SUNNYSIDE CITYWIDE
HOME CARE SERVICES, INC.
Financial Statements
(Together with Independent Auditors’ Report)
Years Ended June 30, 2015 and 2014
SUNNYSIDE CITYWIDE HOME CARE SERVICES, INC.
FINANCIAL STATEMENTS
(Together with Independent Auditors’ Report)
YEARS ENDED JUNE 30, 2015 AND 2014
CONTENTS
Page
Independent Auditors' Report ..................................................................................................................................... 1-2
Financial Statements:
Statements of Financial Position .............................................................................................................................. 3
Statements of Activities ..............................................................................................................................................4
Statements of Functional Expenses ......................................................................................................................... 5
Statements of Cash Flows .........................................................................................................................................6
Notes to Financial Statements ............................................................................................................................. 7-12
Marks Paneth LLP
685 Third Avenue
New York, NY 10017
P 212.503.8800
F 212.370.3759
www.markspaneth.com
New York City
Washington, DC
New Jersey
Long Island
Westchester
INDEPENDENT AUDITORS' REPORT
The Board of Directors of
Sunnyside Citywide Home Care Services, Inc.
We have audited the accompanying financial statements of Sunnyside Citywide Home Care Services, Inc.
(“Citywide”), which comprise the statement of financial position as of June 30, 2015, and the related statements of
activities, functional expenses and cash flows for the year then ended, and the related notes to the financial
statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance
with accounting principles generally accepted in the United States of America; this includes the design,
implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our
audit in accordance with auditing standards generally accepted in the United States of America. 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 involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the
risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the
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 financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position
of Sunnyside Citywide Home Care Services, Inc. as of June 30, 2015, and the changes in its net assets and its
cash flows for the year then ended in accordance with accounting principles generally accepted in the United States
of America.
Prior Period Financial Statements
The financial statements of Citywide as of and for the year ended June 30, 2014, were audited by other auditors
whose report dated February 17, 2015, expressed an unmodified opinion on those financial statements.
New York, NY
February 4, 2016
SUNNYSIDE CITYWIDE HOME CARE SERVICES, INC.
STATEMENTS OF FINANCIAL POSITION
AS OF JUNE 30, 2015 AND 2014
2015
ASSETS
Cash (Note 8)
Accounts receivable, net (Notes 2C, 2F and 3)
Prepaid expenses and other assets
Property and equipment, net (Notes 2D and 4)
Due from affiliates (Note 9)
TOTAL ASSETS
LIABILITIES
Accounts payable and accrued expenses
Workers compensation assessment payable (Note 5)
Due to affiliates (Note 9)
2014
$
8,023,030
3,157,512
108,438
1,217,776
$
7,232,986
3,460,897
27,218
109,127
1,547,654
$
12,506,756
$
12,377,882
$
2,447,305
1,062,644
-
$
1,939,397
1,169,883
214,970
TOTAL LIABILITIES
3,509,949
3,324,250
8,996,807
9,053,632
COMMITMENTS AND CONTINGENCIES (Note 6)
NET ASSETS - UNRESTRICTED (Note 2B)
TOTAL LIABILITIES AND NET ASSETS
$
12,506,756
The accompanying notes are an integral part of these financial statements.
$
12,377,882
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SUNNYSIDE CITYWIDE HOME CARE SERVICES, INC.
STATEMENTS OF ACTIVITES
FOR THE YEARS ENDED JUNE 30, 2015 AND 2014
2015
GOVERNMENT AND OTHER SUPPORT:
Contract revenue - Managed care (Notes 2F)
Grant income (Note 2G)
Other income
$
TOTAL GOVERNMENT AND OTHER SUPPORT
26,779,091
299,651
399,281
2014
$
26,237,514
290,000
445,506
27,478,023
26,973,020
25,059,054
25,159,069
Total program services
25,059,054
25,159,069
Supporting services
Management and general
2,479,668
2,324,881
Total supporting services
2,479,668
2,324,881
27,538,722
27,483,950
OPERATING EXPENSES (Note 2I):
Program services
Home care
TOTAL OPERATING EXPENSES
CHANGE IN NET ASSETS BEFORE NON-OPERATING ACTIVITIES
(60,699)
(510,930)
NON-OPERATING ACTIVITIES:
Interest income
TOTAL NON-OPERATING ACTIVITIES
3,874
3,874
15,401
15,401
CHANGE IN UNRESTRICTED NET ASSETS
(56,825)
(495,529)
UNRESTRICTED NET ASSETS - BEGINNING OF YEAR
UNRESTRICTED NET ASSETS - END OF YEAR
9,053,632
$
8,996,807
The accompanying notes are an integral part of these financial statements.
9,549,161
$
9,053,632
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SUNNYSIDE CITYWIDE HOME CARE SERVICES, INC.
STATEMENTS OF FUNCTIONAL EXPENSES
FOR THE YEARS ENDED JUNE 30, 2015 AND 2014
For the Year Ended June 30, 2015
Program Services
Management
Home Care
and General
Salaries
Payroll taxes and fringe benefits (Note 7)
Total Personnel Costs
$
Consultants
Computer services
Occupancy (Note 6)
Supplies/printing
Travel/transportation
Insurance
Repairs and maintenance
Dues and subscriptions
Depreciation and amortization (Note 4)
Grant expense
Bad debt expense
Other
TOTAL EXPENSES
17,626,108
7,110,171
24,736,279
$
84,844
86,370
52,504
816
47,736
8,551
4,065
7,015
1,007
29,867
$
25,059,054
1,419,309
472,660
1,891,969
Total
$
72,575
83,665
85,167
28,518
936
45,086
28,518
4,009
6,917
993
155,648
75,667
$
2,479,668
19,045,417
7,582,831
26,628,248
For the Year Ended June 30, 2014
Program Services
Management
Home Care
and General
$
72,575
168,509
171,537
81,022
1,752
92,822
37,069
8,074
13,932
2,000
155,648
105,534
$
27,538,722
17,987,936
6,657,601
24,645,537
$
101,666
101,328
63,874
2,203
93,820
10,196
13,862
4,902
92,975
28,706
$
The accompanying notes are an integral part of these financial statements.
25,159,069
$
Total
1,242,588
346,071
1,588,659
$ 19,230,524
7,003,672
26,234,196
265,164
88,186
65,034
36,585
4,597
81,100
28,543
12,025
4,175
9,758
141,055
265,164
189,852
166,362
100,459
6,800
174,920
38,739
25,887
9,077
92,975
9,758
169,761
2,324,881
$ 27,483,950
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SUNNYSIDE CITYWIDE HOME CARE SERVICES, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2015 AND 2014
2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Change in net assets
$
Adjustments to reconcile change in net assets to net cash
provided by (used in) operating activities:
Bad debt expense
Depreciation and amortization
(56,825)
2014
$
155,648
13,932
Subtotal
Changes in operating assets and liabilities:
(Increase) or decrease in assets:
Accounts receivable
Prepaid expenses and other assets
Due from affiliates
Increase or (decrease) in liabilities:
Accounts payable and accrued expenses
Workers compensation asessment payable
Due to affiliates
9,758
9,077
112,755
(476,694)
147,737
27,218
329,878
(1,050,285)
96,155
(595,433)
507,908
(107,239)
(214,970)
Net Cash Provided by (Used in) Operating Activities
(495,529)
467,622
78,601
803,287
(1,480,034)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment
(13,243)
(107,115)
Net Cash Used in Investing Activities
(13,243)
(107,115)
NET INCREASE (DECREASE) IN CASH
790,044
Cash - beginning of the year
CASH - END OF YEAR
(1,587,149)
7,232,986
$
8,023,030
8,820,135
$
The accompanying notes are an integral part of these financial statements.
7,232,986
-6-
SUNNYSIDE CITYWIDE HOME CARE SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2015 AND 2014
NOTE 1 – ORGANIZATION AND NATURE OF ACTIVITIES
Sunnyside Citywide Home Care Services, Inc. (“Citywide”) is a not-for-profit licensed home care service
agency that was established to provide personal care services to the elderly and disabled persons who
require such services in order to maintain themselves safely at home. Citywide is funded primarily by
managed care revenues.
The agency is a not-for-profit organization exempt from federal income tax under Section 501(c)(3) of the
Internal Revenue Code.
The accompanying financial statements were prepared to present the financial position, changes in net
assets and cash flows of only Citywide and do not include the financial position, changes in net assets and
cash flows of its related organizations, Sunnyside Community Services, Inc. (“Sunnyside”), and Sunnyside
Home Care Project, Inc. (“Home Care”).
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A.
Basis of accounting - The accompanying financial statements of Citywide have been prepared on the accrual
basis of accounting. Citywide adheres to accounting principles generally accepted in the United States of
America (“U.S. GAAP”).
B.
Unrestricted Net Assets - Represents net assets resources available for support of Citywide’s operations
over which the Board of Directors has discretionary control.
C.
Allowance for doubtful accounts - Citywide determines whether an allowance for uncollectible accounts
should be provided for accounts receivable. Such estimates are based on management’s assessment of the
aged basis of its receivables, current economic conditions, subsequent receipts and historical information.
Receivables are written off against the allowance for doubtful accounts when all reasonable collection efforts
have been exhausted. As of June 30, 2015 and 2014, Citywide determined an allowance of $425,000 and
$515,000, respectively, was necessary for accounts receivables.
D.
Property and equipment – Property and equipment and leasehold improvements are recorded at cost.
Items with a cost of $1,000 and estimated useful life of greater than one year are capitalized. Property and
equipment are depreciated on the straight-line method over their estimated useful lives. Amortization of
leasehold improvements is recorded on the straight-line method over the term of the lease or the life of the
asset, whichever is shorter.
E.
Advances payable and deferred revenue - Government grants are recorded as revenues to the extent that
expenses have been incurred for the purposes specified by the grantors. To the extent amounts received
exceed amounts spent, Citywide establishes refundable advances from governmental sources.
F.
Contract and managed care revenues - Revenues from care of patients are reported at the estimated net
realizable amounts from patients, third-party payors and others from services rendered, including estimated
retroactive adjustments under reimbursement agreements with third-party payors. Retroactive adjustments
are accrued on an estimated basis in the period the related services are rendered and adjusted in future
periods as final settlements are determined. Laws and regulations governing health care programs are
extremely complex and subject to interpretation. As a result, there is at least a reasonable possibility that
recorded estimates may change by a material amount in the near term. Citywide records accounts
receivable based on established rates or contracts for services provided.
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SUNNYSIDE CITYWIDE HOME CARE SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2015 AND 2014
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
G.
Contributions - Unconditional contributions, including promises to give cash and other assets, are reported
at fair value at the date the contribution is received. The gifts are reported as either temporarily or
permanently restricted support if they are received with donor stipulations that limit the use of the donated
assets. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose
restriction is accomplished, temporarily restricted net assets are reclassified as unrestricted net assets and
reported in the statements of activities as net assets released from restrictions.
H.
Operating leases - Rent expense has been recorded on the straight-line basis over the life of the lease.
Deferred rent, when material, is recorded for the difference between the fixed payment and the rent expense.
I.
Functional allocation of expenses - Because Citywide is a multi-program/multi-funded organization, certain
costs have been allocated, on the statement of functional expenses, between functional and supporting
programs as determined by management. Such allocations conform to those made in seeking funds from thirdparty sources.
J.
Use of Estimates - The preparation of the financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make estimates and assumptions
that affect certain reported amounts and disclosures at the date of the financial statements. Actual amounts
could differ from those estimates.
K.
Reclassifications - Certain line items in the June 30, 2014 financial statements have been reclassified to
conform to the June 30, 2015 presentation.
NOTE 3 – ACCOUNTS RECEIVABLE, NET
Accounts receivable consist of the following as of June 30, 2015 and 2014:
Medicaid – Managed care
Other third-party insurance
Other receivables
Total accounts receivable
Less: allowance for doubtful accounts
Total accounts receivable, net
2015
2014
$ 3,357,719
178,738
46,055
$ 3,775,367
198,616
1,914
3,582,512
(425,000)
3,975,897
(515,000)
$ 3,157,512
$ 3,460,897
-8-
SUNNYSIDE CITYWIDE HOME CARE SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2015 AND 2014
NOTE 4 – PROPERTY AND EQUIPMENT, NET
Property and equipment consists of the following as of June 30, 2015 and 2014:
2015
Leasehold improvements
Furniture and equipment
$
Less: accumulated depreciation and
amortization
Net book value
$
220,920
197,133
$
2014
Estimated
Useful Lives
207,677
197,133
12-15 Years
5 Years
418,053
404,810
(309,615)
(295,683)
108,438
$
109,127
For the years ended June 30, 2015 and 2014, depreciation and amortization expenses amounted to $13,932 and
$9,077 respectively.
NOTE 5 – WORKERS COMPENSATION ASSESSMENT
In 1999, Citywide joined the Health Care Providers Self-Insurance Trust (HCPSIT), a workers’ compensation
group self-insurance trust established to provide Workers’ Compensation coverage and services for providers of
social services throughout the state of New York. A forensic audit of the Trust was commissioned by the New
York State Workers Compensation Board (WCB). That audit determined that HCPSIT had a cumulative deficit in
the amount of $188,187,893. Based on the deficit, the WCB terminated HCPSIT on or about June 30, 2009 and
assumed trust administration and final distribution of the trust’s assets and liabilities. The WCB initiated the
process of determining the assessment amount to be levied on each member of the Trust.
On January 15, 2014, the WCB provided Citywide with a settlement agreement of $1,169,883. The agreement
included an option for a one-time lump sum payment with a 5% discount, which would net to a liability of
$1,111,389; an option to pay the full amount over one or two years, interest free; or the option to pay the full
amount over a ten-year period with an interest rate of 3.5%. Citywide accrued the full amount of $1,169,883 in
June of 2013, while deciding on the best option for Citywide. On June 24, 2014, Citywide elected the option to
pay the full amount over the ten-year period incurring annual interest of 3.5%, and signed the settlement
agreement with WCB. Under the terms of this agreement, Citywide is required to make monthly payments of
$11,568, including interest, beginning in August 2014. Workers compensation assessment payable amounted to
$1,062,644 and $1,169,883 as of June 30. 2015 and 2014, respectively.
Future principal payments are as follows:
2016
2017
2018
2019
2020
Thereafter
$
102,699
106,352
110,135
114,052
118,108
511,298
$ 1,062,644
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SUNNYSIDE CITYWIDE HOME CARE SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2015 AND 2014
NOTE 6 – COMMITMENTS AND CONTINGENCIES
A. Lease Commitments
Citywide subleases its office located in Queens, New York from Sunnyside under three operating leases which
expire on June 30, 2015 and December 31, 2019, provide for payments of real estate taxes and utilities in
addition to minimum rent. On January 25, 2016, Citywide signed an extension on the two office space subleases
through June 30, 2018. In the event that governmental funding is terminated, Citywide may cancel the
subleases upon giving one month’s notice to Sunnyside.
Rent expense for the years ended June 30, 2015 and 2014 was $92,434 and $90,744, respectively.
The future minimum lease payments to Sunnyside, based on the subleases, subject to cancellation, are as
follows:
Years ending June 30:
2016
2017
2018
2019
2020
Total
$
110,000
112,000
115,000
10,000
5,000
$
352,000
B. Third Party Contingencies
Citywide is responsible to report to various third parties, among which are DOH, the New York State Office of
Attorney General (“AG”), the Internal Revenue Service, the New York State Department of Charities
Registration, the Office of Inspector General, and the Office of Medicaid Inspector General (“OMIG”). These
and other agencies, including HRA and DFTA, have the right to audit fiscal as well as programmatic
compliance, i.e., clinical documentation and physician certifications, among other compliance requirements.
DOH increased the Medicaid rates to provide funding for recruitment, training and retention of home health
aides and/or other personnel with direct patient care responsibility. Home Care and Citywide are required to
provide attestations certifying that these funds, if applicable, were paid to home health aides and other
personnel with direct patient care responsibilities.
During 2007, the Attorney General of the State of New York issued subpoenas to several Certified Home
Health Agencies (“CHHAs”) and Long Term Home Health Care Programs (“LTHHCPs”) citing that the Home
Health Aides (“HHAs”) they contracted from licensed vendor agencies were not actually trained, and their
certification as HHAs was falsified. Therefore, the CHHAs and LTHHCPs billed Medicaid for ineligible
services. Citywide maintains that it performed proper due diligence to assure that the HHAs it employs have
appropriate training and certification. Citywide did not receive a subpoena; however, this matter and the
Attorney General’s investigation have not been concluded. Citywide’s management believes that they have
no exposure in this matter.
C. Income Taxes
Citywide believes it has no uncertain tax positions as of June 30, 2015 and 2014 in accordance with
Accounting Standards Codification (“ASC”) Topic 740, “Income Taxes,” which provides standards for
establishing and classifying any tax provisions for uncertain tax positions. Citywide believes it is no longer
subject to federal or state and local income tax examinations by tax authorities for the years ended before
2012.
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SUNNYSIDE CITYWIDE HOME CARE SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2015 AND 2014
NOTE 7 – PENSION PLAN
Citywide maintains a 403(b) pension plan that covers all full-time employees. On an annual basis, the Board
determines a discretionary contribution for employees who are 21 years of age and have completed two years of
service. Citywide’s contributions amounted to $7,577 and $6,749 for the years ended June 30, 2015 and 2014,
respectively.
Union Pension Plan
All union employees of Citywide are covered by an employer contributory pension plan administered by the union.
Union pension expense for the years ended June 30, 2015 and 2014 was $206,165 and $245,845, respectively.
The following information was obtained from Citywide’s union-managed pension plan:
Pension Fund
1199 SEIU Home
Care Employees
Pension Fund
EIN/
Pension
Plan Number
FIP/RP
Status
Pending/
Implemented
2015
2014
Surcharge
Imposed
Expiration
Date of
Collective
Bargaining
Agreement
EIN
13-3943904 Plan
No. 001
Implemented
$206,165
$245,845
No
March 2017
Contributions
As of the date the financial statements were available to be issued, Form 5500 was available for the plan year ended
December 31, 2014 and did not include 2015 plan information. However, the plan’s actuaries have certified that the
plan is not endangered, seriously endangered or critical, as those terms are defined in the Pension Protection Act of
2006 for the plan years beginning January 1, 2015 and 2014.
NOTE 8 – CONCENTRATION
Credit Risk
Cash that potentially subjects Citywide to a concentration of credit risk include cash accounts with banks that
exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. Cash accounts are insured up to
$250,000 per depositor. As of June 30, 2015 and 2014, there was approximately $7.9 million and $7 million,
respectively, of cash held by banks that exceeded FDIC limits.
Revenue
In 2015, 35% of revenues and 12% of Citywide’s accounts receivable are derived from billings to Visiting Nurse
Service of New York, Inc. (“VNS”) and 38% of revenues and 56% of accounts receivable are derived from billings
to four other managed care vendors. In 2014, 38% of Citywide’s revenues and 10% of accounts receivable are
derived from billings to VNS and 44% of revenues and 54% of accounts receivable are derived from billings to
four other managed care vendors.
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SUNNYSIDE CITYWIDE HOME CARE SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2015 AND 2014
NOTE 9 – RELATED PARTY TRANSACTIONS
Citywide is related through common board members to Sunnyside Home Care Project, Inc. (“Home Care”) and
Sunnyside Community Services, Inc. (“Sunnyside”). Citywide contributed $0 and $48,536 to Sunnyside for its
College Readiness Program in 2015 and 2014, respectively.
As of June 30, 2015, Citywide is owed $1,171,533 from Home Care and is owed $46,243 from Sunnyside.
As of June 30, 2014, Citywide is owed $1,547,654 from Home Care and owes $214,970 to Sunnyside. These
represent normal operating expenses advances, are non-interest-bearing and are due on demand.
In addition, in 2015 and 2014 Sunnyside charged rent (Note 6) and other expenses, as outlined in the table below, to
Citywide.
2015
2014
Rent, real estate taxes and utilities expenses
Salaries, fringe benefits and other expenses
$
121,520
886,095
$
127,265
845,340
NOTE 10 – SUBSEQUENT EVENTS
On October 13, 2015, the United States Court of Appeals for the District of Columbia Circuit issued its “Mandate”
giving formal effect to its October, 6th 2015 ruling which validated the U.S. Department of Labor’s (“USDOL”) Final
Rule.
The Final Rule eliminates the application of the Fair Labor Standards Act’s (“FLSA”) “companionship services”
exemption to employees of home care agencies, and requires that home care aides receive premium overtime
compensation for hours worked over 40 in a work week, at time and one-half their regular rate of pay. The “regular
rate of pay” for a home care aide may vary from week to week depending, for example on the employee’s base rate
of pay and differentials for various reasons, e.g., weekend work, special skills etc.
In New York State, the Wage Parity Act (WPA) further requires that for episode-of care hours of service covered by
the WPA, overtime compensation must be calculated based on the “regular rate” of $10 per hour (or higher if the
employee’s base hourly cash wage exceeds $10). Thus an aide working in New York City is entitled to a minimum of
$15 per hour plus supplemental benefit rate of $4.09 per hour for each overtime episode-of care hour worked.
The Final Rule also clarifies the FLSA’s hours worked rules for home care agencies, requiring pay for various other
times that are considered work time, including, but not limited to, intra-day travel time between cases waiting to be
engaged time, and “on call” time. Coupled with New York State Court decisions involving New York State “hours
worked” rules for 24-hour sleep in shifts.
These rules create new and substantial potential pitfalls for home care agencies operating in New York. The major
financial impact will be a significant increase in direct labor costs to home care agencies.
Management has evaluated, for potential accrual or disclosure, events subsequent to the date of the statements of
financial position through February 4, 2016, the date the financial statements were available to be issued.
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