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ACADIANA LEGAL SERVICE CORPORATION FINANCIAL STATEMENTS DECEMBER 31.2016 Postlethwaite &Netterville A Professional Accounting Corporation www.pncpa.com
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Page 1: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

ACADIANA LEGAL SERVICE CORPORATION

FINANCIAL STATEMENTS

DECEMBER 31.2016

Postlethwaite &Netterville

A Professional Accounting Corporation

www.pncpa.com

Page 2: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

Table of Contents

Page

INDEPENDENT AUDITORS' REPORT 1 - 2

FINANCIAL STATEMENTS

Statements of Financial Position 3-4

Statements of Activities and Changes in Net Assets 5-6

Statements of Cash Flows 7

Notes to the Financial Statements 8-18

SUPPLEMENTARY INFORMATION

Schedules of Functional Expenses 19-20

Schedules of Support, Revenue and Expenses 21-24

Schedule of Compensation, Benefits and Other Payments to Executive Director 25

Schedule of LSC Funding Passed-through to Subrecipients (Unaudited) 26

Schedule of Expenditures of Federal Awards and Notes 27 - 28

REPORTS ON COMPLIANCE AND INTERNAL CONTROLS

INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT A UDITING STANDARDS 29-30

INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE 31-32

Schedule of Findings and Questioned Costs 33-34

Summary Schedule of Prior Year Audit Findings 35-37

Page 3: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

P&N Postlethwaite & Netterville

A Professional AccounHng Corporation Associated Offices in Principal Cities of the United States

www.pncpa.com

INDEPENDENT AUDITORS' REPORT

Board of Directors Acadiana Legal Service Corporation Lafayette, Louisiana

Report on ttie Financial Statements

We have audited the accompanying financial statements of the Acadiana Legal Service Corporation (the Corporation), which comprise the statements of financial position as of December 31, 2016 and 2015, the related statements of activities and changes in net assets, cash flows for the years then ended, and the related notes to the finaneial statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these fmancial statements in accordance with aecounting prineiples generally accepted in the United States of Ameriea; this ineludes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of finaneial statements that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audit in accordanee with auditing standards generally accepted in the United States of America and the standards applicable to finaneial audits eontained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the finaneial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit proeedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the finaneial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

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8550 United Plaza Blvd, Suite 1001 • Baton Rouge, LA 70809 • Tel: 225.922.4600 • Fox: 225.922.4611

Page 4: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

Opinion

In our opinion, the financial statements referred to on the previous page present fairly, in all material respects, the financial position of the Acadiana Legal Service Corporation as of December 31, 2016 and 2015, and the changes in net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters

Other Information

Our audit was conducted for the purpose of forming an opinion on the financial statements of the Acadiana Legal Service Corporation as a whole. The accompanying schedules of functional expenses, the schedules of support, revenue, and expenses, and the schedule of compensation, benefits, and other payments to the Executive Director on pages 19-20, 21-24, and 25, respectively, are presented for purposes of additional analysis and are not a required part of the financial statements. The accompanying schedule of expenditures of federal awards on pages 27-28, as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) is also presented for purposes of additional analysis and is also not a required part of the basic financial statements. Such information is the responsihility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole.

The accompanying schedule of LSC funding passed-through to subrecipients on page 26, which is the responsibility of management, is presented for the purpose of additional analysis and is not a required part of the financial statements. Such information has not been subjected to the auditing procedures applied in the audit of the financial statements, and, accordingly, we do not express an opinion or provide any assurance on it.

Other Reporting Required by Government Auditins Standards

In accordance with Government Auditing Standards, we have also issued our report dated April 27, 2017, on our consideration of the Acadiana Legal Service Corporation's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Corporation's internal control over financial reporting and compliance.

t

Baton Rouge, Louisiana April 27, 2017

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P&N

Page 5: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

ACADIANA LEGAL SERVICE CORPORATION LAFAYETTE, LOUISIANA

STATEMENTS OF FINANCIAL POSITION DECEMBER 31,2016 AND 2015

ASSETS

2016 2015 CURRENT ASSETS

Cash and cash equivalents Cash and cash equivalents - temporarily restricted Grants receivable Other receivables Prepaid expenses Client escrow funds, restricted

Total current assets

$ 158,305 269,383

12,239 6,157

36,567 16,433

499,084

$ 208,854 159,602 44,281

4,560 26,620 24,284

468,201

PROPERTY AND EOUIPMENT. NET 599,630 604,892

Total assets $ 1,098,714 $ 1,073,093

The accompanying notes are an integral part of these financial statements.

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Page 6: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

LIABILITIES AND NET ASSETS

CURRENT LIABILITIES Payable from current assets: Accounts payable Accrued expenses Compensated absences Deferred revenue Note payable, current portion Lease obligation, current portion

Total payable from current assets

2016 2015

35,456 37,235 133,524

16,493 3,264

21,768 97,823 145,311

3,285 200,062

3,210 225,972 471,459

Payable from restricted assets: Client escrow funds

Total payable from restricted assets 16,433 16,433

23,614 23,614

Total current liabilities 242,405 495,073

LONG-TERM LIABILITIES Note payable, non-current portion Lease obligation, non-current portion

Total long-term liabilities

170,585

170,585 3,264 3,264

Total liabilities 412,990 498,337

NET ASSETS Uiu'estricted (deficit) Temporarily restricted:

Legal Services Corporation - grants Legal Services Corporation - property Louisiana Bar Foundation

Total temporarily restricted net assets

(183,290)

201,787 599,630 67,597

(189,738)

62,025 604,892 97,577

869,014 764,494

Total net assets 685,724 574,756

Total liabilities and net assets $ 1,098,714 $ 1,073,093

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Page 7: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

ACADIANA LEGAL SERVICE CORPORATION LAFAYETTE, LOUISIANA

STATEMENTS OF ACTIVITIES AND CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

2016 Temporarily

Unrestricted Restricted Total Support and revenue:

Grant revenue $ 144,770 $ 2,677,866 $ 2,822,636 Interest earnings 197 6,030 6,227 Other revenues 18,956 3,646 22,602 Net assets released from restrictions:

Satisfaction of grant restrictions 2,583,022 (2,583,022) -

Total support and revenue 2,746,945 104,520 2,851,465

Expenses: Legal services 2,384,224 - 2,384,224 Support services 356,273 - 356,273

Total expenses 2,740,497 - 2,740,497

Change in net assets 6,448 104,520 110,968

Net assets (deficit) - beginning of year (189,738) 764,494 574,756

Net assets (deficit) - end of year $ (183,290) $ 869,014 $ 685,724

The accompanying notes are an integral part of these financial statements.

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Page 8: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

2015

Unrestricted Temporarily

Restrieted Total

$ 133,281

22,794

$ 2,913,324 5,359

18,776

$ 3,046,605 5,359

41,570

2,802,863 (2,802,863) _

2,958,938 134,596 3,093,534

2,555,368 386,439

- 2,555,368 386,439

2,941,807 - 2,941,807

17,131 134,596 151,727

(206,869) 629,898 423,029

$ (189,738) $ 764,494 $ 574,756

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Page 9: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

ACADIANA LEGAL SERVICE CORPORATION LAFAYETTE, LOUISIANA

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31,2016 AND 2015

2016 2015 Cash flows from operating activities: Change in net assets $ 110,968 $ 151,727 Adjustments to reconcile change in net assets

to cash provided by operating activities: Depreciation 32,101 31,563

Effects on operating cash flows due to changes in: Grants receivable 32,042 1,206 Other receivables (1,597) (630) Prepaid expenses (9,947) 3,539 Client escrow funds 670 -Accounts payable 13,688 (34,776) Accrued expenses (60,588) 3,946 Deferred revenue (3,285) (19,190) Compensated absences (11,787) (4,164)

Net cash provided by operating activities 102,265 133,221

Cash flows used in investing activities: Acquisitions of property and equipment (26,839) (14,821)

Net cash used in investing activities (26,839) (14,821)

Cash flows used by flnancing activities: Capital lease payments (3,210) (3,157) Principal payments on note (12,984) (14,295)

Net cash used in fmancing activities (16,194) (17,452)

Net change in cash and cash equivalents 59,232 100,948

Cash and cash equivalents, beginning of the year

Cash and cash equivalents, end of the year

Supplemental disclosures: Cash paid during the year for interest

368,456

9,406

267,508

$ 427,688 $ 368,456

10,391

The accompanying notes are an integral part of these financial statements.

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Page 10: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

ACADIANA LEGAL SERVICE CORPORATION LAFAYETTE, LOUISIANA

NOTES TO THE FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Operations

Acadiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services to low income and elderly residents of Louisiana. The Corporation is funded primarily by the Legal Services Corporation (LSC), a non-profit corporation established by Congress to administer a nationwide legal assistance program.

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 and the requirements of the Legal Services Corporation Accounting Guide.

Cash and Cash Equivalents

For financial statement purposes, the Corporation considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents.

Client Trust Escrow Funds

Funds received from clients are deposited into a separate cash account and restricted for the payment of expenses in connection with related litigation.

Property and Equipment

Property and equipment is recorded at cost. Depreciation of property and equipment is based upon the estimated useful service lives, which range from 3 to 39 years, using the straight-line method. Maintenance and repairs are charged to expense, while additions and improvements are capitalized.

Allowance for Uncollectible Accounts

Accounts are considered past due based on their contractual terms. Receivables are closely monitored by management during the year and all accounts considered to be uncollectible are written off. As of December 31, 2016 and 2015, the Corporation had no allowance for uncollectible accounts related to grants receivable.

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Page 11: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

ACADIANA LEGAL SERVICE CORPORATION LAFAYETTE, LOUISIANA

NOTES TO THE FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued^

Restricted and Unrestricted Revenue and Support

Contributions received are recorded as unrestrieted, temporarily restricted, or permanently restricted support, depending on the existence and/or nature of any donor restrictions.

All donor-restricted support is reported as an increase in temporarily or permanently restrieted net assets, depending on the nature of the restriction. When a restrietion expires (that is, when a stipulated time restriction ends or purpose restriction is accomplished), temporarily restricted net assets are reclassified to unrestrieted net assets and reported in the Statement of Activities as net assets released from restrictions. The Corporation did not have any permanently restricted net assets as of Deeember 31, 2016 and 2015.

The Corporation recognizes grants from LSC as support on a straight-line basis over the grant period. Any grant remaining unexpended at the end of the aeeounting period is recorded as temporarily restricted net assets. In aecordance with normal LSC policies, the Corporation may use unspent fimds in future periods as long as expenses incurred are in eompliance with specified terms of the LSC grant, as defined. LSC may, at its diseretion, request reimbursement for expenses or return of grants, or both, as a result of non-compliance by the Corporation with the terms of the grant. In addition, if the Corporation terminates its LSC grant activities, all unexpended amounts are to be returned to LSC.

The Corporation reeeived greater than 10% of its revenue from each of the following grantors:

2016 2015

Legal Serviees Corporation 53% 49% Louisiana Bar Foundation 42% 47%

Grants which are cost reimbursable under federal contracts are recorded as unrestrieted net assets in the Statement of Activities. All grantor-restrieted support is reported as an increase in temporarily restricted net assets in the Statements of Activities.

One-time grants can be awarded to support a specifie event or project. These one-time grants that are essentially one-time infusions to the annualized grant should be reeorded as support as eligible costs are ineurred during the period speeified in the grant. Until expenses are ineurred for the restricted activity, one-time grants in this category should be ineluded and recorded in the Corporation's financial statements as deferred revenue on the statement of finaneial position. When a one-time grant or contract expires, the unexpended amount is to be returned to LSC. As of December 31, 2016 and 2015, the Corporation had deferred revenue of $0 and $3,285, respectively, related to its one-time technology initiative grant.

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Page 12: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

ACADIANA LEGAL SERVICE CORPORATION LAFAYETTE, LOUISIANA

NOTES TO THE FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES fcontinued^

Attorney's Fees

Attorney's fees received are recorded during the accounting period in which the money from the fee award is actually received by the Corporation and is expended for any purpose permitted by the LSC Act.

Allocation of Expenses

The costs of providing programs and other activities have been summarized on a functional basis in the Statements of Activities and the Schedules of Functional Expenses. Accordingly, certain costs have been allocated among the programs and supporting services benefited.

Donated Services and Assets

Donated services are legal services rendered at no charge to the Corporation. The value of donated services is based upon estimated fees normally charged by the professional rendering the service. Donated services are recognized both as support and expenses and, therefore, do not affect net assets. Donated services amounted to $661 and $5,582 for the years ended December 31, 2016 and 2015, respectively.

Donated furniture and equipment are recorded as support at their fair value at the date of donation. These donations are either expensed or capitalized based on their fair value.

Income Taxes

The Corporation is exempt from federal tax under Section 501(c)(3) of the Internal Revenue Code. In addition, the Corporation has been classified as an organization that is not a private foundation under Section 509(a)(2). Accordingly, no provision for income taxes has been made. However, if the Corporation would engage in activities unrelated to the purpose for which it was created, taxable income could result. In management's judgment, the Corporation does not have any tax positions that would result in a loss contingency considering the facts, circumstances, and information available at the reporting date.

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Page 13: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

ACADIANA LEGAL SERVICE CORPORATION LAFAYETTE, LOUISIANA

NOTES TO THE FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued^

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 the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Advertising

The Corporation expenses the cost of advertising as incurred. Total advertising expenses for the years ended December 31, 2016 and 2015 were $1,583 and $2,188, respectively.

2. CASH AND CASH EQUIVALENTS

At December 31, 2016 and 2015, the Corporation had cash (book balances) totaling $427,688 and $368,456 consisting primarily of demand deposit accounts at several fmancial institutions. These deposits were stated at cost, which approximates market. Accounts are insured by Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Insurance Fund (NCUSIF) up to $250,000. All of the Corporation's cash balances were insured by the FDIC or NCUSIF at December 31, 2016 and 2015.

3. GRANTS RECEIVABLE

Grants receivable for the Corporation consisted of the following at December 31:

2016 2015 Cajun Area Agency on Aging, Inc. $ - $ 2,598 Cameron Council on Aging, Inc. 198 371 CENLA Area Agency on Aging, Inc. 1,683 1,711 Vernon Parish Council on Aging, Inc. - 1,000 Beauregard Council on Aging 762 1,090 Louisiana Bar Foundation - Bldg Capital Grant - 16,760 Allen Council on Aging 720 314 Calcasieu Council on Aging, Inc. 8,195 5,110 Jefferson Davis Council on Aging, Inc. 681 2,031 Pro Hac Vice - 13.296

Total Grants Receivable $ 12.239 $ 44.281

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Page 14: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

ACADIANA LEGAL SERVICE CORPORATION LAFAYETTE, LOUISIANA

NOTES TO THE FINANCIAL STATEMENTS

4. PROPERTY AND EQUIPMENT

The following is a summary of changes in property and equipment for the years ended December 31, 2016 and 2015, respectively:

Cost: Land

12/31/2015 Additions 231.165 i.

Deletions 12/31/2016 231.165

Buildings and Improvements 1,270,774 7,449 - 1,278,223 Law Library 38,082 - - 38,082 Furniture and Equipment 294.300 19.390 _ 313.690 Furniture and Equipment

1.603.156 26.839 1.629.995 Less: accumulated depreciation Buildings and Improvements (949,790) (13,143) - (962,933) Law Library (22,066) (3,109) - (25,175) Furniture and Equipment 1257.5731 115.8491 - 1273.4221 Furniture and Equipment

11.229.4291 132.1011 _ 11.261.5301 Net property and equipment being depreciated 373.727 15.2621 _ 368.465

Net property and equipment S 604.892 $ 15.2621 $ S 599.630

Cost: 12/31/2014 Additions Deletions 12/31/2015 Land $ 231.165 $ - $ _ $ 231.165

Assets Being Depreciated Buildings and Improvements 1,273,785 10,157 (13,168) 1,270,774 Law Library 38,082 - - 38,082 Furniture and Equipment 967.632 4.664 1677.9961 294.300

2.279.499 14.821 1691.1641 1.603.156 Less: accumulated depreciation Buildings and Improvements (950,752) (12,206) 13,168 (949,790) Law Library (18,956) (3,110) - (22,066) Furniture and Equipment 1919.3221 116.2471 677.996 1257.5731

11.889.0301 (31,563) 691.164 11.229.4291 Net property and equipment being depreciated

Net property and equipment

390.469 116.7421 _

621.634 IK 116.7421 $

373.727

604.892

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Page 15: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

ACADIANA LEGAL SERVICE CORPORATION LAFAYETTE, LOUISIANA

NOTES TO THE FINANCIAL STATEMENTS

4. PROPERTY AND EQUIPMENT (continued)

Depreciation expense for the years ended December 31, 2016 and 2015 was $32,101 and $31,563, respectively.

5. LEASE COMMITMENTS

Operating Leases

The Corporation leases two facilities to serve as branch offices.

The Corporation leases office space in Lake Charles, Louisiana. The lease has a three year lease term. Monthly rental payments are scheduled as follows; 1) $3,055 for the period December 15, 2014 through Deeember 14, 2015; 2) $3,147 for the period December 15, 2015 through December 14, 2016; and 3) $3,240 for the period December 15, 2016 through December 31, 2017.

The Corporation leased space for the Louisiana Disability Law Center in Lake Charles, Louisiana. On March 1, 2014, the Corporation renewed its lease agreement for the Louisiana Disability Law Center for a term of 2 years. The monthly rental fee was $600 per month for the first year, which increased to $609 per month for the second year of the lease term. There was an option to automatically renew the lease terms on March 2016 beginning at a monthly rental rate of $618. However, the offiee was closed on February 28, 2016, and the lease was terminated.

The Corporation also entered into agreements to lease postage meters, ranging between $50 to $120, for each of its offices. The terms of these agreements range from 36 to 60 months.

The operating lease commitments expected under the above leases are as follows for the years ending December 31:

2017 $ 42,648 2018 3,318 2019 3,314 2020 2,953 2021 840

.$ 53.073

The Corporation has entered into month-to-month agreements to lease garage space and storage units. Payments under these agreements approximate $100 per month for the garage space and $455 per month for the storage units and are excluded from the payout schedule above.

Total rent expense charged under the operating leases above totaled $49,410 and $53,019 for the years ended December 31,2016 and 2015, respectively.

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Page 16: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

ACADIANA LEGAL SERVICE CORPORATION LAFAYETTE, LOUISIANA

NOTES TO THE FINANCIAL STATEMENTS

5. LEASE COMMITMENTS (continued)

Capital Lease

The Corporation leases a copier under a non-cancelable lease that is classified as a capital lease that expires in 2017. The lease agreement contains a bargain purchase option at the end of the lease term. The leased copier is amortized on a straight line basis over 5 years. Total accumulated amortization related to the leased copier is $8,908 and $6,681 for the years ended December 31, 2016 and 2015, respectively. The interest rate related to the lease obligation is the implicit borrowing rate of 3%, and the maturity date is December 19, 2017.

The following is a schedule showing the future minimum lease payments under the capital lease by years and the present value of the minimum lease payments as of December 31:

2017 $ 3.361 Total minimum lease payments Less: Amount representing interest Present value of minimum lease payments

At December 31, 2016 and 2015, the present value of minimum lease payments due within one year is $3,264 and $3,210, respectively.

6. NOTES PAYABLE

The Corporation entered into a loan agreement with a financial institution on March 14, 2011 to fund the purchase of an office building in Alexandria, Louisiana. The original loan amount was $260,140, with monthly principal and interest payments which began in April 2011 in the amount of $2,232 per month. A final balloon payment of $200,926 was scheduled to be due at maturity. The interest rate on the note was 6.25% until September 18, 2013. The terms of the note were modified effective September 18, 2013 to reflect an interest rate of 5%. The modified terms under the 5% interest rate required monthly principal and interest payments of $2,057, with a final balloon payment of $197,604 due with an original maturity dated March 14, 2016, at which time the Organization was in communication with the financial institution regarding refinancing. The terms of the note were modified April 15, 2016 to reflect an interest rate of 4.5%. The modified terms under the 4.5% interest rate require monthly principal and interest payments of $2,057, with a final balloon payment of $112,234 due at maturity on April 15, 2021. The note is secured by both office buildings in Alexandria and Lafayette, Louisiana.

3,361 97

$ 3.264

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Page 17: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

ACADIANA LEGAL SERVICE CORPORATION LAFAYETTE, LOUISIANA

NOTES TO THE FINANCIAL STATEMENTS

6. NOTES PAYABLE (continued^

The note payable is scheduled to mature as follows:

Year Ending December 3 P': 2017 2018 2019 2020 2021

16,493 17,249 18,042 18,871

116.423 187.078

7. COMPENSATED ABSENCES

An employee commences to earn and accrue annual leave with pay from the first day of employment. Accrual occurs at rates based on the length of employment. An employee may carry annual leave over Ifom one year to the next. Employees with less than three years of service are limited to 150 hours of accrued leave. Employees with more than three years of service are limited to 225 hours of accrued leave. If accrued annual leave above 150 hours or 225 hours, respectively, is not taken by the end of the calendar year, the amounts exceeding the limit will be forfeited. The Corporation has accrued $133,524 and $145,311 in compensated absences at December 31, 2016 and 2015, respectively.

8. PRIVATE ATTORNEY INVOLVEMENT (PAD

Legal Services Corporation requires attorneys in private practice be involved in the delivery of services by Acadiana Legal Service Corporation. The involvement must equal, at a minimum, 12.5% of the annualized basic field grant. For the years ended December 31, 2016 and 2015, PAl amounted to approximately 20% and 29%, respectively. This is based on the $292,093 and $421,362, respectively, of total PAl expenditures from the LSC basic field grant, Louisiana Bar Foundation grants. Title 111, and other funding sources.

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Page 18: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

ACADIANA LEGAL SERVICE CORPORATION LAFAYETTE, LOUISIANA

NOTES TO THE FINANCIAL STATEMENTS

8. PRIVATE ATTORNEY INVOLVEMENT (PAD (continued^

A schedule of private attorney involvement expenses is listed below:

2016 2015 Salaries and wages:

Lawyers $ 29,689 $ 56,165 Employee benefits 27,555 80,038 Office rent and utilities 10,965 26,583 Equipment rentals and maintenance 2,111 4,992 Office supplies and expenses 5,557 8,031 Travel and training 19,384 28,686 Library and other supplies 2,279 8,679 Telephone 1,894 2,989 Insurance 4,290 9,135 Professional services 2,168 5,726 Contractual services 78,187 117,821 Membership fees 477 508 Litigation costs 155 233 Sub-grants 107,276 66,776 Miscellaneous 106 5.000 Total Private Attorney Involvement (PAI) Expenses $ 292.093 $ 421.362

Compliance percentage Actual PAI to LSC Basic Field Advances

12.50% 19.62%

12.50% 28.63%

9. LIMITATION OF EEDERAL CARRYOVER FUNDS

Legal Services Corporation limits the federal LSC fund balance carryover to 10% of the annualized grant award. Any excess carryover must be returned to Legal Services Corporation. This percentage may be increased to 25% if a waiver of the restriction is submitted and approved. The Corporation has carryover of 13.49% and 4.15% for the years ending December 31, 2016 and 2015, respectively. A waiver will be submitted to LSC related to the excess carryover of approximately $52,000.

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Page 19: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

ACADIANA LEGAL SERVICE CORPORATION LAFAYETTE, LOUISIANA

NOTES TO THE FINANCIAL STATEMENTS

10. RETIREMENT PLAN

The Corporation adopted a 403(b) retirement plan (the Plan) effective Januaiy 1, 1995. The Plan was amended and restated effective January 1, 2009. The plan allows for employee elective deferrals and employer matching contributions. Employees are eligible to make elective deferrals to the plan on their hire date, if their normal work hours are greater than 20 hours per week. Employees are considered eligible for employer matching contributions upon completing 2 years of eligible service. One year of eligible service consists of 1,000 hours. The Corporation shall determine, at its sole discretion, the amount of employer contributions to be made to the plan. Effective September 2013, the Corporation eliminated its employer-portion contribution to the Plan.

11. SUBGRANTS TO OTHER AGENCIES

During each of the years ended December 31, 2016 and 2015, the Corporation granted LSC funds in the amounts of $21,018 to the Lafayette Volunteer Lawyer Project, $11,884 to Central Louisiana Pro Bono Project, and $13,624 to Southwest Louisiana Bar Foundation. All sub-grantees are pro bono programs, which use the funds to provide civil legal services to low-income persons eligible for representation by the Corporation.

In addition, the Corporation also granted Child in Need of Care (CINC) funds in the amounts of $26,250 and $8,750 to the Southwest Louisiana Bar Foundation and $34,500 and $11,500 to Central Louisiana Pro Bono Project for the years ended December 31, 2016 and 2015, respectively.

12. FEDERAL AND STATE GRANTS

The Corporation participates in federal and state grant programs, which are governed by various rules and regulations of the grantor agency. Costs charged to the respective grant programs are subject to audit and adjustment by the grantor agency; therefore, to the extent that the Corporation has not complied with the rules and regulations governing the grants, refunds of any money received may be required and the collectability of any related receivables at December 31, 2016 and 2015, may be impaired. In the opinion of the management of the Corporation, there are no significant contingent liabilities relating to compliance with the rules and regulations governing the respective grants; therefore, no provision has been recorded in the accompanying financial statements for such contingencies.

13. TEMPORARILY RESTRICTED NET ASSETS

Temporarily restricted net assets at December 31, of the Corporation consisted of the following:

2016 2015 Litigation services $ 269,384 $ 159,602 Non-spendable property 599.630 604.892

$ 869.014 $ 764.494

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Page 20: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

ACADIANA LEGAL SERVICE CORPORATION LAEAYETTE, LOUISIANA

NOTES TO THE FINANCIAL STATEMENTS

14. NET ASSETS RELEASED FROM RESTRICTIONS

Net assets were released from grant restrictions by satisfaction of the restricted purposes during the years ended December 31, as follows:

2016 2015 Child in need of care cases Mortgage, foreclosure, and bankruptcy cases Note assistance Other legal assistance

$ 789,139 728,894 45,536 294,545

- 16,760 1.748.347 1.762.664

$ 2.583.022 $ 2.802.863

15. SUBSEQUENT EVENTS

Effective January 3, 2017, Acadiana Legal Service Corporation expanded its operations when the Legal Services Corporation awarded the organization an expansion grant to provide services to eligible clients in 26 new parishes, in the Northern sections of Louisiana. The expansion grant from LSC along with other funding primarily from the Louisiana Bar Foundation for this new service area, will increase ALSC's revenue by approximately $2,600,000 in 2017. In addition, approximately 40 new employees will be hired to staff the new offices in the expanded service area.

Management has evaluated subsequent events through the date that the financial statements were available to be issued, which was April 27, 2017. No subsequent events occurring after this date have been evaluated for inclusion in these financial statements.

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Page 21: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

ACADIANA LEGAL SERVICE CORPORATION LAFAYETTE, LOUISIANA

SCHEDULES OF FUNCTIONAL EXPENSES FOR THE YEARS ENDED DECEMBER 31,2016 AND 2015

2016 Legal Supportive Total

Services Services Expenses

Salaries and wages: Lawyers $ 796,003 $ 41,940 $ 837,943 Paralegals 353,837 82,999 436,836 Other 306,854 71,978 378,832

Employee benefits 281,375 66,002 347,377 Office rent and utilities 106,744 14,556 121,300 Equipment rentals and maintenance 17,866 4,191 22,057 Office supplies and expenses 34,053 7,988 42,041 Travel and training 119,093 7,602 126,695 Depreciation 26,002 6,099 32,101 Library and other supplies 30,067 - 30,067 Telephone 22,396 5,253 27,649 Insurance 38,012 8,917 46,929 Professional services 20,858 4,893 25,751 Contractual services 101,233 23,746 124,979 Membership fees 16,296 375 16,671 Litigation costs 4,851 - 4,851 Sub-grants 107,276 - 107,276 Interest - 9,406 9,406 Miscellaneous 1,408 328 1,736

Total Expenses $ 2,384,224 $ 356,273 $ 2,740,497

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Page 22: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

2015 Legal Supportive Total

Services Services Expenses

$ 850,841 $ 35,825 $ 886,666 359,207 84,259 443,466 343,557 80,588 424,145 348,524 81,753 430,277 109,925 14,990 124,915 16,926 3,970 20,896 43,696 10,250 53,946

113,315 8,224 121,539 25,566 5,997 31,563 47,617 - 47,617 24,075 5,647 29,722 39,654 9,301 48,955 28,147 6,603 34,750

119,180 27,956 147,136 12,924 225 13,149 3,479 - 3,479

66,776 - 66,776 - 10,391 10,391

1,959 460 2,419

$ 2,555,368 $ 386,439 $ 2,941,807

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Page 23: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

ACADIANA LEGAL SERVICE CORPORATION SCHEDULE OF SUPPORT, REVENUE AND EXPENSES

FOR THE YEAR ENDED DECEMBER 31,2016

Temporarily Restricted Legal Services Corporation Louisiana Bar Foundation

Property and Basic Field Equipment Total lOLTA CINC MSS

Revenue and Support Grant revenues $ 1,489,035 $ $ 1,489,035 $ 366,215 $ 773,900 $ Interest earnings 3,416 - 3,416 803 1,664 90 Other revenues 3,646 - 3,646 - - -

Total Revenue and Support 1,496,097 - 1,496,097 367,018 775,564 90

Expenses: Salaries and Wages;

Lawyers 180,248 180,248 242,068 289,404 20,968 Paralegals 286,029 286,029 31,208 60,356 2,487 Non- Lawyers 291,045 291,045 24,584 57,738 2,262

Employee Benefits 212,440 212,440 19,544 104,619 6,595 Office Rent and Utilities 84,539 84,539 - 28,390 2,252 Equipment Rentals and Maintenance 15,351 15,351 - 5,350 -Office Supplies and Expenses 22,035 22,035 4,523 11,250 1,671 Telephone 14,604 14,604 2,160 7,741 76 Travel & Training 50,855 50,855 5,173 63,171 1,364 Depreciation - 32,101 32,101 - - -Library and Other Supplies 17,571 - 17,571 - 10,066 1,789 Insuranee 33,071 - 33,071 - 12,322 1,536 Professional Services 16,718 - 16,718 4,818 2,756 1,459 Contractual Services 27,175 - 27,175 18,974 71,720 1,712 Membership Fees 3,674 - 3,674 9,043 2,923 1,031 Litigation Costs 1,196 - 1,196 2,875 - -Sub-grant Awards 46,526 - 46,526 - 60,750 -Interest 9,406 - 9,406 - - -Miscellaneous 819 - 819 - 583 334

Total Expenses 1,313,302 32,101 1,345,403 364,970 789,139 45,536

Change in Net Assets (Deficit) 182,795 (32,101) 150,694 2,048 (13,575) (45,446)

Net Assets (Deficit) at Beginning of Year 62,025 604,892 666,917 13,935 38,106 45,536

Debt Service Payments (16,194) - (16,194) - - -Acquisition of Property (26,839) 26,839 - - - -

Net Assets (Deficit) at End of Year $ 201,787 $ 599,630 $ 801,417 $ 15,983 $ 24,531 $ 90

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Page 24: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

Temporarily Restricted Unrestricted Louisiana Bar Foundation Total

Temporarily Total 2016 Other Restricted TIG Other Unrestricted Totals

$ 48,716 $ 2,677,866 $ 3,285 $ 141,485 $ 144,770 $ 2,822,636 57 6,030 30 167 197 6,227

- 3,646 - 18,956 18,956 22,602 48,773 2,687,542 3,315 160,608 163,923 2,851,465

18,712 751,400 1,977 84,566 86,543 837,943 - 380,080 - 56,756 56,756 436,836 - 375,629 3,203 - 3,203 378,832

3,068 346,266 - 1,111 1,111 347,377 - 115,181 - 6,119 6,119 121,300 - 20,701 925 431 1,356 22,057 - 39,479 - 2,562 2,562 42,041 - 24,581 - 3,068 3,068 27,649

120,563 1,193 4,939 6,132 126,695 32,101 - - - 32,101 29,426 - 641 641 30,067 46,929 - - - 46,929 25,751 - - - 25,751

119,581 5,250 148 5,398 124,979 16,671 - - - 16,671 4,071 - 780 780 4,851

107,276 - - - 107,276 - 9,406 - - - 9,406 - 1,736 - - - 1,736

21,780 2,566,828 12,548 161,121 173,669 2,740,497

26,993 120,714 (9,233) (513) (9,746) 110,968

- 764,494 - (189,738) (189,738) 574,756

- (16,194) - 16,194 16,194 -

$ 26,993 $ 869,014 $ (9,233) $ (174,057) $ (183,290) $ 685,724

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Page 25: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

ACADIANA LEGAL SERVICE CORPORATION SCHEDULE OF SUPPORT, REVENUE AND EXPENSES

FOR THE YEAR ENDED DECEMBER 31,2015

Temporarily Restricted Legal Services Corporation Louisiana Bar Foundation

Property and Building Capital Pro Hac Basic Field Equipment Total lOLTA Development Vice

Revenue and Support Grant revenues $ 1,471,883 $ $ 1,471,883 $ 304,304 $ 16,760 $ 13,296

Interest earnings 5,359 - 5,359 - - -Other revenues 18,776 - 18,776 - - -

Total Revenue and Support 1,496,018 - 1,496,018 304,304 16,760 13,296

Expenses: Salaries and Wages:

Larvyers 213,834 - 213,834 195,558 - 13,296 Paralegals 239,624 - 239,624 47,197 -Non- Lawyers 324,466 - 324,466 16,076 -

Employee Benefits 290,223 - 290,223 7,352 -Office Rent and Utilities 94,239 - 94,239 - -Equipment Rentals and Maintenance 14,736 - 14,736 - -Office Supplies and Expenses 27,678 - 27,678 3,292 -Telephone 10,594 - 10,594 3,476 -Travel & Training 48,620 - 48,620 584 -Depreciation - 31,563 31,563 - -Library and Other Supplies 30,767 - 30,767 1,000 -Insurance 32,386 - 32,386 - - -Professional Services 20,301 - 20,301 2,334 - -Contractual Services 18,640 - 18,640 2,804 - -Membership Fees 1,800 - 1,800 8,682 - -Litigation Costs 825 - 825 2,014 - -Sub-grant Awards 46,526 - 46,526 - - -Interest 7,926 - 7,926 - 2,465 -Miscellaneous 1,094 - 1,094 - - -

Total Expenses 1,424,279 31,563 1,455,842 290,369 2,465 13,296

Change in Net Assets (Deficit) 71,739 (31,563) 40,176 13,935 14,295 -

Net Assets (Deficit) at Beginning of Year 8,264 621,634 629,898 - - -

Debt Service Payments (3,157) - (3,157) - (14.295) -Acquisition of Property (14,821) 14,821 - - - -

Net Assets (Deficit) at End of Year $ 62,025 $ 604,892 $ 666,917 $ 13,935 $ $

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Page 26: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

Temporarily Restricted Unrestrieted Louisiana Bar Foundation Total

Temporarily Total 2015 MSS CINC Restricted TIG Other Unrestricted Totals

$ 340,081 $ 767,000 $ 2,913,324 $ 19,190 $ 114,091 $ 133,281 $ 3,046,605 - - 5,359 - - - 5,359 - - 18,776 - 22,794 22,794 41,570

340,081 767,000 2,937,459 19,190 136,885 156,075 3,093,534

127,983 267,067 817,738 2,353 66,575 68,928 886,666 42,379 68,920 398,120 - 45,346 45,346 443,466

6,238 75,127 421,907 1,098 1,140 2,238 424,145 42,539 83,728 423,842 - 6,435 6,435 430,277

6,806 20,316 121,361 - 3,554 3,554 124,915 673 3,347 18,756 1,616 524 2,140 20,896

7,250 12,073 50,293 793 2,860 3,653 53,946 3,623 9,798 27,491 - 7,731 7,731 29,722

12,293 52,356 113,853 2,776 4,910 7,686 121,539 - - 31,563 - - - 31,563

5,235 9,715 46,717 - 900 900 47,617

6,143 9,916 48,445 - 510 510 48,955

5,837 5,336 33,808 - 942 942 34,750

26,062 88,106 135,612 10,554 970 11,524 147,136 911 1,756 13,149 - - - 13,149 200 131 3,170 - 309 309 3,479 - 20,250 66,776 - - - 66,776 - - 10,391 - - - 10,391 373 952 2,419 - - - 2,419

294,545 728,894 2,785,411 19,190 137,206 156,396 2,941,807

45,536 38,106 152,048 - (321) (321) 151,727

- - 629,898 - (206,869) (206,869) 423,029

- - (17,452) - 17,452 17,452 -

$ 45,536 $ 38,106 $ 764,494 $ $ (189,738) $ (189,738) $ 574,756

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Page 27: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

ACADIANA LEGAL SERVICE CORPORATION LAFAYETTE. LOUISIANA

SCHEDULE OE COMPENSATION. BENEEITS AND OTHER PAYMENTS TO EXECUTIVE DIRECTOR

FOR THE YEAR ENDED DECEMBER 31. 2016

Executive Director: Joesph Oelkers, III (January 1, 2016 through August 31, 2016) Greg Landry (September 1, 2016 through December 31, 2016)

Joseph Oelkers Greg Landry Purpose Amount Amount

Salary $ 93,538 $ 32,282 Benefits - insurance (Health) 2,859 1,760 Benefits - other (Social/medicare taxes) 7,018 2,429 Benefits - other (describe) (Life insurance and A/D&D) 266 128 Benefits - other (describe) (Disability insurance) 1,051 403 Car allowance (Gas cards/repairs - company car) 861 -

Vehicle provided by the Corporation 236 -

Cell phone 600 -

Dues 935 510 Reimbursements 32 70 Travel 1,746 1,615 Registration fees 500 1,465 Conference travel 3,698 3,792

Total $ 113,340 $ 44,454

Note: Joseph Oelkers, III retired from the position of Exeuctive Director effective August 31, 2016. On September 1, 2016, Greg Landry assumed the role as Executive Director. The above schedule reflects compensation paid to each executive director under their terms during the year ended December 31,2016.

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Page 28: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

ACADIANA LEGAL SERVICE CORPORATION LAFAYETTE. LOUISIANA

SCHEDULE OF LSC FUNDING PASSED-THROUGH TO SUBRECIPIENTS gjNAUDITED)

FOR THE YEAR ENDED DECEMBER 31. 2016

Lafayette Volunteer Central Lonisiana Southwest Louisiana Lawyer Project Fro Bono Project Bar Foundation Total

Salaries and Wages $ 15,018 $ 7,733 $ 10,500 $ 33,251 Employee Benefits - 763 - 763 Rent 3,500 1,633 - 5,133 Telephone 500 822 299 1,621 Training 1,000 - - 1,000 Travel - - 300 300 Insurance 500 338 - 838 Litigation 500 - - 500 Office Expenses - 595 500 1,095 Audit - - 800 800 Miscellaneous - - 1,225 1,225

$ 21,018 $ 11,884 $ 13,624 $ 46,526

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Page 29: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

ACADIANA LEGAL SERVICE CORPORATION LAFAYETTE. LOUISIANA

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED DECEMBER 31. 2016

Federal Grantor/ Pass-Through Grantor/

Program Name Grant

Number CFDA

Number Passed-through to

Suhrecipients Federal

Expenditures

LEGAL SERVICES CORPORATION Basic Field Grant Technology Initiative Grant

N/A N/A

09.619051 09.619051

46,526

46,526

$ 1,356,335 3,285

1,359,620

UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES ADMINISTRATION ON AGING

Title ni. Part B - Supportive Services and Senior Centers Pass-through program from following agencies:

Allen Area Agency on Aging Beauregard Area Agency on Aging Calcasieu Area Agency on Aging Cameron Area Agency on Aging Cajun Area Agency on Aging Cenla Area Agency on Aging Jefferson Davis Area Agency on Aging Vernon Parish Council on Aging

N/A N/A N/A N/A N/A N/A N/A N/A

93.044 93.044 93.044 93.044 93.044 93.044 93.044 93.044

4,390 3,318 9,547 3,039

29,712 20,359 2,672 4,000

77,037

Total Expenditures of Federal Awards 46,526 $ 1,436,657

See the accompanying notes to the schedule of expenditures of federal awards.

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Page 30: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

ACADIANA LEGAL SERVICE CORPORATION LAFAYETTE, LOUISIANA

NOTES TO THE SCHEDULE OF FEDERAL AWARDS

NOTE A - BASIS OF PRESENTATION

The accompanying schedule of expenditures of federal awards includes the federal grant activity of Acadiana Legal Service Corporation and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with 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). Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements.

NOTE B - DE MINIMUS COST RATE

During the year ended December 31, 2016, the Corporation did not elect to use the 10% de minimus cost rate as covered in §200.414 of the Uniform Guidance.

NOTE C - RECONCILIATION OF FEDERAL EXPENDITURES TO THE FINANCIAL STATEMENTS

Unrestricted Grant Restricted Total

Total Expenses $ 173,669 $ 2,566,828 $ 2,740,497 Non-cash adjustments:

Depreciation - (32,101) (32,101) Capital expenditures - 26,839 26,839 Non-federal expenditures (•93.3471 11.205.2311 11.298.5781 Total federal expenditures $ 80.322 $ 1.356.335 $ 1.436.657

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Page 31: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

REPORTS ON INTERNAL CONTROLS

AND COMPLIANCE

Page 32: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

liiSAI Postlethwaite EXMAI & Netterville

A Professional Accounting Corporation Associated Offices in Principal Cities of the United States

www.pncpa.com

INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF

FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT A UDITING STANDARDS

Board of Directors Acadiana Legal Service Corporation Lafayette, Louisiana

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 the Acadiana Legal Service Corporation (the Corporation), which comprise the statement of financial position as of December 31, 2016, the related statement of activities and changes in net assets, and cash flows for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated April 27, 2017.

Internal Control over Financial Reporting

In planning and performing our audit of the financial statements, we considered the Corporation'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 the Corporation's internal control. Accordingly, we do not express an opinion on the effectiveness of Acadiana Legal Service Corporation'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 may exist that have not been identified.

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8550 United Plaza Blvd, Suite 1001 • Baton Rouge, LA 70809 • Tel: 225.922.4600 • Fox: 225.922.4611

Page 33: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Corporation'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 determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of this Report

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 Corporation's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Baton Rouge, Louisiana April 27, 2017

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P&N

Page 34: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

iijSSi Postlethwaite E&AI & Netterville

A Professional Accounting Corporation Associated Offices in Principal Cities of the United States

www.pncpa.com

INDEPENDENT AUDITORS' REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY

UNIFORM GUIDANCE

Board of Directors Acadiana Legal Service Corporation Lafayette, Louisiana

Report on Compliance for Each Major Federal Program

We have audited the Acadiana Legal Service Corporation (the Corporation)'s compliance with the types of compliance requirements described in the OMB Compliance Supplement and the Legal Services Corporation Audit Guide and Compliance Supplement (the Audit Guide) that could have a direct and material effect on each of the Corporation's major federal programs for the year ended December 31, 2016. The Corporation's major federal programs are identified in the summary of auditors' results section of the accompanying schedule of findings and questioned costs.

Management's Responsibility

Management is responsible for compliance with the requirements of laws, regulation, contracts, and grants applicable to its federal programs.

Auditors' Responsibility

Our responsibility is to express an opinion on compliance for each of the Corporation's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; 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), and Legal Services Corporation Audit Guide and Compliance Supplement. Those standards and Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the Corporation's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the Corporation's compliance.

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8550 United Plaza Blvd, Suite 1001 • Baton Rouge, LA 70809 . Tel: 225.922.4600 • Fox: 225.922.461 1

Page 35: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

Opinion on Each Major Federal Program

In our opinion, the Acadiana Legal Service Corporation complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended December 31, 2016.

Report on Internal Control over Compliance

Management of the Corporation is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the Corporation's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Corporation's internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is 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.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.

Baton Rouge, Louisiana April 27,2017

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Page 36: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

ACADIANA LEGAL SERVICE CORPORATION LAFAYETTE. LOUISIANA

SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED DECEMBER 31. 2016

A. Summary of Auditors' Results

Financial Statements Type of auditors' report issued: Unmodified

• Material weakness(es) identified? • Significant deficiency(ies) identified that are

not considered to be material weaknesses?

Noncompliance material to financial statements noted?

.yes

.yes

yes

X no

_x none reported

no

Federal Awards Internal control over major programs:

• Material weakness(es) identified? • Significant deficiency (ies) identified that are

not considered to be material weaknesses?

.yes

.yes

no

jc none reported

Type of auditors' report issued on compliance for major programs: Unmodified

Any audit findings disclosed that are required to be reported in accordance with §200.516 of Uniform Guidance? .yes no

Identification of major programs:

CFDA Numbers 09.619051

Name of Federal Program or Cluster Legal Services Corporation -

Basic Field Grant and Technology Initiative Grant

The threshold for distinguishing types A & B programs was program expenditures exceeding $750,000.

The Acadiana Legal Service Corporation did not qualify as a low-risk auditee.

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Page 37: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

ACADIANA LEGAL SERVICE CORPORATION LAFAYETTE. LOUISIANA

SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED DECEMBER 31. 2016

B. Findings - Financial Statement Audit

None reported.

C. Findings - Major Federal Award Programs

None reported.

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Page 38: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

ACADIANA LEGAL SERVICE CORPORATION LAFAYETTE. LOUISIANA

SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS YEAR ENDED DECEMBER 31. 2016

Findings - Financial Statement Audit

None reported.

Findings - Major Federal Award Programs

CFDA No. 09.619051 - Legal Services Corporation -Basic Field Grant and Technology Initiative Grant

2015 - 001 Internal Control over Eligibility Determinations - 125% of Poverty Guidelines

Questioned Costs: Not applicable.

Criteria:

Universe/ Population Size:

Sample Size:

A system of internal controls over compliance should be established to ensure that policies and procedures exist over the Corporation's ability to comply with Legal Service Corporation eligibility requirements over the use of 125% poverty guidelines for an established year. In accordance with 45 CFR §1611.3(a), the Corporation shall establish a maximum annual income level for persons to be eligible to receive legal assistance under the LSC Act. Maximum annual income shall not exceed 125% of the current official Federal Poverty Guidelines in accordance with 45 CFR §1611.3(b) unless a lower threshold of poverty has been adopted by the Corporation.

In accordance with Appendix A, Compliance Supplement for Audits of LSC Recipients, the case sample should be selected from a universe that includes cases that were open at any point during the year ended December 31, 2015, cases from main and branch offices, cases representing different subject areas from different units/project groups, and cases with different levels of legal representation. Based on these requirements, the total universe is 2,214 cases. This is also considered the population size.

Based on sampling guidance for audits performed under the Uniform Guidance, a sample of 40 cases was selected for testing.

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Page 39: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

ACADIANA LEGAL SERVICE CORPORATION LAFAYETTE. LOUISIANA

SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS YEAR ENDED DECEMBER 31. 2016

Findings - Major Federal Award Programs (continued)

CFDA No. 09.619051 - Legal Services Corporation - Basic Field Grant and Technology Initiative Grant (continued)

2015 - 001 Internal Control over Eligibility Determinations (continued)

Condition(s'):

Cause:

Effect:

Recommendation:

The Corporation utilizes a state-wide case management system, Prime Case Management Software (Prime). This system tracks cases from the initial eligibility of an applicant through closure of a case. During the intake process, case managers obtain income information from applicants that are entered in the Prime system. From this information, a percentage of poverty is computed by the system based on an algorithm. Poverty guidelines are updated yearly based on publications from the U.S. Department of Health and Human Services.

While testing compliance and internal controls with respect to 45 CFR §1611.3(b), we noted that the Prime software was not properly updated for the current 2015 poverty guidelines. From the testing performed, 26 out of 40 case files selected for testing had eligibility determinations that were based on the 2014 poverty guidelines as published in the Federal Register. The Corporation had not adopted a lower threshold of poverty.

Because the Corporation utilizes a state-wide software for case management needs, a third-party administrator is responsible for updating the poverty guidelines every year. The Corporation relied on the third-party administrator to perform this update, and internal controls were not in place to ensure that the eligibility determinations during the year were recalculating appropriately to the most current poverty guidelines.

Since poverty guidelines increased in 2015, there is no risk that the Corporation served ineligible persons through using the outdated poverty guidelines. However, there is a potential that the Corporation denied services to individuals who would have been eligible under the most current poverty thresholds.

The Corporation should establish a policy and implement procedures to validate software calculations within the Prime system to ensure that poverty guidelines have been properly updated at the begiiming of each calendar year. The software should be consistently monitored to ensure it is functioning effectively and in accordance with the most current regulations.

Repeat Finding: No

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Page 40: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

ACADIANA LEGAL SERVICE CORPORATION LAFAYETTE. LOUISIANA

SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS YEAR ENDED DECEMBER 31. 2016

Findings - Major Federal Award Programs (continued)

CFDA No. 09.619051 -LegalServices Corporation -Basic Field Grant and Technology Initiative Grant (continued)

2015 - 001 Internal Control over Eligibility Determinations (continued)

View of Responsible Official:

The Access to Justice Technology Counsel of the Louisiana State Bar Association investigated this matter at the request of the Corporation. In regard to Prime, the statewide case management system, she reported that "after considerable review and investigation ... it was determined that a Prime table, which did not have the poverty levels in the correct eligibility grouping, caused the resulting eligibility error identified by the auditor. "

The Corporation promptly conducted an internal review of our 2015 application database and identified three applications which were erroneously rejected for financial ineligibility. The three applicants are being contacted to ascertain their continuing need for legal assistance.

In order to preclude repetition of this error, a protocol is being formulated to insure that software calculations in Prime are reviewed annually when new poverty thresholds are released. Additionally, this protocol will provide for monitoring of the system in the event ofupdates or other modifications to the case management system.

Updated Status: Resolved.

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Page 41: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

ACADIANA LEGAL SERVICE CORPORATION

REPORT TO MANAGEMENT

DECEMBER 31.2016

Page 42: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

EijfliM Postlethwaite KSUAI & Netterville

A Professional Accounting Corporation

Associated Offices in Principal Cities of the United States

www.pncpa.com

April 27, 2017

To the Management of the Acadiana Legal Service Corporation Lafayette, Louisiana

We have audited the financial statements of the Acadiana Legal Service Corporation (the Corporation), for the year ended December 31, 2016 and have issued our report thereon. As part of our audit, we made a study and evaluation of internal accounting control to the extent we considered necessary to evaluate the system as required by auditing standards generally accepted in the United States of America. Under these standards, the purposes of such evaluation are to establish a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Corporation's internal control.

The objective of internal control is to provide reasonable, but not absolute, assurance as to the safeguarding of assets against loss from unauthorized use or disposition, and the reliability of the financial records for preparing fmancial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that the cost of a system of internal accounting control should not exceed the benefits derived and also recognizes that the evaluation of these factors necessarily requires estimates and judgments by management.

No matter how good a system, there are inherent limitations that should be recognized in considering the potential effectiveness of internal accounting. In the performance of most control procedures, errors can result from misunderstanding of instructions, mistakes of judgment, carelessness, or other personal factors. Control procedures whose effectiveness depends upon segregation of duties can be circumvented by collusion. Similarly, control procedures can be circumvented intentionally by management either with respect to the execution and recording of transactions or with respect to the estimates and judgments required in the preparation of financial statements. Further, projection of any evaluation of internal accounting control to future periods is subject to the risk that the degree of compliance with the procedures may deteriorate. We say this simply to suggest that any system needs to be constantly reviewed and improved where necessary.

However, during the course of our audit, we became aware of a matter that is an opportunity for strengthening internal controls or operating efficiency. Our comment and suggestion regarding this matter is set forth on the following page. This letter does not affect our reports dated April 27, 2017, on the financial statements of the Corporation or the Corporation'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.

8550 United Plaza Blvd, Suite 1001 • Baton Rouge, LA 70809 • Tel: 225.922.4600 • Fox: 225.922.461 1

Page 43: Acadiana Legal Service Corporation - Louisiana Legal Service Corporation (the Corporation) is a non-profit organization which was created in 1978 to primarily provide civil legal services

M - 001 Information Security - Access Administration and Authorization

Condition: While documenting the internal control procedures over the information technology environment, we noted through review of user access listings that several accounting personnel have administrative user rights within the CYMA software, which is used for all accounting functions, including payroll processing. Without the proper segregation of duties, administrative access for accounting persoimel could create heightened risks for fraudulent activity.

Recommendation: The Corporation should review administrative access and restrict access from accounting persormel to ensure appropriate segregation of duties.

Management's Response:

The Corporation currently has internal control policies and procedures which segregates applicable staff's involvement and use of the CYMA software. Specifically, we have assigned selected staff with CYMA Administrator Rights, which only allows specific employees to add or delete users as well as have access to all modules in the accounting software. We also have set up Administrative Users who can access modules in CYMA which pertains only to their specific job functions.

However, we concur with the recommendation to review our protocols and add more restrictions regarding our accounting software. These are the revisions and additional controls we will implement immediately:

• Replace the former Executive Director with the current Executive Director as one of the CYMA Administrators, who will only be allowed to access and print audit reports for every module;

• Add the new Chief Financial Officer as a CYMA Administrator who will be allowed to add and delete users and will have access to all modules; and add the IT Manager who will only be allowed to add and delete users as a CYMA Administrator;

• The Executive Director will be responsible for printing the Accounts Payable Vendor Audit Report and a Payroll Audit Report quarterly and verifying these reports with his initials. The Executive Director will also periodically review the authorized user list as an added precaution.

We will review the status of this comment during our next audit engagement. We have already discussed this comment and suggestion with management, and will be pleased to discuss it in further detail at your convenience, to perform an additional study of this matter, or to assist you in implementing the recommendation.

We appreciate the cooperation received from the Corporation's personnel during the audit process. This report is intended solely for the information and use of the Board of Directors and management of the Corporation, and is not intended to be and should not be used by anyone other than these specified parties.

Sincerely,

P&N


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