Return to flip book view

CLAconnect.comWEALTH ADVISORYOUTSOURCINGAUDIT, TAX, AND CONSULTINGHOPE HOUSE FOR THE MULTIPLE HANDICAPPED (A California Nonprofit Corporation) Financial Statements and Independent Auditors’ Report For the Years Ended August 31, 2019 and 2018

HOPE HOUSE FOR THE MULTIPLE HANDICAPPED (A California Nonprofit Corporation) TABLE OF CONTENTS For the Years Ended August 31, 2019 and 2018 Independent Auditors’ Report ................................................................................................................... 1 Statements of Financial Position ............................................................................................................... 3 Statements of Activities............................................................................................................................. 4 Statements of Cash Flows ........................................................................................................................ 5 Statements of Functional Expenses ......................................................................................................... 6 Notes to the Financial Statements ............................................................................................................ 8 Independent Auditors’ 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 ............................................................................................................. 15

1 INDEPENDENT AUDITORS’ REPORT Board of Directors Hope House for the Multiple Handicapped El Monte, California Report on the Financial Statements We have audited the accompanying financial statements of Hope House for the Multiple Handicapped (the Organization), a California nonprofit public benefit corporation, which comprise the statements of financial position as of August 31, 2019 and 2018, and the related statements of activities, cash flows and functional expenses for the years 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 and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the 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 auditors’ 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 organization’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 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 financial statements.

2 Board of Directors Hope House for the Multiple Handicapped 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 on page one present fairly, in all material respects, the financial position of the Organization as of August 31, 2019 and 2018, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued a report dated April 28, 2020 on our consideration of the Organization’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely 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 effectiveness of the Organization’s 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 the Organization’s internal control over financial reporting and compliance. CliftonLarsonAllen LLP Glendora, California April 28, 2020

HOPE HOUSE FOR THE MULTIPLE HANDICAPPED (A California Nonprofit Corporation) STATEMENTS OF FINANCIAL POSITION August 31, 2019 and 2018 The accompanying notes are an integral part of these financial statements. 3 2019 2018ASSETSCURRENT ASSETS Cash and Cash Equivalents 169,462$ 452,248$ Investments 564,272 - Accounts Receivable 852,775 598,707 Total Current Assets 1,586,509 1,050,955 LONG-TERM ASSETS Property, Plant, and Equipment, Net 1,570,893 1,438,944Other Long Term Assets 45,616 21,493Total Long-Term Assets 1,616,509 1,460,437 Total Assets 3,203,018$ 2,511,392$ LIABILITIES AND NET ASSETSCURRENT LIABILITIESAccounts Payable and Accrued Liabilities 985,194$ 651,690$ Notes Payable, Current Portion 156,158 83,314Total Current Liabilities 1,141,352 735,004 LONG-TERM LIABILITIES Notes Payable, net of current portion 1,147,800 1,856,644Total Long-Term Liabilities 1,147,800 1,856,644 NET ASSETSWithout Donor Restriction 913,866 (80,256) Total Net Assets 913,866 (80,256) Total Liabilities and Net Assets 3,203,018$ 2,511,392$

HOPE HOUSE FOR THE MULTIPLE HANDICAPPED (A California Nonprofit Corporation) STATEMENTS OF ACTIVITIES For the Years Ended August 31, 2019 and 2018 The accompanying notes are an integral part of these financial statements. 4 2019 2018REVENUES, WITHOUT DONOR RESTRICTIONProgram Revenues 6,371,905$ 6,177,115$ Contributions 1,634,503 171,108Fundraising 196,750 222,675Investment Return 47,182 - Other Revenue 45,356 10,631Total Revenues 8,295,696 6,581,529 EXPENSESProgram Services 6,162,137 5,976,800Management and General 1,010,367 472,750 Fundraising 129,070 187,770 Total Expenses 7,301,574 6,637,320 CHANGE IN NET ASSETS994,122 (55,791) Net Assets Without Donor Restriction, Beginning of Year (80,256) (24,465) NET ASSETS WITHOUT DONOR RESTRICTION, END OF YEAR913,866$ (80,256)$

HOPE HOUSE FOR THE MULTIPLE HANDICAPPED (A California Nonprofit Corporation) STATEMENTS OF CASH FLOWS For the Years Ended August 31, 2019 and 2018 The accompanying notes are an integral part of these financial statements. 5 2019 2018CASH FLOWS FROM OPERATING ACTIVITIESChange in Net Assets 994,122$ (55,791)$ Adjustments to Reconcile Change in Net Assets to Net Cash Flows from Operating Activities: Depreciation 65,071 65,206 Donated Investments (1,224,859) - Realized Gains on Investments (7,918) - Unrealized Gains on Investments (23,592) - Change in Operating Assets and Liabilities:Accounts Receivable (254,068) (33,309) Prepaid Expenses - 3,121 Other Long-Term Assets (24,123) (9,293) Accounts Payable and Accrued Liabilities 333,504 17,651 Net Cash Flows from Operating Activities (141,863) (12,415) CASH FLOWS FROM INVESTING ACTIVITIESProceeds from Sale of Investments 2,648,863 - Purchases of Investments (1,956,766) Purchases of Property, Plant, and Equipment (197,020) (588,571) Net Cash Flows from Investing Activities 495,077 (588,571) CASH FLOWS FROM FINANCING ACTIVITIESProceeds from Issuance of Debt 28,407 562,150 Repayments of Debt (664,407) (35,505) Net Cash Flows from Financing Activities (636,000) 526,645 CHANGE IN CASH AND CASH EQUIVALENTS(282,786) (74,341) Cash and Cash Equivalents, Beginning of Year 452,248 526,589 CASH AND CASH EQUIVALENTS, END OF YEAR169,462$ 452,248$ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONInterest Paid During the Year 92,188$ 85,065$

HOPE HOUSE FOR THE MULTIPLE HANDICAPPED (A California Nonprofit Corporation) STATEMENT OF FUNCTIONAL EXPENSES For the Year Ended August 31, 2019 The accompanying notes are an integral part of these financial statements. 6 Program Management 2019Services and General Fundraising TotalSalaries and Wages 4,236,681$ 593,404$ 83,674$ 4,913,759$ Other Employee Benefits 374,928 52,514 7,405 434,847 Payroll Taxes 346,932 48,593 6,852 402,377 Accounting Expenses - 10,930 - 10,930 Other Fees for Services 274,468 53,140 - 327,608 Office Expenses 22,097 72,075 - 94,172 Printing and Postage Expenses - 2,627 - 2,627 Occupancy Expenses 402,604 - - 402,604 Transportation 34,485 - - 34,485 Interest Expense 1,238 90,950 - 92,188 Depreciation Expense 65,071 - - 65,071 Insurance Expense - 78,731 - 78,731 Other Expenses 403,633 7,403 31,139 442,175 Total Expenses by Function 6,162,137$ 1,010,367$ 129,070$ 7,301,574$

HOPE HOUSE FOR THE MULTIPLE HANDICAPPED (A California Nonprofit Corporation) STATEMENT OF FUNCTIONAL EXPENSES For the Year Ended August 31, 2018 The accompanying notes are an integral part of these financial statements. 7 Program Management 2018Services and General Fundraising TotalSalaries and Wages 4,052,634$ 310,565$ 113,320$ 4,476,519$ Other Employee Benefits 361,778 34,140 3,425 399,343 Payroll Taxes 336,523 27,773 9,676 373,972 Accounting Expenses - 10,085 205 10,290 Other Fees for Services 264,513 - - 264,513 Office Expenses - 88,240 2,755 90,995 Printing and Postage Expenses - 1,947 - 1,947Occupancy Expenses 365,345 - 7,512 372,857Transportation 5,823 - 29,885 35,708 Interest Expense 85,065 - - 85,065 Depreciation Expense 61,043 - 4,163 65,206 Insurance Expense 72,403 - 7,550 79,953 Other Expenses 371,673 - 9,279 380,952 Total Expenses by Function 5,976,800$ 472,750$ 187,770$ 6,637,320$

HOPE HOUSE FOR THE MULTIPLE HANDICAPPED (A California Nonprofit Corporation) NOTES TO THE FINANCIAL STATEMENTS For the Years Ended August 31, 2019 and 2018 8 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Activities Since 1963, Hope House for the Multiple Handicapped, Inc. has provided care and treatment services to children and adults with intellectual and developmental disabilities. Services are provided in 11 different residential settings, which include 5 Group Homes for children, 3 Adult Residential Facilities and 3 Intermediate Care Facilities (ICFDDH). Total residential capacity is 59. Additionally, a respite program is operating which sends qualified personnel into private homes for short periods of time (usually less than 4 hours). All programs are operated under the Organization's name. Primary funding of the ICF programs come from the State of California (Medi-Cal program). All others are funded by rate agreements from Regional Centers supported by the California Department of Developmental Services, Los Angeles County Department of Children and Family Services and other county child welfare agencies in California. Basis of Accounting The financial statements have been prepared on the accrual method of accounting and accordingly reflect all significant receivables and liabilities. Basis of Presentation The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America as prescribed by the Financial Accounting Standards Board. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and disclosures. Accordingly, actual results could differ from those estimates. Functional Allocation of Expenses Costs of providing the Organization’s programs and other activities have been presented in the statement of functional expenses. During the year, such costs are accumulated into separate groupings as either direct or indirect. Indirect or shared costs are allocated among program and support services by a method that best measures the relative degree of benefit. The expenses that are allocated include salaries and wages, other employee benefits, payroll taxes, other fees for services, office expenses, and other expenses, which are allocated on the basis of estimates of time and effort. Cash and Cash Equivalents For purposes of the statement of cash flows, the Organization considers all highly liquid investments with maturity of three months or less to be cash equivalents.

HOPE HOUSE FOR THE MULTIPLE HANDICAPPED (A California Nonprofit Corporation) NOTES TO THE FINANCIAL STATEMENTS For the Years Ended August 31, 2019 and 2018 9 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Net Asset Classes Net assets, revenues, gains, and losses are classified based on the existence or absence of donor or grantor imposed restrictions. Accordingly, net assets and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions – Net assets available for use in general operations and not subject to donor restrictions. Net Assets With Donor Restrictions – Net assets subject to donor-imposed restrictions. Some donor-imposed restrictions are temporary in nature, such as those that will be met by the passage of time or other events specified by the donor. Other donor-imposed restrictions are perpetual in nature, where the donor stipulates that resources be maintained in perpetuity. Gifts of long-lived assets and gifts of cash restricted for the acquisition of long-lived assets are recognized as restricted revenue when received and released from restrictions when the assets are placed in service. Donor-imposed restrictions are released when a restriction expires, that is, when the stipulated time has elapsed, when the stipulated purpose for which the resource was restricted has been fulfilled, or both. Accounts Receivable Accounts receivable primarily represent amounts due from state governments as of August 31, 2019 and 2018. Management believes that all receivables are fully collectible; therefore, no provisions for uncollectible accounts were recorded. Investments Investments are recorded at fair value. Both unrealized gains and losses from the fluctuation of fair value and realized gains and losses from the sale of investments are reflected in the Statement of Activities, if they are material. Property, plant and equipment Property, plant and equipment are stated at cost, if purchased or at estimated fair value, if donated. Depreciation is provided on a straight line basis over the estimated useful lives of the assets. The Organization capitalizes all costs for land, buildings, and equipment in excess of $500. Income Taxes The Organization is a non-profit entity exempt from the payment of income taxes under Internal Revenue Code Section 501(c)(3) and California Revenue and Taxation Code Section 23701d. Accordingly, no provision has been made for income taxes. Management has determined that all income tax positions are more likely than not of being sustained upon potential audit or examination; therefore, no disclosures of uncertain income tax positions are required. The Organization is subject to income tax on net income that is derived from business activities that are unrelated to the exempt purposes. The Organization files exempt Organization returns in the US federal jurisdiction and with the California Franchise Tax Board.

HOPE HOUSE FOR THE MULTIPLE HANDICAPPED (A California Nonprofit Corporation) NOTES TO THE FINANCIAL STATEMENTS For the Years Ended August 31, 2019 and 2018 10 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Contributions All contributions are considered to be available for use unless specifically restricted by the donor. Amounts received that are restricted to specific use or future periods are reported as contributions with donor restrictions. Restricted contributions that are received and released in the same period are reported as contributions without donor restrictions. Unconditional promises to give expected to be received in one year or less are recorded at net realizable value. Unconditional promises to give expected to be received in more than one year are recorded at fair value at the date of the promise. Conditional promises to give are not recognized until they become unconditional, that is, when the conditions on which they depend are substantially met. Compensated Absences Accumulated unpaid employee vacation benefits are recognized as a liability of the Organization. The entire compensated absences liability is reported in the accounts payable and accrued liabilities line on the statements of financial position. Employees of the Organization are paid for days or hours worked based upon board approved schedules which include vacation. The compensated absences liability as of August 31, 2019 and 2018 was $329,809 and $286,959, respectively. Change in Accounting Principle On August 18, 2016, FASB issued Accounting Standards Update (ASU) 2016-14, Not-for-Profit Entities (Topic 958) – Presentation of Financial Statements of Not-for-Profit Entities. The update addresses the complexity and understandability of net asset classification, deficiencies in information about liquidity and availability of resources, and the lack of consistency in the type of information provided about expenses and investment return. The Organization has implemented ASU 2016-14 and has applied have adjusted the presentation in these financial statements accordingly. The ASU has been applied retrospectively to all periods presented, except for Note 2, Liquidity and Availability. Evaluation of Subsequent Events - The Organization has evaluated subsequent events through April 28, 2020, the date these financial statements were available to be issued. NOTE 2 LIQUIDITY AND AVAILABILITY Financial assets available for general expenditure are those without donor or other restrictions limiting their use within one year of the statement of financial position date. Financial assets available for general expenditures comprise cash and cash equivalents, investments and accounts receivable, less amounts held for others for the total amount of $1,576,970. As part of its liquidity management plan, the Organization monitors liquidity required and cash flows to meet operating needs on a monthly basis. The Organization structures its financial assets to be available as general expenditures, liabilities and other obligations come due.

HOPE HOUSE FOR THE MULTIPLE HANDICAPPED (A California Nonprofit Corporation) NOTES TO THE FINANCIAL STATEMENTS For the Years Ended August 31, 2019 and 2018 11 NOTE 3 CONCENTRATION OF CREDIT RISK The Organization maintains cash balances held in banks, which are insured up to $250,000 by the Federal Depository Insurance Corporation (FDIC). At times, cash in these accounts exceeds the insured amounts. The Organization has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on its cash and cash equivalents. NOTE 4 INVESTMENTS AND FAIR VALUE MEASUREMENTS In accordance with fair value reporting standards, levels 1 through 3 have been assigned to the fair value measurement of investment. The fair value level of measurement is determined as follows: Level 1 – Quoted prices in an active market for identical assets. Level 2 – Quoted prices for similar assets and market-corroborated inputs. The Organization had no Level 2 investments at August 31, 2019. Level 3 – The Organization’s own assumptions about market participation, including unobservable assumptions about risk, developed based on the best information available in the circumstances. The Organization had no Level 3 investments at August 31, 2019. Investments at August 31, 2019 consisted of the following: Fair ValueCash Portion of Investments 105,368$ Domestic Equities Fund (Level 1) 208,904 Fixed Income Fund (Level 1) 250,000 564,272$ For the year ended August 31, 2019, investment returns consisted of the following: Interest and Dividends 15,672$ Realized Gains 7,918 Unrealized Gains 23,592 47,182$

HOPE HOUSE FOR THE MULTIPLE HANDICAPPED (A California Nonprofit Corporation) NOTES TO THE FINANCIAL STATEMENTS For the Years Ended August 31, 2019 and 2018 12 NOTE 5 PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment in the accompanying financial statements is presented net of accumulated depreciation. Depreciation expense was $65,071 and $65,206 for the years ended August 31, 2019 and 2018, respectively. The components of property, plant and equipment as of August 31, 2019 and 2018 are as follows: 2019 2018Land 563,466$ 563,466$ Building 1,881,628 1,794,645Furniture, Fixtures, Equipment 728,598 636,066 Leasehold Improvements 115,736 115,736 3,289,428 3,109,913 Less: Accumulated Depreciation (1,718,535) (1,670,969) Property, Plant and Equipment, Net 1,570,893$ 1,438,944$ NOTE 6 NOTES PAYABLE In July 2015, the Organization obtained an auto loan with an original amount of $7,398. The loan is secured by the automobile purchase and requires monthly payments of principal and interest in the amount of $185. The interest rate is 8.99% with a maturity date of August 2019. There was no balance as of August 31, 2019. The balance of the loan as of August 31, 2018 was $1,596. In June 2016, the Organization obtained a promissory note with an original amount of $1,500,000. The note is secured by the organization’s property in El Monte, California and requires monthly payments of principal and interest in the amount of $8,992. The interest rate is 5.25% with a maturity date of June 2046. The balance of the loan as of August 31, 2019 and 2018 was $769,886 and $1,415,411, respectively. In May 2018, the Organization obtained a promissory note with an original amount of $562,150. The note is secured by the organization’s property in Baldwin Park, California and requires monthly payments of principal and interest in the amount of $3,370. The interest rate is 5.25% with a maturity date of May 2026. The balance of the loan as of August 31, 2019 and 2018 was $545,066 and $560,097, respectively. In October 2018, the Organization obtained an equipment loan with an original amount of $5,303. The loan is secured by the equipment purchase and requires monthly payments of principal and interest in the amount of $178. There is no interest related to this loan and it has a maturity date of November 2021. The balance of the loan as of August 31, 2019 was $3,726.

HOPE HOUSE FOR THE MULTIPLE HANDICAPPED (A California Nonprofit Corporation) NOTES TO THE FINANCIAL STATEMENTS For the Years Ended August 31, 2019 and 2018 13 NOTE 6 NOTES PAYABLE (CONTINUED) In December 2018, the Organization obtained an equipment loan with an original amount of $6,056. The loan is secured by the equipment purchase and requires monthly payments of principal and interest in the amount of $156. There is no interest related to this loan and it has a maturity date of January 2022. The balance of the loan as of August 31, 2019 was $4,196. In August 2019, the Organization obtained an auto loan with an original amount of $16,992. The loan is secured by the automobile purchase and requires monthly payments of principal and interest in the amount of $346. The interest rate is 8.04% with a maturity date of September 2024. The balance of the loan as of August 31, 2019 was $16,992. Costs associated with obtaining financing are recorded as debt issue costs and are reported as a reduction against total notes payable on the statements of financial position. These costs are amortized to interest expense over the term of the note payable. Amortization of debt issue costs for the years ended August 31, 2019 and 2018 was $1,376 and $1,238, respectively. Debt issue costs as of August 31, 2019 and 2018 were $35,908 and $37,146, respectively. Total future maturities for long-term debt are as follows: Year Ended August 31,2020 156,158$ 2021 155,958 2022 152,948 2023 152,496 2024 149,074 Thereafter 573,232 Less: Debt Issuance Cost (35,908) Total 1,303,958$ NOTE 7 CASH HELD FOR OTHERS The Organization maintains funds for the personal and incidental needs of individual clients. A corresponding liability is included in accounts payable and accrued liabilities section of the statements of financial position. The amounts totaled $9,539 and $15,507 as of August 31, 2019 and 2018 respectively.

HOPE HOUSE FOR THE MULTIPLE HANDICAPPED (A California Nonprofit Corporation) NOTES TO THE FINANCIAL STATEMENTS For the Years Ended August 31, 2019 and 2018 14 NOTE 8 OPERATING LEASES The Organization leases some of its facilities under several lease agreements which expire through March 2023. Future minimum lease payments are as follows: Year Ended August 31,2020 129,650$ 2021 118,500 2022 117,120 2023 17,940 Total 383,210$ NOTE 9 COMMITMENTS The Organization has a line of credit with a financial institution with available credit up to $88,000. The line of credit bears an annual interest rate of 11.5%. There was no balance outstanding as of the years ended August 31, 2019 and 2018. NOTE 10 SUBSEQUENT EVENTS Subsequent to the fiscal year end, the World Health Organization declared the spread of Coronavirus Disease (COVID-19) a worldwide pandemic. The COVID-19 pandemic is having significant effects on global markets, supply chains, businesses, and communities. Specific to the Organization, COVID-19 may impact various parts of its 2020 operations and financial results including but not limited to declines in contributions, additional bad debts, costs for increased use of technology, or potential shortages of personnel. Management believes the Organization is taking appropriate actions to mitigate the negative impact. However, the full impact of COVID-19 is unknown and cannot be reasonably estimated as these events occurred subsequent to year end and are still developing.

INDEPENDENT AUDITORS’ 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 Board of Directors Hope House for the Multiple Handicapped El Monte, California We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of Hope House for the Multiple Handicapped (the Organization), a nonprofit California public benefit corporation, which comprise the statement of financial position as of August 31, 2019, and the related statements of activities, cash flows, and functional expenses for the year then ended, the related notes to the financial statements, and have issued our report thereon dated April 28, 2020. Internal Control Over Financial Reporting In planning and performing our audit, we considered the Organization’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Organization’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Organization’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency or a combination of deficiencies in internal control such that there is a reasonable possibility that a material misstatement of the financial statements will not be prevented or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Board of Directors Hope House for the Multiple Handicapped 16 Compliance and Other Matters As part of obtaining reasonable assurance about whether the Organization’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of 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 non-compliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the organization’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. ClifornLarsonAllen LLP Glendora, California April 28, 2020

Investment advisory services are oered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor. | CliftonLarsonAllen LLP