Audited Financial Statements of a Security Agency by bcn14815

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									REDWOOD COMMUNITY ACTION AGENCY, INC.

                 AUDITED FINANCIAL STATEMENTS




          FOR THE YEAR ENDED DECEMBER 31, 2004


                     IZABAL, BERNACIAK & COMPANY
                       CERTIFIED PUBLIC ACCOUNTANTS
                   REDWOOD COMMUNITY ACTION AGENCY, INC.
                       AUDITED FINANCIAL STATEMENTS
                    FOR THE YEAR ENDED DECEMBER 31, 2004

                                         TABLE OF CONTENTS

                                                                                                                 Page
AUDITED FINANCIAL STATEMENTS
  Independent Auditors’ Report .................................................................................. 1
  Statement of Financial Position ............................................................................... 2
  Statement of Activities ............................................................................................. 3
  Statement of Cash Flows ........................................................................................ 4
  Notes to Financial Statements............................................................................5-14
                                        IZABAL, BERNACIAK & COMPANY
                                                CERTIFIED PUBLIC ACCOUNTANTS

One Market, Spear Street Tower, Suite 344                                             TEL: (415) 896-5551
San Francisco, California 94105                                                       FAX: (415) 896-0584




                                            INDEPENDENT AUDITORS’ REPORT


Board of Directors
Redwood Community Action Agency, Inc.
Eureka, California

We have audited the accompanying statement of financial position of Redwood Community
Action Agency, Inc. as of December 31, 2004 and the related statements of activities and cash
flows for the year then ended. These financial statements are the responsibility of Redwood
Community Action Agency, Inc.'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, 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
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 above present fairly, in all material respects,
the financial position of Redwood Community Action Agency, Inc. for the year ended December
31, 2004 and the change in 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 a report dated March
25, 2005 on our consideration of Redwood Community Action Agency, Inc.'s internal control
over financial reporting and our tests of its compliance with certain provisions of laws,
regulations, contracts and grants and other matters. The purpose of that report is to describe
the scope of our testing on 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.




San Francisco, California
March 25, 2005




                                                            -1-
        REDWOOD COMMUNITY ACTION AGENCY, INC.
           STATEMENT OF FINANCIAL POSITION
                 DECEMBER 31, 2004

ASSETS
  Current Assets
    Cash                                                          $     289,232
    Grants/Contracts Receivable                                         870,041
    Accounts Receivable                                                   1,698
    Prepaids                                                            113,942
    Inventory                                                           192,595
    Investment                                                            4,027
       Total Current Assets                                           1,471,535

  Deposits, Reserves and Custodial                                      203,800

  Fixed Assets
     Land                                                                816,138
     Buildings                                                         3,886,179
     Leasehold Improvement                                               500,000
     Equipment                                                           262,571
     Vehicles                                                            234,049
     Accumulated Depreciation                                         (2,085,872)
       Total Fixed Assets                                              3,613,065

  TOTAL ASSETS                                                    $   5,288,400

LIABILITIES AND NET ASSETS
   Current Liabilities
     Accounts Payable                                             $     267,199
     Current Portion of Long-Term Debt                                  210,744
     Accrued Expenses                                                   203,343
     Deferred Revenue                                                   526,216
     Other Payables                                                       4,027
         Total Current Liabilities                                    1,211,529

  Long Term Liabilities
    Deferred Revenue                                                    155,122
    Security Deposits Payable                                            44,177
    Long Term Debt less Current Portion                               3,236,446
        Total Long Term Liabilities                                   3,435,745

        TOTAL LIABILITIES                                             4,647,274

  Net Assets
    Unrestricted - Designated                                           179,288
     Unrestricted - Undesignated                                        461,838
       TOTAL NET ASSETS                                                 641,126

  TOTAL LIABILITIES AND NET ASSETS                                $   5,288,400




                          See notes to the financial statements
                                          -2-
              REDWOOD COMMUNITY ACTION AGENCY, INC.
                     STATEMENT OF ACTIVITIES
               FOR THE YEAR ENDED DECEMBER 31, 2004


                                                                     UNRESTRICTED
REVENUE, GAINS AND OTHER SUPPORT

  Grant                                                          $       6,366,676
  Contributions                                                             38,755
  Rents                                                                    364,588
  Miscellaneous                                                            833,102

     Total Revenue                                                       7,603,121

EXPENSES

  Personnel                                                              3,243,229
  Travel                                                                   120,080
  Space                                                                    294,834
  Equipment                                                                 88,772
  Other Operating Cost                                                     339,933
  Consultants & Contractors                                              1,243,029
  Direct Services                                                        1,987,897

     Total Expenses Before Depreciation                                  7,317,774

REVENUE IN EXCESS OF EXPENSES BEFORE DEPRECIATION                         285,347

  Depreciation Expense                                                     28,200

REVENUE IN EXCESS OF EXPENSES                                             257,147

  Fixed assets purchased with grant funds                                  17,104

  Depreciation on fixed assets purchased with grant funds                 (171,154)

CHANGE IN NET ASSETS - UNRESTRICTED                                       103,097

  Net Assets at Beginning of the Year                                     538,029

NET ASSETS AT END OF THE YEAR                                    $        641,126




                         See notes to the financial statements
                                          -3-
      REDWOOD COMMUNITY ACTION AGENCY, INC.
            STATEMENT OF CASH FLOWS
       FOR THE YEAR ENDED DECEMBER 31, 2004

CASH FLOWS FROM OPERATING ACTIVITIES
 Change in Net Assets                                     $   103,097
 Depreciation Expense                                          28,200
 Grant fixed assets depreciation                              171,154

 (Increase)/Decrease In:
   Grants/Contracts Receivable                                   2,618
   Accounts Receivable                                              68
   Prepaids                                                     20,535
   Inventory                                                    23,437
   Deposits, reserves and custodial                            (19,905)

 Increase/(Decrease) In:
   Accounts Payable                                            (60,574)
   Accrued Expenses                                              9,267
   Security Deposits Payable                                    (3,696)
   Other Payables                                                 (926)
   Deferred Revenue                                           (349,271)
   Net Cash Used by Operations                                 (75,996)

CASH FLOWS FROM INVESTING ACTIVITIES
 Investments                                                       926
 Land                                                           45,000
 Building                                                      142,455
 Leasehold Improvement                                        (500,000)
 Vehicles                                                      (34,704)
   Net Cash Used by Investing Activities                      (346,323)

CASH FLOWS FROM FINANCING ACTIVITIES
 Increase in Long Term Debt                                    650,000
 Paydowns on Long Term Debt                                   (418,863)
   Net Cash Provided by Financing Activities                   231,137

NET DECRASE IN CASH                                           (191,182)

 Cash Balances at 12/31/03                                    480,414

CASH BALANCES AT 12/31/04                                 $   289,232



                  SUPPLEMENTAL DISCLOSURES
Cash Used by Payments of Interest                         $    34,721



                  See notes to the financial statements
                                  -4-
          REDWOOD COMMUNITY ACTION AGENCY, INC.
            NOTES TO THE FINANCIAL STATEMENTS
           FOR THE YEAR ENDED DECEMBER 31, 2004


NOTE A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

       General
       The Redwood Community Action Agency, Inc. (RCAA) was designated the
       Community Action Agency for Humboldt County on July 1, 1980. The purpose
       of this organization is to mobilize and coordinate anti-poverty resources within
       Humboldt County and to preserve land for scenic, scientific educational and
       open space opportunities.


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


       Financial Statement Presentation
       Redwood Community Action Agency, Inc. follows the recommendations of the
       Financial Accounting Standards Board in its Statement of Financial
       Accounting Standards (SFAS) No. 117, Financial Statements of Not-for-Profit
       Organizations. Under SFAS No.117, the Organization is required to report
       information regarding its financial position and activities according to three
       classes of net assets: unrestricted net assets, temporarily restricted net
       assets, and permanently restricted net assets.


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

       All donor-restricted contributions are reported as an increase in temporarily or
       permanently restricted net assets, depending on the nature of the restriction.
       When a restriction expires (that is, when a stipulated time restriction ends or
       the purpose of the restriction is accomplished), temporarily restricted net
       assets are reclassified to unrestricted net assets and reported in the
       statement of activities as net assets released from restrictions.


       Income Taxes
       The Organization is a not-for-profit organization that is exempt from income
       taxes under Section 501(c)(3) of the Internal Revenue Code.

                                        -5-
       Cash and Cash Equivalents
       For purposes of the statements of cash flows, the Organization considers all
       highly liquid investments available for current use with an initial maturity of
       three months or less to be cash equivalents.


       Accounts / Grants Receivable
       The Organization considers accounts / grants receivable to be fully
       collectable; accordingly no allowance for doubtful accounts is required. If
       amounts become uncollectable, they will be charged to operations when that
       determination is made.


       Estimates
       The preparation of financial statements in conformity with generally accepted
       accounting principles requires management to make estimates and
       assumptions that affect certain reported amounts of, assets and liabilities,
       disclosure of contingent assets and liabilities and the reported revenue and
       expenses.


       Depreciation
       Depreciation is calculated using the straight-line method over the estimated
       useful lives of the asset which range as follows:

                    Buildings                            20 to 30 years
                    Equipment                              3 to 5 years
                    Vehicles                               3 to 5 years

       Depreciation expense for the fiscal year ended December 31, 2004 amounted
       to $28,200 for unrestricted general operations and $171,154 for grant fixed
       assets.

       Assets purchased or donated to unrestricted general operation funds are
       capitalized and depreciated as an operating expense. Assets purchased with
       grant funds are recorded as operating expenditures in the period in which
       they were purchased. Capitalization and depreciation for assets purchased
       with grant funds are accounted for as adjustments in the Statement of
       Changes in Net Assets.


NOTE B: GRANTS/CONTRACTS RECEIVABLE

       Grant/Contracts receivable represents the amount due for revenues earned
       but not yet reimbursed at December 31, 2004. The following amounts are due
       Redwood Community Action Agency, Inc. at December 31, 2004:

                                        -6-
Description                       Acct      Amount
Rio Dell Gateway Project          (123)    $ 3,317
MAC Labor Standards               (124)      10,144
EHAP Capital                      (125)      47,500
VISTA-Partners                    (138)       6,178
Mentoring Children of Prisoners   (140)       2,242
Mentoring DOEd Year 2             (148)       7,470
Mentoring DOEd Year 3             (149)      11,037
CSBG 04/05                        (154)      30,847
HAF Energy Education              (166)       1,043
Reach for the Stars               (167)       1,000
1st Time Homebuyer_Rehab          (198)       9,393
1st Time Homebuyer_COE            (199)       4,871
HAF Rent Subsidies                (204)       6,970
FESG 04/06                        (231)      22,287
Mentoring Children of Prisoners   (240)         327
Mentoring DOEd                    (249)       1,032
MAC CDBG                          (252)      34,033
CalHome Revolving Fund            (306)       1,472
City of Arcata 01/02              (327)       4,643
City of Arcata 01 HOME            (328)      24,752
Arcata Roof                       (329)          98
Rio Dell Portfolio                (342)       2,940
Rio Dell CDBG-GA                  (345)         930
Blue Lake Revolving               (351)       4,377
Blue Lake 03 CDBG GA              (355)         602
Blue Lake 03 CDBG PD              (356)      24,215
Eureka HOME                       (361)      15,258
County HOME                       (371)       9,884
County Cal-Home                   (372)       3,520
CalHome Mobil 04/05               (381)     122,270
Fortuna Revolving Loan            (391)       5,794
Alturas 2004 LIHEAP Wx            (405)       3,111
Alturas DOE                       (406)          74
PG&E Refrigerator Replacement     (407)      38,764
LIHEAP Wx 2004                    (440)      30,142
LIHEAP Ass 16                     (441)      10,464
LIHEAP WPO                        (442)      17,644
DOE 2004/2005                     (460)      15,429
Description                       Acct    Amount
School Lunch                      (503)         118
WIA - Eureka                      (522)       2,397
Basic Center                      (530)       1,841
Raven-HHS 04/05                   (536)       2,413
FESG - TLP 03/05                  (544)       9,061
CYA                               (580)      17,214
Division Consulting               (602)          52

                           -7-
         Lindsay Creek                           (620)           24,089
         Reaches to Beaches                      (642)           10,533
         Elk River trail Design                  (653)            2,967
         HBWAC                                   (698)           10,138
         Humboldt Bay Enhancement                (699)           14,249
         Safeco Ins-Fire Damage                  (702)            8,709
         NFF-Phase II                            (928)           11,918
         Martin Slough SCC                       (942)            8,162
         Headwaters Construction                 (957)           39,840
         Widow White                             (958)           10,862
         Hammond South & Widow Wht               (959)           20,461
         Punta Gorda Lighthouse                  (962)           30,000
         NOAA-CSP                                (964)            2,383
         Headwaters Trail Brushing               (965)            5,000
         Mail Ridge Road                         (966)           21,065
         Hole in the Hammond                     (972)           29,359
         Bull Creek                              (980)           51,136

         TOTAL GRANTS/CONTRACTS                                $870,041
         RECEIVABLE




NOTE C: DEFERRED REVENUE

       Deferred revenue represents the excess of funds advanced less earned
       revenue for ongoing programs at December 31, 2004:


         Description                            Acct            Amount
         North Coast Mentor Program             (137)               363
         Americorps Carryover                   (184)             1,037
         Americorps 04/05                       (185)             4,635

                                      -8-
          St. Joes 04/05                              (224)           24,989
          SJHS MAC                                    (250)           38,004
          MAC Fundraising                             (251)            6,281
          EHAP XI                                     (273)            5,003
          Revolving Loan Fund                         (305)          130,574
          HPG                                         (333)            9,318
          Rio Dell CDBG – PD HR                       (346)           37,145
          Rio Dell CDBG – PD HA                       (348)            2,745
          Rio Dell CDBG – PD HR                       (348)           75,398
          LIHEAP Carryover Funds                      (403)            6,339
          ULTS                                        (419)           19,802
          LEAD Video                                  (477)           12,493
          Shelter Activities                          (501)              956
          HBWQIP                                      (660)           11,376
          CRI Mowing                                  (681)            3,578
          Ford – Phase II                             (929)           42,025
          Coastal Access                              (960)           13,008
          Native Grass                                (961)            7,151
          Barri Ranch                                 (968)            2,159
          City of Eureka FTHB Match                                   70,348
          Miscellaneous                                                1,489
              Total Current Deferred Revenue                       $ 526,216

          Total Long Term Deferred Revenue:
             AGENCY FUND: 1100 California Street 155,122

          TOTAL DEFERRED REVENUE                                   $ 681,338




NOTE D: NOTES PAYABLE

       Redwood Community Action Agency, Inc. has the following notes payable:

       Lender: California Department of Housing and
                Community Development - HOME                         $530,450
       Interest Rate: 0%
       Maturity Date: 20 years from Certificate of Occupancy,
                  projected at September 2013.
       Collateral: Apartment Building, Fortuna, California
       Restricted Covenant: Provide regulated rent housing
                  until loan is paid in full.

                                       -9-
Lender: City of Eureka                                        20,241
Interest Rate: 3% per annum, simple interest
Maturity Date: September 2007
Collateral: Building, Eureka, California


Lender: California Department of Housing and
         Community Development - HOME                        875,500
Interest Rate: 2% per annum, simple interest
Maturity Date: 20 years from Certificate of Occupancy,
           projected at December 2013
Collateral: Duplexes, McKinleyville, California
Restrictive Covenant: Provide regulated rent housing
           until loan is paid in full.


Lender: Humboldt Bank                                         46,847
Interest Rate: 3.23%
Maturity Date: March 15, 2005
Collateral: 1450 Pine St., Eureka, California


Lender: Humboldt Bank                                         11,289
Interest Rate: 7.750%
Maturity Date: April 15, 2007
Collateral: Diesel Truck




Lender: California Department of Housing and
         Community Development - HOME                        422,300
Interest Rate: 0%
Collateral: 1015 Loni Drive, Fortuna, California
Restricted Covenant: First seven years payment of residual
           receipts as defined by Regulatory Agreement.
           Remaining 13 years payment of $22,700 due
           annually.

Lender: Humboldt Bank                                         31,656
Interest Rate: 6.500%
Maturity Date: August 15, 2012
Collateral: 1528 Third St., Eureka



                                 -10-
Lender: Luther Burbank SLA                                       77,896
Interest Rate: 5.95%
Maturity Date: January 1, 2026
Collateral: 2910 & 2912 California Street, Eureka, California

Lender: Department of Housing and
         Community Development - HOME                           280,122
Interest Rate: 3%
Maturity Date: August 2027
Collateral: 1528 Third Street, Eureka, California

Lender: Humboldt Bank                                            66,048
Interest Rate: 6.50%
Maturity Date: October, 2018
Collateral: 523 & 525 9th Street, Eureka, California
            537 & 825 G Street, Eureka, California

Lender: Crossland Mortgage Corp.                                107,886
Interest Rate: 7%
Maturity Date: August, 2028
Collateral: 924 & 926 G Street, Eureka, California

Lender: Department of Housing and
         Community Development - Home                           326,955
Interest Rate: 0%
Maturity Date: July 8, 2026
Collateral: 829 C Street, Eureka, California
Restrictive Comment: Provide regulated rent housing
           until loan is paid



Lender: Redwood Capital Bank                                    150,000
Interest Rate: 6.250%
Maturity Date: December 15, 2005
Comment: Line of Credit


Lender: Department of Housing and
         Community Development - EHAP                           500,000
Interest Rate: 3%
Maturity Date: 7 years from Date of Recordation by
           County Recorder
Collateral: 2415 Second Street, Eureka, California
Restrictive Comment: Provide temporary housing for
          homeless families and individuals.



                                 -11-
          Total Notes Payable                                                  $3,447,190
          Less: Current Portion                                                  (210,744)

          Long-Term Notes Payable, December 31, 2004                           $3,236,446


Principal payments for the next five fiscal years are project as follows:

          Year ended December 31:
                           2005                              $210,744
                           2006                                15,046
                           2007                                32,769
                           2008                                11,786
                           2009                                12,787
                           Total                             $283,132

                                Thereafter,                $3,164,058

          Interest expense for the fiscal year ended December 31, 2004 amounted to
          $34,721.


NOTE E: INVESTMENT

          The investment represents Redwood Community Action, Inc.'s wholly owned
          subsidiary, Redwood Economic Opportunities, Inc. (REO). Redwood
          Economic Opportunities, Inc. is currently non-operative. The investment is
          valued at net book value which approximates market value at December 31,
          2004.

NOTE F: INVENTORY

          At December 31, 2004 inventory is comprised of supplies used by the Agency
          in its energy weatherization programs and houses held for resale. The
          inventory is stated at cost.


NOTE G: DESIGNATED NET ASSETS

          The Board of Directors of RCAA has designated these funds for the following
          purposes:


                        Shelter                    (200)            $ 24,768
                        Housing                    (300)               7,901
                        Energy                     (400)             109,109
                        Youth Service              (500)              13,363

                                            -12-
                    HUD                                         23,250
                    Mentoring                                      897
                    Total Designated Fund Balance             $179,288


NOTE H: CLASSIFICATION OF EXPENSES

       Expenses by function for the year ended December 31, 2004
       are as follows:

             Program Expense                                $6,833,807
             Management and General                            508,002
             Fundraising                                         4,165
             Total                                          $7,345,974

NOTE I: RETIREMENT PLAN

       RCAA has established a profit sharing plan. A participant must have attained
       the age of 21, completed 12 months of service, and been credited with 1000
       hours of service during the eligibility computation period. Each plan year, the
       Employer will contribute to the Plan the amount determined by the Employer
       at its discretion. The Employer may choose not to contribute to the Plan for a
       particular year. An Advisory committee will base an employee’s
       allocation upon the total compensation paid during that plan year to all
       participants in the Plan. Participants become vested 20% with 3 years of
       service, 40% with 4 years, 60% with 5 years, 80% with 6 years, 100% with 7
       years of service.




                                       -13-
       For the year ended December 31, 2004 the Agency’s contribution of $51,377
       is included with accrued expenses.


NOTE J: LEASE COMMITMENT

       As of December 31, 2004, RCAA has entered into various noncancelable
       operating lease agreements for the rental of office and residential facilities,
       expiring from January 2006 to September 2018, minimum rentals, on an
       annual basis, are as follows:

                               2005                            $15,841
                               2006                             12,241
                               2007                              8,161
                               2008                                  1
                               2009                                  1
                               Thereafter                            9
                                                               $36,254


NOTE K: CONCENTRATION OF CREDIT RISK ARISING FROM CASH DEPOSITS IN
        EXCESS OF INSURED LIMITS

       RCAA maintains cash balances at various financial institutions located in
       Eureka, California. The balances are insured by the Federal Deposit
       Insurance Corporation up to $100,000. At December 31, 2004 the Agency’s
       uninsured cash balance totaled approximately $468,326.




                                       -14-

								
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