National Performance Network, Inc....A CRI 0 ^ p p Carr, Riggs & Ingram, LLC RIGGS & m Veterans...

NATIONAL PERFORMANCE NETWORK, INC.

FINANCIAL STATEMENTS

For the Years Ended June 30,2016 and 2015

A CRI CPAs and Advisors

CRIcpa.com

National Performance Network, Inc. Table of Contents

June 30, 2016

REPORT

Independent Auditors' Report 1

FINANCIAL STATEMENTS

Statements of Financial Position 3

Statements of Activities and Changes in Net Assets 4

Statements of Functional Expenses 6

Statements of Cash Flows 8

Notes to Financial Statements 9

Schedule of Compensation, Benefits, and Other Payments to Agency Head 18

OTHER INDEPENDENT AUDITORS' REPORT

Independent Auditors' Report on Internal Control Over Financial Reporting And on Compliance And Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 19

Schedule of Findings and Reponses 21

Report

A CRI 0 ^ p p Carr, Riggs & Ingram, LLC RIGGS & m Veterans Blvd, Suite 350 INGRAM Metalrle, Louisiana 70005

CPAs and Advisors (504) 837-9116 (504) 837-0123 (fax) www.CRIcpa.com

INDEPENDENT AUDITORS' REPORT

To the Board of Directors of National Performance Network, Inc. New Orleans, Louisiana

Report on the Financial Statements

We have audited the accompanying financial statements of National Performance Network, inc. (a Louisiana not-for-profit corporation) (the Organization), which comprise the statements of financial position as of June 30,2016 and 2015, and the related statements of activities and changes in net assets, functional expenses, and cash flows for the years then ended, and the related notes to the financial statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity's preparation and fair presentation of the financial statements in orderto design audit procedures 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 financial statements.

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

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of National Performance Network, Inc. as of June 30,2016 and 2015 and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matter

Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The Schedule of Compensation, Benefits, and Other Payments to Agency Head on page 18 is presented for purposes of additional analysis as required by the State of Louisiana Act 706, and is not a required part of the financial statements.

The Schedule of Compensation, Benefits, and Other Payments to Agency Head is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated May 30, 2017, on our consideration of National Performance Network, Inc.'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 National Performance Network, Inc.'s internal control over financial reporting and compliance.

f U.t May 30, 2017

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Financial Statements

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National Performance Network

Statements of Financial Position

As of June 30, 2016 2015

Current Assets:

Cash and cash equivalents

Certificate of deposits

Grants receivable

Prepaid expenses

ASSETS

S 615,259

1,302,000

1,425,292

2,164

s 391,186

300,000

2,211,480

3,885

Total Current Assets 3,344,715 2,906,551

Noncurrent Assets:

Property and equipment, net 590,500 614,876

Total Noncurrent Assets 590,500 614,876

TOTAL ASSETS S 3,935,215 s 3,521,427

Current Liabilities:

Accounts payable

Grants payable

Accrued expenses

Lease payable, current

Note payable, current

LIABILITIES

S 45,480

652,083

14,472

3,067

4,561

s 30,189

689,452

28,007

3,067

4,296

Total Current Liabilities 719,663 755,011

Noncurrent Liabilities:

Lease payable, net of current

Note payable, net of current

4,091

24,778

7,158

29,339

Total Noncurrent Liabilities 748,532 791,508

Net Assets

Unrestricted

Temporarily restricted

(247,519)

3,434,202

(102,152)

2,832,071

Total Net Assets 3,186,683 2,729,919

TOTAL LIABILITIES AND NET ASSETS S 3,935,215 s 3,521,427

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

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For the year ended June 30,


Statement of Activities and Changes in Net Assets

2016

Temporarily

Unrestricted Restricted Total

SUPPORT AND REVENUE

Contributions

Foundation S 849,886 S 2,291,619 s 3,141,505

Corporation 15,164 - 15,164

Individual 88,958 - 88,958

Government grants

Federal 55,000 - 55,000

State 22,556 - 22,556

Local 37,260 - 37,260

Partner contributions 114,982 - 114,982

Dues 10,950 - 10,950

Registration and admissions 30,130 - 30,130

Contract and rental income 276,229 - 276,229

Other 4,936 - 4,936

1,506,051 2,291,619 3,797,670

Net assets released from restriction:

Satisfaction of program restrictions 1,689,488 (1,689,488) -

Total Support and Revenue 3,195,539 602,131 3,797,670

EXPENSES

Program 2,827,774 - 2,827,774

Management and general 361,841 - 361,841

Fundraising 151,291 - 151,291

Total Expenses 3,340,906 3,340,906

CHANGE IN NET ASSETS (145,367) 602,131 456,764

NET ASSETS (DEFICIT) - BEGINNING OF YEAR (102,152) 2,832,071 2,729,919

NET ASSETS (DEFICIT) - END OF YEAR S (247,519) S 3,434,202 s 3,186,683

The accompanying notes ore on integral part of these financial statements.

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Statement of Activities and Changes in Net Assets

2015

Temporarily

Unrestricted Restricted Total

SUPPORT AND REVENUE

Contributions

Foundation $ 1,161,544 S 608,555 1,770,099

Corporation 18,711 - 18,711

Individual 116,492 - 116,492

Government grants

Federal 65,000 - 65,000

State 20,250 - 20,250

Local 38,313 2,500 40,813

Partner contributions 127,000 - 127,000

Dues 12,600 - 12,600

Registration and admissions 31,924 - 31,924

Rental Income 96,020 - 96,020

1,687,854 611,055 2,298,909

Net assets released from restriction:

Satisfaction of program restrictions 1,723,503 (1,723,503) -

Total Support and Revenue 3,411,357 (1,112,448) 2,298,909

EXPENSES

Program 2,787,165 - 2,787,165

Management and general 383,940 - 383,940

Fundraising 127,640 - 127,640

Total Expenses 3,298,745 3,298,745

CHANGE IN NET ASSETS 112,612 (1,112,448) (999,836)

NET ASSETS (DEFICIT) - BEGINNING OF YEAR (214,764) 3,944,519 3,729,755

NET ASSETS (DEFICIT) - END OF YEAR $ (102,152) S 2,832,071 S 2,729,919

The accompanying notes ore on integral part of these financial statements.

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Statement of Functional Expenses

2016

Program

Management

and General Fundraising Total

Communications S 13,729 $ 4,644 S 1,817 s 20,190

Contractor fees 137,905 23,545 6,727 168,177

Professional fees 112,620 19,228 5,494 137,342

Depreciation 27,301 7,584 3,033 37,918

Fees and services 18,756 12,504 1,645 32,905

Interest 1,558 266 76 1,900

Occupancy 169,204 47,001 18,800 235,005

Payroll taxes and benefits 110,710 27,678 15,377 153,765

Postage and delivery 1,586 221 201 2,008

Printing 7,471 1,868 - 9,339

Program grants 1,218,596 - - 1,218,596

Program activities 309,990 19,787 - 329,777

Promotions and marketing 20,233 213 852 21,298

Salaries and wages 586,066 146,516 81,398 813,980

Travel 92,049 50,786 15,871 158,706

S 2,827,774 $ 361,841 S 151,291 s 3,340,906


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Statement of Functional Expenses

For the year ended June 30, 2015

Management

Program and General Fundraising Total

Communications $ 14,393 S 4,868 S 1,905 $ 21,166

Contractor fees 194,327 33,178 9,479 236,984

Professional fees 141,538 24,164 6,905 172,607

Depreciation 18,019 9,320 3,728 31,067

Fees and services 14,094 9,396 1,236 24,726

Interest 711 121 35 867

Occupancy 112,962 31,378 12,552 156,892

Payroll taxes and benefits 72,793 52,192 12,361 137,346

Postage and delivery 4,095 570 518 5,183

Printing 6,159 1,540 - 7,699

Program grants 1,381,310 - - 1,381,310

Program activities 238,524 15,225 - 253,749

Promotions and marketing 27,066 285 1,140 28,491

Salaries and wages 500,428 161,904 73,592 735,924

Travel 60,746 39,799 4,189 104,734

$ 2,787,165 S 383,940 S 127,640 $ 3,298,745


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Statements of Cash Flows

For the years ended June 30, 2016 2015

CASH FLOWS FROM OPERATING ACTIVITIES

Change in net assets S 456,764 $ (999,836)

Adjustments to reconcile change in net assets to

cash provided by (used in) operating activities:

Depreciation 37,918 31,067

Changes in operating assets and liabilities:

Accounts receivable - 17,914

Grants receivable 786,188 (189,406)

Prepaid expenses 1,721 20,259

Accounts payable 15,291 (10,610)

Grants payable (37,369) 80,163

Deposits - 1,400

Accrued expenses (13,535) 470

Net cash provided by (used in) operating activities 1,246,978 (1,048,579)

CASH FLOWS FROM INVESTING ACTIVITIES

Redemption of certificates of deposit 300,000 861,394

Purchases of certificates of deposit (1,302,000) -

Purchases of property and equipment (13,542) (483,315)

Net cash (used in) provided by investing activities (1,015,542) 378,079

CASH FLOWS FROM FINANCING ACTIVITIES

Payments on note payable (4,296) (1,715)

Payments on lease payable (3,067) (1,789)

Net cash used in financing activities (7,363) (3,504)

NET INCREASE (DECREASE) IN CASH AND CASH

EQUIVALENTS 224,073 (674,004)

CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 391,186 1,065,190

CASH AND CASH EQUIVALENTS - END OF YEAR S 615,259 $ 391,186

SUPPLEMENTAL DISCLOSURES:

Cash paid for interest S 3,078 $ 1,662

Schedule of Noncash Investing and Financing Transactions:

Capital lease obligation incurred for use of equipment $ $ 12,014

Property and equipment obtained under a note payable $ $ 35,350


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National Performance Network, Inc. Notes to Financial Statements

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Activities

National Performance Network, Inc. (the Organization) is a group of diverse cultural organizers, including artists, working to create meaningful partnerships and provide leadership that enables the practice and public experience of the performing arts in the United States. The Organization services artists, arts organizers, and a broad and diverse range of audiences and communities across the country through commissions, residencies, community cultural projects, and other artistic activities. In certain programs, the Organization subsidizes artists' and presenters' projects.

Basis of Accounting

The financial statements of the Organization have been prepared on the accrual basis of accounting, where revenues are recorded when earned and expenses are recorded when incurred. Contributions are recognized when received or unconditionally promised. In-kind donations are recognized at fair value when received.

Basis of Presentation

The financial statements are presented in accordance with accounting principles generally accepted in the Unites States of America. The Organization classifies resources for accounting and reporting purposes into three net asset categories which are unrestricted, temporarily restricted, and permanently restricted based upon the following criteria:

• Unrestricted net assets represent expendable funds available for operations which are not otherwise limited by donor restrictions.

• Temporarily restricted net assets consist of contributed funds subject to specific donor-imposed restrictions contingent upon specific performance of a future event or a specific passage of time before the Organization may spend the funds.

• Permanently restricted net assets are subject to irrevocable donor restrictions requiring that the assets be maintained in perpetuity usually forthe purpose ofgeneratinginvestmentincome to fund current operations. There were no permanently restricted net assets at June 30, 2016 or 2015.

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1 National Performance Network, Inc.

Notes to Financial Statements

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles 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 revenues and expenses during the reporting period. Actual results could differ from those estimates.

Income Taxes

The Organization is a not-for-profit organization that is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code and has been designated as an organization which is not a private foundation. It is exempt from Louisiana income tax underthe Section 121(5)ofTitle47ofthe Louisiana Revised Statutes of 1950. Management believes there are no uncertain tax positions included in the accompanying financial statements. The Organization had no unrelated business activity in the fiscal years ended June 30, 2016 and 2015.

Donated Assets and Services

The Organization records non-cash donations as contributions at its estimated fair value at the date of the donation. Such donations are reported as unrestricted support unless the donor has restricted the donated asset to a specific purpose. Contributed services are recorded when the services, if significant in amount, create or enhance non-financial assets or require specialized skills provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation.

Cash and Cash Equivalents

For purposes of the statements of cash flows, the Organization considers all highly liquid investments that mature within three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents include demand deposits and interest bearing demand deposits. Management believes the amounts recorded in the accompanying financial statements approximate fair value.

Accounts and Grants Receivable

Accounts receivable represent amounts due from other organizations, as well as individuals. Grants receivable represent amounts due from foundations and other organizations. Amounts are stated at net realizable value and management estimates that all amounts are collectible. Management believes the accounts receivable and grants receivable amounts recorded in the accompanying financial statements approximate fair value.

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Certificate of Deposits

Investments as of June 30, 2016 and 2015 represent certificates of deposit which do not meet the definition of cash and cash equivalents; these certificates bore interest rates ranging from 0.30% to 0.55%.

Fair Value Measurements

The carrying amounts reflected in the statements of financial position for cash, cash equivalents, accounts receivable, and grants receivable approximate the respective fair values of those instruments, due to their relatively short collection times.

Property and Equipment

Property and equipment are recorded at cost, with the exception of donated items, which are recorded at fair market value at the date of the donation. It is the Organization's policy to capitalize expenditures for items in excess of $500 with a useful life greater than one year. Acquisitions and donations of property and equipment are recorded as unrestricted assets, unless the donor imposes a restriction. Depreciation is provided over the estimated useful lives of the respective assets, approximately five to fifteen years, on a straight-line basis.

Grants Payable

The Organization acts as an intermediary for partners within their network. Grants payable represents amounts due to other organizations and foundations that pass through the Organization that have been received as of year-end but have yet to be disbursed.

Functional Expense Allocation

Generally, expenses are charged to each program or function based on direct expenditures incurred. Expenditures not directly chargeable are allocated to programs or functions based on management's estimated percentage of time spent by the Organization's employees on each program.

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Unrestricted Revenue and Support

The Organization receives its support and revenue primarily from private foundations. Grants and contributions received, as well as collectible unconditional promises to give, are recognized in the period received or unconditionally pledged. Grants and contributions with donor-imposed restrictions are reported as an increase in temporarily or permanently restricted net assets, depending on the nature of the restriction. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statements of activities and changes in net assets as net assets released from restrictions. Pledged contributions are recorded as receivables when a firm pledge is made and collectability is reasonably determinable. If a pledge is to be received over a period of more than a year, the respective non-current amount is recorded at the net present value of future contributions as a non-current receivable.

Reclassifications

Certain accounts in the financial statements have been reclassified to conform to the current year.

NOTE 2: CONCENTRATIONS OF CREDIT RISK

The Organization maintains its cash and cash equivalent balances in various financial institutions located in New Orleans, Louisiana, that may, at times, exceed amounts covered by insurance provided by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. As of June 30, 2016, the Organization's cash balances exceeded the FDIC insurance by 1,298,611. The Organization's cash balances did not exceed the FDIC insurance at June 30, 2015. Management has not experienced losses in the past and believes the risk of loss would be insignificant to the financial statements and the operations of the Organization.

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NOTE 3: GRANTS RECEIVABLE

Grants receivable consisted of the following at June 30: 2016 2015

The Andrew W. Mellon Foundation s 1,196,000 s -Doris Duke Charitable Foundation 100,000 1,648,920 Ford Foundation - 250,000 Louisiana Division of the Arts 4,500 5,062 National Endowment for the Arts 55,000 65,000 Arts Council New Orleans 4,101 5,563 Japan Foundation 45,564 91,128 Robert Sterling Clark Foundation - 75,000 Joan Mitchell - 10,000 Surdna Foundation - 20,000 Multi-Art Production Fund - 35,607 Other grants receivable 20,127 5,200

Total grants receivable s 1,425,292 s 2,211,480

As of June 30, 2016 and 2015, 84% and 75%, respectively, of total grants receivable were from one entity.

NOTE 4: PROPERTY AND EQUIPMENT

Property and equipment consisted of the following as of June 30:

2016 2015

Furniture and equipment s 84,988 $ 84,988

Leasehold improvements 636,287 622,745

Less: accumulated depreciation (130,775) (92,857)

Property and equipment, net s 590,500 $ 614,876

Depreciation expense was $37,918 and $31,067 for the years ended June 30, 2016 and 2015, respectively.

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NOTE 5: TEMPORARILY RESTRICTED NET ASSETS

Temporarily restricted net assets were made available based on restrictions per the following grantors at June 30:

2016 2015

Doris Duke Charitable Foundation

The Andrew Mellon Foundation

Ford Foundation

Andy Warhol Foundation

Japan Foundation

Robert Sterling Clark Foundation

Multi-Art Production Fund

Surdna Foundation

Ruth Fertel Foundation

MAP Fund

Greater Flouston Community Foundation

Rosamary Foundation

Keller Family Foundation

Other grants

$ 1,042,240 2,213,235

50,000

48,128

25,000

16,012 4,935

332

34,320

1,884,480

317,000

250,000

75,000

93,692 75,000 30,426

16,638

16,313

16,302

9,067

9,893

38,260

Net temporarily restricted net assets $ 3,434,202 2,832,071

NOTE 6: CAPITAL LEASE PAYABLE

The Organization entered into a 60 month capital lease for office equipment in November 2014. The economic substance of this lease is that the Organization is financing the acquisition of the asset through a lease, and accordingly, it is recorded in the Organization's assets and liabilities. The lease will be invoiced in 35 monthly payments over the next three years.

The minimum lease liability payments are as follows for the years ending June 30,

2017

2018

2019

Total

3,067

3,067

1,024

S 7,158

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NOTE 7: LONG TERM DEBT

Note Payable

On January 10,2015, the Organization entered into a note payable with it lessor to cover the costs of an elevator in the building. The note bears a 6 percent interest rate with monthly payment of $516 for 7 years.

Principle payments are as follows for the years ending June 30:

2017 4,561 2018 4,842 2019 5,141 2020 5,458 2021 5,794

Thereafter 3,543

total $ 29,339

NOTE 8: OPERATING LEASES

On October 17, 2013, the Organization entered into an operating lease for the building used to house operations and an attached parking lot. The lease is for the term of 120 months and commenced April 1, 2014. Rent for the preoccupancy period was $2,749 monthly; preoccupancy is the period between the lease commencing and the Organization occupying while renovations are ongoing. Starting in November 2015 the Organization began paying normal monthly rental payments of $5,787 and the preoccupancy monthly rental payments of $2,749 ceased. Total rental expense related to this lease was $68,288 and $54,980 for the years ended June 30, 2016 and 2015, respectively.

The minimum lease payments are as follows for the years ending June 30,

2017 69,444

2018 71,756

2019 72,912

2020 75,232

2021 76,392

Thereafter 275,628

$ 641,364

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NOTE 9: RELATED PARTY TRANSACTIONS

Members of the Board of Directors were paid a per diem for attendance at board meetings and were also reimbursed for out-of-pocket expenses resulting from their participation in the Organization's activities in the amount of $9,101 and $7,264 for the years ended June 30,2016 and 2015, respectively.

NOTE 10: PROGRAM EXPENSES

During the years ended June 30, 2016 and 2015, the Organization provided subsidies totaling $1,218,596 and $1,381,310, respectively, to artists and artistic organizations undervarious programs it administers. Under certain programs, the subsidy provided by the Organization is expected to be matched by one or more participating partners, as detailed below, for the Organization's three major programs for the years ended June 30:

Subsidy Provided by National Performance Network

Anticipated Matching Subsidy from Partner Organizations

2016 2015 2016 2015 Residency Fund Community Fund Creation Fund

$ 531,524 43,550

425,000

$ 663,055 42,000

523,000

s 1,423,091 51,200

1,440,000

$ 1,027,000 123,000

1,749,000

Unmatched subsides 1,026,497

218,522 1,228,055

153,255 2,914,291 2,899,000

$ 1,218,596 $ 1,381,310 $ 2,914,291 $ 2,899,000

Under the terms of the subsidy agreements, the Organization has no additional financial obligation or liability associated with the failure of the participating partners to pay the commissioned artist the partner matching subsidy.

The Organization also provides fiscal sponsorship and financial services for New Orleans, Louisiana based cultural projects. Fiscal sponsorship and financial services consisted of the following as of June 30:

2016 2015

Revenues and released from restrictions related to fiscally

sponsored projects: $ 569,395

Expenses related to fiscally sponsored projects: 564,395

Revenue that remains restricted related to fiscally

sponsored projects: $ 82,183

$ 767,607

762,809

$ 134,340

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NOTE 11: COMMITMENTS AND CONTINGENCIES

Grant awards require the fulfillment of certain conditions as set forth in the instrument of the grant. Failure to fulflll the conditions could result In the return of the funds to the grantors. The Organization deems the contingency remote since, by accepting the grants and their terms. It has accommodated the objectives of the Organization to the provisions of the grants. The Organization's management is of the opinion that the Organization has complied with the terms of all grants.

NOTE 12: SUBSEQUENT EVENTS

Management has evaluated subsequent events through the date that the financial statements were available to be issued. May 30, 2017, and determined that no events occurred that require disclosure. No subsequent events occurring after this date have been evaluated for inclusion in these financial statements.

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Supplementary Information

National Peformance Network, Inc.

Schedule of Compensation, Benefits, and Other Payments to Agency Head

For the Year Ended June 30,2016

Agency Head Name: MK Wegmann

Purpose Amount

Salary $

Benefits-health insurance

Benefits-retirement

Deferred compensation

Workers comp

Benefits-life insurance

Benefits-long term disability

Benefits-Fica & Medicare

Car allowance

Vehicle provided by government

Cell phone

Dues

Vehicle rental

Per diem

Reimbursements

Travel

Registration fees

Conference travel

Unvouchered expenses

Meetings & conventions

Other

Total $

* Louisiana Revised Statute 24:513(A)(3} as amended by Act 706 of the 2014 Regular Legislative

Session requires that the total compensation, reimbursements, and benefits of an agency head or

political subdivision head or chief executive officer related to the position, including but not limited

to travel, housing, unvouchered expenses, per diem, and registration fees be reported as a

supplemental report within the financial statement of local governmental and quasi-public auditees.

In 2015 Act 462 of the 2015 Regular Session of the Louisiana Legislature further amended R.S.

24:513(A){3} to clarify that nongovernmental entities or not-for-profit entities that receive public

funds shall report only the use of public funds for the expenditures itemized in the supplemental

report.

See independent auditor's report.

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A A m C A R R I W I RIGGS & Carr, Riggs & Ingram, LLC

1% I INGRAM 111 Veterans Blvd, Suite 350

CPAs and Advisors ^

(504) 837-9116 (504) 837-0123 (fax) www.CRIcpa.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 AUDITING STANDARDS

To the Board of Directors of National Performance Network, Inc. New Orleans, 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 National Performance Network, Inc. (a nonprofit organization) (the Organization), which comprise the statement of financial position as of June 30,2016, and the related statements of activities and changes in net assets, functional expenses, and cashflows for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated May 30, 2017.

INTERNAL CONTROL OVER FINANCIAL REPORTING

In planning and performing our audit of the financial statements, we considered the Organization'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 Organization's internal control. Accordingly, we do not express an opinion on the effectiveness of the Organization's internal control.

A deficiency in internai 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 materiai 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 bas\s. 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

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deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

COMPLIANCE AND OTHER MATTERS

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

CdAi) U,t

May 30, 2017

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National Performance Network, Inc. Schedule of Findings and Responses

For The Year Ended June 30, 2016

Finding 2016-001 Timely Submission of Annual Audit Report

Condition: National Performance Network, Inc. is required to remit the annual audited financial statements to the Louisiana Legislative Auditor no later than six months after year-end.

Criteria: Louisiana state statute 24:511 - 24:559, Louisiana Audit Law, states that quasi-public entities with more than $500,000 in revenue must submit their audited annual financial reports to the Louisiana Legislative Auditor within six (6) months of the close of the auditee's fiscal year.

Effect: Late submission causes the auditee to be put on the non-compliance list and can result in withholding of state and/or federal pass-through funding to the auditee.

Cause: Turnover of several key accounting staff caused the submission of the annual audit report to be filed late.

Recommendation: We recommend that management implement policies and procedures to ensure timely filing of any and all required reports.

Management's Response and Corrective Action Plan: The Organization has hired a new CEO and is working on implementing policies to ensure timely filing of all audit reports.

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