TRIANGLE RESIDENTIAL OPTIONS FOR SUBSTANCE ABUSERS, INC.
AND AFFILIATES
_______________
CONSOLIDATED FINANCIAL STATEMENTS
for the year ended June 30, 2016
TRIANGLE RESIDENTIAL OPTIONS FOR SUBSTANCE ABUSERS INC.
AND AFFILIATES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
_________________
Page(s)
1-2
Independent Auditor’s Report
Consolidated Financial Statements:
Consolidated Statement of Financial Position
3
Consolidated Statement of Activities
4
Consolidated Statement of Functional Expenses
5
Consolidated Statement of Cash Flows
6-7
Notes to Consolidated Financial Statements
8 - 16
Supplementary Information:
Schedule of Federal and State Awards
17
Independent Auditor’s Report on Internal Control over Financial
Reporting and on Compliance and Other Matters Based on an
Audit of Financial Statements Performed in Accordance with
Government Auditing Standards
18 - 19
•
Langdon & Company
LLP
Certified Public Acrnunrants
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors of
Triangle Residential Options for Substance Abusers, Inc. and Affiliates
Report on the consolidated financial statements
We have audited the accompanying consolidated financial statements of Triangle Residential Options for
Substance Abusers, Inc. and Affiliates (the "Organization"), which comprise of the statement of financial
position as of June 30, 2016, and the related statements of activities, functional expenses, and cash flows for
the year then ended, and the related notes to the consolidated financial statements.
Management's Responsibility for the consolidatedfinancial statements
Management is responsible for the preparation and fair presentation of these consolidated 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
consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these consolidated 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 consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud
or error. In making those risk assessments, the auditor considers internal control relevant to the entity's
preparation and fair presentation of the consolidated financial statements in order to 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 consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
223 Highway 70, East Pointe, Suite 100, Garner, NC 27529
P: 919-662-1001
I F: 919-662-1002 I www.langdoncpa.com
Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the financial position of Triangle Residential Options for Substance Abusers, Inc. and Affiliates as of June 30,
2016, 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.
Other Matters
Other Information
Our audit was conducted for the purpose of forming an opinion on the consolidated financial statements as a
whole. The accompanying Schedule of Federal and State awards, as required by North Carolina G.S. 143C-623 Non-State Entities Receiving State Funds is presented for purposes of additional analysis and is not a
required part of the consolidated financial statements. Such information is the responsibility of management
and was derived from and relates directly to the underlying accounting and other records used to prepare the
consolidated financial statements. The information has been subjected to the auditing procedures applied in the
audit of the consolidated financial statements and certain additional procedures, including comparing and
reconciling such information directly to the underlying accounting and other records used to prepare the
consolidated financial statements or to the consolidated 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 consolidated financial
statements as a whole.
Report on Summarized Comparative Information
We have previously audited Triangle Residential Options for Substance Abusers, Inc. and Affiliates' 2015
consolidated financial statements and we expressed an unmodified opinion on those audited consolidated
financial statements in our report dated October 13, 2015. In our opinion, the summarized comparative
information presented herein as of and for the year ended June 30, 2015 is consistent, in all material respects,
with the audited consolidated financial statements from which it has been derived.
Other Reporting Required by Government Auditi11g Standards
In accordance with Government Auditing Standards, we have also issued our report dated October 11, 2016,
on our consideration of Triangle Residential Options for Substance Abusers, Inc. and Affiliates' internal
control over financial reporting and on our tests of their 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 in considering
Triangle Residential Options for Substance Abusers, Inc. and Affiliates' internal control over financial
reporting and compliance.
~o......~\,~~~l.,..~I;>
Gamer, North Carolina
October 11, 2016
2
TRIANGLE RESIDENTIAL OPTIONS FOR SUBSTANCE ABUSERS, INC.
AND AFFILIATES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
June 30, 2016
with comparative totals as of June 30, 2015
ASSETS
LIABILITIES AND NET ASSETS
2016
Current assets:
Cash and cash equivalents
Replacement reserves
Accounts receivable (less allowances for doubtful accounts of $7,842 and
$41,102 at June 30, 2016 and 2015, respectively)
Grants receivable
Current portion of long-term note receivable
Other receivables
Promises to give
Due from residents (less allowances for doubtful accounts of $8,442 and
$23,339 at June 30, 2016 and 2015, respectively)
Prepaid expenses
Inventory
Total current assets
$
2,729,619
97,079
2015
$
1,649,398
87,335
306,057
51,960
25,000
69,566
100,000
364,310
53,050
25,000
63,903
100,000
11,248
202,018
2,163,286
5,755,833
11,536
133,285
1,943,316
4,431,133
2016
Current liabilities:
Accounts payable
Accrued expenses
Current portion of long-term debt
Current maturities of obligations under capital leases
Refundable advances - grant
Total current liabilities
Long-term liabilities:
Refundable advances
Long-term debt, less current portion
Obligations under capital leases, less current maturities
Total long-term liabilities
Total liabilities
Property and equipment, net
12,793,694
Other assets:
Promises to give in one to five years
Long-term note receivable, less current portion
Total other assets
Total assets
The accompanying notes are an integral
part of the consolidated financial statements.
3
$
301,396
195,265
391,166
49,209
1,071,030
2,008,066
2015
$
368,627
179,862
379,066
12,858
940,413
490,450
1,914,870
69,806
2,475,126
490,450
2,297,332
42,594
2,830,376
4,483,192
3,770,789
13,372,684
801,421
100,000
14,274,105
12,451,209
636,145
100,000
13,187,354
$ 18,757,297
$ 16,958,143
12,481,633
185,106
22,664
207,770
45,377
45,377
$ 18,757,297
$ 16,958,143
Net assets:
Unrestricted
Temporarily restricted
Permanently restricted
Total net assets
Total liabilities and net assets
TRIANGLE RESIDENTIAL OPTIONS FOR SUBSTANCE ABUSERS, INC.
AND AFFILIATES
CONSOLIDATED STATEMENT OF ACTIVITIES
for the year ended June 30, 2016
with comparative totals for 2015
Public support and revenue:
Public support:
Contributions
Grants
Donated materials, services and
property
Total public support
Revenue:
Net vocational programs revenue
Graduate program revenue
Transitional care revenue
Other income
Interest income
Total revenue
Net assets released from restrictions
Total public support and revenue
Expenses:
Program services
Unrestricted
2016
Temporarily Permanently
Restricted
Restricted
$
$
681,810
1,832,658
4,412,786
6,927,254
240,527
55,764
$
296,291
9,643,173
158,076
439,434
13,922
3,662
10,258,267
-
131,015
17,316,536
-
2015
Totals
$
922,337
1,888,422
Totals
$
974,045
911,496
-
4,412,786
7,223,545
4,258,438
6,143,979
-
9,643,173
158,076
439,434
13,922
3,662
10,258,267
8,975,283
144,725
537,174
6,849
9,664,031
(131,015)
-
-
-
165,276
-
17,481,812
15,808,010
15,098,293
-
-
15,098,293
14,191,750
Supporting services:
Management and general
Fundraising
Total supporting services
820,376
476,392
1,296,768
-
-
820,376
476,392
1,296,768
771,709
384,603
1,156,312
Total expenses
16,395,061
-
-
16,395,061
15,348,062
-
1,086,751
459,948
100,000
13,187,354
12,727,406
100,000
$ 14,274,105
$ 13,187,354
Changes in net assets
Net assets at beginning of year
Net assets at end of year
921,475
165,276
12,451,209
636,145
$ 13,372,684
$
801,421
The accompanying notes are an integral
part of the consolidated financial statements.
4
$
TRIANGLE RESIDENTIAL OPTIONS FOR SUBSTANCE ABUSERS, INC.
AND AFFILIATES
CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES
for the year ended June 30, 2016
with comparative totals for 2015
Salaries, tax and benefits
Resident expenses
Supplies
Insurance
Auto expenses
Utilities and security
Vocational programs expense
Maintenance and repairs
Equipment rent
Telephone
Professional Fees
Interest expense
Small equipment
Taxes and licenses
Bad debt (recovery) expense
Meals and travel
Dues and subscriptions
Training expense
Office expense
Advertising
Depreciation and amortization
Loss on disposal of
property and equipment
Miscellaneous
Total expenses
$ 2,970,342
5,311,077
509,156
351,437
295,869
959,690
1,123,728
1,094,989
113,196
150,819
655,143
102,824
106,145
133,699
(19,183)
54,425
3,708
13,714
57,076
29,378
1,078,842
2,219
$ 15,098,293
Management
and General
$
623,551
4,858
26,201
146
34,658
3,214
2,581
4,974
59,734
1,269
13,012
6,717
6,050
3,885
13,907
555
14,689
FundRaising
$
287,920
14,958
19,359
12,786
1,907
2,444
4,457
71,119
3,364
6,050
11,710
1,256
2,903
16,716
571
18,872
375
820,376
476,392
$
$
The accompanying notes are an integral
part of the consolidated financial statements.
5
2015
2016
Supporting
Services
Program
Services
Grand
Totals
$ 3,881,813
5,311,077
528,972
396,997
296,015
1,007,134
1,123,728
1,100,110
118,221
160,250
785,996
102,824
110,778
152,761
(19,183)
72,852
11,014
20,502
87,699
30,504
1,112,403
2,594
$ 16,395,061
$
Totals
3,526,218
5,131,454
390,318
368,448
334,033
1,029,201
1,244,139
847,100
125,930
142,019
566,546
117,987
142,943
194,964
40,956
40,094
9,904
18,293
87,964
24,717
958,840
5,538
456
$ 15,348,062
TRIANGLE RESIDENTIAL OPTIONS FOR SUBSTANCE ABUSERS, INC.
AND AFFILIATES
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended June 30, 2016
with comparative totals for 2015
2016
Cash flows from operating activities:
Cash received from grantors and contributors
Cash received from clients and third-party payers
Cash paid to suppliers and employees
Interest received
Interest paid
Net cash provided by operating activities
$
Cash flows from investing activities:
Purchases of property and equipment
Proceeds from sales of property and equipment
Replacement reserve deposits
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from issuance of debt
Repayment of debt
Repayment of obligations under capital leases
Contributions restricted for clinical building
Net cash provided by (used in) financing activities
Net (decrease) increase in cash
$
$
(Continued)
6
1,961,727
9,616,104
(10,748,684)
6,849
(76,036)
759,960
(1,065,586)
125,350
(9,744)
(949,980)
(1,318,545)
21,200
(17,892)
(1,315,237)
(529,632)
(24,642)
191,028
(363,246)
321,015
(410,061)
(12,449)
122,660
21,165
1,080,221
Cash at beginning of year
Cash at end of year
3,619,030
10,364,276
(11,513,968)
3,662
(79,553)
2,393,447
2015
1,649,398
2,729,619
(534,112)
$
2,183,510
1,649,398
TRIANGLE RESIDENTIAL OPTIONS FOR SUBSTANCE ABUSERS, INC.
AND AFFILIATES
CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
for the year ended June 30, 2016
with comparative totals for 2015
2016
Reconciliation of changes in net assets to net
cash provided by operating activities:
Changes in net assets
Adjustments to reconcile changes in net assets to net cash
cash provided by operating activities:
Depreciation and amortization
Contributions restricted for clinical building
Bad debt (recovery) expense
Accretion of imputed interest discount
In-kind property and equipment donations
(Gain)/Loss on disposal of property and equipment
Changes in assets and liabilities:
Note receivable
Accounts receivable
Grants receivable
Promises to give
Other receivables
Due from residents
Prepaid expenses
Inventory
Accounts payable
Accrued expenses
Refundable advance - grant
Net cash provided by operating activities
Supplemental schedule of noncash investing and financing activities:
Purchase of building and land with debt proceeds
Acquisition of equipment under capital leases
In-kind property and equipment donations
$
$
$
$
The accompanying notes are an integral
part of the consolidated financial statements.
7
1,086,751
2015
$
459,948
1,112,403
(191,028)
(19,183)
23,271
(217,746)
(13,922)
958,840
(122,660)
40,956
41,951
(447,474)
5,538
22,713
77,436
1,090
(185,106)
(5,663)
288
(68,733)
(219,970)
(95,587)
15,403
1,071,030
2,393,447
21,998
(55,128)
(5,028)
96,807
(9,193)
5,252
2,883
(197,905)
(50,374)
13,549
759,960
136,000
88,205
217,746
441,951
$
$
$
67,901
447,474
515,375
TRIANGLE RESIDENTIAL OPTIONS FOR SUBSTANCE ABUSERS, INC.
AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
_________________
1.
OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Triangle Residential Options for Substance Abusers, Inc. and affiliates (the "Organization") was
incorporated on October 8, 1992. It is a multi-year residential self-help program for substance abusers
located in North Carolina. The Organization serves men and women, age 18 and older, at no cost to
the individual. For some, it serves as an alternative to incarceration.
The Organization's program emphasizes education, vocational training and communication skills. In
order to provide residents with job skills, the Organization operates a number of income-generating
vocational training programs. These vocational training programs include moving and storage services,
lawn care, commercial cleaning, Christmas tree lots and a thrift store. The Organization is also
supported with significant amounts of contributions, government grants and donated materials,
services and property.
Principles of Consolidation
The consolidated financial statements include the accounts of Triangle Residential Options for
Substance Abusers, Inc., ("TROSA, Inc.") TROSA Commercial, Inc., and TROSA Residential, Inc.,
both of which TROSA, Inc. is the sole member.
Cash and Cash Equivalents
For the purpose of the consolidated statement of cash flows, the Organization considers cash on hand
and deposits in bank and all highly liquid investments with an original maturity of three months or
less, excluding cash whose use is restricted by debt covenants, to be cash and cash equivalents. The
Organization maintains its cash accounts with financial institutions, which at times, exceed federally
insured limits. The Organization has not experienced any losses in such accounts.
Accounts Receivable
Accounts receivable are stated at the amount management expects to collect from outstanding
balances. Management provides for probable uncollectible amounts through a method that
approximates a provision for bad debt expense and an adjustment to a valuation allowance based on its
assessment of the current status of individual accounts. Balances that are still outstanding after
management has used reasonable collection efforts are written-off through a charge to the valuation
allowance and a reduction of accounts receivable.
Contributions, Grants and Federal and State Awards
Contributions, grants, and Federal and State awards received by the Organization are recorded as
unrestricted, temporarily restricted, or permanently restricted support depending on the existence
and/or nature of any donor/grantor restrictions. Contributions that are restricted by the donor are
reported as increases in unrestricted net assets if the restrictions expire, that is, the stipulated time
restrictions end or a purpose restriction is accomplished, in the reporting period in which the revenue
is recognized. All other donor-restricted contributions are reported as increases in temporarily or
permanently restricted net assets, depending on the nature of the restrictions. When a restriction
expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the
statement of activities as net assets released from restrictions.
8
TRIANGLE RESIDENTIAL OPTIONS FOR SUBSTANCE ABUSERS, INC.
AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
_________________
1.
OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Contributions, Grants and Federal and State Awards (Continued)
Conditional promises to give are recognized when the conditions on which they depend are
substantially met. Unconditional promises to give, due in subsequent years, are reported at the present
value of their net realizable value using a risk adjusted discount rate.
Inventory
Inventory primarily consists of donated and purchased food and beverages, supplies and items sold in
the course of the Organization's vocational training programs. Inventory is valued at the lower of cost
or market and cost is determined on the first-in, first-out method. Donated items are recorded at
estimated fair value at the date of donation.
The Organization receives a significant amount of contributed goods and materials that it processes as
merchandise available for sale in its thrift store. The Organization believes that the inventory of these
donated items does not possess an attribute that is easily measureable or verifiable with sufficient
reliability to determine inventory value at the time of the donation. Instead, the value of inventory at
the end of the year is estimated using historical sales of similar inventory.
Property and Equipment
The Organization capitalizes property and equipment over $2,000. Lesser amounts are expensed.
Purchased property and equipment are recorded at cost. Donated property and equipment is recorded
as revenue at its estimated fair value as of the date of the donation. Such donations are reported as
unrestricted revenue unless the donor has restricted the donated asset to a specific purpose. Assets
donated with explicit restrictions regarding their use and contributions of cash that must be used to
acquire property and equipment are reported as either temporarily or permanently restricted support.
The Organization reclassifies temporarily restricted net assets to unrestricted net assets in conjunction
with the recognition of depreciation expense over the useful life of the donated asset. Absent donor
stipulations regarding how long those donor assets must be maintained, the Organization reports
expirations of donor restrictions when the donated or acquired assets are placed into service as
instructed by the donor. The Organization reclassifies temporarily restricted net assets to unrestricted
net assets at that time. Depreciation is computed using the straight-line method over the following
useful lives:
Buildings and improvements
Furniture and equipment
Vehicles
5-40 years
5-10 years
5-7 years
Expenditures for repairs and maintenance are charged to expense as incurred. The cost of major
renewals and betterments is capitalized and depreciated over their useful lives. Upon disposition of
property and equipment, the related asset and accumulated depreciation amounts are removed and any
gain or loss is reflected within the statement of activities for the period.
9
TRIANGLE RESIDENTIAL OPTIONS FOR SUBSTANCE ABUSERS, INC.
AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
_________________
1.
OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Donated Assets and Services
Donated materials, property and equipment and services are recorded at their estimated fair market
values at date of receipt and are reflected as contributions in the accompanying consolidated financial
statements. The Organization benefited from donated labor valued at $196,601 and $305,795 for the
years ended June 30, 2016 and 2015, respectively. The Organization recognizes the fair value of
contributed services received if such services a) create or enhance a nonfinancial asset or b) require
specialized skills that are provided by individuals possessing those skills and would typically need to
be purchased if not contributed.
The Organization receives services from a large number of volunteers who give significant amounts of
their time to the Organization’s programs but which do not meet the criteria for financial statement
recognition.
Functional Classification of Expenses
Operating expenses not directly attributable to a specific function are allocated to specific functions by
the Organization's management based on what it considers to be the best available objective criteria,
such as hours worked or relative benefit.
Income Taxes
TROSA, Inc. is exempt from income tax under the Internal Revenue Code Section 501(c)(3). TROSA
Residential, Inc. and TROSA Commercial, Inc. are exempt from income tax under the Internal
Revenue Code Section 501(c)(2). There is no unrelated business income tax for the years ended June
30, 2016 and 2015.
The Organization evaluates its uncertain tax positions using provisions of Financial Accounting
Standards Board Accounting Standards Codification (ASC) 740-10-25, Recognition of a Tax Position. Accordingly, it is the Organization's policy to record a liability for any tax position taken that is
beneficial to the Organization, including any related interest and penalties, when it is more likely than
not the position of management with respect to a transaction or class of transactions will be overturned
by a taxing authority upon examination. Management believes there are no such positions as of June
30, 2016 or 2015.
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 amount of assets and liabilities and the disclosure of contingent assets and liabilities at the
date of the consolidated financial statements, and the reported amounts of revenue and expenses
during the reporting period. Accordingly, actual results could differ from those estimates.
Management considers the estimates of the valuation of donated inventory, including food, beverages,
and supplies, as well as donated services and property to be critical accounting policies requiring
extensive subjective judgments. The valuation of donated food, beverages, supplies and services is
based on quoted valuations, historical experience and price comparisons for similar products and
services. Actual results could differ from these estimates under different assumptions or conditions.
10
TRIANGLE RESIDENTIAL OPTIONS FOR SUBSTANCE ABUSERS, INC.
AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
_________________
1.
OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Schedule of Expenditures of Federal and State Awards
The accompanying Schedule of Federal and State Awards includes the federal and State grant activity
of the Organization and is presented on the cash basis of accounting. Some amounts presented in this
schedule may differ from amounts presented in, or used in the preparation of, the basic consolidated
financial statements.
Advertising Expenses
The cost of advertising is charged to expense as incurred. Advertising expense amounted to $30,504
and $24,717 for the years ended June 30, 2016 and 2015, respectively.
Comparative Totals
The consolidated financial statements include certain prior year summarized comparative information
in total but not by net asset class. Such information does not include sufficient detail to constitute a
presentation in conformity with accounting principles generally accepted in the United States of
America. Accordingly, such information should be read in conjunction with the Organization's
consolidated financial statements for the year ended June 30, 2015, from which the summarized
information was derived.
2.
NOTE RECEIVABLE
Note receivable consists of a non-interest bearing note due in six annual payments of $25,000,
beginning April 27, 2013 and relates to the sale of certain real property. Management considers this
note to be fully collectible and, accordingly, no allowance for doubtful accounts is considered
necessary.
Note receivable is summarized as follows at June 30, 2016 and 2015:
Note Receivable - current portion
$
Note receivable - non current portion
Less unamortized discount based on imputed interest rate of
3.25%
Note receivable less unamortized discount
11
$
2016
25,000
$
2015
25,000
25,000
50,000
(2,336)
22,664
47,664
(4,623)
45,377
70,377
$
TRIANGLE RESIDENTIAL OPTIONS FOR SUBSTANCE ABUSERS, INC.
AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
_________________
3.
PROMISES TO GIVE
Promises to give are summarized as follows at June 30, 2016 and 2015:
Promises to give - current portion
$
Promises to give - one to five years
Less unamortized discount based on imputed interest rate of
3.25%
Promises to give less unamortized discount
4.
2016
100,000
$
200,000
$
(14,894)
185,106
285,106
2015
100,000
-
$
100,000
PROPERTY AND EQUIPMENT
Net property and equipment is summarized as follows at June 30, 2016 and 2015:
Land
Buildings and improvements
Furniture and equipment
Vehicles
Construction in progress
Less accumulated depreciation and amortization
Net property and equipment
2016
$ 2,197,816
15,081,479
1,074,406
2,552,285
210,591
21,116,577
(8,322,883)
$ 12,793,694
2015
$ 2,197,746
14,416,325
955,480
2,200,188
42,301
19,812,040
(7,330,407)
$ 12,481,633
Included in furniture and equipment is the net book value of equipment under capital leases, as
referenced in Note 6.
5.
REFUNDABLE ADVANCE - GRANT
During 2016, the Organization received a two-year restricted grant totaling $3,250,000, which ends on
June 30, 2017. At June 30, 2016, $1,625,000 had been received and $1,071,030 remains unexpended
and is classified as a current liability in the accompanying consolidated statement of financial position.
6.
LEASES
The Organization leases equipment, buildings, dumpsters, and warehouse space under non-cancelable
operating lease agreements expiring in 2020. Lease expense relating to these leases was $28,494 and
$55,445 for the years ended June 30, 2016 and 2015, respectively.
The Organization also leases equipment under capital lease agreements expiring in 2021. The assets
and liabilities under the capital leases are recorded at the lower of the present value of the minimum
lease payments or the fair value of the assets. The assets are amortized over the related lease term or
the estimated productive life. Amortization of the equipment under the capital leases was $19,562 and
$11,183 for the years ended June 30, 2016 and 2015, respectively.
12
TRIANGLE RESIDENTIAL OPTIONS FOR SUBSTANCE ABUSERS, INC.
AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
_________________
6.
LEASES (Continued)
The equipment and related accumulated amortization as of June 30, 2016 are as follows:
Equipment
Less accumulated amortization
$
$
156,106
(30,745)
125,361
Future minimum lease payments under the non-cancelable operating leases, including the financial
impact of escalation clauses, and the present value of future minimum lease payments under capital
leases are as follows:
Operating
Capital
Leases
Leases
Year ending June 30,
2017
$
33,583
$
53,102
2018
23,846
45,954
2019
13,391
19,284
2020
6,414
6,864
Thereafter
365
Total minimum lease payments
$
77,234
$
125,569
Less amount representing interest
(6,554)
Present value of net minimum capital lease payments
$
119,015
Less current maturities
(49,209)
Obligations under capital leases, less current maturities
$
69,806
7.
REFUNDABLE ADVANCES
Refundable advances are summarized as follows as of June 30, 2016 and 2015:
North Carolina Housing Finance Agency
Refundable advance, secured by a deed of trust on the property and
assignment of rents and leases. Assuming the Organization
complies with applicable restrictions and covenants, the advance
will be forgiven in 10% increments beginning in 2024 and will be
entirely forgiven by November 2033.
2016
2015
$ 120,000
$ 120,000
70,450
70,450
North Carolina Housing Finance Agency
Refundable advance, secured by a deed of trust on the property and
assignment of rents and leases. Assuming the Organization
complies with applicable restrictions and covenants, the advance
will be forgiven in 10% increments beginning in 2028 and will be
entirely forgiven by November 2037.
13
TRIANGLE RESIDENTIAL OPTIONS FOR SUBSTANCE ABUSERS, INC.
AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
_________________
7.
REFUNDABLE ADVANCES (Continued)
PNC Bank, National Association
Refundable advance, secured by a deed of trust on the property and
assignment of rents and leases pursuant to the Federal Home Loan
Bank Act. Assuming the Organization complies with applicable
restrictions and covenants, the advance will be forgiven in full in
October 2027.
Total refundable advances
8.
2016
2015
300,000
300,000
$ 490,450
$ 490,450
LONG-TERM DEBT
Long term debt is summarized as follows at June 30, 2016 and 2015:
2016
2015
North Carolina Housing Finance Agency
Non-interest bearing note payable, due December 2037 in monthly
installments of $794, with a face amount of $204,210 net of
unaccreted discount of $97,943 (effective interest rate, 6.9%) as of
June 30, 2016, secured by a deed of trust on property and
assignment of rents and leases.
$ 106,267
$ 108,383
City of Durham
Non-interest bearing note payable, due April 2035 in monthly
installments of $769, with a face amount of $173,673 net of
unaccreted discount of $66,248 as of June 30, 2016 (effective
interest rate, 5.6%) secured by real property and assignment of
rents and leases.
107,425
110,564
Branch Banking and Trust
Note payable with a fixed interest rate of 2.85%, due in monthly
installments of $21,657, maturing December 2018, secured by real
property.
559,287
799,180
Branch Banking and Trust
Acquisition and construction loan in the name of TROSA
Commercial, Inc. with a fixed interest rate of 3.99% due in monthly
installments of $15,707, maturing September 2024, secured by real
property. Guaranteed by TROSA, Inc.
1,319,998
1,452,016
14
TRIANGLE RESIDENTIAL OPTIONS FOR SUBSTANCE ABUSERS, INC.
AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
_________________
8.
LONG-TERM DEBT (Continued)
2016
2015
213,059
$ 2,306,036
(391,166)
$ 1,914,870
206,255
$ 2,676,398
(379,066)
$ 2,297,332
North Carolina Housing Finance Agency
Non-interest bearing note payable, due in full at maturity (October
2042), with a face amount of $500,000 net of unaccreted discount
of $286,941 as of June 30, 2016 (effective interest rate, 3.25%),
secured by real property and assignment of rents.
Less current portion
Long-term portion
Future maturities of long-term debt at June 30, 2016 are summarized as follows:
Year ending June 30,
2017
2018
2019
2020
2021
Thereafter
$ 391,166
404,279
213,933
162,660
169,421
964,577
$ 2,306,036
Certain agreements contain various restrictive covenants, including requirements regarding minimum
cash to debt ratio, filing of annual compliance certificates, maintaining documentation related to lowcome housing calculations and maintaining replacement reserve deposits. The Organization was in
compliance with restrictive covenants contained in the debt agreements at June 30, 2016 and 2015.
The discount on the applicable loans is accreted to interest expense over the lives of the loans. The
aggregate remaining unaccreted discount as of June 30, 2016 and 2015 was $451,132 and $472,846,
respectively. Imputed interest expense of $23,271 and $35,364 is reported in the accompanying
consolidated statement of functional expenses for the years ended June 30, 2016 and 2015,
respectively.
9.
LINE OF CREDIT
The Organization has available a revolving line of credit in the amount of $750,000 for the years
ended June 30, 2016 and 2015. Interest accrues at 2.25% above the 30-day LIBOR (0.47% and 0.18%
at June 30, 2016 and 2015, respectively). The line is collateralized by a first deed of trust on certain
real property, accounts receivable, and inventory. There was no outstanding balance at June 30, 2016
or 2015, and the line expires on March 10, 2017.
15
TRIANGLE RESIDENTIAL OPTIONS FOR SUBSTANCE ABUSERS, INC.
AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
_________________
10.
RESTRICTIONS ON ASSETS
Temporarily restricted net assets at June 30, 2016 and 2015 respectively, are summarized as follows:
2016
2015
Donated building (net book value)
$
$
20,833
Food commodities
30,218
251
Education
21,616
37,627
Clinical Building
292,196
104,588
Automotive
4,850
NCHFA Housing Program
97,937
105,349
City of Durham Housing Program
67,663
73,752
NCHFA Housing Program - Dormitories
286,941
293,745
$
801,421
$
636,145
Permanently restricted net assets at June 30, 2016 and 2015 respectively, are summarized as follows:
2016
Donated land
$
100,000
2015
$
100,000
Title of certain land and building, with a carrying value of $100,000, was transferred from Durham
County (the “County) in 1994. Under the terms of this agreement, title will revert back to the County
if it ceases to be used for the purpose of conducting community education, development,
revitalization, drug treatment, and recreational activities or for any other purpose for which the County
could use the property as a governmental entity.
Net assets released from donor restrictions by accomplishing purpose or time restrictions were
$131,015 and $133,643 for the years ended June 30, 2016 and 2015, respectively.
11.
RETIREMENT PLAN
Employees of the Organization may participate in an Internal Revenue Code section 403(b) retirement
savings plan. The plan was funded solely by employee contributions to the plan, pursuant to a salary
reduction agreement, until October 1, 2014 when the Organization began providing an employer
match. The match is dollar for dollar for the first 3% and fifty cents on the dollar for the next 2% with
a maximum match of 4%. An employee must contribute to receive the match. Contributions to the
plan during the year ended June 30, 2016 and 2015 were $88,265 and $53,951, respectively
12.
SUBSEQUENT EVENTS
Effective July 1, 2016, the Organization established a 457(b) plan for eligible employees.
Management has evaluated subsequent events through October 11, 2016, the date which the
consolidated financial statements are available for issue.
16
TRIANGLE RESIDENTIAL OPTIONS FOR SUBSTANCE ABUSERS, INC.
AND AFFILIATES
SCHEDULE OF EXPENDITURES OF FEDERAL AND STATE AWARDS
for the year ended June 30, 2016
_________________
Federal
CFDA
Number
Project/
Contract #
Federal Awards:
U.S. Department of Agriculture
Passed through N.C. Department of Agriculture
Emergency Food Assistance Program (Food Commodities)
10.569
G20100007611DFC
Department of Veterans Affairs - VA Health
Passed through the Durham VA Medical Center
VA Homeless Providers Grant and Per Diem Program
VA Homeless Providers Grant and Per Diem Program
64.024
64.024
08-096-NC
10-834-NC
Federal/State Grantor/Pass Through Grantor/Program
TOTAL FEDERAL AWARDS
State Awards:
NC Department of Health and Human Services
N/A
0003396
Alliance Behavioral Healthcare
N/A
N/A
TOTAL STATE AWARDS
TOTAL AWARDS
Receipts
$
55,764
Expenditures
$
25,797
255,368
255,368
311,132
281,165
524,055 *
1,625,000
350,000
350,000
1,975,000
874,055
$ 2,286,132
$
1,155,220
Note: The information on this schedule has been prepared on the cash basis of accounting. Therefore, receipts are
recognized when received rather than when earned, and expenditures are recognized when paid rather than when
obligations are incurred.
* Programs that have a direct and material effect on the Organization’s financial statements.
17
II
Langdon & Company up
Certified Public Accountants
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON
AN AUDIT OF FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Board of Directors of
Triangle Residential Options for Substance Abusers, Inc. and Affiliates
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 consolidated financial statements of Triangle Residential
Options for Substance Abusers, Inc. and Affiliates (the "Organization"), which comprise the statement of
financial position as of June 30, 2016, and the related consolidated statements of activities, functional expenses
and cash flows for the year then ended, and the related notes to the financial statements, and have issued our
report thereon dated October 11, 2016.
Internal Control over Financial Reporting
In planning and performing our audit of the consolidated 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 consolidated 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 internal control exists when the design or operation of a control does not allow management or
employees, in the normal course of performing their assigned functions, to prevent, or detect and correct,
misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in
internal control, such that there is a reasonable possibility that a material misstatement of the entity's
consolidated financial statements will not be prevented, or detected and corrected on a timely basis. A
significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe
than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section
and was not designed to identify all deficiencies in internal control that might be material weaknesses or
significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in
internal control that we consider to be material weaknesses. However, material weaknesses may exist that have
not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Organization's consolidated 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 consolidated 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.
223 Highway 70, East Pointe, Suite 100, Gamer, NC 27529
P: 919-662-1001
I F: 919-662-1002 I www.langdoncpa.com
18
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.
..
ct~.4~~ ~
October 11, 2016
19