06 jan-3 amifl:l»6 file06 jan-3 amifl:l»6 delta community action association, inc. tallulah,...

06 JAN-3 AMIfl:l»6

Delta Community Action Association, Inc.Tallulah, Louisiana

Financial Statements

As of and for the Years Ended June 30,2005 and 2004With Supplemental Information Schedules

Under provisions of state law, this report is a publicdocument. Acopy of the report has been submitted tothe entity and other appropriate public officials. Thereport is available for public inspection at the BatonRouge office of the Legislative Auditor and, whereappropriate, at the office of the parish clerk of court.

Release Date


Table of Contents

Independent Auditors' Report

Financial Statements:

Statements of Financial Position

Statements of Activities

Statements of Cash Flows

Notes to Financial Statements

Combining Schedules:

Combining Schedule of Financial Position

Combining Schedule of Activities

Supplemental Information Schedules Prepared For Grants and Contracts Analysis

Head Start Program Grant Award 06CHQ393J14For the Contract Period: July 1, 2004 to June 30, 2005

Child and Adult Care Food ProgramFor the Contract Period: October 1,2003 to September 30,2004

Family Day Care Home ProgramFor the Contract Period: October 1, 2003 to September 30, 2004

Delta Recovery Center Contract DOA No. 351501435For the Contract Period: July 1, 2004 to June 30, 2005

Schedule of Expenditures of Federal Awards

Page No.

1- 2

3

4

5

6- 12

13

14

16

17

18

19

20

(Continued)


Table of Contents(Continued)

Page No.

Report on Internal Control Over Financial Reporting and onCompliance and Other Matters Based on an Audit of Financial Statements 21 - 22Performed in Accordance With Government Auditing Standards

Report on Compliance with Requirements Applicable to Each Major Programand on Internal Control over Compliance in Accordance with OMB Circular A-133 23 - 24

Summary Schedule of Prior Audit Finding 25 - 26

Schedule of Findings and Questioned Costs 27 - 28

Schedule of Prior Audit Findings for Louisiana Legislative Auditor 29

Schedule of Current Audit Findings for Louisiana Legislative Auditor 30

COOK & MOREHART

Certified Public Accountants

1215 HAWN AVENUE • SHREVEPORT, LOUISIANA 71107 • P.O. BOX 78240 • SHREVEPORT, LOUISIANA 71137-8240

TRAVIS H. MOREHART, CPA TELEPHONE (318) 222-5415 FAX (318) 222-5441 RAYEBURN G. COOK (RET.)A. EDWARD BALL, CPAVICKIE D. NOBLE, CPA

MEMBERAMERICAN INSTITUTE

C. BRYAN COYLE, CPA CERTIFIED PUBLIC ACCOUNTANTS

SOCIETY OF LOUISIANACERTIFIED PUBLIC ACCOUNTANTS

independent Auditors' Report

To the Board of DirectorsDelta Community Action Association, Inc.Tallulah, Louisiana

We have audited the accompanying statements of financial position of Delta Community Action Association, Inc. asof June 30, 2005 and 2004, and the related statements of activities and cash flows for the years then ended. Thesefinancial statements are the responsibility of Delta Community Action Association, Inc.'s management. Ourresponsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of Americaand the standards applicable to financial audits contained in Government Auditing Standards, issued by theComptroller General of the United States. Those standards require that we plan and perform the audits to obtainreasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used and significant estimates made by management, as well asevaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for ouropinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial positionof Delta Community Action Association, Inc. as of June 30, 2005 and 2004, and the changes in its net assets andits cash flows for the years then ended in conformity with accounting principles generally accepted in the UnitedStates of America.

In accordance with Government Auditing Standards, we have also issued our report dated October 7, 2005 on ourconsideration of Delta Community Action Association, Inc.'s internal control over financial reporting and on our testsof its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. Thepurpose of that report is to describe the scope of our testing of internal control over financial reporting and complianceand the results of that testing and not to provide an opinion on the internal control over financial reporting or oncompliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards andshould be considered in assessing the results of our audit.

Our audit was performed for the purpose of forming an opinion on the basic financial statements of Delta CommunityAction Association, Inc. taken as a whole. The accompanying schedule of expenditures of federal awards is presentedfor purposes of additional analysis as required by U. S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and'Non-Profit Organizations, and is not a required part of the basic financial statements.Such information has been subjected to the auditing procedures applied in the audit of the basic financial statementsand, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as awhole.

The accompanying supplemental combining schedules on pages 13 and 14 are presented for the purpose of additionalanalysis and are not a required part of the financial statements of Delta Community Action Association, Inc. Suchinformation has been subjected to the auditing procedures applied in the audit of the financial statements and, in ouropinion, is fairly stated in all material respects in relation to the financial statements taken as a whole.

The accompanying supplemental schedules, listed as "Supplemental Information Schedules Prepared For Grants andContracts Analysis" in the table of contents, and shown on pages 16-19, are presented for the purpose of providingvarious funding sources of Delta Community Action Association, Inc. additional individual grant and contract analysisand are not a required part of the financial statements. The information is prepared on a prescribed basis of thevarious funding sources of Delta Community Action Association, inc., and certain schedules are for periods other thanDelta's audit year. These schedules are not presented in accordance with generally accepted accounting principles.Accordingly, these schedules are not intended to present financial position and results of operations in conformity withgenerally accepted accounting principles. Such information has been subjected to the auditing procedures applied inthe audit of the financial statements and, in our opinion, they are fairly stated on the basis of accounting practicesprescribed by the various funding sources.

Cook and MorehartCertified Public AccountantsOctober 7,2005


Statements of Financial PositionJune 30,2005 and 2004

Assets 2005 2004

Current assets:Cash $ 295,192 $ 243,992Grant receivables 168,706 321,665Due from other funds 37,647 48,147

Total current assets 501,545 613,804

Property and Equipment:Property and equipment 1,526,269 1,376,820Accumulated depreciation (842,922) (726,607)

Total property and equipment 683,347 650,213

Total Assets $ 1,184,892 $ 1,264.017

Liabilities and Net Assets

Current liabilities:Accounts payable $ 178,084 $ 293,355Accrued liabilities 65,714 55,708Due to other funds 37,647 48,147Other liabilities 2,316Refundable advances 46,622 56,581

Total current liabilities 328,067 456,107

Net assets:Unrestricted:

Operating 152,675 157,697Designated 20,803Fixed assets 683,347 650,213

Total net assets 856,825 807,910

Total Liabilities and Net Assets $ 1,184,892 $ 1,264,017

The accompanying notes are an integral part of this statement.

3


Statements of ActivitiesFor the Years Ended June 30, 2005 and 2004

Unrestricted

Revenues and Other Support:

Contractual revenue - grantsMiscellaneous revenues

Total revenues and other support

Expenses:

Head Start programChild care food programCommunity services block grantHome energy assistanceFamily day care servicesDelta recovery programMigrant educationGeneral services

Total expenses

Changes in net assets

Net assets as of beginning of year

Net assets as of end of year

2005 2004

$ 4,107,720 $ 3,470,634528 11,940

4,108,248

2,482,052223,707158,25413,259947,540124,938100,1339,450

4,059,333

48,915

807,910

$ 856,825 $

3,482,574

1,829,669188,006169,46212,651852,860124,839111,16511,071

3,299,723

182,851

625,059

807,910


4


Statements of Cash FlowsFor the Years Ended June 30, 2005 and 2004

2005 2004Operating activities

Changes in net assetsAdjustments to reconcile change in net assets to

net cash provided by operating activities:DepreciationLoss on disposal(Increase) decrease in operating assets:

Grant receivablesIncrease (decrease) in operating liabilities:

Accounts payableAccrued liabilitiesRefundable advancesOther liabilities

Net cash provided by operating activities

Investing activities

Payments for property and equipment

Net cash used in investing activities

Net increase in cash

Cash as of beginning of year

Cash as of end of year

$ 48,915 $

117,641443

152,959

(115,271)10,006(9,959)(2,316)

202,418

(151,218)

(151,218)

51,200

243,992

$ 295,192 $

182,851

90,4421,005

32,302

36,2832,307

(70,453)(2,725)

272,012

(262,232)

(262,232)

9,780

234,212

243,992


5


Notes to Financial StatementsJune 30, 2005 and 2004

(1) Summary of Significant Accounting Policies

A. Nature of Activities

Delta Community Action Association, Inc. (Delta) is a private nonprofit corporation incorporated underthe laws of the State of Louisiana. A Board of Directors composed of 15 members governs Delta. Deltaoperates as a community action agency administering various federal and state funded programs designedto provide assistance to the poor and disadvantaged in various parishes in Louisiana that Delta serves.The following programs, with their approximate percentage of total revenues indicated, are administeredby Delta:

Head Start Program (61%) - Provides comprehensive early child development for disadvantaged andhandicapped preschool children and their families. Funding is provided by federal funds from the U.S.Department of Health and Human Services.

Child Care Food Program (6%) - Provides a food service program in coordination with the Head StartProgram. Funding is provided by federal funds from USDA passed through the Louisiana Department ofEducation.

Community Services Block Grant (4%) - Administers programs designed to provide services andactivities that will have a measurable impact on causes of poverty in the community. Funding is providedby federal funds passed through the Louisiana Department of Labor.

Home Energy Assistance (.5%) - Assists low income households to offset the burden of high energycosts. Funding is provided by federal funds passed through Louisiana Housing Finance Agency.

Family Day Care Services (23%) - Provides a food service program for children in private nonprofitcenters of approximately 140 homes. Financing is provided by federal funds passed through theLouisiana Department of Education.

Delta Recovery Program (3%) - Provides substance abuse treatment and education for eligibleparticipants. Funding is provided by federal funds passed through the Louisiana Department of Health andHospitals, Division of Alcohol and Drug Abuse.

Migrant Education (2.5%) - Provides assistance, such as housing, to establish or improve programsdesigned to meet the special educational needs of migratory children of migratory agricultural workersor migratory fishers. Funding is provided by federal funds passed through the Louisiana Department ofEducation.

(Continued)

6


Notes to Financial StatementsJune 30,2005 and 2004

(Continued)

B. Basis of Accounting

The financial statements of Delta have been prepared on the accrual basis of accounting.

C. Basis of Presentation

Financial statement presentation follows the recommendations of the Financial Accounting StandardsBoard in its Statement of Financial Accounting Standards (SFAS) No. 117, Financial Statements of Not-for-profit Organizations. Under SFAS No. 117, the Organization is required to report informationregarding its financial position and activities according to three classes of net assets: unrestricted netassets, temporarily restricted net assets, and permanently restricted net assets.

D. Income Tax Status

Delta is a nonprofit corporation and is exempt from state and federal income taxes under Section 501(c}(3) of the Internal Revenue Code. However, income from certain activities not directly related to Delta'stax- exempt purpose would be subject to taxation as unrelated business income. There was no unrelatedbusiness income for the years ended June 30,2005 and 2004.

E. Use of Estimates

Management uses estimates and assumptions in preparing financial statements. Those estimates andassumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets andliabilities and the reported revenues and expenses. Actual results could differ from those estimates.

F. Cash and Cash Equivalents

For purposes of the Statement of Cash Flows, Delta considers all unrestricted highly liquid investmentswith an initial maturity of three months or less to be cash equivalents.

G. Property and Equipment

Property and equipment are carried at cost or, if donated, at the approximate fair value at the date ofdonation. Depreciation is computed using the straight- line method over the estimated useful life of eachasset. The Federal Government has a reversionary interest in property purchased with federal funds. Itsdisposition as well as the ownership of any proceeds therefrom is subject to federal regulations.

(Continued)

7



(Continued)

H. Revenue and Support

Contributions received are recorded as unrestricted, temporarily restricted, or permanently restrictedsupport, depending on the existence and/or nature of any donor restrictions. Contractual grant revenueis reported as unrestricted support due to the restrictions placed on those funds by the funding sourcesbeing met in the same reporting period as the revenue is earned.

Support that is restricted by the donor is reported as an increase in unrestricted net assets if therestriction expires in the reporting period in which the support is recognized. All other donor-restrictedsupport is reported as an increase in temporarily or permanently restricted net assets, depending on thenature of the restriction. When a restriction expires (that is, when a stipulated time restriction ends orpurpose restriction is accomplished), temporarily restricted net assets are reclassified to unrestricted netassets and reported in the Statement of Activities as net assets released from restrictions.

(2) Concentrations of Credit Risk

Financial instruments that potentially subject Delta to concentrations of credit risk consist principally oftemporary cash investments and grant receivables.

Concentrations of credit risk with respect to grant receivables are limited due to these amounts being due fromgovernmental agencies under contractual terms. As of June 30, 2005 and 2004, Oelta had no significantconcentrations of credit risk in relation to grant receivables.

Delta maintains cash balances at several financial institutions. Accounts at each institution are insured bythe Federal Deposit Insurance Corporation (FDfCJ up to $100,000. At June 30, 2005 total cash balances heldat financial institutions was $539,199. Of this amount, $278,002 was secured by FDIC, $190,679 wascollateralized by pledged securities and the remaining $70,518 was unsecured. At June 30,2004 total cashbalances held at financial institutions was $393,169. Of this amount, $261,216 was secured by FDIC andthe remaining $131,953 was collateralized by pledged securities.

(3) Grant Receivables

Various funding sources provide reimbursement of allowable costs under contracts or agreements. Thesebalances represent amounts due from funding sources at June 30, 2005 and 2004, but received after thosedates.

(Continued)



(Continued)

(4) Due To and Due From Other Funds

The following schedule represents amounts due to and due from other funds at June 30, 2005:

Due From Due ToFund Other Funds Other Funds

General Services § 22,000 $Head Start Program - due from Child Care

Food Program 15,647Child Care Food Program - 15,647Community Services Block Grant - 4,000Family Day Care Home Program - _ 18,000

$ 37,647 $ 37,647

The following schedule represents amounts due to and due from other funds at June 30, 2004:

Due From Due ToFund Other Funds Other Funds

General Services $ 32,500 $Head Start program - due from Child Care

Food Program 15,647Child Care Food Program - 15,647Community Services Block Grant - 14,500Family Day Care Home Program ^_ 18,000

$ 48,147 $ 48,147

(Continued)

9



(Continued)

(5} Property and Equipment

Property and equipment consisted of the following at June 30, 2005:

BuildingsLeasehold improvementFurniture and equipmentVehiclesVehicles not in operationAccumulated depreciation

Npt investment in property

EstimatedDepreciable

Life

7-20 years7-20 years5-10 years

5 years

and equipment

PurchasedPurchased With

With Federal Non-FederalFunds Funds

$ 416,870 $125,317309,128 749641,06733,138

( 842,173) ( 749)

$ 683,347 $

Total

$ 416,870125,317309,877641,06733,138

( 842,922)

S 683,347

Depreciation expense for the year ended June 30, 2005 was $ 1 1 7,641 .

Property and equipment consisted of the following at

BuildingsLeasehold improvementFurniture and equipmentVehiclesVehicles not in operationAccumulated depreciation

Net investment in property

EstimatedDepreciable

Life

20-30 years10-20 years5-10 years

5 years

and equipment

June 30, 2004:

PurchasedPurchased With

With Federal Non-FederalFunds Funds

$ 416,870 $125,317242,983 749557,763

33,138( 725,858) ( 749}

$ 650,213 $

Total

$ 416,870125,317243,732557,763

33,138( 726,607)

$ 650,213

Depreciation expense for the year ended June 30,2004 was $90,442.

(Continued)

10



(Continued)

(6} Refundable Advances

Delta records federal funds received in excess of expenditures as a refundable advance until they are expendedfor the purpose of the contract or until the funds are returned to the appropriate funding source.

(7} Contractual Revenue - Grants

During the years ended June 30, 2005 and 2004, Delta received contractual revenue from federal and stategrants in the amount of $4,107,720 and $3,470,634, respectively. The continued existence of these fundsis based on annual contract renewals with various funding sources.

(8) Retirement Plan

Delta participates in a tax deferred annuity plan whereby an amount equal to 5% of the salary of eligibleemployees is contributed to purchase annuity contracts with an insurance company. The annuities are in theemployee's name upon funding. The amount contributed for the years ended June 30, 2005 and 2004 was$33,711 and $38,220, respectively.

(9) Accrued Liabilities

Accrued liabilities consisted of the following:2005 2004

Accrued leave payable $ 36,095 $ 40,597Payroll taxes payable 29,619 15,111

$ 65,714 $ 55,708

(Continued)

11


Notes to Financial StatementsJune 30,2005 and 2004

{Continued}

(10) Leases

Delta leases certain buildings and equipment under operating leases. Rental costs on those leases for the yearsended June 30,2005 and 2004, were as follows:

2005 2004Buildings $ 52,800 $ 27,600Equipment 29,566 27,595

$ 82,366 $ 55,195

Commitments under lease agreements having initial remaining terms in excess of one year are as follows:

For the Year EndingJune 30,2006 $ 25,9782007 18,3472008 9,8542009 2,0572010 -_

Total minimum future rentals $ 56,236

(11) Other Liabilities

Other liabilities consist of an amount due to the state from the agency's Family Day Care Home program. Arepayment schedule was set up with the state to remit $500 per month from non-federal funds until thebalance is paid in full. The original amount due to the state was $5,041. The balance owed as of June 30,2003 was $5,041. This balance was paid in full during the year ended June 30, 2004.

Another repayment schedule was set up with the state to remit $500 per month from non-federal funds untilthe balance owed of $2,816 is paid in full. The balance owed as of June 30, 2004 was $2,316. This balancewas paid in full during the year ended June 30, 2005.

12

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Supplemental Information Schedules PreparedFor Grants and Contracts Analysis

15


Head Start Grant No. 06CH0393/14Schedule of Revenues, Expenditures and Changes in Fund Balance

For the Contract Period: July 1, 2004 to June 30, 2005

Revenues:

Amount awarded this budget periodGrantee's contribution

Total revenues

Expenses:PersonnelFringe benefitsTravelEquipmentSuppliesOther

Head Start grant expenses

Grantee's share

Total expenses

Revenue over expenses

Fund balance, beginning July 1, 2004

Reprogrammed PY 12 fiscal year 6-30-03

Fund balance, ending June 30, 2005

ApprovedBudget

$ 2,792,537 $698,134

3,490,671

1,071,785337,186

20,00086,00064,500

1,213,0662,792,537

698,134

$ 3,490,671

$

COB BalanceActual Current Year

2,792,537629,009

3,421,546

1,324,099 $370,530

18,10581,253

119,900602,147

2,516,034 $

629,009

3,145,043

276,503

93,541

(66,905)

303,139

(252,314)(33,344)

1,8954,747

(55,400)610,919276,503

16


Child and Adult Care Food ProgramHead Start Pood Service

Louisiana Department of EducationSchedule of Revenues and Expenditures

For the Contract Period: October 1, 2003 to September 30, 2004

Revenue:

Contract revenue $ 191,237

Expenses:

Salaries 100,936Fringe benefit 25,831Other administrative costs 4,123Non food supplies 736Food service costs 56,284

Total expenses 187,910

Excess revenue (expenses} 3,327

Fund balance, beginning October 1, 2003

Fund balance, ending September 30,2004 $ 3,327

17

Delta Community Action Association, Inc.Taliulah, Louisiana

Family Day Care Home ProgramLouisiana Department of Education

Schedule of Revenues and ExpendituresFor the Contract Period: October 1, 2003 to September 30, 2004

Revenue:

Contract revenue $ 888,125

Expenses:

Salaries 80,588Fringe benefit 19,449Travel 5,125Office costs 13,460Operating costs 6,767Provider payments 762,307

Total expenses 887,696

Excess revenue (expenses) $ 429

18


Delta Recovery CenterDOA Contract No. 351501435

Schedule of Revenues, Expenditures and Changes in Fund BalanceFor the Contract Period: July 1, 2004 to June 30, 2005

Revenue:

Contract revenue

Total revenue

Expenses:

SalariesFringe benefitTravelOperating servicesSuppliesProfessional servicesCapital assets

Total federal expenditures

Budget Actual

$ 123,782

123,782

Actual(Over) Under

Budget

$ 82,80714,0774,500

19,1211,2007,856

100

81,498 $14,2663,976

19,8551,0174,326

1,309(189)524

(734)183

3,530100

$ 129,661 124,938 $ 4,723

Excess revenue (expenses)

Fund balance, beginning July 1,2004

Fund balance, ending June 30, 2005

(1,156)

49,648

48,492

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COOK & MOREHART


1215 HAWN AVENUE * SHREVEPORT, LOUISIANA 71107 • P.O. BOX 78240 • SHREVEPORT, LOUISIANA 71137-8240

TRAVIS H. MOREHART, CPA TELEPHONE (318) 222-5415 FAX (318) 222-5441 RAYEBURN G. COOK (RET.)A. EDWARD BALL, CPAVICKIE D. NOBLE, CPA




Report on Internal Control Over FinancialReporting and on Compliance and Other Matters Based on an Audit of Financial Statements

Performed in Accordance With Government Auditing Standards


We have audited the financial statements of Delta Community Action Association, Inc. (a nonprofit organization) as of and forthe year ended June 30, 2005, and have issued our report thereon dated October 7, 2005. We conducted our audit inaccordance with auditing standards generally accepted in the United States of America and the standards applicable to financialaudits contained in Government Auditing Standards, issued by the Comptroller General of the United States.

Internal Control Over Financial ReportingIn planning and performing our audit, we considered Delta Community Action Association, Inc/s internal control over financialreporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statementsand not to provide an opinion on the internal control over financial reporting. However, we noted a certain matter involving theinternal control over financial reporting and its operation that we consider to be a reportable condition. Reportable conditionsinvolve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control overfinancial reporting that, in our judgment, could adversely affect Delta Community Action Association, Inc.'s ability to record,process, summarize and report financial data consistent with the assertions of management in the financial statements. Thereportable condition is described in the accompanying schedule of findings and questioned costs as item 2005-B1.

A material weakness is a reportable condition in which the design or operation of one or more of the internal control componentsdoes not reduce to a relatively low level the risk that misstatements caused by error or fraud in amounts that would be materialin relation to the financial statements being audited may occur and not be detected within a timely period by employees in thenormal course of performing their assigned functions. Our consideration of the internal control over financial reporting would notnecessarily disclose all matters in the internal control that might be reportable conditions and accordingly, would not necessarilydisclose all reportable conditions that are also considered to be material weaknesses. However, we believe that the reportablecondition described above is not a material weakness.

In addition, we noted certain other matters involving the internal control over financial reporting that we have reported to themanagement of Delta Community Action Association, Inc., in a separate management letter dated October 7, 2005.

21

Compliance and Other MattersAs part of obtaining reasonable assurance about whether Delta Community Action Association, Inc/s financial statements arefree of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts andgrant agreements, noncompliance with which could have a direct and material effect on the determination of financial statementamounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly,we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to bereported under Government Auditing Standards.

This report is intended solely for the information and use of management, the Board of Directors and federal awarding agenciesand pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.

Cook & MorehartCertified Public AccountantsOctober 7, 2005

22

COOK & MOREHART

Certified Public A ccountants

1215 HAWN AVENUE • SHREVEPORT, LOUISIANA 71107 • P.O. BOX 78240 * SHREVEPORT, LOUISIANA 71137-8240

TRAVIS H. MOREHART, CPA TELEPHONE (318) 222-5415 FAX (318) 222-5441 RAYEBURN G COOK (RET.)A. EDWARD BALL, CPAVICKIE D. NOBLE, CPA

__. MEMBERAMERICAN INSTITUTE



Report on Compliance with Requirements Applicable to EachMajor Program and on Internal Control Over Compliance in

Accordance With OMB Circular A-133


ComplianceWe have audited the compliance of Delta Community Action Association, Inc. (a non-profit organization) with the types ofcompliance requirements described in the U. S. Qfficeof Management and Budget {OMB} Circular A-133 Compliance Supplementthat are applicable to each of its major federal programs for the year ended June 30, 2005. Delta Community ActionAssociation, Inc/s major federal programs are identified in the summary of auditor's results section of the accompanyingschedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts and grantsapplicable to each of its major federal programs is the responsibility of Delta Community Action Association, Inc/s management.Our responsibility is to express an opinion on Delta Community Action Association, Inc.'s compliance based on our audit.

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 fovernment Auditing Standards, issued by the Comptroller General ofthe United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Thosestandards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whethernoncompliance with the types of compliance requirements referred to above that could have a direct and material effect on amajor federal program occurred. An audit includes examining, on a test basis, evidence about Delta Community ActionAssociation, Inc.'s compliance with those requirements and performing such other procedures as we considered necessary inthe circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legaldetermination on Delta Community Action Association, Inc.'s compliance with those requirements.

In our opinion. Delta Community Action Association, Inc. complied, in all material respects, with the requirements referred toabove that are applicable to each of its major federal programs for the year ended June 30, 2005.

Internal Control Over ComplianceThe management of Delta Community Action Association, Inc. is responsible for establishing and maintaining effective internalcontrol over compliance with requirements of laws, regulations, contracts and grants applicable to federal programs. In planningand performing our audit, we considered Delta Community Action Association, Inc.'s internal control over compliance with

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requirements that could have a direct and material effect on a major federal program in order to determine our auditingprocedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliancein accordance with OMB Circular A-133.

We noted a certain matter involving the internal control over compliance and its operation that we consider to be a reportablecondition. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design oroperation of the internal control over compliance that, in our judgment, could adversely affect Delta Community ActionAssociation, Inc.'s ability to administer a major federal program in accordance with the applicable requirements of laws,regulations, contracts, and grants. The reportable condition is described in the accompanying schedule of findings andquestioned costs as item 2005-C1.

A material weakness is a reportable condition in which the design or operation of one or more of the internal control componentsdoes not reduce to a relatively low level the risk that noncompliance with the applicable requirements of laws, regulations,contracts, and grants caused by error or fraud that would be material in relation to a major federal program being audited may occurand not be detected within a timely period by employees in the normal course of performing their assigned functions. Ourconsideration of the internal control over compliance would not necessarily disclose all matters in the internal control that mightbe reportable conditions and accordingly, would not necessarily disclose all reportable conditions that are also considered to bematerial weaknesses. However, we believe that the reportable condition described above is not a material weakness.

This report is intended solely for the information and use of management, the Board of Directors and federal awarding agenciesand pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.

Cook & MorehartCertified Public AccountantsOctober 7, 2005

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Summary Schedule of Prior Audit FindingsJune 30, 2005

2004-C1 REPORTABLE CONDITION

DEPARTMENT OF HEALTH AND HUMAN SERVICES - Head Start Program CFDA #93.600DEPARTMENT OF AGRICULTURE - Child and Adult Care Food Program (Head Start and Family Day Care HomePrograms)

CFDA #10.558

Statement of Condition: During our audit, we noted that the agency utilizes signature stamps and a check-signingmachine for authorized signatures on checks. Individuals preparing the checks have access to the stamps and thecheck-signing machine.

Recommendation: We recommend that adequate internal controls be established concerning separation of duties, andthat individuals preparing checks not have access to signature stamps or the check-signing machine.

Current Status: See reportable condition in current year audit.

2004-C2 FINDING

DEPARTMENT OF HEALTH AND HUMAN SERVICES - Head Start Program CFDA #93.600DEPARTMENT OF AGRICULTURE - Child and Adult Care Food Program (Head Start and Family Day Care HomePrograms)

CFDA #10.558

Statement of Condition: During our audit, we noted that the agency had not performed a physical inventory duringthe past two years.

Recommendation: We recommend that the agency establish adequate controls to ensure compliance with theequipment and real property management requirements, including performing a physical inventory at least once everytwo years and reconciling the results of the physical inventory to the equipment records.

Current Status: Improvement noted. No finding in current year audit.

(Continued)

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Summary Schedule of Prior Audit FindingsJune 30, 2005

(Continued)


DEPARTMENT OF HEALTH AND HUMAN SERVICES - Head Start Program CFDA #93.600

Statement of Condition: During our audit, we noted that the agency did not have adequate procedures in place tomonitor compliance with the Matching requirement for its Head Start program. Although the required match was met,additional in-kind documentation had to be obtained during audit fieldwork to meet the match requirement.

Recommendation: We recommend that the agency establish adequate controls to ensure compliance with thematching requirement, including periodic monitoring of the match throughout the program year.



DEPARTMENT OF AGRICULTURE - Child and Adult Care Food Program (Head Start and Family Day Care HomePrograms)

CFDA #10.558

Statement of Condition-. During our audit, we tested 25 provider files for compliance with the eligibility requirementsof the Family Day Care Home program. We noted that controls were not effective to ensure the accuracy andcompleteness of data used to make eligibility determinations and to ensure that all required forms and supportingdocumentation were maintained in participant files. Documentation for providers concerning enrollment forms,employment verification, and attendance reports were not complete.

Recommendation: We recommend that the agency develop a checklist to be used for each participant file to ensurethat files are complete and contain all necessary information. In addition, the agency should assign someone with theresponsibility for reviewing files on a continuing basis to ensure completeness of information.


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Schedule of Findings and Questioned CostsJune 30, 2005

A. Summary of Audit Results

1. The auditor's report expresses an unqualified opinion on the financial statements of Delta Community ActionAssociation, Inc.

2. One reportable condition is reported in the Report on Compliance and on Internal Control Over Financial ReportingBased on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards. Thecondition is not reported as a material weakness.

3. Wo instances of noncompliance material to the financial statements of Delta Community Action Association, Inc.were disclosed during the audit.

4. Dne reportable condition is reported in the Report on Compliance With Requirements Applicable to Each MajorProgram and Internal Control Over Compliance in Accordance With OMB Circular A-133. The condition is notreported as a material weakness.

5. The auditor's report on compliance for the major federal award programs for Delta Community Action Association,Inc. expresses a qualified opinion.

6. Findings relative to the major federal award programs for Delta Community Action Association, Inc. are reportedin part C of this Schedule.

7. The programs tested as major programs included: 1) Head Start Program CFDA #93.600, and 2) Child and AdultCare Food Program (FDCH and Head Start} CFDA #10.558.

8. The threshold for distinguishing Types A and B programs was $300,000.

9. Delta Community Action Association, Inc. does not qualify as a low-risk auditee.

(Continued)

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Delta Community Action Association, inc.Tallulah, Louisiana

Schedule of Findings and Questioned CostsJune 30, 2005

(Continued)

Findings - Financial Statements Audit

2005-B1 REPORTABLE CONDITION

Statement of Condition: During our audit, we noted that the agency utilizes signature stamps and a check-signingmachine for authorized signatures on checks. Individuals preparing the checks have access to the stamps and thecheck-signing machine.

Criteria and Effect: Adequate internal controls should provide that a single individual not have the ability to preparechecks and sign checks, thereby eliminating the review process.

Cause: Adequate controls concerning separation of duties were not established.

Recommendation: We recommend that adequate internal controls be established concerning separation of duties, andthat individuals preparing checks not have access to signature stamps or the check-signing machine.

Response: DCAA has in place a procedure that ensures adequate internal controls concerning separation of duties,so that individuals preparing checks do not have access to signature stamps or the check-signing machine.

C. Findings and Questioned Costs - Major Federal Award Programs Audit


As stated in 2005-B1, during our audit, we noted that the agency utilizes signature stamps and a check-signingmachine for authorized signatures on checks. Individuals preparing the checks have access to the stamps and thecheck-signing machine.

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Delta Community Action Association, inc.Tallulah, Louisiana

Schedule of Prior Audit Findings For Louisiana Legislative AuditorJune 30, 2005

There were four findings in the previous audit for the year ended June 30, 2004. See accompanying SummarySchedule of Prior Audit Findings.

There were nine management letter comments in the previous audit for the year ended June 30,2004, as follows:

Comment #\ - Payroll Transactions

See repeat comment in current year audit.

Comment #2 - Family Day Care Home Program Excess Funds

No comment in current year audit.

Comment #3 - Payroll Process

Improvement noted. No comment in current year audit.

Comment #4 - Payroll General Ledger


Comment #5 - Procurement


Comment #6 - Liheap Program File Exam


Comment #7 - Migrant Contract


Comment #8 - Head Start File Exam


Comment i?9 - Migrant Financial Reports

See repeat comment in current year audit.

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Schedule of Current Audit Findings For Louisiana Legislative AuditorJune 30, 2005

There was one finding for the current year audit period ended June 30, 2005, as described in the accompanyingSchedule of Findings and Questioned Costs.

There were five management letter comments for the current audit year ended June 30, 2005. Management'sresponse to these is as follows:

Comment #1 - Payroll Transactions

Current pay rate authorizations will be obtained when pay rates change. Authorizations for deductions will be updatedand signed prior to changes in the employee's deductions.

Comment #2 - Family Day Care Home Program File Exam

The agency will assign someone with responsibility for reviewing all enrollment forms upon submission for accuracyand completeness before they are filed in participant's file.

Comment #3 - Migrant Financial Reports

DCAA financial reports will be reexamined to verify if funds should be returned to the funding source.

Comment #4 - Fixed Assets

DCAA is continuing to update and reconcile the fixed asset inventory.

Comment #5 - Issuance of Checks

DCAA has an employee independent of all payable, disbursing, cash, receiving and general ledger functions to havecustody of the checks after signing and before mailing.

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COOK & MOREHART


1215 HAWN AVENUE • SHREVEPORT, LOUISIANA 71107 • P.O. BOX 78240 • SHREVEPORT, LOUISIANA 71137-8240

TRAVIS H. MOREHART, CPA TELEPHONE (318) 222-5415 FAX (318) 222-5441 RAYEBURN G. COOK (RET.)A. EDWARD BALL, CPAVICKIE D. NOBLE. CPA




Management Letter

October 7,2005

Board of DirectorsDelta Community Action Association, Inc.Tallulah, Louisiana

We have audited the financial statements of Delta Community Action Association, Inc. (Delta), for the year ended June30, 2005, and have issued our report thereon dated October 7, 2005. In planning and performing our audit of thefinancial statements of Delta Community Action Association, Inc., we considered its internal control over financialreporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financialstatements and not to provide assurance on the internal control over financial reporting.

During our audit certain matters were noted involving internal controls over financial reporting and other operationalmatters which appear to merit your attention for consideration to improve the internal control or operations of Delta.These comments have been discussed with the appropriate members of management.

(1) Payroll Transactions

During our testing of payroll transactions, we noted the following:• Current pay rate authorizations were not always obtained when pay rates changed.• Authorizations for deductions were not always updated when amounts deducted from employees' pay changed.

We recommend the following:• The agency utilize one pay rate authorization form for each employee, detailing the gross wages and the allocation

of pay between the various programs, and that those authorizations be updated each time employees' paychanges.

• Authorizations for deductions be updated timely when amounts deducted from employees' pay change.

(2) Family Day Care Home Program File Exam

During our testing of eligibility for the Family Day Care Home Program, we noted the following:• For five files tested, the enrollment forms did not correctly indicate whether child was a resident child or non-

resident child.• Many enrollment forms did not include enrollment dates or drop dates.

We recommend that the agency implement procedures to ensure that enrollment forms are reviewed for accuracy andcompleteness.

(3) Migrant Financial Reports

During our audit, we noted that the Migrant financial reports sent to the state were not being prepared from orreconciled to the agency's general ledger. As a result, excess funds were drawn down, as follows:

Revenue $ 107,384Expenses ( 103,544)

Excess $ 3,840

We recommend that financial reports be reviewed and approved by the accounting department prior to submission.We further recommend that the agency contact its funding source as to the disposition of the excess funds.

(4) Fixed Assets

During our audit, we noted that the agency completed an annual inventory of its fixed assets. However, the inventoryrecords were not reconciled to the agency's depreciation schedule I prior year listing of fixed assets.

We recommend that the agency reconcile the results of its annual inventory to its depreciation schedule / prior yearlisting of fixed assets.

(51 Issuance of Checks

During our audit, we noted that checks were being returned to the accounting department for mailing after necessarysignatures had been obtained.

We recommend that the custody of checks after signature and before mailing be handled by an employee independentof all payable, disbursing, cash, receiving, and general ledger functions

We express sincere thanks to Delta personnel for the cooperation and assistance provided us during our audit. Weare available to provide you assistance and consultation in the implementation of the above mentioned items. Thisletter is furnished solely for the use of management and the Board of Directors and is not intended to be used for anyother purpose.

Cook & MorehartCertified Public Accountants

06 jan-3 amifl:l»6 file06 jan-3 amifl:l»6 delta community action association, inc. tallulah,...

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