EDUCATIONAL AND TREATMENT COUNCIL, INC. Lake Charles, Louisiana

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					EDUCATIONAL AND TREATMENT COUNCIL, INC.
          Lake Charles, Louisiana


        FINANCIAL STATEMENTS AND
      INDEPENDENT AUDITORS' REPORT

               Year Ended June 30,2007




    Under provisions of state law, this report is a pu^
    document. Acopy of the report has been submitted to
    the entity and other appropriate public officials- The
    report is available for public inspection at the Baton
    Rouge office of the Legislative Auditor and, where
    appropriate, at the office of/the parish clerk of court

        Release Date
TABLE OF CONTENTS

                                                                 Page

Independent Auditor's Report                                      1-2

Financial Statements:
         Statement of Financial Position                           3
         Statement of Activities                                   4
         Statement of Cash Flows                                   5
        Statement of Functional Expenses                          6
        Notes to Financial Statements                            7-13

Schedule of Expenditures of Federal Awards                        14

Independent Auditors' Report on Compliance and on
         Internal Control Over Financial Reporting Based
        On an Audit of Financial Statements Performed in
        Accordance with Government Auditing Standards            15-16

Report on Compliance with Requirements Applicable to each
        Major Program and on Internal Controls over Compliance
        in Accordance with OMB Circular A-133                    17-18

Schedule of Findings and Questioned Costs                        19-21
                             BROUSSARD & COMPANY
                             CERTIFIED PUBLIC ACCOUNTANTS, LX.C.
                       PI
                       i-J
  Founded in 1978




                                            INDEPENDENT AUDITOR'S REPORT

           Board of Directors
           Educational and Treatment Council, Inc.
           Lake Charles, Louisiana

           We have audited the accompanying statement of financial position of Educational and Treatment Council,
           inc., (a non-profit organization) as of June 30, 2007, and the related statement of activities, functional
           expenses, and cash flows for the year then ended. These financial statements are the responsibility of the
           Organization's management. Our responsibility is to express an opinion on these financial statements based
           on our audit.

           We conducted our audit 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 audit to obtain reasonable assurance about whether the financial statements are free of material
           misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
           disclosures in the financial statements. An audit also includes assessing the accounting principles used and
           the significant estimates made by management, as well as evaluating the overall financial statement
           presentation. We believe that our audit provides a reasonable basis for our opinion.

           In our opinion, the financial statements referred to in the first paragraph present fairly, in all material
           respects, the financial position of Educational and Treatment Council, Inc. as of June 30, 2007, and the
           changes in its net assets and its cash flows for the year then ended in conformity with accounting principles
           generally accepted in the United States of America.

          In accordance with Government Auditing Standards, we have also issued our report dated January 31,2008,
          on our consideration of the Organization'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 the internal control over
          financial reporting or on compliance. That report is an integral part of an audit performed in accordance
          with Government Auditing Standards and should be considered in assessing the results of our audit.




MOSS BLUFF OFFICE                                      LAKE CHARLES OFFICE                              SULPHUR OFFICE
695 Sam Houston Jooe* Partway. Suite D                 One Ukeihore Drive, Suite 1900                   704 first Avtnue
Lake Charles. Loaislau 70611                           uke Charles. Louisiana 70629                     Sulphur. Louisiana 70663
Ph: 037) 217-?370 Fax; t.l?7)-M9-6647                   Ph: (337)439-6600 Fax: tt37) 439-6647            Ph; OT7) 527-0010 Fax:(337)527-0014
Board of Directors
Educational and Treatment Council, Inc.
Lake Charles, Louisiana



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


Lake Charles, Louisiana
January 31,2008
                                  EDUCATIONAL AND TREATMENT COUNCIL, INC.
                                              Lake Charles, Louisiana
                                          Statement of Financial Position
                                                As of June 30,2007

                                                                                  Temporarily
                                                             Unrestricted          Restricted            Totals
                      ASSETS
CURRENT ASSETS
 Cash and cash equivalents                               $        354,931     $            189       $     355,120
 Grant receivable                                                 453,496                                  453,496
 Interest receivables                                               3,356                                    3,356
 Prepaid expenses                                                  12,979                                   12,979
        Total Current Assets                                      824,762                  189             824,951
NONCURRENT ASSETS
 Investments                                                      573,903                                  573,903
 Fixed assets at cost ( net of accumulated
   depreciation of 712,753)                                        748,343                                 748,343
                                                                 1,322,246                                1,322,246
TOTAL ASSETS                                             $       2,147,008    $            189       $    2,147,197

        LIABILITIES AND NET ASSETS

CURRENT LIABILITIES
 Accounts payable                                        $         69,980     $                      $      69,980
 Interest payable                                                  15,205                  -                 15,205
 Accrued liabilities                                               67,977                  -                67,977
 Deferred revenue                                                 228,931                  -               228,931
 Rent Deposits                                                      3,958                  -                  3,958
   Total Current Liabilities                                      386,051                            $     386,05!

NONCURRENT LIABILITIES
 Notes payable                                                    510,000                                  510,000

TOTAL LIABILITIES                                                 896,051                                  896,051

NET ASSETS
 Unrestricted                                                    1,250,957                                1,250,957
 Temporarily restricted                                                                    189                  189
   Total Net Assets                                              1,250,957                 189            1,251,146

TOTAL LIABILITIES AND NET ASSETS                                2,147,008                  189           2,147,197




                          The accompanying notes are an integral part of the financial statements.
                                   EDUCATIONAL AND TREATMENT COUNCIL, INC.
                                             Lake Charles, Louisiana
                                              Statement of Activities
                                               As of June 30, 2007

                                                                                       Temporarily
                                                                 Unrestricted           Restricted        Total
PUBLIC SUPPORT, REVENUES AND
 OTHER SUPPORT
 Contributions                                               $           4,298     $            -     $        4,298
 Donated materials and services                                         35,869                                35,869
 Grants and contracts                                                1,859,367                             1,859,367
 Service taxes                                                         450,508                               450,508
 Investment income                                                      47,561                                47,561
 Miscellaneous income                                                      323                                   323
 Special event (net of direct benefit cost)                             32,277                                32,277
 Insurance proceeds                                                     78,838                                78,«38
 TOTAL PUBLIC SUPPORT, REVENUES
  AND OTHER SUPPORT                                                 2,509,041                             2,509,041

EXPENSES AND LOSSES
 Residential Services                                                1,327,761                            U27J6I
 Community Program Services                                          1,145,221                            1,145,221
 TOTAL EXPENSES
  AND LOSSES                                                        2,472,982                             2,472,982

 CHANGE IN NET ASSETS                                                  36,059                                36,059

NET ASSETS AT BEGINNING OF YEAR                              $      1,458,990      $            189   S   1,459,179
 Prior period adjustment                                             (244,092)                             (244,092)
NET ASSETS AT BEGINNING OF YEAR, RESTATED                           1,214,898                   189       1,215,087

NET ASSETS AT END OF YEAR                                           1,250,957                   189   $   1,251,146




                         The accompanying notes are an integral part of the financial statements.
                                    EDUCATIONAL AND TREATMENT COUNCIL, INC.
                                                Lake Charles, Louisiana
                                           Statements of Functional Expenses
                                                  As of June 30,2007

                                                          Program Services
                                                    Community
                                                     Program          Residential                    2007
                                                     Services          Services                      Total
Salaries and wages                                $      699,068   $       711,869                    1,410,937
Payroll taxes and fringe benefits                        104,650           103,778                      208,428
 Total Salaries and
  Related Benefits                                        803,718               815,647               1,619,365

Advertising                                                  1,501                1,630                  3,131
Client activities                                           92,311                8,383                100,694
Communications                                              16,611               15,312                 31,923
Contractual services                                       166,410               18,291                184,701
Donated services                                            17,527                7,606                 25,133
Donated supplies                                             8,058                3,128                  11,186
Dues and subscriptions                                       1,450                1,789                  3,239
Educational                                                      48                  -                      48
Food                                                           616               41,656                 42,272
Housekeeping supplies                                          347                5,011                  5,358
Insurance                                                   34,447               46,347                 80,794
Interest                                                    20,000                5,000                 25,000
Janitorial services                                          8,220               12,319                 20,539
Licenses                                                       633                   328                   961
Miscellaneous                                                2,732                 1,393                 4,125
Motor vehicle                                               12,201                 8,880                21,081
OMH repite activities                                        9,167                   -                   9,167
Persona) client needs/clothing                                  •                11,065                 11,065
Postage                                                      1,535                  339                  1,874
Printing                                                         83                 395                    478
Professional services                                        4,352                4,280                  8,632
Public relations                                               648                  291                    939
Recreational                                                    -                10,081                 10,081
Rent                                                        24,075               26,872                 50,947
Repairs & maintenance-building and grounds                   2,204                1,592                  3,7%
Repairs & maintenance-equipment                              4,809                5,213                 10,022
Supplies                                                    11,884               12,894                 24,778
Therapeutic supplies                                         1,722                   91                  1,813
Travel and training                                         38,268                7,565                 45,833
Utilities                                                   13,189               33,047                 46,236

 Total before                                           1,298,766             1,106,445              2,405,211
  depreciation

Depreciation                                               28,995                38,776                 67,771

 TOTAL EXPENSES                                   $      1,327,761     J      1,145,221              2,472,982




                          The accompanying notes are an integral part of the financial statements.
                                  EDUCATIONAL AND TREATMENT COUNCIL, INC.
                                              Lake Charles, Louisiana
                                             Statements of Cash Flows
                                         For The Year Ended June 30,2007



Cash Flows From Operating Activities:
  Excess (deficiency) of revenue over expenses                                           36,059
  Adjustments to reconcile excess of revenues over
   expenses to net cash provided by operating activities;
    Depreciation                                                                        67,771
   (Increase) decrease in grants receivable                                           (328,906)
    (Increase) decrease in prepaid expenses                                              1,615
    increase (decrease) in accounts payable                                             25,903
   Increase (decrease) in deferred revenue                                               7,373
   Increase (decrease) in rent deposits                                                  3,147
   Increase (decrease) in accrued expenses                                              26,536
      Total Adjustments                                                               (196,561)

Net Cash Provided (Used) by Operating Activities                                      (160,502)

Cash Flows From Investing Activities:
 Unrealized (gain) loss on investments                                                 (16,627)
 (Increase) decrease in interest receivables                                            (1,191)
 Purchase of capital assets                                                            (31,038)
 Proceeds from sale and maturity of investments                                        490,000
 Purchase of investments                                                              (395,000)
   Net Cash Provided (Used) by Investing Activities                                     46,144


Net Increase (Decrease) In Cash                                                       (114,358)

Cash and Cash Equivalents - Beginning of Year                                          469,478

Cash and Cash Equivalents - End of Year                                                355,120




                         The accompanying notes are an integral part of the financial statements.
                       EDUCATIONAL AND TREATMENT COUNCIL, INC.
                                         Lake Charles, Louisiana
                                       Notes to Financial Statements
                                               June 30,2007

NOTE A- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Nature of Activities

Educational and Treatment Council, Inc. (ETC) is a nonprofit corporation organized in 1974 under the
laws of the State of Louisiana, for the purpose of serving children, adolescents, families, individuals,
and communities withm the five-parish area of Southwest Louisiana, through comprehensive counseling
services, crisis services, prevention services, community education and residential services for youth.
Educational and Treatment Council, Inc. provides prevention and intervention services that address
issues affecting at-risk youth and their families. All services are available at no cost to clients.

Harbour House, a program of Educational and Treatment Council, Inc., is a 20-bed emergency shelter
for children and youth ages 3-17 years old. The shelter serves abused and neglected children, foster
children, runaway and homeless youth, status offenders, and other youth in need of a safe place to stay.
Harbour House also provides brief respite for children of families in crisis to ensure safety and reduce
stress. In addition to short-term residential care, other services provided include education, counseling,
assessment, and referral. Established in 1985, Harbour House is licensed by the State of Louisiana as an
emergency shelter for children. The average length of stay for residents is 14 days and the maximum
length of stay is 105 days.

La Maison de Grace, another residential service of ETC, is a transitional living program which
provides supervised apartment housing for up to 18 months for homeless youth ages 17-21 including
parenting youth and their children. Services focus on vocational training, job attainment, educational
advancement and money management

Community-based services of Educational and Treatment Council, Inc. include in-home crisis
counseling, child abuse prevention and intervention, home visitation, case management, planned
respite, and outpatient substance abuse treatment for juveniles.

Basis of Accounting

The accompanying financial statements have been prepared on the accrual basis of accounting in
accordance with generally accepted accounting principles.

Support and Revenue

Contributions directly from the public are generally available for unrestricted use unless specifically
restricted by the donor.

Support that is restricted by the donor is reported as an increase in unrestricted net assets if the
restriction expires in the reporting period in which the support is recognized. All other donor-restricted
support is reported as an increase in temporarily or permanently restricted net assets depending on the
nature of the restriction. When a restriction expires, restricted net assets are reclassified to unrestricted
net assets.
                       EDUCATIONAL AND TREATMENT COUNCIL, INC
                                        Lake Charles, Louisiana
                                      Notes to Financial Statements
                                              June 30,2007

NOTE A- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — (Continued)

Support that is restricted by the donor is reported as an increase in unrestricted net assets if the
restriction expires in the reporting period in which the support is recognized. AH other donor-restricted
support is reported as an increase in temporarily or permanently restricted net assets depending on the
nature of the restriction. When a restriction expires, restricted net assets are ^classified to unrestricted
net assets.

Contributions of donated noncash assets are recorded at their fair values in the period received.
Contributions of donated services that create or enhance nonfinancial assets or that require specialized
skills, are provided by individuals possessing those skills, and would typically need to be purchased if
not provided by donation, are recorded at their fair values in the period received.

Endowment contributions and investments are permanently restricted by the donor. Investment
earnings available for distribution are recorded in unrestricted net assets. Investment earnings with
donor restrictions are recorded in temporarily or permanently restricted net assets based on the nature
of the restrictions.

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 revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Grants Receivable

Grants receivable at June 30,2007 of $453,496 represents receivables from federal, state and local
grants.

Concentration of Credit Risks

The Council maintains cash accounts at various financial institutions that provided federally insured
limits up to $100,000. At June 30,2007, the Council's uninsured cash balances totaled $116,077.

Investments
Investments are composed of government obligations, mutual funds, and cash equivalents and are
carried at fair value.

Statement of Cash Flows

For the purposes of the Statement of Cash Flows, the Council considers all highly liquid debt
investments purchased with a maturity of three months of less to be cash equivalents.
                      EDUCATIONAL AND TREATMENT COUNCIL, INC.
                                      Lake Charles, Louisiana
                                    Notes to Financial Statements
                                            June 30,2007

NOTE A- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — (Continued)

Income tax status

Educational and Treatment Council, Inc. is a nonprofit organization as described under Section 501(c)
(3) of the Internal Revenue Code and is exempt from federal and state income taxes. In addition, the
organization has been determined by the Internal Revenue Service not to be a private foundation within
the meaning of Section 509(a) of the Internal Revenue Code.

Property and equipment

Property and equipment is stated at cost or fair market value at date of donation for in-kind
contributions. Depreciation is provided over the estimated useful lives of the assets using the straight-
line method. Depreciation amounted to $67,770 for the year ended June 30, 2007, and is calculated on
the straight-line method based on the estimated useful lives below:

            Buildings                                                      30 years
            Furniture, fixtures and equipment                              5-10 years
            Transportation equipment                                       5 years
            Leasehold improvements                                         IS years

The Organization follows the practice of capitalizing all property and equipment in excess of $500.

Functional Allocation of Expenses

Expenses were allocated in the accompanying financial statements to program and supporting service
functional expense groups. The methods of allocation were based on several factors such as utilization
of office space as well as the Council estimates of the relative proportion of various staff members'time
and effort between programming and administrative functions.

NOTE B — DONATED MATERIALS AND SERVICES

included in contributions revenue and program expenses is the estimated value of donated materials and
equipment of $11,186 and donated services of $25,133. Donated goods and services were used to
enhance program activities and operations. However, a substantial number of volunteers have donated
significant amounts of time to the Council's programs services and its rundraising activities which have
not been reflected in the financial statements inasmuch no objective basis is available to measure the
value of such services.
                          EDUCATIONAL AND TREATMENT COUNCIL, INC.
                                       Lake Charles, Louisiana
                                     Notes to Financial Statements
                                             June 30,2007

NOTE C —CAPITAL ASSETS

The Capital Asset Activity for the year ended June 30,2007, was as follows:

                                   Beginning                                       Ending
                                    Balance        Increases      Decreases        Balance
 Land                              S 25,000        $         -    $               $ 25,000
 Building and Improvement           1,075,686           3,600                      1,079,286
 Furniture, Fixtures & Equipment    318,620            27,438                       346,058
 Construction in progress              10,752                -                        10,752
                                    1,430,058          31,038                      1,461,096
 Less accumulated depreciation        644,982          67,771                        712,753
                                   $ 785,076       $ (36,733)      $              $ 748,343



NOTE D - INVESTMENTS

As of June 30,2007 the cost and market value of investments are as follows:

                                    Cost           Fair Value
Certificates of deposit            $ 297,000       $ 295,903
US Treasury Strips                   246,179         278,000

Total investments                  $ 543,179       $ 573,903




The US Treasury Strips, with a fair market value of $278,000 are designated for the future payment of
long-term debt.

NOTE E —BOARD DESIGNATED UNRESTRICTED NET ASSETS

Board designated unrestricted net assets as of June 30, 2006 are funds set aside for future payments of
long-term debt and insurance proceeds to repair property and contents damage.


NOTE F — TEMPORARJLY RESTRICTED NET ASSETS

Temporarily restricted net assets as of June 30,2007 are available for the following purposes or
periods:

                  Runaway Youth Act Program                                               $189




                                                                                                    10
                      EDUCATIONAL AND TREATMENT COUNCIL, INC.
                                       Lake Charles, Louisiana
                                     Notes to Financial Statements
                                             June 30,2007


NOTE G — CONCENTRATIONS

For the year ended June 30, 2007, the Council received 69% of its funding from federal and state
grants. The operations of the Council are subject to the administrative directives, rules and regulations
of federal and state regulatory agencies. Such administrative directives, rules and regulations are
subject to change by legislative acts or administrative changes. Such changes may occur with little
notice or inadequate funding to pay the related cost, including additional administrative burden, to
comply with a change.

NOTE H — COMMITMENTS AND CONTINGENCIES

On September 24, 2005, the Council's property sustained damage as a result of Hurricane Rita. As of
June 30, 2007, insurance proceeds of $429,663 have been received. Repairs to the property are on
going. The Council estimates the cost of repairs to be in excess of the proceeds, but expects to receive
additional funding through insurance litigation and disaster grants (NOTE O).

NOTE I —RETIREMENT COMMITMENTS

All employees of the Council are members of the Federal Social Security System. The Program
contributes 7.65% of gross salaries up to appropriate statutory limits to that system. The Federal Social
Security System administers the plan and pays benefits.

NOTE J — TAX-DEFERRED ANNUITY PLAN

The Organization participated in a tax-deferred annuity plan qualified under Section 403(b) of the
Internal Revenue Code, The plan covers full-time and thirty-two hour part-time employees who have
complete three months of service. The Organization contributes for each eligible participant in an
amount determined by the employee. Employees who have completed one year of service are eligible
for the employer match contribution. On January 1, 2002, the Board of Directors adopted an employer
contribution of 25% of an employee's contributions not to exceed 5% of the employee's annual salary.
Employees may make contributions to the plan up the maximum allowed by the Internal Revenue Code
if they wish. Plan expenses were $768 for the year ended June 30,2007.




                                                                                                       11
                      EDUCATIONAL AND TREATMENT COUNCIL, INC.
                                      Lake Charles, Louisiana
                                    Notes to Financial Statements
                                            June 30,2007

NOTE K— SICK AND VACATION PAY

The first six months of employment are considered a probationary period during which time sick leave
accrues at one day per month worked. Any days missed during this period are treated as
noncompensatory leave. Upon completion of the probationary period, vacation leave begins accruing at
one day per month worked. Termination of service with the Council during this period results in
forfeiture of all accrued sick and vacation leave.

After the probationary period, full time employees begin accruing sick ieave at the rate of one day per
month. This accrual of sick leave shall continue until the employee has accrued a maximum of 30 days
sick leave. After this maximum has been achieved, no further sick leave shall be accrued until the
balance is reduced below 30 days. Any employee terminating agency service shall not be compensated
in any form for any unused accrued sick leave. Therefore, no liability has been accrued for these
benefits.

After the probationary period, full time employees begin accruing annual leave at the rate of one day per
month up to twelve (12) days annual leave each year of employment. After three years of service the
annual leave increases one day for each additional year of service up to a maximum of twenty (20) days
per year. Any unused annual leave at June 30th of each year shall be reduced to zero unless carryover is
authorized by the Board. The dollar value of accrued leave at June 30,2007 was $8,722.

NOTE L— LONG-TERM DEBT

ETC's Long-term debt at consist of the following as of June 30,2007.

Small Business Administration, payments beginning
April 7,2007, interest 4.75% per annum, secured by a building            $ 10,000

Note payable to Brown Foundation, Inc. due November 11, 2018,
plus interest payable annually at 5%, secured by a building              $ 500,000

On April 7, 2006, the U.S. Small Business Administration (SBA) authorized a loan to ETC in the
amount of $55,800. Interest will accrue at the rate of 4.75% per annum, with installment payments of
$309 monthly beginning twelve months from the date of the promissory note. The balance of principal
and interest will be payable 30 years from the date of the promissory note. ETC must submit to SBA
evidence of SBA's recorded lien position prior to the disbursement of loan funds in excess of $10,000.

A requirement of the Brown Foundation note is that a sinking fund must be established by year 2002.
Annual payments are payable into the sinking fund for years 2002 through 2017 in a sum sufficient to
insure, when the final payment becomes due, the sinking fund will be able to repay the entire principal
sum due. An investment designated by the Board as the sinking fund with a balance of $278,000, at
June 30, 2007 has been made to pay off this debt at maturity (see Note E). The investment is a zero
coupon bond set to mature for $500,000 at November 8,2018 and to fully pay the long-term debt. There
are no future sinking fund or debt service funding requirements.




                                                                                                     12
                     EDUCATIONAL AND TREATMENT COUNCIL, INC.
                                      Lake Charles, Louisiana
                                    Notes to Financial Statements
                                            June 30,2007


NOTE M - OPERATING LEASE COMMITMENT

The Council leases office space for its Resource Center under a month to month lease operating under
the same terms of the original lease which expires August 31, 2006. The Council also leases an
apartment complex for its transitional living program under a month to month lease. Rental expenses
under these two operating leases as of June 30,2007, were $26,872 and $24,075 respectively.

NOTE N — JUVENILE SERVICES TAX

On May 5, 1984, the property owners of Calcasieu Parish passed the Juvenile Detention, Probation
and Services Tax. The Juvenile Services tax was approved by voters for 2.4 mills for a ten year period.
The Calcasieu Parish Policy Jury shall pay as soon as ad valorem taxes are received by the Calcasieu
Parish Police Jury a sum equal to the stated contract amount. For and in consideration of the payment
of the foregoing lease sums, Educational and Treatment Council, Inc. shall provide juvenile services
without further cost to the Court of the Calcasieu Parish Police Jury for emergency shelter to children
as described in the purpose above. The Juvenile Services Tax was renewed by parish voters in 1994
and 2004.

Amounts paid under the contract for the year ended June 30,2007 was $457,862.

NOTE 0— SUBSEQUENT EVENTS

In September 2006, ETC filed a petition for damages naming its insurance provider of property
insurance defendant. The petition claim is for damages incurred due to failure of the defendant to pay
dwelling coverage, personal property coverage, adequate loss of use, and contents. Since receiving
notice of the lawsuit, the insurance provider has assigned a new adjuster for the claim. As of June 30,
2007, the claim for statutory penalties and attorneys' fees was still pending. The amount of recovery
is unknown at this time. ETC has been assigned a FEMA representative to review the Council's losses
and eligibility for disaster grants, however, the amount will not be determmable until the insurance
proceeds have been determined.

NOTE P — PRIOR PERIOD ADJUSTMENTS

Net assets at the beginning of the year have been adjusted to correct errors made in prior years. The
errors had no effect on net income for the year ended June 30, 2007. The adjustments were to deferred
revenue and accrued liabilities.




                                                                                                     13
                                       Educational and Treatment Council, Inc.

                                    Schedule of Expenditures of Federal Awards
                                              Year Ended June 30, 2007

                                           CFDA                           Program
        Program Title                      Number          Grant Number                    Program Expenses

U.S. Department
 of Health and
 Human Services:
Direct programs:
    Basic Center Program for
 Runaway & Homeless Youth                    93.623   G064224             09/29/09                   $55,000
    Transitional Living
Program for Homeless Youth                   93.550   G064224             02/28/09                   288,988
    Passed through Louisiana
Department of Health and
Hospitals - Office of Mental
Health                                       93.958   594748              06/30/09                   481,952

Office of Mental Health -
Hurricane Recovery                           93.958                       06/30/07                    115,601
    Passed through Louisiana
    Department of Social
    Services - OCD
    Title IV-B                               93.556   587440 & 626114     08/31/08                   446,633

 United States Department of
 Agriculture:
   Passed through Louisiana
   Department of Education:
    National School Lunch
     Program                                 10.555   NA                                               16,038

 United States Department of
 Housing and Urban
 Development:
   Passed through Louisiana
   Department of Social
   Services and City of Lake
   Charles:
      Emergency Shelter
       Grants Program                        14.231   12714               6/30/07                      9,000

United States Department of
Justice:
    Passed through Calcasicu
Parish Police Jury                           16.585   NA                  12/31/08                    29,482
                Total federal assistance                                                            1.442,694

 Basis of Presentation

 The accompanying schedule of expenditures of federal awards includes the federal grant activity of
 Educational and Treatment Council, Inc., and is presented on the accrual basis of accounting. The
 information on this schedule is presented in accordance with the requirements of the Office of
 Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit
 Organizations, Certain costs have been allocated to the federal program in accordance with OMB
 Circular A-122, Cost Principles for Non-Profit Organizations. The amounts presented in this schedule do
 not differ from amounts presented in, or used in the preparation of the financial statements.
                             BROUSSARD & COMPANY
                             CERTIFIED PUBLIC ACCOUNTANTS, L.L.C.

  Founfodin 1978




                 INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE AND ON INTERNAL CONTROL
                  OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS
                     PERFORMED IN ACCORDANCE WITH GOVERNMENT A UDJTING STANDARDS

           Board of Directors
           Educational and Treatment Council, Inc.
           Lake Charles, Louisiana

           We have audited the financial statements of Educational and Treatment Council, Inc. as of and for the year
           ended June 30,2007, and have issued our report thereon dated January 31,2008. We conducted our audit 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
           Genera! of the United States.


           Internal Control Over Financial Reporting

           In planning and performing our audit, we considered the Educational and Treatment Council, Inc.'s internal
           control over financial reporting as 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 die Educational and Treatment Council, Inc.'s internal control over financial reporting.
           Accordingly, we do not express an opinion on the effectiveness of the Organization's internal control over
           financial reporting.

          Our consideration of the internal control over financial reporting was for the limited purpose described in
          the preceding paragraph and would not necessarily identify ail deficiencies in the internal control over
          financial reporting that might be significant deficiencies or material weaknesses. However, as discussed
          below, we identified certain deficiencies in internal control over financial reporting that we consider to be
          significant deficiencies.

          A control deficiency 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 misstatements
          on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies,
          that adversely affects the organization's ability to initiate, authorize, record, process, or report financial data
          reliably in accordance with generally accepted accounting principles, such that there is more than a remote
          likelihood that a misstatement of the organization's financial statements that is more than inconsequential
          will not be prevented or detected by the organization's internal control.

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



MOSS BLUFF OFFICE                                       LAKE CHARLES OFFICE                                SULPHUR OFFICE
695 Sam Houston Jones Partway, Suite D                  One Lakeihore Drive, Suite 1900                    704 First Avenue
Uke Clwrtes. Louisiana 70611                            Lake Chariei, Louisiuu 70629                       Sulphur, Louisiana 70663
Ph: (337) 217-W70 Fax: W7i 4.19-6647                    Ph: (337> 439-6600 Fax: (337) 439-6647             Ph: (337) 527-0010 Fw: (337) 527-0014
Board of Directors
Educational and Treatment Council, Inc.
Lake Charles, Louisiana
Page 2
Our consideration of internal control over financial reporting was for the limited purpose described in the
first paragraph of this section and would not necessarily identify all deficiencies in internal control that
might be significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies
that are also considered to be material weaknesses. However, of the significant deficiencies described
above, we consider items 2007-1 and 2007-2 to be material weaknesses.

Compliance

As part of obtaining reasonable assurance about whether Educational and Treatment Council, Inc.'s,
financial statements are free of material misstatement, we performed tests of its compliance with certain
provisions of laws, regulations, contracts, and grants, 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 an instance of noncompliance that are required to be reported
under Government Auditing Standards as item 2007-3.


This report is intended for the information of the management, the Legislative Auditor of the State of
Louisiana, federal awarding agencies and pass-through entities and is not intended to be and should not be
used by anyone other than these specified parties. However, this report is a matter of public record and its
distribution is not limited.



Lake Charles, Louisiana
January 31,2008
                             BROUSSARD & COMPANY
                             CERTIFIED PUBLIC ACCOUNTANTS,                  L.L.C

 Founded in 197$




                                    REPORT ON COMPLIANCE WITH REQUIREMENTS
                        APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER
                               COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133


            Board of Directors
            Educational and Treatment Council, Inc.
            Lake Charles, Louisiana

            Compliance

            We have audited the compliance of Educational and Treatment Council, Inc. with the types of compliance
            requirements described in the "U.S. Office of Management and Budget (OMB) Circular A-J 33 Compliance
            Supplement that are applicable to each of its major federal programs for the year ended June 30, 2007.
            Educational and Treatment Inc.'s major federal programs are identified in the summary of auditor's results
            section of the accompanying schedule of findings and questioned costs. Compliance with the requirements
            of laws, regulations, contracts, and grants applicable to each of its major federal programs is the
            responsibility of Educational and Treatment Council, Inc.'s management Our responsibility is to express an
            opinion on Educational and Treatment Council, Inc.'s compliance based on our audit

            We conducted our audit of compliance in accordance with auditing standards generally accepted in the
            United States of America; the standards applicable to financial audits contained in Government Auditing
            Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of
            States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133
            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 Educational
            and Treatment Council, Inc.'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. Our audit does not provide a legal determination of Educational and Treatment Council, Inc.'s
            compliance with those requirements.

            In our opinion, Educational and Treatment Council, Inc. complied, in all material respects, with the
            requirements referred to above that are applicable to each of its major federal programs for the year ended
            June 30,2007.




MOSS BLUFF OFFICE                                     LAKE CHARLES OFFICE                             SULPHUR OFFICE
695 Sam Houston Jonc> Parkway. Suite D                One Lakeshore Drive. Suilc 1900                 704 Fim Avenue
Lake Charles, l-ou.siaru 70611                        Lak* Charles, Louisiana 70629                   Sulphur, Louisiana 70663
Ph: .337) 217-3370 Fax: (337)439-6647                 Ph: (337)439-660(1 Fax; (337)439-6647           Ph: f337) 527-0010 Fax: (337) 527-0014
Board of Directors
Educational and Treatment Council, Inc.
Lake Charles, Louisiana
Page 2

Internal Control Over Compliance

The management of Educational and Treatment Council, Inc. is responsible for establishing and maintaining
effective internal control over compliance with the requirements of laws, regulations, contracts, and grants
applicable to federal programs. In planning and performing our audit, we considered Educational and
Treatment Council, Inc.'s internal control over compliance with the requirements that could have a direct
and material effect on a major federal program in order to determine our auditing procedures for the purpose
of expressing our opinion on compliance, 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 Educational and Treatment Council, Inc.'s internal control over compliance.

A control deficiency in an entity's internal control over compliance 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 noncompliance with a type of compliance requirement of a federal program
on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies,
that adversely affects the entity's ability to administer a federal program such that there is more than a
remote likelihood that noncompliance with a type of compliance requirement of a federal program that is
more than inconsequential will not be prevented or detected by the entity's internal control.

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in
more than a remote likelihood that material noncompliance with a type of compliance requirement of a
federal program will not be prevented or detected by the entity's internal control.

Our consideration of internal control over compliance was for the limited purpose described in the first
paragraph of this section and would not necessarily identify all deficiencies in internal control that might be
significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over
compliance that we consider to be material weaknesses, as defined above.

This report is intended solely for the information of the audit committee, management, and federal and state
awarding agencies and pass-through entities and is not intended to be and should not be used by anyone
other than these specified parties. However, this report is a matter of public record and its distribution is not
limited.




Lake Charles, Louisiana
January 31,2008
EDUCATIONAL AND TREATMENT COUNCIL, INC.

SUMMARY OF AUDITOR'S RESULTS

   1.       The auditor's report expresses an unqualified opinion on the financial statements of
            Educational and Treatment Council, Inc.
  2.        Instances of material weaknesses to the financial statements are reported as items 07-
            1 and 07-2.
   3.       One instance of noncompliance material to the financial statements was reported as
            item 07-3.
  4.        No significant deficiencies or material weaknesses were reported during the audit of
            the major federal award programs.
   5.       The auditor's report on compliance for major federal award programs for Educational
            and Treatment Council, Inc. expresses an unqualified opinion on all major federal
            programs.
  6.        The audit disclosed no audit findings relating to major programs.
  7.        The programs tested as major programs included:
            U. S. Department of Health and Human Services
            Transitional Living Program for Homeless Youth
            CFDA 93.550

            U. S. Department of Health and Human Services
            Office of Mental Health
            CFDA 93.958

            U. S. Department of Health and Human Services
            Basic Center Program for Runaway & Homeless Youth
            CFDA 93.556

  8.        The threshold for distinguishing Types A and B programs was $500,000.
  9.        Educational and Treatment Council, Inc. was determined to be a low-risk auditee.

PRIOR YEAR FINDINGS

        No findings were noted in prior year.
                     EDUCATIONAL AND TREATMENT COUNCIL, INC.
                    SCHEDULE OF FINDINGS AND QUESTIONED COSTS
                               Year Ended June 30,2007



07-1   Reconcialrions

       Condition:          The organization has not reconciled the financial statements to
                           supporting records in a timely manner. Specifically, checking
                           accounts, accounts receivable, and accounts payable, were not
                           reconciled until after year end.

       Criteria:           Effective internal control requires that all checking accounts,
                           accounts payable and accounts receivable be reconciled from
                           detailed supporting records to the financial statements.

       Effect:             Material errors could have occurred and not detected due to the
                           above condition.

       Recommendation:     The Organization should reconcile all checking accounts, accounts
                           receivable and accounts payable records on a monthly basis.

       Response:           The Organization will contract the services of an accounting firm
                           to assist in the reconciliation of the above financial statement
                           information.

07-2   Financial Statement Reporting

       Condition:            The Organization relies on the auditing firm to assist in the
                             preparation of external financial statements and related
                             disclosures. Under U. S. generally accepted auditing standards,
                             we cannot be considered part of the Organization's internal
                             control structure and because of limitations of the accounting staff,
                             the design of the Organization's internal control structure does not
                             otherwise include procedures to prevent or detect a material
                             misstatement in the external financial statements.

       Recommendation:       The Organization should contract or employ the appropriate
                             personnel to assist in the preparation of external financial
                             statements.

       Response:             The Organization will consider the cost effectiveness of the
                             above recommendation.
07*3 - Late Filing of Audit Report

     Condition:      The June 30,2007 financial statements were not filed with the Legislative
                     Auditor's office by December 31,2007.


     Criteria:       State law requires that audited financial statements be filed with the
                     Legislative Auditor by six months after year end.

     Response:       The audit firm that had performed the engagement for the prior year
                     withdrew from the current year's engagement. Management will closely
                     monitor this reporting requirement in future years to prevent reoccurrence.