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HomeMy WebLinkAboutHorizons Financial Horizons, A Family Service Alliance Cedar Rapids, Iowa FINANCIAL REPORT June 30, 2023 and 2022 C O N T E N T S Page INDEPENDENT AUDITOR'S REPORT ON THE FINANCIAL STATEMENTS 3-5 FINANCIAL STATEMENTS Statements of financial position 6 Statements of activities 7 Statements of functional expenses 8-9 Statements of cash flows 10 Notes to financial statements 11-18 SUPPLEMENTARY INFORMATION 19 Schedule of expenditures of federal awards 20-21 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 22-23 INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE 24-26 Schedule of findings and questioned costs 27-29 INDEPENDENT AUDITOR'S REPORT Board of Directors Horizons, A Family Service Alliance Cedar Rapids, Iowa Report on the Audit of the Financial Statements Opinion We have audited the accompanying financial statements of Horizons, A Family Service Alliance (a nonprofit organization), which comprise the statements of financial position as of June 30, 2023 and 2022, and the related statements of activities, functional expenses, and cash flows for the years then ended, and the related notes to the financial statements. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Horizons, A Family Service Alliance as of June 30, 2023 and 2022, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinion 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 General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of Horizons, A Family Service Alliance and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Organization’s ability to continue as a going concern within one year after the date that the financial statements are available to be issued. -3- Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit 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 Horizons, A Family Service Alliance’s internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about Horizons, A Family Service Alliance’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit. Supplementary Information Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying supplementary information, including the schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is presented for purposes of 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 supplementary information is fairly stated in all material respects in relation to the financial statements as a whole. -4- Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 24, 2024, on our consideration of Horizons, A Family Service Alliance'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 solely 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 the effectiveness of the Organization’s 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 Horizons, A Family Service Alliance’s internal control over financial reporting and compliance. Denman CPA LLP West Des Moines, Iowa January 24, 2024 -5- See Notes to Financial Statements. -6- Horizons, A Family Service Alliance STATEMENTS OF FINANCIAL POSITION June 30 2023 2022 ASSETS CURRENT ASSETS Cash and cash equivalents $2,466,346 $ 948,967 Cash – restricted, custodial funds 290,037 214,343 Certificates of deposit 700,000 1,002,232 Receivables, net 247,776 446,750 Grants and contributions receivable 163,265 200,572 Prepaid expenses 7,959 16,412 Assets held for sale – 308,430 Total current assets 3,875,383 3,137,706 PROPERTY AND EQUIPMENT Land and improvements 340,930 295,033 Buildings and improvements 2,565,334 2,565,335 Equipment 820,506 687,490 Vehicles 599,405 528,679 Software 96,301 96,301 Total 4,422,476 4,172,838 Accumulated depreciation 2,199,131 1,976,836 Net property and equipment 2,223,345 2,196,002 OTHER ASSETS Beneficial interest in assets held by Community Foundations 81,413 76,119 Long-term certificates of deposit 42,789 42,406 Total other assets 124,202 118,525 Total assets $6,222,930 $5,452,233 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable $ 104,945 $ 92,007 Refundable advances 20,000 – Accrued expenses 127,221 170,663 Custodial funds held 289,936 212,616 Total current liabilities 542,102 475,286 NET ASSETS Without donor restrictions Undesignated 5,436,150 4,673,256 Designated – endowment 44,181 40,976 Total net assets without donor restrictions 5,480,331 4,714,232 With donor restrictions 200,497 262,715 Total net assets 5,680,828 4,976,947 Total liabilities and net assets $6,222,930 $5,452,233 See Notes to Financial Statements. -7- Horizons, A Family Service Alliance STATEMENTS OF ACTIVITIES Year ended June 30, 2023 Year ended June 30, 2022 Without donor With donor Without donor With donor restrictions restrictions Total restrictions restrictions Total SUPPORT AND REVENUE Public support Contributions $ 593,330 $ – $ 593,330 $ 425,256 $ 27,000 $ 452,256 Contributed property and equipment – – – 13,520 – 13,520 Contributed services and materials 10,117 – 10,117 132 – 132 United Way 35,195 163,265 198,460 33,380 200,572 233,952 County and city support 953,491 – 953,491 665,974 – 665,974 Other grants 1,531,194 – 1,531,194 1,594,000 – 1,594,000 Total public support 3,123,327 163,265 3,286,592 2,732,262 227,572 2,959,834 Program service fees 1,247,288 – 1,247,288 855,483 – 855,483 Rent 85,639 – 85,639 106,892 – 106,892 Miscellaneous 764 – 764 – – – Investment return 41,963 2,089 44,052 (2,223) (2,584) (4,807) Net assets released from restrictions 227,572 (227,572) – 208,000 (208,000) – Total support and revenue 4,726,553 (62,218) 4,664,335 3,900,414 16,988 3,917,402 EXPENSES Program services Consumer credit counseling 291,934 – 291,934 253,639 – 253,639 Youth and senior meals 2,088,976 – 2,088,976 2,055,541 – 2,055,541 Neighborhood transportation service 1,372,083 – 1,372,083 1,059,525 – 1,059,525 Total program services 3,752,993 – 3,752,993 3,368,705 – 3,368,705 Supporting activities Management and general 449,782 – 449,782 430,134 – 430,134 Marketing and fundraising 96,562 – 96,562 81,717 – 81,717 Total supporting activities 546,344 – 546,344 511,851 – 511,851 Total expenses 4,299,337 – 4,299,337 3,880,556 – 3,880,556 CHANGE IN NET ASSETS, from operations 427,216 (62,218) 364,998 19,858 16,988 36,846 OTHER GAINS AND LOSSES Gain on sale of assets held for sale 338,883 – 338,883 – – – Gain on disposal of property and equipment – – – 19,836 – 19,836 Total other gains and losses 338,883 – 338,883 19,836 – 19,836 CHANGE IN NET ASSETS 766,099 (62,218) 703,881 39,694 16,988 56,682 NET ASSETS, beginning 4,714,232 262,715 4,976,947 4,674,538 245,727 4,920,265 NET ASSETS, ending $5,480,331 $ 200,497 $5,680,828 $4,714,232 $ 262,715 $4,976,947 See Notes to Financial Statements. -8- Horizons, A Family Service Alliance STATEMENTS OF FUNCTIONAL EXPENSES Year ended June 30, 2023 Program services Consumer Youth Neighborhood credit and transportation counseling senior meals service Total Salaries $ 173,988 $ 733,751 $ 759,451 $1,667,190 Employee benefits 24,814 118,876 56,531 200,221 Payroll taxes 16,109 70,753 73,065 159,927 Total salaries and related benefits 214,911 923,380 889,047 2,027,338 Travel and conferences 3,707 15,034 10,096 28,837 Printing and publications 469 7,134 5,364 12,967 Postage, shipping and delivery 4,430 6,330 173 10,933 Telephone and internet 18,446 61,879 58,739 139,064 Occupancy 20,751 155,556 105,636 281,943 Transportation – 22,900 168,867 191,767 Supplies 6,847 164,463 6,362 177,672 Repairs and maintenance 102 29,918 1,580 31,600 Meals – 630,417 – 630,417 Professional fees and contracted services 5,035 7,099 12,014 24,148 Depreciation 17,236 64,866 114,205 196,307 Totals $ 291,934 $2,088,976 $1,372,083 $3,752,993 Supporting activities Management Marketing and and Grand general fundraising Total total Salaries $ 200,929 $ 33,668 $ 234,597 $1,901,787 Employee benefits 45,267 8,148 53,415 253,636 Payroll taxes 16,436 3,193 19,629 179,556 Total salaries and related benefits 262,632 45,009 307,641 2,334,979 Travel and conferences 3,927 744 4,671 33,508 Printing and publications 850 1,694 2,544 15,511 Postage, shipping and delivery 985 2,257 3,242 14,175 Telephone and internet 14,912 12,053 26,965 166,029 Occupancy 52,902 13,076 65,978 347,921 Transportation – – – 191,767 Supplies 17,827 13,870 31,697 209,369 Repairs and maintenance 726 96 822 32,422 Meals – 290 290 630,707 Professional fees and contracted services 69,032 7,473 76,505 100,653 Depreciation 25,989 – 25,989 222,296 Totals $ 449,782 $ 96,562 $ 546,344 $4,299,337 See Notes to Financial Statements. -9- Horizons, A Family Service Alliance STATEMENTS OF FUNCTIONAL EXPENSES (continued) Year ended June 30, 2022 Program services Consumer Youth Neighborhood credit and transportation counseling senior meals service Total Salaries $ 158,640 $ 817,266 $ 563,089 $1,538,995 Employee benefits 17,834 101,560 39,276 158,670 Payroll taxes 14,097 73,642 51,481 139,220 Total salaries and related benefits 190,571 992,468 653,846 1,836,885 Travel and conferences 1,845 10,834 8,474 21,153 Printing and publications 403 5,337 10,890 16,630 Postage, shipping and delivery 3,724 7,392 1,226 12,342 Telephone and internet 12,570 59,101 62,196 133,867 Occupancy 20,867 148,328 89,082 258,277 Transportation – 28,899 135,733 164,632 Supplies 3,297 132,924 5,768 141,989 Repairs and maintenance – 20,909 2,349 23,258 Meals – 565,220 – 565,220 Professional fees and contracted services 6,271 12,218 8,545 27,034 Depreciation 14,091 71,911 81,416 167,418 Totals $ 253,639 $2,055,541 $1,059,525 $3,368,705 Supporting activities Management Marketing and and Grand general fundraising Total total Salaries $ 191,179 $ 32,553 $ 223,732 $1,762,727 Employee benefits 30,876 7,509 38,385 197,055 Payroll taxes 21,305 2,839 24,144 163,364 Total salaries and related benefits 243,360 42,901 286,261 2,123,146 Travel and conferences 1,912 1,392 3,304 24,457 Printing and publications 625 7,231 7,856 24,486 Postage, shipping and delivery 1,025 886 1,911 14,253 Telephone and internet 19,331 12,304 31,635 165,502 Occupancy 86,985 13,836 100,821 359,098 Transportation – – – 164,632 Supplies 8,390 1,634 10,024 152,013 Repairs and maintenance 585 48 633 23,891 Meals – 181 181 565,401 Professional fees and contracted services 40,059 1,304 41,363 68,397 Depreciation 27,862 – 27,862 195,280 Totals $ 430,134 $ 81,717 $ 511,851 $3,880,556 See Notes to Financial Statements. -10- Horizons, A Family Service Alliance STATEMENTS OF CASH FLOWS Year ended June 30 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets $ 703,881 $ 56,682 Adjustments to reconcile change in total net assets to net cash flows from operating activities Depreciation 222,296 195,280 Change in beneficial interest in assets held by Community Foundations (5,294) 7,641 Reinvested interest (2,339) 30,881 Gain on disposal of property and equipment – (19,836) Gain on sale of assets held for sale (338,883) – Contributions restricted for long-term purposes – (13,520) Change in assets and liabilities Receivables 198,974 (127,974) Grants and contributions receivable 37,307 7,428 Prepaid expenses 8,453 6,459 Accounts payable 12,938 18,221 Refundable advances 20,000 – Accrued expenses (43,442) (47,755) Custodial funds held 77,320 29,815 Net cash flows from operating activities 891,211 143,322 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment (249,639) (211,372) Proceeds from sale of assets held for sale, net 647,313 – Purchase of certificates of deposit (700,000) (1,000,000) Proceeds from sale of certificates of deposit 1,004,188 – Net cash flows from investing activities 701,862 (1,211,372) NET CHANGE IN CASH AND CASH EQUIVALENTS 1,593,073 (1,068,050) CASH AND CASH EQUIVALENTS Beginning 1,163,310 2,231,360 Ending $2,756,383 $1,163,310 RECONCILIATION OF CASH AND CASH EQUIVALENTS PER STATEMENTS OF CASH FLOWS TO STATEMENTS OF FINANCIAL POSITION Cash and cash equivalents $2,466,346 $ 948,967 Cash – restricted, custodial funds 290,037 214,343 $2,756,383 $1,163,310 SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES In-kind contributions of property and equipment $ – $ 13,520 Horizons, A Family Service Alliance NOTES TO FINANCIAL STATEMENTS -11- NOTE 1 NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES Nature of Activities Horizons, A Family Service Alliance (the Organization) was incorporated in the State of Iowa on July 1, 2005. The purpose of the Organization is to provide services to youth and families through assessing their social needs, providing education, advocacy and services to meet those needs. Description of Programs Consumer Credit Counseling – Individual counseling and group education to help individuals overcome debt problems. Youth and Senior Meals – Programs to assist the elderly, ill, persons with disabilities, and youth with their daily nutritional needs. Neighborhood Transportation Services – A program providing curb-to-curb and shuttle van services, affordable night and weekend transportation to work, school, or life skill classes typically during times when the fixed route city buses do not operate. Basis of Accounting The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. As required by the Not-for-Profit Organizations Topic of the FASB Accounting Standards Codification, the Organization reports information regarding its financial position and activities according to two classes of net assets: Net assets without donor restrictions are those assets which are not restricted by donor-imposed stipulations. The Organization's Board of Directors has earmarked portions of its net assets without donor restrictions as board designated for various purposes. Net assets with donor restrictions result from contributions and other inflows of assets whose use by the Organization is limited to donor-imposed stipulations. As donor-imposed stipulations expire, net assets with donor restrictions are reclassified as net assets without donor restrictions and reported in the statement of activities as net assets released from restriction. Use of 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 disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents and Concentration of Credit Risk For statement of cash flow purposes, the Organization considers restricted cash, money market funds, and all highly liquid securities with an initial maturity of three months or less to be cash equivalents. The Organization maintains depository accounts at various financial institutions. At times, these accounts exceed the FDIC insurance limits; however, management does not believe the Organization is exposed to any significant risk of loss. Certificates of Deposit The Organization recognizes certificates of deposit at cost plus accrued interest. Horizons, A Family Service Alliance NOTES TO FINANCIAL STATEMENTS -12- NOTE 1 NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES (continued) Receivables Receivables are recorded at the estimated net realizable amount expected to be received from third party payors, clients, grantors and others. The Organization records an allowance for uncollectible account balances based on an evaluation of the collectability of the receivables, including historical loss experience, payer base, and economic conditions. At June 30, 2023 and 2022, the allowance for uncollectible accounts was $18,421. Property and Equipment The Organization capitalizes all property and equipment expenditures with a cost basis of greater than $1,000. Property and equipment is recorded at cost. Depreciation is computed utilizing the straight-line method over the estimated useful lives of the assets. Donated property and equipment are recorded at their estimated fair value at the date of the gift. The estimated useful lives of assets are as follows: Asset Class Estimated useful lives Land improvements 25 years Buildings and improvements 10 – 40 years Equipment 3 – 10 years Vehicles 5 years Software 5 years Beneficial Interest in Assets Held by Community Foundations Beneficial interest in assets held by community foundations consists of assets held at the Greater Cedar Rapids Community Foundation and the Community Foundation of Johnson County (the Community Foundations) under designated agency agreements. Beneficial interests are carried at fair value, with gains and losses resulting from market fluctuations recognized in the period in which the fluctuations occur. Investment return is reported as an increase or decrease in net assets without donor restrictions, unless the use of the assets is restricted by the donor and the restrictions have not been met in the reporting period in which the income was recognized. The Organization holds a share of the pooled funds and not direct ownership of the underlying investments. The funds are subject to policies and governing documents of the Community Foundations, including control over investment and asset management. Distributions from the funds are paid to the Organization according to the Community Foundations’ distribution policies. Revenue Recognition Government and Private Grants and Contributions Revenue from government and private grants are generally considered to be subject to conditions that must be met before the Organization is entitled to funding. The Organization recognizes revenue from grants and contracts when all material barriers have been overcome in order for the Organization to be entitled to the funding. Typically these barriers are overcome when qualifying expenditures have been incurred or defined outcomes have been achieved. Revenues from grants and contracts whose conditions have been met are recorded as grants and contributions receivable until funded by the grantor. Funding received prior to the conditions being met is recorded as refundable advances. Contributions are recognized as revenue when the donor makes a promise to give to the Organization which is, in substance, unconditional. Conditional promises to give are recognized only when the conditions on which they depend are substantially met. Unconditional contributions are recorded as with or without donor restrictions, depending on the existence and/or nature of any donor restrictions. An allowance for doubtful accounts is provided based upon management’s judgment, including such factors as prior history and nature of the contribution. Horizons, A Family Service Alliance NOTES TO FINANCIAL STATEMENTS -13- NOTE 1 NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES (continued) Revenue Recognition (continued) Public support that is expected to be collected within one year is recorded at its net realizable value. Public support that is expected to be collected in future years is reported at fair value using present value techniques. The discount on those amounts is computed using an interest rate applicable in the year in which the contribution was received. All grants and contributions receivable as of June 30, 2023 are anticipated to be collected in the following year and, therefore, no discount has been recorded. Program Service Fees Program service fees (fee for service revenues) consist primarily of financial counseling services billed to other organizations and transportation services. These revenues are reported at the amount that reflects the consideration the Organization expects to be entitled to in exchange for providing the service. The transaction price is based on standard charges for services provided, reduced by discounts provided to clients, and/or implicit price concessions provided to clients. The Organization determines its estimates of discounts and implicit price concessions based on contractual agreements and historical experience. Performance obligations for counseling and transportation services are satisfied at the point-in-time the service is provided (i.e. a counseling appointment occurs or a client is provided transportation). Generally, these services are billed within days of the service being performed or at the end of the month. Contributed Goods and Services Contributions of donated goods are recorded at their fair values in the period received. Contributions of donated services that create or enhance nonfinancial assets or that require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation, are recorded at their fair values in the period received. Numerous volunteers have donated significant amounts of time to the Organization. The value of these services has not been recorded to the financial statements as the criteria for recognition has not been met. Contributed property and equipment are recorded at their estimated fair value at the date of the gift, based on the fair value of similar assets in the local market. Such donations are reported as unrestricted support unless the donor has restricted the donated asset for a specific purpose. The Organization recognized $-0- and $13,520 of in-kind property and equipment contributions for the years ended June 30, 2023 and 2022, respectively. The Organization recognized $10,117 and $132 of in-kind food and advertising for the years ended June 30, 2023 and 2022, respectively. Contributed services and materials are valued at the price the Organization would have paid for similar services and materials in the local market. The in-kind expenses benefited program and supporting services. Income Taxes The Organization is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code and, accordingly, no provision for income taxes has been made. Accounting principles generally accepted in the United States of America require management to evaluate tax positions taken by the Organization and recognize a tax liability (or asset) for an uncertain position that more likely than not would not be sustained upon examination by the Internal Revenue Service. Management has evaluated their material tax positions and determined there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. The Organization is subject to routine audits by tax authorities; however, there are currently no audits for any tax periods in progress. Management believes the Organization is no longer subject to income tax examinations for years prior to 2019. Horizons, A Family Service Alliance NOTES TO FINANCIAL STATEMENTS -14- NOTE 1 NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES (continued) Allocations of Functional Expenses The Organization allocates its functional expenses among its various programs and supporting activities. Expenses that can be identified with a specific program or supporting activity are allocated directly to that specific program or supporting activity. Other expenses that are common to several programs or supporting activities are allocated on the basis of estimates of square footage and time and effort. Advertising Advertising costs are expensed as incurred. Advertising expense for the years ended June 30, 2023 and 2022 was $15,511 and $24,486, respectively. Adoption of New Accounting Standard Effective July 1, 2021, the Organization adopted FASB Accounting Standards Codification 842, Leases (FASB ASC 842). The Organization determines if an arrangement contains a lease at inception based on whether the Organization has the right to control an asset during the contract period and other facts and circumstances. The Organization elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed it to carry forward the historical lease classification. As the Organization only acts as lessor and not lessee, the adoption of FASB ASC 842 did not result in the recognition of any right-of-use assets or lease liabilities. The adoption of FASB ASC 842 did not have a material impact on the Organization’s results of operations or cash flows. NOTE 2 LIQUIDITY AND AVAILABILITY The Organization regularly monitors the availability of resources required to meet its operating needs and other commitments while striving to maximize the investment of its available funds. For purposes of analyzing resources available to meet general expenditures over a 12-month period, the Organization considers all expenditures related to its ongoing activities as well as the conduct of services to support those activities to be general expenditures. In addition to the financial assets available to meet general expenditures over the next 12 months, the Organization operates with a balanced budget and anticipates collecting sufficient revenue to cover general expenditures. The Organization considers contributions and grants restricted for programs which are ongoing, major, and central to its annual operations to be available to meet cash needs for general expenditures. The following table shows the total financial assets held by the Organization, which are available to meet the general expenditures and future needs of the Organization as of the statement of financial position date: June 30 2023 2022 Cash and cash equivalents $2,466,346 $ 948,967 Certificates of deposit 700,000 1,002,232 Receivables, net 247,776 446,750 Grants and contributions receivable 163,265 200,572 Totals $3,577,387 $2,598,521 Horizons, A Family Service Alliance NOTES TO FINANCIAL STATEMENTS -15- NOTE 3 GRANTS AND CONTRIBUTIONS RECEIVABLE Grants and contributions receivable are expected to be collected within one year and totaled $163,265 and $200,572 at June 30, 2023 and 2022, respectively. NOTE 4 BENEFICIAL INTEREST IN ASSETS HELD BY COMMUNITY FOUNDATIONS The Organization’s beneficial interest in assets held by Community Foundations consists of assets held by the Greater Cedar Rapids Community Foundation and the Community Foundation of Johnson County (Community Foundations). The Organization holds a share of the Community Foundations’ pooled funds and not direct ownership of the underlying investments. Although the pooled funds include investments in equity, fixed income, real assets, and other marketable securities, the pool itself is not a publicly traded instrument. Management estimates the fair value of its pooled investments at the statement of financial position date based on its relative ownership investment in the pool. All funds held at the Community Foundations are measured at fair value using the net asset value per share, or its equivalent, practical expedient. Investments Measured Using the Net Asset Value per Share Practical Expedient Redemption Redemption Fair value Unfunded frequency notice 2023 2022 commitments (if currently eligible) period Beneficial interests in assets held at Community Foundations $ 81,413 $ 76,119 None Daily None NOTE 5 LINE OF CREDIT The Organization has a $500,000 revolving line of credit available at a bank. The line of credit bears interest at a rate equal to 1% below the U.S Prime rate, not to be less than 3.25% (rate of 7.25% at June 30, 2023). The line of credit matures on April 1, 2024. The agreement is collateralized by the Organization’s real property located at 819 5th Street SE in Cedar Rapids, Iowa. The balance of the line of credit at June 30, 2023 and 2022 was $-0-. NOTE 6 NET ASSETS Net assets with donor restrictions are available for the following purposes: June 30 2023 2022 United Way – for subsequent year’s operations $ 163,265 $ 200,572 Programs – 27,000 Accumulated earnings on perpetual endowment 20,232 18,143 Perpetual endowment 17,000 17,000 $ 200,497 $ 262,715 Net assets were released from donor restrictions by incurring program expenses satisfying the restricted purpose or through the passage of time as follows: Year ended June 30 2023 2022 Expiration of time restrictions $ 200,572 $ 208,000 Program expenses 27,000 – $ 227,572 $ 208,000 Horizons, A Family Service Alliance NOTES TO FINANCIAL STATEMENTS -16- NOTE 7 ENDOWMENT FUNDS The Organization's endowment funds consist of board designated endowment net assets, investment return on donor- restricted endowment funds which is available for appropriation, and net assets with donor restrictions which provide that the corpus be invested in perpetuity and only the income be used. As required by generally accepted accounting principles, net assets associated with endowment funds are classified and reported based on the existence or absence of donor-imposed restrictions. The Organization follows the endowment fund disclosure requirements of the Not-for-Profit Entities Topic of the FASB Accounting Standards Codification as well as the Uniform Prudent Management of Institutional Funds Act (Act) which was adopted as law in the State of Iowa. The Organization has adopted the practice of preserving the fair value of the original gift as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the Organization classifies as net assets with donor restrictions, held in perpetuity the original value of gifts donated to the permanent endowment, the original value of subsequent gifts to the permanent endowment, and accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donor-restricted endowment funds that is classified as net assets with donor restrictions, held in perpetuity is classified as endowment earnings on donor-restricted endowment funds that are held until those amounts are appropriated for expenditure by the Organization in a manner consistent with the standard of prudence prescribed by the Act. In accordance with the Act, the Organization considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds: • the duration and preservation of the various funds • the purposes of the donor-restricted endowment funds • general economic conditions • the possible effect of inflation and deflation • the expected total return from income and the appreciation or depreciation of investments • other resources of the Organization • the Organization’s investment policies. In addition to the endowment funds described above, the Organization’s board of directors has designated unrestricted net assets as endowment funds. These funds and their investment earnings are reported with net assets without donor restrictions on the statements of financial position. The Organization’s endowment consists of interest in assets held at the Greater Cedar Rapids Community Foundation and the Community Foundation of Johnson County (Community Foundations) and is governed by endowment agreements between the Organization and the Community Foundations. Per the Community Foundations’ investment policies, the assets of the endowment fund are to be invested with the primary objective of providing consistent flow of funds in support of the Organization’s mission and a secondary objective of preserving the real value (inflation adjusted) of current assets and future gifts. Endowment assets are invested in a well-diversified asset mix that is intended to result in a moderate level of investment risk. Annually, the Organization may request from the Community Foundations distributions consistent with the Community Foundations’ distribution policies. The Organization did not request distributions for the years ending June 30, 2023 and 2022. Horizons, A Family Service Alliance NOTES TO FINANCIAL STATEMENTS -17- NOTE 7 ENDOWMENT FUNDS (continued) Endowment net asset composition by type of fund as of June 30, 2023 and 2022 is as follows: 2023 2022 With donor Without donor With donor Without donor restrictions restrictions Total restrictions restrictions Total Board-designated endowment funds $ – $ 44,181 $ 44,181 $ – $ 40,976 $ 40,976 Donor-restricted endowment funds Original donor-restricted gift amounts required to be held in perpetuity 17,000 – 17,000 17,000 – 17,000 Accumulated earnings on perpetual endowment 20,232 – 20,232 18,143 – 18,143 $ 37,232 $ 44,181 $ 81,413 $ 35,143 $ 40,976 $ 76,119 The change in endowment net assets was as follows: Year ended June 30, 2023 Year ended June 30, 2022 With donor Without donor With donor Without donor restrictions restrictions Total restrictions restrictions Total Balance, beginning of year $ 35,143 $ 40,976 $ 76,119 $ 37,727 $ 46,032 $ 83,759 Investment return 2,089 3,205 5,294 (2,584) (5,056) (7,640) Balance, end of year $ 37,232 $ 44,181 $ 81,413 $ 35,143 $ 40,976 $ 76,119 NOTE 8 OPERATING LEASES The Organization rents out portions of its property and facilities under two operating leases. The first ends on September 30, 2024, and the other has a termination clause which would allow for the expiration of the lease on August 1, 2025. The future minimum lease payments on these leases are as follows: Year ending June 30 2024 $ 65,532 2025 55,888 2026 4,318 $ 125,738 Rental income for the years ended June 30, 2023 and 2022 was $85,639 and $106,892, respectively. NOTE 9 EMPLOYEE BENEFITS The Organization maintains a defined contribution 401(k) plan covering employees who have one month of service and are age 21 or older. The plan allows employees to defer their income on a pretax basis through contributions to the plan. In addition, the Organization matches 50% of the participants’ eligible contributions, up to 6% of their compensation. The Organization’s expense under the plan for the years ended June 30, 2023 and 2022 was $41,279 and $21,440, respectively. Horizons, A Family Service Alliance NOTES TO FINANCIAL STATEMENTS -18- NOTE 10 MAJOR FUNDING SOURCES A substantial portion of the Organization’s total support and revenue is received from the Heritage Area Agency on Aging (HAAA). This funding concentration is summarized as follows: 2023 2022 Source Revenue % of total Revenue % of total HAAA $ 899,500 18% $ 819,816 21% Receivables as of June 30, 2023 and 2022 included $29,512 and $64,131, respectively, from HAAA. NOTE 11 ASSETS HELD FOR SALE During the year ended June 30, 2021, the Organization began to actively market the sale of one of its facilities, as it was no longer being used by the Organization. The carrying value of these assets held for sale at June 30, 2022 was $308,430 and was reported as assets held for sale on the 2022 statement of financial position. The facility was sold in August 2022 for $700,000, with net proceeds of $647,313 reflected on the 2023 statement of cash flows and a gain on the sale of $338,883 reported on the 2023 statement of activities.. NOTE 12 SUBSEQUENT EVENTS The Organization has evaluated subsequent events through January 24, 2024, the date the financial statements were available to be issued. There were no subsequent events which required accrual or disclosure. -19- SUPPLEMENTARY INFORMATION See Independent Auditor's Report. -20- Horizons, A Family Service Alliance SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Year ended June 30, 2023 Assistance Agency or Federal Grantor/Program Title/ Listing pass-through Federal Grant Description number Pass-through Grantor number expenditures U.S. Department of Agriculture Child and Adult Care Food Program 10.558 $ 144,896 U.S. Department of Housing and Urban Development Community Development Block Grant Program 14.218 City of Cedar Rapids, Iowa N/A 18,036 Housing Counseling Assistance Program 14.169 42,969 Total U.S. Department of Housing and Urban Development 61,005 U.S. Department of Health and Human Services COVID-19 and Influenza Vaccine Uptake Initiative for Older Adults and People with Disabilities 93.048 National Council on Aging N/A 59,356 Aging Cluster Special Programs for the Aging, Title III, Part C, Nutrition Services 93.045 Heritage Area Agency on Aging N/A 476,601 Nutrition Services Incentive Program 93.053 Heritage Area Agency on Aging N/A 233,846 Total Aging Cluster 710,447 Total U.S. Department of Health and Human Services 769,803 U.S. Department of Homeland Security Emergency Food and Shelter National Board Program – Phase 39 97.024 Linn County, Iowa N/A 7,732 Emergency Food and Shelter National Board Program – ARPA-R 97.024 Linn County, Iowa N/A 25,000 32,732 U.S. Department of Treasury Coronavirus State and Local Fiscal Recovery Fund 21.027 Linn County, Iowa ARPA2022-011 105,226 Coronavirus State and Local Fiscal Recovery Fund 21.027 Linn County, Iowa ARPA2022-012 50,000 Coronavirus State and Local Fiscal Recovery Fund 21.027 Linn County, Iowa ARPA2022-216 64,000 219,226 Total federal expenditures $1,227,662 See Independent Auditor's Report. -21- Horizons, A Family Service Alliance SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (continued) Year ended June 30, 2023 NOTE A BASIS OF PRESENTATION The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal grant activity of Horizons, A Family Service Alliance (the Organization) under programs of the federal government for the year ended June 30, 2023. The information in the Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Organization, it is not intended to and does not present the financial position, changes in net assets or cash flows of the Organization. NOTE B SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Expenditures Expenditures reported in the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Indirect Cost Allocation Rate The Organization has elected not to use the 10 percent de minimus indirect cost rate as allowed under the Uniform Guidance. NOTE C IN-KIND SUPPORT In-kind support for volunteer hours in the amount of $16,774 for congregate meals and $431,461 for home delivered meals, totaling $448,235, was obtained for the Aging Cluster (Assistance Listing numbers 93.045 and 93.053), which is required by the grant. -22- 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 Board of Directors Horizons, A Family Service Alliance Cedar Rapids, Iowa 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 Horizons, A Family Service Alliance (a nonprofit corporation), which comprise the statement of financial position as of June 30, 2023, and the related statements of activities, functional expenses and cash flows for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated January 24, 2024. Report on Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered Horizons, A Family Service Alliance'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 Horizons, A Family Service Alliance's internal control. Accordingly, we do not express an opinion on the effectiveness of Horizons, A Family Service Alliance'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 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. 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 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 or significant deficiencies may exist that were not identified. -23- Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether Horizons, A Family Service Alliance's financial statements are free from 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 financial statements. 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 The 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 Organization’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Horizons, A Family Service Alliance’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Denman CPA LLP West Des Moines, Iowa January 24, 2024 -24- INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE Board of Directors Horizons, A Family Service Alliance Cedar Rapids, Iowa Report on Compliance for Each Major Federal Program Opinion on Each Major Federal Program We have audited Horizons, A Family Service Alliance’s compliance with the types of compliance requirements identified as subject to audit in the OMB Compliance Supplement that could have a direct and material effect on each of Horizons, A Family Service Alliance’s major federal programs for the year ended June 30, 2023. Horizons, A Family Service Alliance’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. In our opinion, Horizons, A Family Service Alliance complied, in all material respects, with the 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, 2023. Basis for Opinion on Each Major Federal Program We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America (GAAS); the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report. We are required to be independent of Horizons, A Family Service Alliance and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major federal program. Our audit does not provide a legal determination of Horizons, A Family Service Alliance’s compliance with the compliance requirements referred to above. Responsibilities of Management for Compliance Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to Horizons, A Family Service Alliance’s federal programs. -25- Auditor’s Responsibilities for the Audit of Compliance Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on Horizons, A Family Service Alliance’s compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about Horizons, A Family Service Alliance’s compliance with the requirements of each major federal program as a whole. In performing an audit in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding Horizons, A Family Service Alliance’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances. • Obtain an understanding of Horizons, A Family Service Alliance’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of Horizons, A Family Service Alliance’s internal control over compliance. Accordingly, no such opinion is expressed. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit. Report on 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 a combination of deficiencies, in internal control over compliance, such that there is a 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. -26- Our consideration of internal control over compliance was for the limited purpose described in the Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified. Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed. 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 the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Denman CPA LLP West Des Moines, Iowa January 24, 2024 -27- Horizons, A Family Service Alliance SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year ended June 30, 2023 SECTION I – SUMMARY OF INDEPENDENT AUDITOR’S RESULTS Financial Statements Type of report the auditor issued on whether the financial statements audited were prepared in accordance with GAAP: Unmodified opinion Internal control over financial reporting:  Material weakness(es) identified? Yes X No  Significant deficiency(ies) identified? Yes X None Reported Noncompliance material to financial statements noted? Yes X No Federal Awards Internal control over major federal programs:  Material weakness(es) identified? Yes X No  Significant deficiency(ies) identified? Yes X None Reported Type of auditor’s report issued on compliance for major federal programs: Unmodified opinion  Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a)? Yes X No Identification of major federal programs: Assistance Listing Number 93.045, 93.053 – Aging Cluster Dollar threshold used to distinguish between type A and type B programs: $750,000 Auditee qualified as low-risk auditee? Yes X No -28- Horizons, A Family Service Alliance SCHEDULE OF FINDINGS AND QUESTIONED COSTS (continued) Year ended June 30, 2023 SECTION II – FINANCIAL STATEMENT FINDINGS INTERNAL CONTROL DEFICIENCIES No matters were noted. INSTANCES OF NONCOMPLIANCE No matters were noted. -29- Horizons, A Family Service Alliance SCHEDULE OF FINDINGS AND QUESTIONED COSTS (continued) Year ended June 30, 2023 SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS INTERNAL CONTROL DEFICIENCIES No material weaknesses in internal control over the major program were noted. INSTANCES OF NONCOMPLIANCE No matters were noted.