Get 08 08 03:36p SRMUEL STEVENS 318 219-7841 p.l

SAMUEL W. STEVENS, IIICertified Public Accountant

O F F I C I A LFILE C O P Y

DO NOT SEND OUT'(Xerox necessnrycopies from thiscopy and PLACE

BACK in FILE)

THE EXTRA MILE, REGION Vn, INC.

U nder 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 nate_

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THE EXTRA MILE, REGION VII, INC.SHREVEPORT, LOUISIANA

Table of Contents

Page(s)

Independent Auditor* s Rep ort 1 -2

Statement of Financial Position 3

Statement of Activities 4

Statement of Functional Expenses 5

Statement of Cash Flows 6

Notes to Financial Statements 7-11

OTHER REPORTS

Report on Internal Control Over Financial Reporting and on Complianceand Other Matters Based on an Audit of Financial Statements Performedin Accordance with Government Auditing Standards 12-13

Schedule of Findings 14-17For the Year Ended June 30, 2007

Schedule of Prior Year Findings 18For the Year Ended June 30, 2006

Management's Corrective Action Plan 19

Oct 08 08 03:36P SflMUEL STEVEMS 318 219-7841p.3

SAMUEL W. STEVENS, III CPAP.O. Box 52631 Shreveport, LA 71)35 • (318) 458-0930 • Fax (318) 219-7841

INDEPENDENT AUDITOR'S REPORT

The Board of DirectorsThe Extra Mile, Region VII, Inc.Shreveport, Louisiana

I have audited the accompanying statement of financial position of The Extra Mile, Region VII, Inc. (TheExtra Mile) of Shreveport, Louisiana (a nonprofit organization) as of June 30, 2007 and the relatedstatements of activities, and cash flows for the year then ended. These financial statements are theresponsibility of the Organization's management. My responsibility is to express an opinion on thesefinancial statements based on my audit.

Except as discussed in the following paragraph, I conducted my audit in accordance with auditingstandards generally accepted in the United States of America. Those standards require that I plan andperform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessing the accounting principles usedand significant estimates made by management, as well as evaluating the overall financial statementpresentation. I believe that my audit provides a reasonable basis for our opinion.

Supporting documentation was not available for a significant many disbursements made subsequent June30,2007. Accordingly, it was not practicable for me to extend my audit of such accounts payable beyondthe amounts recorded as of June 30, 2007.

In my opinion, except for the effects of such adjustments, if any, as might have been determined to benecessary had the supporting documentation referred to in the preceding paragraph been susceptible tosatisfactory audit tests, the financial statements referred to above present fairly, in all material respects,the financial position of The Extra Mile as of June 30, 2007, and the changes in its net assets and its cashflows for the year then ended in conformity with accounting principles generally accepted in the UnitedStates of America.

In accordance with Government Auditing Standards, I have also issued my report dated June 27, 2008, onmy consideration of The Extra Mile's internal control over financial reporting and on my tests of itscompliance with certain provisions of laws, regulations, contracts, and grant agreements and othermatters. The purpose of that report is to describe the scope of my testing of internal control over financialreporting and compliance and the results of that testing and not to provide an opinion on the internal

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control over financial reporting or on compliance. That report is an integral part of an audit performed inaccordance wtih Government Auditing Standards and should be considered in assessing the results of myaudit.

September 24, 2008

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The Extra Mile, Region VII, Inc-

Statement of Financial PositionJune 30,2007

AssetsCurrent Assets:

Cash $ 1,979Grants Receivable 8,010Intermediary Receivable 80,953Prepaid expenses 1,615

Total Current Assets 92,55 7

Equipment ~ net 4,200

Total Assets $ 96,757

Liabilities and Net AssetsCurrent Liabilities:

Accounts Payable & Accrued Expenses $ 39,397Bank Overdraft 42,932Accrued payroll and taxes 3,569Refundable advances 13,264Line of credit 30S679Lease obligation - current portion 3,040

Total Current Assets 132,881

Total Liabilities 132,881

Net Assets:Unrestricted (48,705)Temporarily Restricted 12,581

Total Net Assets (36,124)^

Total Liabilities and Net Assets $ 96,757

See Accompanying Notes to Financial StatementsPageS

Get 08 08 03:37p SFIMUEL STEVENS 318 219-7841 P .6

The Extra Mile, Region VII, Inc.

Statement of ActivitiesFor the Year Ended June 30,2007

Revenue and SupportGrant RevenueContributionsFundraisingAdministrativeOther RevenueTotal Revenue and Support

Net Assets Released From Restrictions

Total Revenue and Support

ExpensesProgram Services

Big Brothers Big SistersYouth Volunteer Corp

Total Program Services

Supporting Services:Management And GeneralFundraising

Total Support Services

Total Expenses

Change in Net Assets

Net AssetsBeginning of Year

End of Year

Unrestricted

: 109,7578,426

10,49314,19911,072

153,947

12,414

166,361

39,37831,595

TemporarilyRestricted

$ 12,581

12,581

(12,414)

167

70,973

108,804426

109,231

180,204

(13,843)

(34,862)

(48,705)

167

12,414

$ 12,581

Total

122,3388,426

10,49314,19911,072

166,528

166,528

39,37831.59570,973

108,804426

109,231

180,204

(13,676)

(22,448)

(36,124)

See Accompanying Notes to Financial StatementsPage 4

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The Extra Mile, Region VII, Inc.

Statement of Functional ExpensesFor the Year Ended June 30, 2007

Big BrothersBig Sisters

Youthyoivnteer

Corp _ManagementAnd General Fvndraismg Total Expenses

Salaries S 33,296Payroll taxes and related benefits 2,520Travel 646Operating services 2,772Interest expenseProfessional servicesBuilding rentOffice supplies 119Utilities and telephone 25Printing and promotionDepreciation -

17,6011,2712,2286,104

164

4201,4362,372

39,0734,2008,035

31,9644,7601,175

10,325599

4,2291,5952,850

426

89,9707,991

10,90941,2664,9241,175

10,3251,1375,6903,9672.850

Total Expenses 39,378 S 31,595 S 108,804 $ 426 $ 180,204

See Accompanying Notes to Financial StatementsPageS

Oct 08 08 03:37P S f l M U E L S T E V E N S 318 219-7841

The Extra Mile, Region VH, Inc.

Statement of Cash FlowsJune 30, 2007

Cash Flows from Operating Activities:Change in Net Assets $ (13,676)

Adjustments to Reconcile Change in Net Assets toNet Cash Provided from Operations:

Depreciation 2,850(Increase/Decrease in

Grants Receivable 4,554Intermediary Receivable (46,165)Prepaid expenses 1,416

(lncrease)/Decrease inAccounts Payable & Accrued Expenses 8,444Bank Overdraft 39,319Accrued payroll and taxes 1,109Refundable advances (665)

Net Cash Provided/(Used) by Operating Activities (2,815)

Cash Flows from Financing ActivitiesNet Proceeds (Payments) from Revolving Line of Credit 2,690Payments On Capital Lease Obligations (1,563)

Net Cash Flows Provided/Used) by Financing Activities 1,127

Net Decrease in Cash (1,688)

Cash , Beginning of Year 3,667

Cash, End of Year $ 1,979

See Accompanying Notes to Financial StatementsPage 6

Oct 08 08 03:37P SRMUEL STEVENS 318 213-7941 p.9

The Extra Mile, Region YE, Inc.Shreveport, Louisiana

Notes to the Financial StatementsJune 30, 2007

Note 1 Organization and Significant Accounting Policies

The Extra Mile, Region, VII, Inc (Extra Mile") is a not-for-profit corporation under the laws of the Stateof Louisiana, Extra Mile was established to provide volunteer coordination and support services for theOffices of Mental Health, Developmental Disabilities and Substance Abuse. Extra Mile serves theparishes of Caddo, Bossier, Webster, Claibome, Bienville, Red River, Desoto, Sabine, Natchitoches, andWinn in Region VII.

The Extra Mile is comprised of the following two principal programs:

Youth Volunteer CorpsThe Youth Volunteer Corps of Shreveport Bossier (YVC) is a program sponsored under The Extra Mile.Regions VII, Inc. Youth Volunteer Corps is a national organization that mobilizes youth between theages of 11 and 18 in community service projects that promote service, learning, citizenship, relationshipbuilding and leadership. YVC has several projects throughout the year such as the Martin Luther KingDay service project, National Youth Service Day, Make a Difference Day and other national days ofservice. The program is funded primarily from the Department of Health and Hospitals office of MentalHeath, Hands On, and other miscellaneous contributions.

Big Brothers Big SistersBig Brother Big Sisters of Caddo-Bossier (BBBS) is a program sponsored by Extra Mile, Region VII, Inc.Big Brother Big Sister of America is a national organization that targets youth between the ages of 6 and15 who come primarily from single parent households, grandparent as primary-caregiver homes, low tomoderate income households or children at risk of academic or behavior modification. The program'sprimary purpose is the creation of one-on-one relationships between adult volunteers and children throughschool-based and community based mentoring partnerships with faith based organizations. This programis funded primarily by the Department of Health and Hospitals Office of Mental Health, Hands On,grants, contributions, membership fees and fundraising efforts of Big Brother Big Sister of America.Funds also come from other miscellaneous contributions.

Extra Mile also acts as fiscal agent for the Office of Mental Health in administering its Consumer CareResources and Systems of Care grants and for the Office for Citizens with Developmental Disabilitiesgrant

Summary of Significant Accounting PoliciesAccounting policies of Extra Mile conform with accounting principles generally accepted in the UnitedStates of America and reflect practices appropriate to he industry in which it operates. The significantpolicies are summarized below.

Basis of Accounting: The agency prepares its financial statements of the accrual basis of accounting.Accordingly, revenue are recognized when earned and expenses are recognized when incurred.

Functional Expenses: Expenses are charged to each program based upon direct expenditures incurred.

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Grants Receivable: Various funding sources provide reimbursement of allowable costs and payment onunits of service in connection with providing services under contracts or agreements. This balancerepresents amounts due from funding sources at June 30, 2007, but received after that date.

Intermediary Accounts: Extra Mile has entered into fiscal agency agreements with various agenciesunder the Department of Health and Hospitals whereby Extra Mile is the recipient organization thatfacilitates the transfer of assets between the grantor and the beneficiary and has no discretion as to theiruse. The transfer is subject to the grantor's unilateral right to redirect the use of the assets tobeneficiaries. The Extra Mile had the following receivables at June 30, 2007.

Office of Mental Health Systems of Care $ 9,963Office of Mental Consumer Care Resources 70,990

Intermediary Receivable $ 80,953

Refundable Advances: Certain funds have been received by Extra Mile as agent for the resourceprovider, and may be transferred to third parties only upon the authority of he resource provider. SinceExtra Mile has no discretion as to their use, they are accounted for as refundable advances as follows:

NWRMR-OADA $ 320NWRMR-OCDD 1,294NWRMH 456Mental Health Coalition 3,669Breakaway Natchitoches/Metamorphosis 2,389Pines Treatment Center 2,852Challenge 766Minden Mental Health 172OADA Prevention 586LA State Association Treasurer/BBBS 509Shreveport Mental Health Center 251

Totals , $ 13,264

Grant Revenue: Extra Mile is dependent on federal and state grants. Its continued existence is based onannual contract renewals with various funding sources.

Net Assets: Under the provisions of Statement of Financial Accounting Standards No. 117, " FinancialStatements for Not-For-Profit Organizations" net assets and revenues and contributions, expenses, gainsand losses are classified based on the existence or absence of donor-imposed restrictions. Accordingly,net assets of the Extra Mile and changes therein are classified and reported as follows:

Unrestricted net assets - Net assets that are not subject to donor-imposed stipulations. Supportrestricted by the donor is reported as an increase in unrestricted net assets if the restriction expires inthe reporting period in which the support is recognized.

Temporarily restricted net assets - Net assets that are subject to donor-imposed stipulations whichmay or will be met either by actions of the Extra Mile and/or the passage of time. All donor-restrictedsupport is reported as an increase in temporarily or permanently restricted net assets, depending on

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Oet 08 08 03:38p SflMUEL STEVENSP . I i

the nature of the restriction. When a restriction expires (i.e., when a stipulated time restriction ends orpurpose restriction is accomplished), temporarily restricted net assets are reclassified to unrestrictednet assets and reported in the Statement of Activities as net assets released from restrictions.

Contributions: All contributions are considered available for unrestricted use unless specifically restrictedby the donor.

Federal Income Taxes: Extra Mile is a tax-exempt organization as described in Section 501(c)(3) of theInternal Revenue Code and is classified by the Internal Revenue Service as an organization other than aprivate foundation. Extra Mile, therefore is not subject to income taxes. However, income from certainactivities not directly related to Extra Mile's tax exempt purpose is subject to taxation as unrelatedbusiness income. Extra Mile had no such income for the year ended June 30, 2007. Extra Mile is alsoexempt from state income taxes.

Equipment: is stated at cost Extra Mile follows the practice of capitalizing expenditures for equipment inexcess of $500. Depreciation of equipment is computed on a straight-line basis over the estimated usefullives of the assets.

Equipment owned by Extra Mile while used in the program for which it was purchased or in other futureauthorized programs totaled $1,890 for the year ended June 30, 2006. The funding sources, however, havea reversionary interest in the equipment purchased with grant funds; therefore, its disposition as well asthe ownership of any sale proceeds therefore, is subject to funding source regulations.

Website Development: Costs are amortized on the straight-line basis over an estimated useful life of fiveyears. Amortization expense for the year ended June 30, 2007, was $678.

Risks and Uncertainties: The preparation of financial statements in conformity with generally acceptedaccounting principles requires management to make estimates and assumptions that affect the reportedamounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of thefinancial statements and the reported amounts of revenues and expenses during the reporting period.Actual results could differ from those estimates.

Concentrations of Credit Risk: Financial instruments that potentially subject Extra Mile to concentrationsof credit risk consist principally of temporary cash investments and grant receivables. Concentrations ofcredit risk with respect to grant receivables are limited due to these amounts being due from governmentalagencies under contractual terms.

Extra Mile maintains cash balances at a single financial institution. These accounts collectively areinsured by the Federal Deposit Insurance Corporation (FDIC) up to $100,000. At June 30, 2007, therewere no uninsured balances at this institution.

Note 2 Equipment - net

A summary of equipment at June 30, 2007 follows:

Furniture, fixtures and movable equipment $ 5,109Computer Equipment 5,748Total " io|g57

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Accumulated Depreciation $ (6,657)Equipment, net $ 4,200

Total depreciation expense charged to operations was $2,850 for the year ended June 30, 2007.

Note 3 Leases

Operating Lease- On November 1, 2003, The Extra Mile entered into an agreement to lease its officespace for one year term. Thereafter, the lease is renewable in one year increments. Total lease expensefor 2007 totaled $10,325,

Capital Lease - During 2007, the Extra Mile leased equipment under capital leases which expire inSeptember 2007. The assets and liabilities under capital leases are recorded at present value of the futureminimum lease payments. The assets are depreciated over their estimated useiul lives. Depreciation onassets under capital leases charged to expense in 2007 totaled $1,022. Gross assets recorded as capitalleases of $5,109 and accumulated depreciation of $2,895 are included in property and equipment on thebalance sheet as of June 30, 2007.

Minimum future lease payments under capital leases as of June 30, 2007 are as follows:

2008 Total minimum lease payments $ 3,198Less: amount representing interest 158

Present value of net minimum lease payments 3,040Less: current obligations (3,040)

Long term obligation $ -

Interest rates on capital leases are Imputed based on the Extra Mile's incremental borrowing rate at theinceptionof each lease.

Note 4 Notes Payable

The Extra Mile entered into the following debt agreements:Promissory note payable on demand under a $30,000 line ofcredit with a bank, bearing interest at prime plus 3%, adjustedmonthly, unsecured. The interest rate at June 30, 2007, was 11.25%. $ 30,679

Less current portion 30,679Long-term portion $

Interest expense for the year ended June 30, 2007, totaled $4,924.

Note 5 Temporarily Restricted Net Assets

Temporarily restricted net assets of $12,581 at June 30, 2007. was composed of unexpended grant funds.

Note 6 ConcentrationsThe Extra Mile received grant revenue from the following sources in 2007:

State and local

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DHH- Office of Mental Health 40 %DHH - Office of Community Services 24 %DHH - Office of Addictive Disorders 1 4 %Louisiana Public Health Institute - Tobacco-Free Living 17 %

OtherMiscellaneous _ 5_ %

Totals 100% %

Note 7 Commitments and ContingenciesGrants require the fulfillment of certain conditions as set forth in grant contracts. Failure to fulfill theconditions as set forth in the grant contracts could result in the return of grant funds to the grantor,

Note 8 Going Concern ConsiderationsThe accompanying financial statements have been prepared assuming that the Extra Mite. Region VII,Inc. will continue as a going concern. At June 30, 2007, total liabilities exceed total assets by $36,124.Additionally, the organization has sustained substantial decreases in net assets in recent years resulting ina deficit in net assets. Currently, the Extra Mile is experiencing cash flow problems. The checkingaccount is being regularly overdrawn and the revolving line of credit that was being used for workingcapital has been depleted.

Management anticipates growth in both fundraised monies and community support in 2008. AlthoughExtra Mile has experienced setbacks, the Board of Directors and staff are diligently working to strengthenthe organization financially through strategic planning, fund development, board development, and byseeking technical assistance for financial planning, The ability of the organization to continue as a goingconcern is dependent upon the success of managements endeavors to increase revenues and to reduceexpenses.

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SAMUEL W. STEVENS, III CPAP.O. Box52631 • Shreveport, LA 71135 • (318) 458-0930 • Fax (318) 219-7841

REPORT ON INTERNAL CONTROL OVER FINANCIALREPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON

AN AUDIT OF FINANCIAL STATEMENTS PERFORMEDIN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

The Extra Mile, Region VII, Inc.Shreveport, Louisiana

I have audited the financial statements of The Extra Mile, Region VII, Inc., (The Extra Mile) (a not-for-profit organization) as of and for the year ended June 30, 2007 and have issued my report thereondated September 24, 2008.1 conducted my audit in accordance with auditing standards generallyaccepted In the United States of America and the standards applicable to financial audits contained inGovernment Auditing Standards, issued by the Comptroller General of the United States.

Infernal Control Over Financial ReportingIn planning and performing my audit, I considered The Extra Mile's internal control over financialreporting as a basis for designing my auditing procedures for the purpose of expressing my opinionon the financial statements, but not for the purpose of expressing an opinion on the effectiveness ofthe The Extra Mile's internal control over financial reporting. Accordingly, I do not express anopinion on the effectiveness of the Organization's internal control over financial reporting.

My consideration of internal control over financial reporting was for the limited purpose described inthe preceding paragraph and would not necessarily identify all deficiencies in internal control overfinancial reporting that might be significant deficiencies or material weaknesses. However, asdiscussed below, I identified a deficiency in internal control over financial reporting that I consider tobe a significant deficiency.

A control deficiency exists when the design or operation of a control does not allow management oremployees, in the normal course of performing their assigned functions, to prevent or detectmisstatements on a timely basis. A significant deficiency is a control deficiency, or combination ofcontrol deficiencies, that adversely affects the organization's ability to initiate, authorize, record,process, or report financial data reliably in accordance with generally accepted accounting principles,such that there is more than a remote likelihood that a misstatement of the organization's financialstatements that is more than inconsequential will not be prevented or detected by the organization'sinternal control. I consider the deficiencies described in the accompanying schedule of findings andresponses to be significant deficiencies in internal control over financial reporting. The controldeficiencies noted are described in the accompanying schedule of findings as items 2007-1, 2007-2,2007-3, 2007-4, 2007-5, 2007-6, 2007-7, and 2007-8

A material weakness is a significant deficiency, or combination of significant deficiencies, that resultsin more than a remote likelihood that a material misstatement of the financial statements will not beprevented or detected by the organization's internal control.

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My consideration of the internal control over financial reporting was for the limited purposedescribed in the first paragraph of this section and would not necessarily identify all deficiencies inthe internal control that might be significant deficiencies and, accordingly, would not necessarilydisclose all significant deficiencies that are also considered to be material weaknesses.. However, ofthe control deficiencies described above, I consider items 2007-2, 2007-3, 2007-5, 2007-6, and 2007-6, to be material weaknesses.

Compliance and Other MattersAs part of obtaining reasonable assurance about whether The Extra Mile's financial statements arefree of material misstaternent, I performed tests of its compliance with certain provisions of laws,regulations, contracts, and grant agreements, noncompliance with which could have a direct andmaterial effect on the determination of financial statement amounts. However, providing an opinionon compliance with those provisions was not an objective of my audit, and accordingly, I do notexpress such an opinion. The results of my tests disclosed no Instances of noncompliance or othermatters that are required to be reported under Government Auditing Standards.

This report is intended solely for the information and use of the board of directors, management,Louisiana Legislative Auditor and federal awarding agencies and pass- through entities and is notintended and should not be used by anyone other than these specified parties

September 24, 2008

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The Extra Mile, Region VIL Inc.Shreveport, Louisiana

Schedule of Findings and Questioned CostsFor the Year Ended June 30, 2007.

I have audited the financial statements of The Extra Mile, Region VII, Inc., as of and for the year endedJune 30, 2007 and have issued my report thereon dated September 24, 2008, I conducted my audit inaccordance with auditing standards generally accepted in the United States of America and the standardsapplicable to financial audits contained in Government Auditing Standards, issued by the ComptrollerGeneral of the United States. My audit of the financial statements as of June 30, 2007, resulted in anunqualified opinion.

Section I Summary of Auditor's Reports

a. Report on Internal Control and Compliance Material to the Financial Statements

Internal ControlMaterial Weaknesses: Yes Control Deficiencies: Yes

ComplianceCompliance Material to Financial Statements: No

b. Federal Awards - Not Applicable.

c. Identification of Major Programs - Not Applicable.

Section H Financial Statement Findings

Finding 2007-1 Bank reconciliation for Extra Mile's Special Account and Northwest Louisiana Coalitionaccounts were not prepared as of June 30, 2007. Old outstanding items on main operating account werenot researched and resolved in a timely manner.

Condition: Bank reconciliations were not properly prepared for year end reporting. I noted outstandingchecks dated during August 2006.

Criteria: Bank reconciliations should be prepared and reviewed on a monthly basis. Outstandingreconciling items should be investigated on a monthly basis as a part of the reconciliation process todetermine if the items are valid reconciling items.

Effect Cash as reported in the internally prepared financial statements was misstated at June 30, 2007.

Cause: The Extra Mile experienced turnover in the Executive Director and bookkeeper positions duringthe year ended June 30, 2007. A bookkeeper was engaged to prepare year end financial statements. Muchof the accounting was performed after year end based on using insufficient records and the accounts werenot reconciled due to their level of immateriality to the financial statements.

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Recommendations: All bank accounts should be reconciled on a monthly basis. Policies should beestablished to resolve reconciling items based on their age and validity. The reconciliation should bereviewed and signed or initialed by the Executive Director.

Finding 2007-2 The Extra Mile is not recording items on an accrual basis.

Condition: Prepaid expenses and accounts payable were not properly recorded.

Criteria: Expenses should be deducted in the fiscal period incurred.

Effect: Internal financial statements were materially misstated at June 30, 2007. Audit adjustments weremade to record prepaid expenses and accounts payable.

Cause: The bookkeeper did not examine supporting documentation to assure prepaid and accountspayable balances were properly recorded as of June 30, 2007.

Recommendations: The Extra Mile should hire or engage a well-qualified bookkeeper. I recommendexamination of insurance policies to determine the proper period in which premiums are to be expenses. Irecommend examination of documentation supporting disbursements made after year end to identifypayables.

Finding 2007-3 Certain transactions could not be supported by documentation.

Condition: The Extra Mile could not locate several supporting documents during the audit. Missing itemsincluded invoices or documents supporting certain cash disbursements, line of credit statements. Alsomissing were certain copies of reimbursement requests of costs from the grant agencies,

Criteria: All transactions should be supported by documentation. This documentation should be readilyavailable in order to provide evidence that the transaction is valid.

Effect: Certain expenses and other transactions needed to be reclassed during the audit. Disbursementsrecorded as expense for the current period should have been recorded as payments on accounts payable.Accounts receivable amounts were not properly supported at year end.

Cause: During relocation documentation was lost and the remaining documentation was not adequatelyfiled

Recommendations: We recommend that the Extra Mile implement policies to retain and file supportingdocumentation.

Finding 2007-4 I noted three instances where the signature policy was circumvented by splitting theinvoice and writing two or three checks.

Condition: I noted instances where a series of checks were written in check number order to the samevendor on the same date. The check signing policy requires 2 signatures for transactions exceeding $500.

Criteria: Checks should not be divided in order to avoid a second signature.

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Effect: Violation of internal control policy.

Cause: According to Kenya Scruggs, the Executive Director, this happened during emergencies when asecond signor was not available.

Recommendations: I recommend that the Executive Director obtain a second signature on all checks over$500. Policy should not be violated under any circumstances. In order to strengthen controls in the cashdisbursement area, I also recommend adopting a policy requiring a board member to sign any checkwritten to the Executive Director. By implementing this policy, it will avoid a situation where theExecutive Director has to sign her own checks.

Finding 2007-5 The Extra Mile Is not complying with IRS and state payroll reporting requirements.

Condition: I noted the Federal Form 941, Quarterly Payroll Report was not prepared for the quarter endedJune 30, 2007. During my review of disbursements subsequent to June 30, 2007 through November 302007 I also noted no payment of federal payroll taxes for the quarter ended June 30, 2006. I noted theLouisiana Form LI Quarterly Payroll Reports were not prepared for any quarter during the year endedJune 30, 2007. I also noted the Louisiana payroll taxes were not paid during the year ended June 30,2007.

Criteria: Payroll reports should be filed quarterly on a timely basis. Payroll taxes should be paid timely.

Effect Payroll reports not filed and taxes not paid timely

Cause: The Extra Mile experienced turnover in the Executive Director and bookkeeper positions duringthe year these matters should have been addressed.

Recommendations: I recommend timely preparation of payroll tax reports and payment of payroll taxes.The Executive Director should review and sign the reports quarterly. The Executive Director shouldreview tax payments monthly to assure Federal and State payroll taxes are adequately and timelyremitted,

Finding 2007-6 Instances of improper recording.

Condition: We noted the following Items:

• Several disbursements were recorded to grants receivable instead of expenses,• Property that was no longer in the possession of Extra Mile remained on the books.

Credit card invoices were being improperly recorded. The unpaid balance was not recorded as a liability.

Criteria: All transactions should be properly and timely recorded.

Effect The internally prepared financial statements were materially misstated at June 30, 2007.

Cause: The Extra Mile experienced turnover in the Executive Director and bookkeeper positions. Thebookkeeper contracted to prepare year end financial statements did not correct or record the transactionsproperly.

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Recommendations: The Extra Mile should hire or engage a well-qualified bookkeeper.

Finding 2007-7 The Extra Mile did not comply with Financial Reporting requirements of its Grantoragencies and the Louisiana Legislative Auditor

Condition: Financial Statements were not timely audited and submitted.

Criteria: The Extra Mile was required to provide audited financial statements to the Louisiana LegislativeAuditor by December 31, 2007.

Effect Financial support form grant agencies ceased funding.

Cause: Proper internal financial statements were not prepared timely. I also noted the Board met only twotimes during the year. The minutes did not indicate financial statements were provided or requested.

Recommendations: The Board of Directors should meet consistently and regularly and minutesadequately prepared. The Board should require the preparation of monthly financial statements. TheBoard should review and evaluate financial statements, budgets comparisons and other financial reportsconsistently and frequently during the year.

Finding 2007-8 The Extra Mile serves as an agent for resource providers by receiving and holding fundsuntil the providers authorize the funds to be transferred to third parties. It was noted that there is notenough cash to cover the undistributed funds that have been received by the resource provider.

Condition: There is no cash available to cover any requests for distribution by the resource providers.

Criteria: The Extra Mile is responsible for distributing funds for certain resource providers. The ExtraMile has no discretion as to their use. The funds are accounted for as refundable advances. A cash reserveshould be set aside for these liabilities.

Effect The Extra Mile currently has no cash available when providers request a distribution of their fundsto a third party.

Cause: The Extra Mile currently has a cash flow problem and no policy to set aside funds for theserefundable liability accounts.

Recommendations: The Board of Directors should create a policy regarding funds when the Extra Mile isacting as an agent for resource providers. Any funds received by a resource provider for futuredistribution to a third party should be reserved or board restricted. This will prevent those funds frombeing used for the operations of the Extra Mile.

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The Extra Mile, Region VII, Inc.Shreveport, Louisiana

Schedule of Prior Year FindingsFor the Year Ended June 30, 2007

Finding 2006-1 Bank reconciliations generated through QuickBooks did not reconcile to cash for sixmonths from January 2007 through June 2007. Old outstanding items on the bank reconciliation are notresearched and resolved in a timely manner.

Status: Similar finding noted in 2007,

Finding 2006-2 The Extra Mile is not recording items on an accrual basis.

Status: This is a repeat finding in 2007.

Finding 2006-3 during our test work, certain transactions could not be supported by documentation.

Status: This is a repeat finding in 2007.

Finding 2006-4 Extra Mile is not operating in accordance with its articles of incorporation and by-lawswith regard to the number of members on its Board of Directors.

Status: Corrective action taken. The Board revised the required number from 12 to 7 membersand is in compliance

Finding 2006-5 during our test work, we noted six instances where the signature policy was circumventedby splitting the invoice and writing two or three checks.

Status: This is a repeat finding in 2007.

Finding 2006-6 The Extra Mile is not complying with IRS rates and state regulations.

Status: Similar finding noted in 2007

Finding 2006-7 during our test work, several items were noted to be incorrectly recorded.

Status: This is a repeat finding in 2007

Finding 2006-8 financial statements were not presented to the Board of Directors on a monthly basis.

Status: This is a repeat finding in 2007

Finding 2006-9 The Extra Mile serves as an agent for resource providers by receiving and holding fundsuntil the providers authorize the funds to be transferred to third parties. It was noted that there is notenough cash to cover the undistributed funds that have been received by the resource provider.

Status: This is a repeat finding in 2007

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Get 08 08 03:42P SRMUEL STEVENS318 219-7841

The Extra Mile Resign ViK inc.

3306 Midway Street • Shreveport. LA 7! UN

(3 IS) 632-58HO • FAX: (3 IS) 632-5KK6

Email: infott,c\tramile7.on; - ww\v. 1 -HOO-Yolunt.ccr.orq

p.21

October 6, 2008

The Extra Mile Region VII, Inc.

Management's Corrective Action Plan

For The Years Ended June 30, 2007

Response 1: Procedures for reconciling statements will be incorporated and performed monthly to ensure that all bankaccounts are reconciled, items are reviewed, researched and resolved monthly by the bookkeeper, and approved by theExecutive Director

Response 2: As of January 2008, the Extra Mile has contracted with an external accounting firm to ensure expenses andpayables are recorded in the proper period.

Response 3: For the 2007-2008 fiscal year, the The Extra Mile reestablished the filing system that was in place. Prior tothe physical move of the operations, vendor files as well as grant/contract files were readily accessible.

Response 4: The organization will put in place an emergency policy that ensure that all checks over $500 have twosignatures and that all reimbursements to the Executive Director be signed by a board member.

Response 5: The organization has filed all past state and federal payroll tax reports; however, payment arrangements havebeen established for the payment of the past liabilities. The organization has implemented procedures to monitor thetimely filing of payroll reports and paying payroll taxes timely.

Response 6: As of January 2008, the Extra Mile has contracted with an external accounting firm to ensure financialstatements, consisting of a balance sheet and income statement, are reported to the board on a monthly basis.

Response 7: As of January 2008, the Extra Mile has contracted with an external accounting firm to ensure compliancewith Financial Reporting requirements of its Grantor agencies and th Louisiana Legislative Auditor.

Response 8: The organization has put in place a policy to secure an additional account separate from the operating accountof The Extra Mile, to ensure the availability of all Liability account funds.

Sincerely,

Kenya Scruggs

Executive Director