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SUNNYSIDE HOME CAREPROJECT, INC.FINANCIAL STATEMENTSAND AUDITOR’S REPORTJUNE 30, 2014 AND 2013
SUNNYSIDE HOME CARE PROJECT, INC.TABLE OF CONTENTSIndependent Auditor’s ReportExhibitA -Statement of Financial PositionB -Statement of ActivitiesC -Statement of Cash FlowsNotes to Financial StatementsSchedule1-Schedule of Operating Expenses
Independent Auditor’s ReportBoard of DirectorsSunnyside Home Care Project, Inc.Report on the Financial StatementsWe have audited the accompanying financial statements of Sunnyside Home Care Project,Inc., which comprise the statement of financial position as of June 30, 2014 and 2013, andthe related statements of activities and cash flows for the years then ended, and the relatednotes to the financial statements.Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these financialstatements in accordance with accounting principles generally accepted in the United Statesof America; this includes the design, implementation, and maintenance of internal controlrelevant to the preparation and fair presentation of financial statements that are free frommaterial misstatement, whether due to fraud or error.Auditor’s ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audits.We conducted our audits in accordance with auditing standards generally accepted in theUnited States of America. Those standards require that we plan and perform the audit toobtain reasonable assurance about whether the financial statements are free from materialmisstatement.An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor’sjudgment, including the assessment of the risks of material misstatement of the financialstatements, whether due to fraud or error. In making those risk assessments, the auditorconsiders internal control relevant to the entity’s preparation and fair presentation of thefinancial statements in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of theentity’s internal control. Accordingly, we express no such opinion. An audit also includesevaluating the appropriateness of accounting policies used and the reasonableness ofsignificant accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements.AuditorsAuditorsand Consultantsand Consultants655 Third655 Avenue,Third Avenue,12th Floor,12th NewFloor,York,NewNYYork,10017NY 10017ServingServingthe Healththe HealthCare &CareNot for& NotProfitforSectorsProfit Sectors (212) 867-4000(212) 867-4000/ Fax (212)/ Fax867-9810(212) 867-9810/ www.loebandtroper.com/ www.loebandtroper.com
2.We believe that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion.OpinionIn our opinion, the financial statements referred to above present fairly, in all materialrespects, the financial position of Sunnyside Home Care Project, Inc. as of June 30, 2014and 2013, and the results of its operations, the changes in its net assets and its cash flows forthe years then ended in accordance with accounting principles generally accepted in theUnited States of America.Supplementary InformationOur audits were conducted for the purpose of forming an opinion on the financial statementsas a whole. The information in Schedule 1 is presented for purposes of additional analysisand is not a required part of the financial statements. Such information is the responsibilityof management and was derived from and relates directly to the underlying accounting andother records used to prepare the financial statements. The information has been subjectedto the auditing procedures applied in the audit of the financial statements and certainadditional procedures, including comparing and reconciling such information directly to theunderlying accounting and other records used to prepare the financial statements or to thefinancial statements themselves, and other additional procedures in accordance with auditingstandards generally accepted in the United States of America. In our opinion, theinformation is fairly stated, in all material respects, in relation to the financial statements as awhole.February 17, 2015
EXHIBIT ASUNNYSIDE HOME CARE PROJECT, INC.STATEMENT OF FINANCIAL POSITIONJUNE 30, 2014 AND 201320142013ASSETSCurrent assetsCash and cash equivalentsCertificates of depositAccounts receivable - net (Note 3)Prepaid expenses and other assetsDue from related parties (Note 4) 2,138,7375,5224,765,175208,009369,599 4,418,4401,004,1474,204,67078,610112,743Total current assets7,487,0429,818,610Fixed assets - net (Note 5)3801,599Total assets 7,487,422 9,820,209 2,119,2071,545,771 1,970,632950,338LIABILITIES AND NET ASSETSCurrent liabilitiesAccounts payable and accrued expensesDue to related parties (Note 4)Due to City of New York Human ResourcesAdministration (Note 10)Grant advancesTotal current liabilitiesNet assets (Exhibit B)UnrestrictedTotal liabilities and net assetsSee independent auditor's report.The accompanying notes are an integral part of these statements. 734,2977,487,422 9,820,209
EXHIBIT BSUNNYSIDE HOME CARE PROJECT, INC.STATEMENT OF ACTIVITIESYEARS ENDED JUNE 30, 2014 AND 20132014Operating revenuesContract revenue - Managed careContract revenue - City of New YorkHuman Resources Administration (HRA) - net (Note 11)Contract revenue - NYC Department for the Aging (DFTA)Contract revenue - Client fees Operating revenues - net of contractual allowancesand discountsProvision for bad debts (Note 2)23,236,901Operating expenses (Schedule 1)Program services - home careManagement and generalTotal operating expensesOperating gainNonoperating revenues and expenses and other changesHRA Recovery (Note 10)Contributed services (Note 13)Contributed services - professional fees (Note 13)Interest 48)Net assets - unrestricted - beginning of year6,734,297The accompanying notes are an integral part of these ge in unrestricted net assets (Exhibit C)See independent auditor's report. (669,006)Net operating revenues less provision for bad debtNet assets - unrestricted - end of year (Exhibit A)2013 2,792,149279,5236,454,774 6,734,297
EXHIBIT CSUNNYSIDE HOME CARE PROJECT, INC.STATEMENT OF CASH FLOWSYEARS ENDED JUNE 30, 2014 AND 20132014Cash flows from operating activitiesChange in net assets (Exhibit B)Adjustments to reconcile change in net assets to netcash provided (used) by operating activitiesDepreciation and amortizationDecrease (increase) in assetsAccounts receivablePrepaid expenses and other assetsDue from related partiesIncrease (decrease) in liabilitiesAccounts payable and accrued expensesDue to City of New York Human ResourcesAdministrationDue to related partiesGrant advances Net cash provided (used) by investing activitiesNet change in cash and cash equivalentsThe accompanying notes are an integral part of these 998,625(2,782)(2,279,703)Cash and cash equivalents - beginning of year618,0834,418,440 279,5232,660(3,278,328)Cash flows from investing activitiesPurchases of certificates of depositRedemptions of certificates of depositSee independent auditor's report.(3,942,148) 1,219Net cash provided (used) by operating activitiesCash and cash equivalents - end of year20132,138,7373,800,357 4,418,440
SUNNYSIDE HOME CARE PROJECT, INC.NOTES TO FINANCIAL STATEMENTSJUNE 30, 2014 AND 2013NOTE 1 - NATURE OF ORGANIZATIONSunnyside Home Care Project, Inc. (Sunnyside), a not-for-profit licensed home care serviceagency, was established to provide personal care services to the elderly and disabled personswho require such services in order to maintain themselves safely at home. Sunnyside is fundedprimarily by fees from the City of New York Human Resources Administration (HRA) andmanaged care revenues.Sunnyside is a not-for-profit organization exempt from federal income tax under Section501(c)(3) of the Internal Revenue Code.The accompanying financial statements were prepared to present the financial position, changesin net assets and cash flows of only Sunnyside Home Care Project, Inc., and do not include thefinancial position, changes in net assets and cash flows of its related organizations, SunnysideCommunity Services, Inc. (Community Services), and Sunnyside Citywide Home Care Services,Inc. (Citywide).NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESBasis of accounting - The financial statements are prepared on the accrual basis of accounting.Use of estimates - The preparation of financial statements in conformity with accountingprinciples generally accepted in the United States of America requires management to makeestimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the date of the financial statements and thereported amounts of revenues and expenses during the reporting period. Actual results coulddiffer from those estimates.Cash and cash equivalents - Cash and cash equivalents consist of cash and highly liquidinvestments with maturity dates, when acquired, of three months or less.Certificates of deposit - Certificates of deposit have maturity dates of more than three monthsand are considered investments for purposes of cash flow reporting.Accounts receivable and allowance for doubtful accounts - Sunnyside records receivablesbased on established rates or contracts for services provided. Bad debt is charged if thereceivable is determined to be uncollectible based on periodic review by management. Factorsused to determine whether an allowance should be recorded include the age of the receivableand a review of payments subsequent to year end. Accounting principles generally accepted inthe United States of America require that the allowance method be used to recognize bad debts.Interest is not charged on the outstanding balances.-continued-
2.SUNNYSIDE HOME CARE PROJECT, INC.NOTES TO FINANCIAL STATEMENTSJUNE 30, 2014 AND 2013NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)Fixed assets - Fixed assets and leasehold improvements are recorded at cost. Items with a costof 1,000 and an estimated useful life of greater than one year are capitalized. Fixed assets aredepreciated on the straight-line method over their estimated useful lives. Amortization ofleasehold improvements is recorded on the straight-line method over the term of the lease or theestimated useful life of the asset, whichever is shorter.Grant advances - Payments from government agencies in excess of qualifying expenses underthe terms of the contract are reflected on the balance sheet as grant advances.Unrestricted net assets - Unrestricted net assets include funds having no restriction as to use orpurpose imposed by donors.Contract and managed care revenues - Revenues from care of patients are reported at theestimated net realizable amounts from patients, third-party payors and others from servicesrendered, including estimated retroactive adjustments under reimbursement agreements withthird-party payors. Retroactive adjustments are accrued on an estimated basis in the period therelated 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 tointerpretation. As a result, there is at least a reasonable possibility that recorded estimates maychange by a material amount in the near term.Client fees - Fees are recognized during the period the related services are provided.Contributed services - Contributed services are reported at fair value at the date the contributionis received.Functional allocation of expenses - The costs of providing Sunnyside’s services have beensummarized on a functional basis. Accordingly, certain costs have been allocated among theprograms and supporting services benefited.Operating leases - Rent expense has been recorded on the straight-line basis over the life of thelease. Deferred rent, when material, is recorded for the difference between the fixed paymentand the rent expense.Measure of operations - Sunnyside includes in its definition of operations all revenues andexpenses associated with services provided to elderly and disabled persons. Excluded fromoperations are contributed services, interest income and HRA recovery.-continued-
3.SUNNYSIDE HOME CARE PROJECT, INC.NOTES TO FINANCIAL STATEMENTSJUNE 30, 2014 AND 2013NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)Uncertainty in income taxes - Sunnyside has determined that there are no material uncertain taxpositions that require recognition or disclosure in the financial statements. Periods endingJune 30, 2011 and subsequent remain subject to examination by applicable taxing authorities.Subsequent events - Subsequent events have been evaluated through February 17, 2015, whichis the date the financial statements were available to be issued.NOTE 3 - ACCOUNTS RECEIVABLEAt June 30, 2014 and 2013, accounts receivable consist of the following:2014NYC Department for the Aging Human Resources AdministrationAllowance for doubtful accounts386,3991,384,118(1,000,000)Human Resources Administration - netClientsAllowance for doubtful accounts384,118955,004(880,495)Clients - net74,5092013 157)44,535Managed careAllowance for doubtful d care - net3,920,1493,146,374 4,765,175 4,204,670Net receivable-continued-
4.SUNNYSIDE HOME CARE PROJECT, INC.NOTES TO FINANCIAL STATEMENTSJUNE 30, 2014 AND 2013NOTE 4 - RELATED-PARTY TRANSACTIONSSunnyside is related, through common board control, to Sunnyside Citywide Home CareServices, Inc. (Citywide) and Sunnyside Community Services, Inc. (Community Services).At June 30, 2014, Sunnyside is owed 369,599 from Community Services and owes Citywide 1,545,771. At June 30, 2013, Sunnyside is owed 112,743 from Community Services andowes Citywide 950,338. These represent normal operating expenses, are noninterest-bearingand due on demand.In addition, in 2014 and 2013 Community Services allocated rent and other expenses, asoutlined in the table below, to Sunnyside.2014Rent, real estate taxes and utilities expensesSalaries, fringe benefits and other expenses 198,929412,4142013 192,200133,624NOTE 5 - FIXED ASSETS2014Leasehold improvementsFurniture and equipment Accumulated depreciationand amortization 201331,043498,298 ontinued- 1,599EstimatedUseful Lives12-15 years5 years
5.SUNNYSIDE HOME CARE PROJECT, INC.NOTES TO FINANCIAL STATEMENTSJUNE 30, 2014 AND 2013NOTE 6 - LEASE COMMITMENTSSunnyside subleases its office located in Queens, New York from Community Services undertwo operating leases which expire on June 30, 2015 and provide for payments of real estatetaxes and utilities in addition to minimum rent. In the event that governmental funding isterminated, Sunnyside may cancel the subleases upon giving one month’s notice to CommunityServices.Rent expense for the years ended June 30, 2014 and 2013 was 140,399 and 137,511,respectively.The future minimum annual rental payments are due as follows:2015 143,347NOTE 7 - PENSION PLANNonunion Pension PlanSunnyside and its related entities maintain a 403(b) pension plan which covers all full timeemployees. On an annual basis, the Board determines a discretionary contribution for employeeswho are 21 years of age and have completed two years of service. Sunnyside’s contributionsamounted to 10,672 and 12,613 for the years ended June 30, 2014 and 2013, respectively.Union Pension PlanAll union employees of Sunnyside are covered by an employer contributory pension planadministered by the union. Union pension expense for the years ended June 30, 2014 and 2013was 184,457 and 49,940, respectively.-continued-
6.SUNNYSIDE HOME CARE PROJECT, INC.NOTES TO FINANCIAL STATEMENTSJUNE 30, 2014 AND 2013NOTE 7 - PENSION PLAN (continued)The following information was obtained from Sunnyside’s union-managed pension plan:PensionFundEIN/PensionPlanNumber1199 SEIUHome CareEmployeesPensionFundEIN13-3943904PlanNo. 001PensionProtection ActZone Date ofCollectiveBargainingAgreement 184,457 49,940NoSeptember2015ContributionsAs of the date the financial statements were available to be issued, Form 5500 was available forthe plan year ended December 31, 2013 and did not include 2014 plan information. However,the plan’s actuaries have certified that the plan is not endangered, seriously endangered orcritical, as those terms are defined in the Pension Protection Act of 2006 for the plan yearsbeginning January 1, 2014 and 2013.NOTE 8 - CONCENTRATIONSFinancial instruments which potentially subject Sunnyside to a concentration of credit risk arecash accounts with financial institutions in excess of FDIC insurance limits.In 2014, contracts with HRA represent 11% of total revenues and 20% of accounts receivable.Contracts with 3 managed care vendors represent 71% of total revenues and 42% of accountsreceivable.In 2013, contracts with HRA represent 58% of total revenues and 28% of accounts receivable.Contracts with 3 managed care vendors represent 32% of total revenues and 42% of accountsreceivable.-continued-
7.SUNNYSIDE HOME CARE PROJECT, INC.NOTES TO FINANCIAL STATEMENTSJUNE 30, 2014 AND 2013NOTE 9 - LINE OF CREDITSunnyside had a 1,000,000 line of credit with Citibank, N.A. bearing interest at .5% over thebank’s base rate of 3.25%, which was 3.75% at June 30, 2013. During 2014 and 2013, therewere no borrowings under the line of credit. All borrowings under the line of credit weresecured by a certificate of deposit with Citibank, N.A. On October 31, 2013, the line of creditexpired and the certificate of deposit was redeemed.NOTE 10 - HRA RECOVERYThe City of New York Human Resources Administration exercises control over the use of itsfunds and limits their use to the HRA program. HRA conducted a close-out for fiscal yearsended June 30, 2009, 2010 and 2011 and determined that Sunnyside refund 4,893,673. AtJune 30, 2014, there was a balance due to HRA of 693,580 relating to this refund. Sunnysidehas not recorded a liability for fiscal years 2012 through 2014 as the amounts areundeterminable until HRA completes a close-out audit for each fiscal year.NOTE 11 - HRA RATE REDUCTIONSNew York State Department of Health (DOH) imposed a 2% reduction of all Medicaid fundingand adjusted a previous trend factor retroactive to April 1, 2008 of 28 cents per hour, which,during 2012 was increased to 31 cents per hour. Total reductions to revenue during 2013 was 403,909, which was fully paid during 2013. There were no reductions during 2014.NOTE 12 - CONTINGENCIESSunnyside is responsible to report to various third parties, among which are DOH, the NewYork State Office of Attorney General (AG), the Internal Revenue Service, the New York StateDepartment of Charities Registration, the Office of Inspector General, and the Office ofMedicaid 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 documentationand physician certifications, among other compliance requirements.DOH increased the Medicaid rates to provide funding for recruitment, training and retention ofhome health aides and/or other personnel with direct patient care responsibility. Sunnyside isrequired to provide attestations certifying that these funds, if applicable, were paid to homehealth aides and other personnel with direct patient care responsibilities.-continued-
8.SUNNYSIDE HOME CARE PROJECT, INC.NOTES TO FINANCIAL STATEMENTSJUNE 30, 2014 AND 2013NOTE 12 - CONTINGENCIES (continued)During 2007, the Attorney General of the State of New York issued subpoenas to severalCertified Home Health Agencies (CHHAs) and Long Term Home Health Care Programs(LTHHCPs) citing that the Home Health Aides (HHAs) they contracted from licensed vendoragencies were not actually trained, and their certification as HHAs was falsified. Therefore, theCHHAs and LTHHCPs billed Medicaid for ineligible services. Sunnyside maintains that itperformed proper due diligence to assure that the HHAs it employs have appropriate trainingand certification. Sunnyside did not receive a subpoena; however, this matter and the AttorneyGeneral’s investigation have not been concluded. Sunnyside’s management believes that theyhave no exposure in this matter.NOTE 13 - CONTRIBUTED SERVICESIn 2013, Sunnyside received in-kind assistance with leadership development and humanresource practices; professional development and talent strategy; and real estate planning. Thetotal value of contributed services of 157,223 has been reflected as revenues and expenses inthe accompanying statement of activities. There were no contributed services received in 2014.NOTE 14 - FUNCTIONAL EXPENSESSunnyside provides home care services to the elderly and disabled persons. Expenses related toproviding these services in 2014 and 2013 are functionalized as follows:Program - home care servicesManagement and generalTotal expenses20142013 25,424,4911,874,252 27,528,4391,537,309 27,298,743 29,065,748
SUNNYSIDE HOME CARE PROJECT, INC.SCHEDULE 1SCHEDULE OF OPERATING EXPENSESYEARS ENDED JUNE 30, 2014 AND 20132014ManagementandGeneralProgramServicesHome CarePersonnel and related costsConsultantsOccupancy and telephoneRepairs and maintenanceComputer servicesSupplies, postage and printingTravel and conferencesHealth care assessmentOther Total expenses beforedepreciation andamortizationDepreciation and amortizationTotal expensesSee independent auditor's report. ,219 913,47526,69325,424,491 1,874,252 ome Care 05,8651,4291,2312,66027,528,439 l1,380,086 28,908,525
Program services - home care 25,424,491 27,528,439 Management and general 1,874,252 1,380,086 Total operating expenses 27,298,743 28,908,525 . 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 .
