.



June 30, 2014

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NOTE B - PROPERTY AND EQUIPMENT Property and equipment consist of the following:

Land - transitional housing 738,016$ Building - transitional housing 4,974,812Program equipment 218,889Office equipment 337,948Agency vehicles 79,429Leasehold improvements 842,141Building improvements 13,697

7,204,932

Less: accumulated depreciation (3,001,546)

4,203,386$

For the year ended June 30, 2014, depreciation expense was $225,690.

NOTE C - TEMPORARILY RESTRICTED NET ASSETS

Temporarily restricted net assets at June 30, 2014 are restricted for the following purposes:

Children's Programs $ 2,720 Transitional housing program 384,985 First Avenues 731,490 Forgivable debt (Note D) 4,173,291

$ 5,292,486

Net assets of $319,703 were released from donor restrictions by incurring expenditures satisfying the restricted purposes.



June 30, 2014

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NOTE D - TRANSITIONAL HOUSING FACILITY The Center constructed a transitional housing facility which was partially financed by a $4,173,291 loan administered by the Mayor's Office of Housing. The loan is secured by a deed of trust on the land and improvements and assignment of rents. The term of the loan is for 75 years, expiring in 2075. The Center's obligation to repay the loan will be waived at the end of the loan term providing that the facility is maintained for qualifying low income occupants (as defined) and there are no events of default as defined in the agreement. No interest will be charged on the loan amount unless the loan is in default. In the event of default, compound interest at 10% will be charged for the period from initial borrowing through the date of repayment of the loan. Management has determined that the likelihood of the Center violating the terms of the loan agreement is remote. Therefore, during the year ended June 30, 2005, the loan was reclassified as a temporarily restricted contribution. This amount will remain temporarily restricted until the loan matures in 2075. The terms of the loan, under a regulatory agreement, provide for the establishment and maintenance of replacement reserves and operating reserves in separate FDIC insured interest bearing accounts. The replacement reserve is funded by monthly deposits of $2,002. The operating reserve was initially funded with $30,000 and is currently fully funded. Any additional deposits to operating reserve are discretionary. At June 30, 2014, replacement reserves amounted to $304,695 and operating reserves amounted to $234,587, for a total of $539,282.

NOTE E - RETIREMENT PLAN

The Center has a 401(k) retirement plan. The plan covers substantially all Center employees who have attained the age of twenty-one and have met a one-year service requirement, as defined. Eligible employees may contribute any portion of their compensation up to the statutory maximum amount. The Center, at its discretion, may make a matching contribution equal to a discretionary percentage of employee deferrals. In addition, the Plan provides for discretionary employer profit sharing contributions. All employer contributions are subject to vesting over a period of four years. Total employer contributions for the year ended June 30, 2014 amounted to $11,241.



June 30, 2014

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NOTE F - COMMITMENTS

In January 2013, the Center entered into a lease agreement for a copy machine. The term of the agreement is 60 months and calls for monthly payments in the amount of $1,665. In May 2013, the Center entered into a three-month contract with a consulting firm to assist with development and fundraising efforts. During the year ended June 30, 2014, the Center extended its lease agreement for premises in San Francisco, California for the operation of the First Avenues program to June 30, 2016. The lease agreement calls for monthly payments in the amount of $4,300. Future minimum payments required under the agreements are as follows:

Year ending June 30, 2015 $ 71,580 2016 71,580 2017 19,980 2018 9,990

$ 173,130

NOTE G - COLLECTIVE BARGAINING AGREEMENT

Approximately 58% of the Center’s employees are members of the Professional Employees International Union, Local No. 3 AFL-CIO. The Center’s contract with the union goes through June 2017.

SUPPLEMENTAL INFORMATION


SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

Year ended June 30, 2014

18

Federal CFDA Pass-through Entity

Number Identifying Number June 30, 2014

Department of Housing and Urban Development (Pass-through from the City and County of S.F.)

HOME Investment Partnerships Program 14.239 186 $ 4,173,291

McKinney Supportive Housing Program- Transitional Housing 14.235 DPSS12000949 339,963

McKinney Supportive Housing Program- First Avenues 14.235 DPSS12000475 165,190

McKinney Supportive Housing Program- Dudley Apartments 14.235 DPSS12000776 221,809

726,962

Emergency Solutions Grant Program - FamilyResidences 14.231 50,000

Emergency Solutions Grant Program - FirstAvenues 14.231 152,094

202,094

Total Department of Housing and Urban Development 5,102,347

Department of Homeland Security(Pass-through from the S.F. Emergency Food and Shelter Local Board)

Emergency Food and Shelter National Board Program 97.024 17,500

Total Department of Homeland Security 17,500

Department of Agriculture

Child and Adult Care Food Program 10.558 50,665

Total Department of Agriculture 50,665

Total Federal Programs $ 5,170,512


NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

June 30, 2014

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NOTE A - BASIS OF ACCOUNTING

The accompanying supplemental Schedule of Expenditures of Federal Awards has been prepared on the accrual basis of accounting. The resources and related expenditures are classified for accounting and reporting purposes into funds established according to their nature and purpose. Under the accrual basis, revenue is recorded when realized and expenditures are recorded when incurred, without regard to the time of cash receipt or payment. The focus of the accrual basis of accounting is on the matching of revenue realized with costs incurred. Revenues for the Federal programs are received as reimbursement for specific purposes or projects and are recognized based upon eligible recorded expenditures.

NOTE B - HOME INVESTMENT PARTNERSHIP PROGRAM

Federal awards received under the HOME Investment Partnership Program are in the form of a loan for a period of 75 years. The loan is secured by a deed of trust on land and improvements, and assignment of rents. The loan obligation will be waived at the end of the loan term providing that the loan is not in default. In the event of default, compound interest at 10% will be charged for the period from initial borrowing through the date of repayment of the loan. The amount of HOME Investment Partnership Loan represents the balance outstanding at June 30, 2014.

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

20

Board of Directors Hamilton Family Center We have audited, in accordance with the 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, the financial statements of Hamilton Family Center (a California non-profit organization), which comprise the statement of financial position as of June 30, 2014, and the related statements of activities, and cash flows for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated December 30, 2014. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered Hamilton Family Center’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Hamilton Family Center’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Center’s internal control. 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 combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the Center’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. 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 that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

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 (continued)

21

Compliance and Other Matters As part of obtaining reasonable assurance about whether Hamilton Family Center’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 or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report This purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Center’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Center’s internal control and compliance. Accordingly, this communication is not suitable for any other purposes.


INDEPENDENT AUDITORS' REPORT ON COMPLIANCE FOR EACH

MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133

22

Board of Directors Hamilton Family Center Report on Compliance for Each Major Federal Program We have audited Hamilton Family Center’s compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of Hamilton Family Center’s major federal programs for the year ended June 30, 2014. Hamilton Family Center’s major federal programs are identified in the summary of auditors’ results section of the accompanying schedule of findings and questioned costs. Management’s Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs. Auditors’ Responsibility Our responsibility is to express an opinion on compliance for each of Hamilton Family Center’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 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 federal program occurred. An audit includes examining, on a test basis, evidence about the Hamilton Family Center's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of Hamilton Family Center’s compliance. Opinion on Each Major Federal Program In our opinion, Hamilton Family Center complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2014.

INDEPENDENT AUDITORS' REPORT ON COMPLIANCE FOR EACH

MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133 (continued)

23

Report on Internal Control over Compliance Management of Hamilton Family Center is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the Hamilton Family Center’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, 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 Hamilton Family Center’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of the internal control over compliance 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 compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.



SCHEDULE OF FINDINGS AND QUESTIONED COSTS


24

Unmodified

yes x

yes x

yes x

yes x

yes x

Unmodified

yes x

CFDA Number14.23914.235 Supportive Housing Program

Dollar threshold used to distinguish betweenType A and Type B programs:

x yes

no

Significant deficiencies identified?

Material weakness(es) identified?

reported in accordance with section 510(a) of

no

Circular A-133?

Any audit findings disclosed that are required to be

Internal control over major programs:

none reported

no

no

Financial Statements

Type of auditor's report issued

Internal control over financial reporting:

Material weakness(es) identified?

Significant deficiencies identified?

major programs:Type of auditor's report issued on compliance for

Noncompliance material to financial statements noted?

Federal Awards

Section I - Summary of Auditor's Results

300,000$

Auditee qualified as low-risk auditee?

none reported

Major Programs:Name of Federal Program or ClusterHOME Investment Partnerships Program

no


SCHEDULE OF FINDINGS AND QUESTIONED COSTS (continued)


25

No matters reported.

Section II - Financial Statement Findings

No matters reported.

Section III - Federal Award Findings and Questioned Costs

Documents

Hamilton Family Center FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS ... · Hamilton Family Center FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT June 30, 2014 with comparative