Independent Auditor's Report on the Consolidated Financial Statements ...
consolidated statement of financial position as of December 31, 2012, and the
related.
Audited Consolidated Financial Statements & Reports Required by Government Auditing Standards and OMB Circular A-133 GOODWILL INDUSTRIES INTERNATIONAL, INC. AND RELATED ENTITIES
December 31, 2012
Goodwill Industries International, Inc. and Related Entities Contents
Independent Auditor’s Report on the Consolidated Financial Statements and Supplementary Schedule of Expenditures of Federal Awards
1-2
Consolidated Financial Statements Consolidated statements of financial position
3
Consolidated statements of activities
4
Consolidated statements of cash flows
5
Notes to the consolidated financial statements
6 - 20
Additional Information Independent auditor's report on the additional information
21
Schedule of functional expense
22
Reports Required by Government Auditing Standards and OMB Circular A-133 Schedule of expenditures of federal awards
23
Notes to the schedule of expenditures of federal awards
24
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
25 - 26
Independent auditor’s report on compliance for each major program; and report on internal control over compliance in accordance with OMB Circular A-133
27 - 28
Schedule of findings and questioned costs
29 - 30
Independent Auditor’s Report on the Consolidated Financial Statements and Supplementary Schedule of Expenditures of Federal Awards To the Board of Directors Goodwill Industries International, Inc. and Related Entities We have audited the accompanying consolidated financial statements of Goodwill Industries International, Inc. and Related Entities (the Organization), which comprise the consolidated statement of financial position as of December 31, 2012, and the related consolidated statements of activities and cash flows for the year then ended, and the related notes to the consolidated financial statements. The prior year summarized comparative information has been derived from the Organization's 2011 consolidated financial statements and, in our report dated February 23, 2012, we expressed an unqualified opinion on those consolidated financial statements. Management’s Responsibility for the Consolidated Financial Statements
2 0 2 1 L S t r e e t, N W
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
Suite 400
20036
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, with respect to Goodwill Industries International, Inc. (GII), 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 Organization’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 Organization’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.
1
To the Board of Directors March 4, 2013 Page 2 of 2
Opinion In our opinion, the 2012 consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Goodwill Industries International, Inc. and Related Entities as of December 31, 2012, and the changes in their net assets and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. Other Matters Our audit was conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The schedule of expenditures of federal awards, as required by Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, 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. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated, March 4, 2013, on our consideration of GII’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, 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 GII’s internal control over financial reporting or compliance.
Washington, DC March 4, 2013
2
Goodwill Industries International, Inc. and Related Entities Consolidated Statements of Financial Position 2012 December 31,
Temporarily Restricted
Unrestricted
2011
Permanently Restricted
Total
Total
Assets Cash and cash equivalents - Note B
$
Investments - Notes B, C, & D
1,938,299
$
7,782,092
Accounts and notes receivable - Note E
$
-
$
1,234,909
901,343
Prepaid expenses and other assets Property and equipment - Notes H & I
$
2,062,368 9,952,539
901,343
528,213 292,530
2,271,525
2,271,525
3,061,825
392,781
392,781
594,500
8,429,474
8,429,474
8,679,903
932,598
Grants receivable - Note G
1,938,299 16,259,097
932,598
Pledges receivable - Note F
Total assets
7,242,096
$
21,715,514
$
8,174,694
$
1,234,909
$
31,125,117
$
25,171,878
$
3,628,270
$
-
$
-
$
3,628,270
$
3,984,825
Liabilities and Net Assets Liabilities Accounts payable
1,841,730
1,841,730
1,468,741
393,119
393,119
377,755
Capital lease obligation
-
-
29,450
Bonds payable - Note I
1,600,000
1,600,000
1,700,000
109,635
109,635
111,355
21,883
21,883
21,883
Accrued expense - Note D Deferred revenue
Interest rate swap agreement - Notes B & I Security deposit - Note M Total liabilities Net assets - Notes J & K Total liabilities and net assets
$
7,594,637
-
-
7,594,637
7,694,009
14,120,877
8,174,694
1,234,909
23,530,480
17,477,869
21,715,514
See notes to the consolidated financial statements.
$
8,174,694
$
1,234,909
$
31,125,117
$
25,171,878
3
Goodwill Industries International, Inc. and Related Entities Consolidated Statements of Activities 2012 Year Ended December 31,
Unrestricted
Temporarily Restricted
2011
Permanently Restricted
Total
Total
Revenue and support Membership dues
$
Federal awards - Note N
19,097,240
$
-
$
$
-
16,218,479
$
17,922,153
16,218,479
30,424,132
13,683,044
3,044,029
Contributions - Note L
2,311,077
Program services fees
2,738,776
2,738,776
2,430,117
Legacies and bequests
443,466
443,466
134,732
Rental - Note M
297,239
297,239
297,239
Investment income - Note C
133,861
166,470
126,905
5,701
12,373
52,650,415
54,391,680
-
-
52,650,415
54,391,680
Other income
11,371,967
19,097,240
32,609
5,701
Net assets released from restriction - Note J Total revenue and support
41,245,839
11,404,576
6,457,652
(6,457,652)
47,703,491
4,946,924
-
-
Expense Program services Sponsored programs and grants - Note N
22,791,216
22,791,216
32,777,301
Direct services to membership
13,648,595
13,648,595
12,810,872
5,947,774
5,947,774
5,354,413
42,387,585
42,387,585
50,942,586
4,098,640
4,098,640
3,644,262
508,916
508,916
479,458
Support services to membership Total program services Management and general services General and administrative Resource development Total management and general
Change in net assets from operations Net gain on investments - Note C Unrealized gain (loss) on interest rate swap - Note I
4,123,720
46,995,141
55,066,306
4,946,924
-
5,655,274
10,793
59,055
395,617
46,995,141
-
708,350 325,769
Net assets, beginning of year $
1,035,839
4,957,717
59,055
6,052,611
13,085,038
3,216,977
1,175,854
17,477,869
14,120,877
See notes to the consolidated financial statements.
(674,626) 72,882
1,720
1,720
Change in net assets
Net assets, end of year
4,607,556 -
4,607,556
Total expense
$
8,174,694
$
1,234,909
$
23,530,480
(51,186) (652,930) 18,130,799 $
17,477,869
4
Goodwill Industries International, Inc. and Related Entities Consolidated Statements of Cash Flows 2012
Year Ended December 31,
2011
Cash flows from operating activities Change in net assets
$
6,052,611
$
(652,930)
Adjustments to reconcile change in net assets to net cash provided by operating activities: (395,617)
Net gain on investments
(72,882)
Uncollectible accounts
8,985
78,646
Loss on disposal of property and equipment
1,970
-
985,153
908,110
Depreciation and amortization
(1,720)
Unrealized (gain) loss on interest rate swap
51,186
Changes in assets and liabilities: Accounts and notes receivable
(382,115)
96,252
Pledges receivable
(640,068)
(252,261)
Grants receivable
790,300
Prepaid expenses and other assets
201,719
2,133,309 (107,889)
Accounts payable
(356,555)
Accrued expense
372,989
(62,099)
Deferred revenue
15,364
55,288
600,405
1,315,963
6,653,016
663,033
5,767,459
1,465,191
Total adjustments Net cash provided by operating activities
(1,511,697)
Cash flows from investing activiites Proceeds from sales of investments Purchases of investments Purchases of property and equipment
(11,678,400)
(342,964)
(736,694)
(960,111)
(6,647,635)
Net cash (used in) provided by investing activities
162,116
Cash flows from financing activiites (100,000)
(100,000)
Principal payments on capital lease obligation
Principal payment on bonds payable
(29,450)
(37,265)
Net cash used in financing activities
(129,450)
(137,265)
Net (decrease) increase in cash and cash equivalents
(124,069)
687,884
2,062,368
Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year
1,374,484
$
1,938,299
$
2,062,368
$
72,581
$
78,416
Supplemental disclosure of cash flow information: Cash paid during the year for interest
See notes to the consolidated financial statements.
5
Goodwill Industries International, Inc. and Related Entities Notes to the Consolidated Financial Statements A. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization: Goodwill Industries International, Inc. (GII) was established in 1902 and was later incorporated in the Commonwealth of Massachusetts. GII improves the quality of life of people with disabilities and other special needs. GII’s membership consists of local Goodwill Industries in the United States, Canada, and internationally. All GII members are autonomous, communitybased, nonprofit corporations that provide rehabilitation services, training, placement, and employment for people with disabilities and other disadvantaged persons. GII provides its members with various services, including consulting for workforce development, retail, contracts, strategic planning, education/training, national public relations, and research. GII also represents its membership before the Federal government and international entities. 15810 Indianola Drive, LLC (the LLC) was organized in 2004 under the laws of the State of Delaware. The LLC operates, uses, develops, improves, renovates, maintains, manages, leases, and, when applicable, sells, exchanges, or otherwise disposes of real, personal, and mixed property. The LLC is a single-member limited liability company owned entirely by GII. Goodwill Mission and Job Creation Services, Inc. (GMJCS) was organized in 2012 under the laws of the District of Columbia. GMJCS advances the creation of jobs and services for people with disabilities and economic disadvantages by providing funds and working capital to Goodwill member organizations with terms that are more beneficial, and at a lower total cost, than Goodwill members could obtain from conventional commercial lending sources. GMJCS is controlled entirely by GII via sole corporate membership. Principles of consolidation: The consolidated financial statements include the accounts of GII, the LLC, and GMJCS (collectively referred to as the Organization). Significant intra-entity accounts and transactions have been eliminated in consolidation. Income taxes: GII is exempt from the payment of income taxes on its exempt activities under Section 501(c)(3) of the Internal Revenue Code and has been classified by the Internal Revenue Service as other than a private foundation within the meaning of Section 509(a)(1) of the Internal Revenue Code. As a single-member limited liability company, LLC is treated as a disregarded entity for income tax purposes. Therefore, the LLC’s financial activity is reported in conjunction with the Federal income tax filings of GII. GMJCS has applied for, but has not yet been granted, exemption from the payment of income taxes on its exempt activities under Section 501(c)(3) of the Internal Revenue Code. While awaiting approval of its application for exemption, GMJCS will file Federal Form 990 and intends to operate within its intended exempt purposes. The Organization is subject to income tax on its unrelated business activities, such as income from the virtual member market place and rental income, which is debt financed. However, the Organization has generated net operating loss carry-forwards resulting from these taxable activities. The net operating loss carry-forwards, which may be applied against future years’ taxable income, totaled approximately $401,000 at December 31, 2012. The net operating loss carry-forwards will expire at various dates through 2032. A deferred tax asset has not been recognized due to the uncertainty of realizing a benefit from the net operating loss carry-forwards. The Organization believes that it has appropriate support for income tax positions taken. Therefore, management has not identified any uncertain income tax positions. Generally, income tax returns related to the years ended December 31, 2009 through 2012 remain open for examination by taxing authorities.
6
Goodwill Industries International, Inc. and Related Entities Notes to the Consolidated Financial Statements A. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Basis of accounting: The Organization prepares its consolidated financial statements on the accrual basis of accounting. Revenue, other than contributions, is recognized when earned and expense when the obligation is incurred. Use of estimates: The preparation of consolidated 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. Accordingly, actual results could differ from estimates. Cash and cash equivalents: For financial statement purposes, the Organization considers demand deposits to be cash equivalents. Amounts held within the investment portfolio are not included in cash and cash equivalents because they are held for long-term or investment purposes. Deferred revenue: Deferred revenue consists of meeting registrations, event sponsorships, and GoodTrak fees. Revenue relating to meeting registrations and event sponsorships is recognized in the period when the meeting or event occurs. Fees related to GoodTrak, which is GII's webbased software system that allows client tracking and case management for Goodwill members, is recognized using the straight-line method over the user’s service period. Contributions: Contributions are recorded as unrestricted, temporarily restricted, or permanently restricted support depending upon the existence and/or nature of donor restrictions. Support that is restricted by the donor is reported as an increase in temporarily or permanently restricted net assets, as applicable. Within temporarily restricted net assets, amounts are reclassified to unrestricted net assets when restrictions expire. Program services: Program service descriptions are as follows: Sponsored programs and grants: Sponsored programs and grants includes efforts to develop higher quality job opportunities for people with disabilities and disadvantages, to provide awards for family-strengthening at the local community level, to improve the current workforce development system for the Hispanic population, and to build family economic success. Direct services to membership: Direct services to membership includes consultations, executive professional development, training seminars, data processing, financial and management information, and assistance in the development of national and local communications materials. Support services to membership: Support services to membership includes learning events such as the Conference of Executives and the Delegate Assembly. Management and general services: Management and general services descriptions are as follows: General and administrative: The general and administrative service includes expenditures to secure proper administrative functioning, maintain the building, and manage the financial responsibilities of the Organization. Resource development: The resource development service includes expenditures that encourage and secure financial support for the Organization.
7
Goodwill Industries International, Inc. and Related Entities Notes to the Consolidated Financial Statements A. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Functional allocation of expenses: The costs of providing various program and supporting services have been summarized on a functional basis in the statement of activities. Accordingly, certain costs have been allocated among the program and supporting services benefited. Measure of operations: The Organization does not include either 1) net gain on investments or 2) unrealized gain (loss) on interest rate swap in the change in net assets from operations. Prior-year comparative totals: The consolidated financial statements include certain 2011 summarized comparative information in total but not by net asset class. Such information does not include sufficient detail to constitute a complete presentation in conformity with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the 2011 consolidated financial statements, from which the summarized information was derived.
B. CONCENTRATIONS AND RISKS Credit risk: The Organization maintains demand deposits and money market funds at financial institutions. At times, certain balances held within these accounts may not be fully guaranteed or insured by the U.S. Government. The uninsured portions of cash and money market accounts are backed solely by the assets of the underlying institution. Therefore, the failure of an underlying institution could result in financial loss to the Organization. However, the Organization has not experienced losses on these accounts in the past, and management believes the risk of loss, if any, to be minimal. Market risk: The Organization invests in a professionally managed portfolio of mutual funds. Such investments are exposed to market and credit risks. Therefore, the Organization’s investments may be subject to significant fluctuations in fair value. As a result, the investment balances reported in the accompanying consolidated financial statements may not be reflective of the portfolio's value during subsequent periods. Interest rate risk: The Organization has bonds payable with a variable rate of interest. To minimize the unpredictability of interest payments, the Organization has entered into an interest rate swap agreement to convert the interest portion of its obligation from a variable rate to a fixed rate. Therefore, interest payments are calculated using the fixed interest rate and no other cash payments are required in relation to the interest rate swap agreement unless it is terminated prior to maturity. In the event of termination prior to maturity, the amount paid or received in termination would be calculated as the net present value, using current interest rates, of the remaining interest payments due through the end of the original term of the agreement.
8
Goodwill Industries International, Inc. and Related Entities Notes to the Consolidated Financial Statements C. INVESTMENTS In accordance with generally accepted accounting principles, the Organization uses the following prioritized input levels to measure fair value. The input levels used for valuing investments are not necessarily an indication of risk. Level 1 – Observable inputs that reflect quoted prices for identical assets or liabilities in active markets, such as stock quotes; Level 2 – Includes inputs other than Level 1 inputs that are directly or indirectly observable in the marketplace, such as yield curves or other market data; Level 3 – Unobservable inputs which reflect the reporting entity’s assessment of the assumptions that market participants would use in pricing the asset or liability including assumptions about risk, such as bid/ask spreads and liquidity discounts. The following is a summary of the fair values of investments, which are measured on a recurring basis using Level 1 inputs, at December 31,: 2012 Cash and cash equivalents Mutual funds - bonds Mutual funds - equities
2011
$
7,795,545 5,408,061 3,055,491
$
2,724,576 5,048,456 2,179,507
$
16,259,097
$
9,952,539
The Organization maintains investments which are held to fund the deferred compensation obligation which is described in Note D. The investments held to fund deferred compensation totaled $223,500 and $168,000 at December 31, 2012 and 2011, respectively. Investment return consists of the following for the years ended December 31,: 2012 Interest and dividends Investment fees
Realized gain Unrealized loss
2011
$
199,731 (33,261)
$
152,927 (26,022)
$
166,470
$
126,905
$
498,099 (102,482)
$
249,039 (176,157)
$
395,617
$
72,882
9
Goodwill Industries International, Inc. and Related Entities Notes to the Consolidated Financial Statements D. RETIREMENT PLANS Deferred compensation: The Organization has deferred compensation agreements with key employees under Section 457(b) and 457(f) of the Internal Revenue Code. The Organization has designated certain investments as held to fund its obligation under the agreements (see Note C). During the year ended December 31, 2011, the Organization provided a distribution to the participant under the deferred compensation agreement representing full satisfaction of its obligation. The Organization’s contributions under the deferred compensation plan totaled $55,500 and $168,000 during the years ended December 31, 2012 and 2011, respectively. The deferred compensation liability is included in accrued expense and totaled $223,500 and $168,000 at December 31, 2012 and 2011, respectively. Defined contribution: The Organization has a defined contribution 403(b) thrift plan which is available to all full-time employees who have completed six months of service. The Organization’s contributions on behalf of each eligible employee equal 7.5% of the employee’s compensation plus 4.3% of compensation in excess of the Social Security Average Annual Wage in effect on the first day of the plan year. The Organization's contributions to the plan, excluding applicable forfeitures, totaled $1,003,948 and $922,707 for the years ended December 31, 2012 and 2011, respectively.
E. ACCOUNTS AND NOTES RECEIVABLE Accounts and notes receivable consists of amounts owed to the Organization primarily for membership dues or program services. Accounts and notes receivable are recorded at net realizable value. The Organization provides for probable losses on accounts and notes receivable using the allowance method. The allowance is determined based on management's experience and collection efforts. Balances that remain outstanding after the Organization has used reasonable collection efforts are written off. In particular, the portion of the allowance relating to doubtful member notes receivable totaled $327,000 and $486,000 as of December 31, 2012 and 2011, respectively. Accounts and notes receivable consist of the following at December 31,: 2012 Membership dues and programs Member notes receivable Other receivables
$
1,012,681 384,715 163,683
2011 $
1,561,079 Less allowance for doubtful accounts and notes
1,175,151
(659,736) $
901,343
351,642 514,638 308,871
(646,938) $
528,213
10
Goodwill Industries International, Inc. and Related Entities Notes to the Consolidated Financial Statements F. PLEDGES RECEIVABLE The Organization records pledges receivable (unconditional promises to give contributions) that are expected to be collected within one year at net realizable value. The Organization records multiyear pledges receivable at the present value of their estimated future cash flows. The Organization provides for probable losses on pledges receivable using the allowance method. The allowance is determined based on management's experience and collection efforts. Balances that remain outstanding after the Organization has used reasonable collection efforts are written off. During the year ended December 31, 2012, the Organization obtained commitments in excess of its goal for the National PSA Campaign. Therefore, the Organization has indicated its intention to provide a rebate to the member donors relating to amounts received in excess of the project budget. Therefore, the Organization has recorded the National PSA Campaign pledges and the related contributions net of the rebate which is intended to be provided to member donors in the future. Pledges receivable consist of the following at December 31,: 2012 National PSA Campaign Bank of America - Vested in Vets Caterpillar Foundation Hurricane Katrina Campaign
$
2011
1,383,000 250,000 119,598 -
$
1,752,598 Less rebate for National PSA Campaign
267,858 32,500 300,358
(820,000)
-
Less discount to net present value
-
(3,756)
Less allowance for doubtful pledges
-
(4,072)
$
932,598
$
292,530
11
Goodwill Industries International, Inc. and Related Entities Notes to the Consolidated Financial Statements G. GRANTS RECEIVABLE Grants receivable consist of amounts due from federal government agencies. Management periodically reviews the status of all grants receivable for collectability. Each balance is assessed based on management's knowledge of and relationship with the government agency and the age of the receivable balance. As a result of these reviews, balances deemed to be uncollectible are charged directly to bad debt expense. Management believes that the use of the direct write-off method approximates the results that would be presented if an allowance for doubtful accounts was recorded. Grants receivable consist of the following at December 31,: 2012 SCSEP Good Guides Good Prospects Pathways out of poverty Agrability
2011
$
1,758,936 349,179 84,114 79,296 -
$
1,815,046 707,388 105,512 364,736 69,143
$
2,271,525
$
3,061,825
H. PROPERTY AND EQUIPMENT Acquisitions of property and equipment greater than $3,000 are recorded at cost and depreciated using the straight-line method over the following estimated useful lives: building – 30 years; building improvements – 10 years; and furniture and equipment – 3 to 5 years. Property and equipment consists of the following at December 31,: 2012 Land Building and improvements Furniture and equipment Artwork
$
Less accumulated depreciation and amortization $
1,500,000 8,076,402 5,209,698 60,000
2011 $
1,500,000 8,048,999 5,540,802 60,000
14,846,100
15,149,801
(6,416,626)
(6,469,898)
8,429,474
$
8,679,903
12
Goodwill Industries International, Inc. and Related Entities Notes to the Consolidated Financial Statements I.
DEBT OBLIGATIONS Bonds payable: The Organization had tax-exempt bonds payable which were issued by Maryland Economic Development Corporation, the original trustee. The original principal amount of the bonds was $3,700,000, which was used for the purchase of land and building at 15810 Indianola Drive. During 2010, the bonds were purchased from the original trustee by a bank. Although the outstanding principal amount was not changed, the interest terms changed. The Organization has signed a credit agreement with the bank that stipulates payment terms relating to principal and interest. The bonds mature on February 1, 2034 and interest is based on LIBOR plus 2.5%, multiplied 67% and a margin rate factor (as determined by the Bank). LIBOR was 0.2087% and 0.2953% at December 31, 2012 and 2011, respectively. The bonds are secured by the land and building at 15810 Indianola Drive. The agreement with the bank contains various debt covenants, including requirements that the Organization maintain unrestricted liquidity of greater than 15% and maintain a cash flow to debt service ratio of not less than 1.15 to 1. The Organization was in compliance with the debt covenants at December 31, 2012 and 2011. Future payments of principal on the bonds payable are as follows: Year Ending December 31, 2013 2014 2015 2016 2017 Thereafter
Amount $
100,000 100,000 100,000 100,000 100,000 1,100,000
$
1,600,000
13
Goodwill Industries International, Inc. and Related Entities Notes to the Consolidated Financial Statements I.
DEBT OBLIGATIONS - CONTINUED Interest rate swap agreement: The Organization has an interest rate swap agreement, which is intended to allow the Organization to minimize the risk of future interest rate fluctuations related to the bonds payable described above. As the variable interest rate on the bonds payable decreases, the interest rate swap liability increases. The agreement expires February 1, 2034 and has a fixed interest rate of 2.24%. The fair value of the interest rate swap agreement is the estimated amount that the swap issuer would receive or pay to terminate the agreement at the reporting date, taking into account current interest rates and the current credit worthiness of the swap counter parties. In particular, the fair value of the interest rate swap agreement was based on an income approach calculation using Level 3 inputs. In the calculation, the swap issuer estimated the fair value of the liability based on both the present value of projected future interest rates and the fixed rate stipulated in the agreement. Management believes the calculation to be a reasonable approximation of the fair value of the liability under the interest rate swap agreement. The change in the liability under the interest rate swap agreement was recorded as an unrealized loss within the statement of activities. The fair value of the interest rate swap agreement, which was measured on a recurring basis using Level 3 inputs, consists of the following as of and for the year ended December 31,: 2012
2011
Interest rate swap agreement, beginning Unrealized (gain) loss on interest rate swap
$
111,355 (1,720)
$
60,169 51,186
Interest rate swap agreement, ending
$
109,635
$
111,355
J. NET ASSETS Unrestricted net assets: Unrestricted net assets include those net assets whose use is not restricted by donors, even though their use may be limited in other respects, such as by board designation. Unrestricted net assets consist of the following at December 31,: 2012 Undesignated - general operations Designated - international activities
2011
$
13,165,507 955,370
$
12,129,668 955,370
$
14,120,877
$
13,085,038
Temporarily restricted net assets: Temporarily restricted net assets include those net assets whose use by the Organization has been donor restricted by specific time or purpose limitations.
14
Goodwill Industries International, Inc. and Related Entities Notes to the Consolidated Financial Statements J. NET ASSETS - CONTINUED Temporarily restricted net assets consist of the following at December 31,: 2012 Endowment Funds (Note K) Alumni Century Fund Alumni Travel Fund Anthony Family Foundation - Family Strengthening Anthony Family Foundation - Community College Bank of America - Vested in Vets Casey Foundation Charles Schwab - Good A$$et$ Charles Schwab - Good A$$et$ 2 Disaster Relief Fund Disaster Relief Fund - Ike Disaster Relief Fund - Infrastructure Dulin Executive Management Development Fund Dulin Membership GII Training Fund Dulin Senior Management Fund Dulin Strategic Planning Fund Elsine Katz Fund Goizueta Foundation Goizueta 2013 Kresge Foundation Lumina II Matthews Entrepreneurial Award National Assembly Works Support National PSA Campaign Public Policy Fund QBE Foundation Robert Watkins Award Fund Tornado Relief Fund Tracfone Wireless, Inc. Walmart Foundation - Beyond Jobs Program Walmart Foundation - Beyond Jobs Program 2.0 Walmart Foundation - GoodJobs Program Walmart Foundation - My Free Taxes International activities Endowment Funds (Note K) Asia Associations - Going Global Fund Caterpillar Foundation Going Global Fund International Foundation Grant Zimbabwe Oakland/Philippine Fund Revolving No - Interest Loan Fund Russia Training Fund UMCOR Grant For Russia
$
101,732 11,571 13,094 45,591 19,841 499,729 9,783 17,728 166,760 78,232 1,816 18,522 70,955 36,235 120,878 15,846 2,567 608,846 54,106 296,620 232 1,446,375 35,398 50,000 37,194 15,755 135,357 2,983,824 466,016 242,415
2011 $
114,492 250 403,792 24,343 1,305 13,163 2,000 1,500 10,831 $
8,174,694
88,551 11,571 16,462 35,000 19,841 157,497 80,232 1,816 35,128 60,955 30,755 130,878 15,846 3,555 168,814 386,640 232 5,000 76,398 39,415 15,755 116,073 1,052,248 92,844 250 505,564 40,858 1,305 13,163 2,000 1,500 10,831
$
3,216,977
15
Goodwill Industries International, Inc. and Related Entities Notes to the Consolidated Financial Statements J. NET ASSETS - CONTINUED Net assets are released from restrictions either as a result of the expiration of a time restriction or due to the satisfaction of a purpose restriction. The following net assets were released from restrictions during the year ended December 31, 2012: Endowment Funds (Note K) Alumni Travel Fund Anthony Family Foundation - Family Strengthening Bank of America - Vested in Vets Charles Schwab - Good A$$et$ Charles Schwab - Good A$$et$ 2 Casey Foundation Disaster Relief Fund Disaster Relief Fund - Infrastructure Dulin Executive Management Development Fund Dulin Membership GII Training Fund Dulin Senior Management Fund Elsine Katz Fund Goizueta Foundation Goizueta 2013 Kresge Foundation Lumina II Matthews Entrepreneurial Award National Assembly Works Support National PSA Campaign Public Policy Fund Robert Watkins Award Fund Tracfone Wireless, Inc. Walmart Foundation - Beyond Jobs Program Walmart Foundation - Beyond Jobs Program 2.0 Walmart Foundation - GoodJobs Program Walmart Foundation - My Free Taxes International activities Caterpillar Foundation Going Global Fund
$
15,079 9,869 9,409 271 144,769 33,240 140,217 2,000 16,606 20,000 9,520 40,000 1,132 155,948 2,602,600 95,894 190,020 4,115 5,000 53,625 41,000 3,399 716 1,056,654 516,808 533,984 633,726 105,536 16,515
$
6,457,652
16
Goodwill Industries International, Inc. and Related Entities Notes to the Consolidated Financial Statements K. ENDOWMENTS The Organization’s endowments consist of donor-restricted endowment funds which are classified within permanently restricted net assets. As required by generally accepted accounting principles, net assets associated with endowment funds are classified and reported based on the existence or absence of donor-imposed restrictions. Interpretation of Relevant Law The Board of Director’s interpretation of the Commonwealth of Massachusetts law underlies the Organization’s net asset classification of donor-restricted endowment funds as requiring the preservation of the fair value of the original gift. As a result of this interpretation, the Organization classifies as permanently restricted net assets (1) the original value of gifts donated to the permanent endowment, (2) the original value of subsequent gifts to the permanent endowment, and (3) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument. Absent explicit direction from the donor regarding the classification of investment income from the permanently restricted endowments, investment income is recorded in temporarily restricted activities until appropriated for spending. Return Objectives and Risk Parameters The Organization has adopted investment and spending policies for endowment assets that attempt to provide a predictable stream of funding to programs supported by its endowment while seeking to maintain the purchasing power of the endowment assets. Under this policy, as approved by the Board of Directors, the endowment assets are invested in a manner that is intended to produce results that achieves constant growth of the distribution amount and the corpus. Actual returns in any given year may vary from this amount. Strategies Employed for Achieving Objectives To satisfy its long-term objectives, the Organization relies on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends). The Organization targets a diversified asset allocation that places more emphasis on fixed income securities than equity securities to achieve its long-term return objectives within prudent risk constraints. Spending Policy and How Investment Objectives Relate to Spending Policy The Organization has adopted investment and spending policies for endowment assets that attempt to provide a predictable stream of funding to programs supported by the endowment funds while seeking to maintain the purchasing power of the endowment assets. Endowment assets include those assets of donor-restricted funds that the Organization must hold in perpetuity or for donor-specified periods. Under this policy, as approved by the Board of Directors, the endowment assets are invested in a balanced portfolio comprised of cash, fixed income securities, and equity securities.
17
Goodwill Industries International, Inc. and Related Entities Notes to the Consolidated Financial Statements K. ENDOWMENTS – CONTINUED Funds with Deficiencies From time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below the level that the donor originally contributed as an endowment fund to the Organization. In accordance with generally accepted accounting principles, deficiencies of this nature would be reported within unrestricted net assets. However, there were no funds with deficiencies at December 31, 2012 and 2011. Endowment funds consisted of the following at December 31, 2012, with 2011 totals: Temporarily Restricted
Unrestricted Frank F. Flegal Education and Training
$
-
$
Kenneth K. King Training Trust * Richard and Lois England *
2011
2012 Permanently Restricted
69,952
$
20,000
Total $
89,952
Total $
81,968
26,515
879,052
905,567
851,478
5,265
107,526
112,791
102,628
International activities Barker Education Gerald Clore Training Sioux City $
-
$
6,949
123,131
130,080
130,547
102,112
100,000
202,112
181,038
5,431
5,200
10,631
9,590
216,224
$
1,234,909
$
1,451,133
$
1,357,249
* The gift instruments for these endowment funds include donor instructions indicating that investment appreciation (depreciation) should be included in permanently restricted net assets. Changes in endowment funds consist of the following for the year ended December 31, 2012, with 2011 totals:
Temporarily Restricted
Unrestricted Endowment funds, beginning
$
-
$
2012 Permanently Restricted
181,395
$
1,175,854
2011 Total $
1,357,249
Total $
1,370,182
Investment return Interest and dividends Investment fees
41,212
41,212
28,897
(14,311)
(14,311)
(1,554)
Realized gain (loss)
25,191
8,867
34,058
14,128
Unrealized gain (loss)
(2,184)
50,188
48,004
(26,026)
49,908
59,055
108,963
15,445
(15,079)
(28,378)
Appropriations Endowment funds, ending
(15,079) $
-
$
216,224
$
1,234,909
$
1,451,133
$
1,357,249
18
Goodwill Industries International, Inc. and Related Entities Notes to the Consolidated Financial Statements L. IN-KIND CONTRIBUTIONS The Organization receives in-kind contributions primarily related to donated advertising which is recorded at estimated fair value. In addition, donated services are recognized as contributions and expensed in accordance with generally accepted accounting principles (GAAP). In order to meet the criteria for recognition in the consolidated financial statements, contributions of in-kind services must (a) create or enhance non-financial assets or (b) require specialized skills, be performed by people with those skills, and would otherwise be purchased by the Organization. The Organization received the following in-kind contributions during the years ended December 31,: 2012 Advertising Professional services
2011
$
1,444,500 675,000
$
1,444,500 247,767
$
2,119,500
$
1,692,267
M. COMMITMENTS & CONTINGENCIES Tenant lease: The Organization has an operating lease agreement to provide office space in its building to an unrelated tenant. The lease agreement expires in 2014 and the tenant provided a security deposit of $21,883 equal to the first month's rent. Rental revenue totaled $297,239 for both of the years ended December 31, 2012 and 2011. Future minimum cash basis rental receipts are as follows: Year Ending December 31, 2013 2014
Amount $
334,290 285,510
$
619,800
Government grants: Amounts received or receivable from government agencies relating to grants are subject to audit and adjustment by the government agencies. The amount of expenditures which may be potentially disallowed cannot be determined at this time, although management expects such amounts, if any, to be immaterial.
19
Goodwill Industries International, Inc. and Related Entities Notes to the Consolidated Financial Statements N. PASS THROUGH AWARDS The following chart provides a summary of federal awards which were passed through to the Organization’s members during the years ended December 31,: 2012 Pass through awards Direct awards
2011
$
14,483,898 1,734,581
$
28,264,042 2,160,090
$
16,218,479
$
30,424,132
O. SUBSEQUENT EVENTS Subsequent events have been evaluated through March 4, 2013, which is the date the consolidated financial statements were available to be issued. In March 2013, the Organization’s Executive Committee approved a motion for GII to fund a loan loss reserve of $1,000,000 for GMJCS. The reserve is intended to cover the first $1,000,000 of losses on loans made by GMJCS to GII members. The loan loss reserve will be used by GMJCS only in the event that such losses occur.
20
Independent Auditor’s Report on the Additional Information To the Board of Directors Goodwill Industries International, Inc. and Related Entities
2 0 2 1 L S t r e e t, N W
Suite 400
20036
We have audited the consolidated financial statements of Goodwill Industries International, Inc. and Related Entities as of and for the year ended December 31, 2012, and have issued our report thereon dated March 4, 2013, which contained an unqualified opinion on those consolidated financial statements. Our audit was performed for the purpose of forming an opinion on the consolidated financial statements as a whole. The schedule of functional expense on the following page is presented for the purposes of additional analysis and is not a required part of the consolidated financial statements. Such additional 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 additional 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 additional information is fairly stated in all material respects in relation to the consolidated financial statements as a whole.
Washington, DC March 4, 2013
21
Goodwill Industries International, Inc. and Related Entities Schedule of Functional Expense Year Ended December 31, 2012 Program Services Sponsored Programs and Grants Salaries
$
Employee benefits
1,630,344
Direct Services to Membership $
291,906
Payroll taxes Personnel expenses Awards and grants Professional fees Printing, publications, and advertising Conferences and conventions Travel and agency vehicles
Rental and maintenance Seminar and training fees
2,361,440
Total $
503,773
10,093,710
$
2,054,646
1,868,974
$
326,577
322,899
$
71,837
12,285,583 2,453,060
120,942
438,952
165,121
725,015
124,806
21,443
871,264
2,043,192
7,799,845
3,030,334
12,873,371
2,320,357
416,179
15,609,907
19,660,295
511,429
80,949
20,252,673
114
7,636
20,260,423
681,838
1,852,860
887,052
3,421,750
410,219
16,730
3,848,699
694
1,487,818
40,370
1,528,882
2,110
30
1,531,022
44,636
359,738
972,341
1,376,715
116,538
15,954
1,509,207
150,056
354,135
196,919
701,110
43,883
17,916
762,909
84,020
128,767
212,787
419,744
6,475
639,006
189,009
181,568
370,577
9,836
9,798
390,211
158,390
76,350
67,589
302,329
68,184
1,793
372,306
24,106
86,030
75,613
185,749
106,018
159
146,153
58,396
204,708
84,386
2,089
291,183
25,030
143,760
68,366
237,156
27,369
7,858
272,383
Professional dues
Telephone and communications
$
1,258,967
Real estate related expenses
Supplies
6,101,926
Support Services to Membership
Total
Management and General Services General Administrative Resource Services Development
291,767
Employee relations
28,885
4,133
33,018
43,938
374
77,330
Bond interest
13,854
10,756
24,610
46,062
1,169
71,841
166
42,832
Postage and shipping
9,211
19,153
31,184
11,482
Bank service charges
2,820
1,337
2,738
4,075
25,162
29,237
Bad debt
1,503
3,091
4,594
4,391
8,985
273
235
508
232
740
13,146,210
5,828,370
41,765,796
3,740,025
504,167
46,009,988
502,385
119,404
621,789
358,615
4,749
985,153
Capital lease interest 22,791,216 Depreciation and amortization Total expense
$
22,791,216
$
13,648,595
$
5,947,774
$
42,387,585
$
4,098,640
$
508,916
$
46,995,141
22
Goodwill Industries International, Inc. Schedule of Expenditures of Federal Awards Year Ended December 31, 2012 Federal Grantor Pass Through Grantor CFDA Program Title
Federal CFDA Number
Other Identifying Number
17.235
Various
ARRA 17.275
Various
Federal Expenditures
U.S. Department of Labor Senior Community Service Employment Program (SCSEP) - Note C
$
12,043,411
Program of Competitive Grants for Worker Training and Placement in High Growth and Emerging Industry Sectors - Note C
2,022,094
Subtotal U.S. Department of Labor
14,065,505
U.S. Department of Justice Juvenile Mentoring Program - Note C
16.726
2011-JU-FX-0020
1,578,980
ARRA 16.808
2009-SC-B9-0035
482,689
Recovery Act Edward Byrne Memorial Competitive Grant Program - Note C Subtotal U.S. Department of Justice
2,061,669
U.S. Department of Agriculture Purdue University Cooperative Extension Service Total Expenditures of Federal Awards
10.500
8000026124-AG
91,305 $
16,218,479
23
Goodwill Industries International, Inc. Notes to the Schedule of Expenditures of Federal Awards A. BASIS OF PRESENTATION The accompanying schedule of expenditures of federal awards includes the federal grant activity of Goodwill Industries International, Inc. and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of OMB Circular A133, Audits of State, Local Governments, and Non-Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic consolidated financial statements.
B. EXPENDITURES Expenditures are recognized following the cost principles contained in OMB Circular A-122, Cost Principles for Non-Profit Organizations, wherein either certain types of expenditures are not allowable or reimbursements of allowable costs are limited.
C. SUBRECIPIENTS The following is a summary of federal awards which were passed through to subrecipients during the year ended December 31, 2012:
Federal Grantor CFDA Program Title
Federal CFDA Number
Pass Through Amount
U.S. Department of Labor Senior Community Service Employment Program (SCSEP)
17.235
$
11,487,751
Program of Competitive Grants for Worker Training and Placement in High Growth and Emerging Industry Sectors
ARRA 17.275
1,605,266
Subtotal U.S. Department of Labor
13,093,017
U.S. Department of Justice Juvenile Mentoring Program Recovery Act Edward Byrne Memorial Competitive Grant Program
16.726
1,318,096
ARRA 16.808
72,785
Subtotal U.S. Department of Labor Total Awards Passed Through
1,390,881 $
14,483,898
24
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 Goodwill Industries International, Inc. We have audited the consolidated financial statements of Goodwill Industries International, Inc. and Related Entities (the Organization), which comprise the consolidated statement of financial position as of December 31, 2012, and the related consolidated statements of activities and cash flows for the year then ended, and the related notes to the consolidated financial statements and have issued our report thereon dated March 4, 2013. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and, with respect to Goodwill Industries International, Inc. (GII), the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. The financial statements of 15810 Indianola Drive, LLC (the LLC) and Goodwill Mission and Job Creation Services, Inc. (GMJCS) were not audited in accordance with Government Auditing Standards and, accordingly, this report does not extend to the related entities. Internal Control over Financial Reporting 2 0 2 1 L S t r e e t, N W
Suite 400
20036
In planning and performing our audit of the consolidated financial statements, we considered GII'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 GII’s internal control. Accordingly, we do not express an opinion on the effectiveness of GII’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 GII’s 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 over financial reporting 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.
25
To the Board of Directors March 4, 2013 Page 2 of 2
Compliance and Other Matters As part of obtaining reasonable assurance about whether GII's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. We included a recommendation, which we consider to be an informational matter describing potential changes related to single audits of federal awards, that we reported to the Audit Committee in a separate letter dated March 4, 2013. Purpose of this Report The purpose of this report is solely to describe the scope of our testing on internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of GII’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering GII’s internal control and compliance. Accordingly, this report is not suitable for any other purpose.
Washington, DC March 4, 2013
26
Independent Auditor’s Report on Compliance for Each Major Program; and Report on Internal Control over Compliance in Accordance with OMB Circular A-133 To the Board of Directors Goodwill Industries International, Inc. Report on Compliance for Each Major Federal Program We have audited the compliance of Goodwill Industries International, Inc. (GII) with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that could have a direct and material effect on each of GII’s major federal programs for the year ended December 31, 2012. GII's major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. Management’s Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs. Auditor’s Responsibility 2 0 2 1 L S t r e e t, N W
Suite 400
20036
Our responsibility is to express an opinion on compliance for each of GII’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and NonProfit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about GII's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of GII's compliance. Opinion on Each Major Program In our opinion, GII complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended December 31, 2012.
27
To the Board of Directors March 4, 2013 Page 2 of 2
Report on Internal Control over Compliance Management of GII is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered GII's internal control over compliance with the types of compliance requirements that could have a direct and material effect on a major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of GII’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Purpose of this Report The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.
Washington, DC March 4, 2013
28
Goodwill Industries International, Inc. Schedule of Findings and Questioned Costs Year Ended December 31, 2012 Section I – Summary of Audit Results Financial Statements Type of auditor's report issued:
Unmodified
Internal control over financial reporting:
Material weakness(es) identified?
Yes
X
No
Significant deficiency(ies) identified that are not considered to be material weakness(es)?
Yes
X
None reported
Noncompliance material to financial statements noted?
Yes
X
No
No
Federal Awards Internal control over the major programs:
Material weakness(es) identified?
Yes
X
Significant deficiency(ies) identified that are not considered to be material weakness(es)?
Yes
X
Type of auditor's report issued on compliance for the major programs:
None reported
Unmodified
Any audit findings disclosed that are required to be reported in accordance with section 510(a) of Circular A-133?
Yes
X
No
Identification of major programs: U.S. Department of Labor Senior Community Service Employment Program (CFDA 17.235) Program of Competitive Grants for Worker Training and Placement in High Growth and Emerging Industry Sectors (CFDA ARRA 17.275) U.S. Department of Justice Juvenile Mentoring Program (CFDA 16.726) Recovery Act Edward Byrne Memorial Competitive Grant Program (CFDA ARRA 16.808)
Dollar threshold used to distinguish between Type A and Type B programs: Auditee qualified as low-risk auditee?
$486,700 X
Yes
No 29
Goodwill Industries International, Inc. Schedule of Findings and Questioned Costs Year Ended December 31, 2012 Section II – Financial Statement Findings No matters were reported. Section III – Federal Award Findings and Questioned Costs No matters were reported. Section IV – Prior Year No matters were reported.
30
