THE ARC OF HILO (A Hawaii Nonprofit Corporation) AUDITED

THE ARC OF HILO (A Hawaii Nonprofit Corporation)

AUDITED CONSOLIDATED FINANCIAL STATEMENTS (With Independent Auditors’ Report) FOR THE YEAR ENDED JUNE 30, 2016

TABLE OF CONTENTS

Page Independent Auditors’ Report on Consolidated Financial Statements and Supplemental Schedules

1

Consolidated Financial Statements: Consolidated Statement of Financial Position

3

Consolidated Statement of Activities and Changes in Net Assets

5

Consolidated Statement of Functional Expenses

6

Consolidated Statement of Cash Flows

7

Notes to the Consolidated Financial Statements

8

Schedule of Expenditures of Federal Awards Notes to the Schedule of Expenditures of Federal Awards

14 15

Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Consolidated financial statements Performed in Accordance with Government Auditing Standards

16

Independent Auditor's Report on Compliance for Each Major Federal Program and on Internal Control Over Compliance Required by the Uniform Guidance

18

Schedule of Findings and Questioned Costs

20

Supplementary Information:

23

Consolidating Statement of Financial Position

24

Consolidating Statement of Activities and Changes in Net Assets

26

Certified Public Accountants Member: AICPA HSCPA

INDEPENDENT AUDITORS’ REPORT ON CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES To the Board of Directors and Management of The Arc of Hilo Hilo, HI 96720 We have audited the accompanying consolidated financial statements of The Arc of Hilo (a nonprofit organization) and affiliate, which comprise the consolidated statement of financial position as of June 30, 2016, and the related consolidated statements of activities and changes in net assets, functional expenses, and cash flows for the year then ended, and the related notes to the consolidated financial statements. Management’s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of The Arc of Hilo as of June 30, 2016, and the consolidated changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Maui: Big Island: 1885 Main Street, Suite 408 ● Wailuku, Hawaii 96793 Location: 136 Kinoole Street ● Hilo, Hawaii 96720 Mailing: P.O. Box 4372 ● Hilo, Hawaii 96720 310 Ohukai Road, Suite 305 ● Kihei, Hawaii 96753 Phone: 808.242.5002 www.carbocpa.com Phone: 808.930.9850

To the Board of Directors and Management of The Arc of Hilo (continued) Other Matters The prior year summarized comparative information have been derided from The Arc of Hilo’s 2015 consolidated financial statements and were audited by other auditors whose report dated September 29, 2015, expressed an unmodified opinion on those statements. Report on Supplementary Information Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The Consolidating Statement of Financial Position and Consolidating Statement of Activities and Changes in Net Assets on pages 24-26 are presented for purposes of additional analysis and are not a required part of the 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 financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the 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 financial statements as a whole. Other Information Our audit was conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The accompanying Schedule of Expenditures of Federal Awards, as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 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 15, 2017, on our consideration of The Arc of Hilo’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 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 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 Arc of Hilo’s internal control over financial reporting and compliance.

Carbonaro CPAs & Management Group Hilo, Hawaii March 15, 2017

Page 2

THE ARC OF HILO Consolidated Statements of Financial Position As of June 30, 2016 and 2015 ASSETS

2016 CURRENT ASSETS Cash and Cash Equivalents Reserve for Replacements Cash (Note 8) Tenant Security Deposit (Note 8) Total Cash and Cash Equivalents (Note 2) Accounts Receivable (Net of Allowance of Doubtful Accounts of $1,493 as of June 30, 2016 and 2015) (Note 2) Grants Receivable (Note 2) Investments (Note 12) Other Recievables Prepaids and Other Assets Total Current Assets FIXED ASSETS (Note 2) Land Buildings Furniture and Equipment Vehicles Residence Improvements Construction in Progress Accumulated Depreciation Net Fixed Assets TOTAL ASSETS

$

405,612 359,577 18,752 783,941

2015 $

874,714 296,467 19,381 1,190,562

223,193 77,686 63,047 17,392

183,991 91,045 64,529 18,917 14,462

1,165,259

1,563,506

1,688,376 6,678,809 903,723 332,356 26,445 -

222,013 3,962,589 723,582 379,406 26,445 4,128,014

(4,038,071)

(3,760,514)

5,591,638

5,681,535

$ 6,756,897

$ 7,245,041

The accompanying notes are an integral part of these consolidated financial statements. Page 3

THE ARC OF HILO Consolidated Statements of Financial Position As of June 30, 2016 and 2015 LIABILITIES AND NET ASSETS

2016 CURRENT LIABILITIES Accounts Payable Other Payables Accrued Interest Accrued Payroll Current Portion of Mortgage and Notes Payable (Note 5) Tennant Security Deposits (Note 8) Other Deposits Deferred Revenue Total Current Liabilities

$

80,568 11,654 10,125 69,921 296,473 18,752 5,275 -

2015 $

275,019 30,392 10,636 94,320 318,456 19,381 2,075 5,000

492,768

755,279

LONG TERM LIABILITIES Mortgage and Notes Payable (Note 5)

2,102,095

2,217,361

Total Long Term Liabilities

2,102,095

2,217,361

4,162,034 -

4,272,401 -

4,162,034

4,272,401

$ 6,756,897

$ 7,245,041

NET ASSETS (Note 3) Unrestricted Net Assets Temporarily Restricted Net Assets Total Net Assets TOTAL LIABILITIES AND NET ASSETS


THE ARC OF HILO Consolidated Statement of Activities and Changes in Net Assets For the Year Ended June 30, 2016 (With Comparative Totals For the Year Ended June 30, 2015)

Unrestricted SUPPORT AND REVENUES Sales and Services State of Hawaii Contracts Housing Assistance (Note 16) Rental and Laundry Income Other Federal Grants Private Foundation Income Donations Program Revenue Other Income Fundraising and Sales County of Hawaii Grants

$

Hawaii United Way

-

$

45,000

Total Expenses $

NET ASSETS, JUNE 30, 2015

(45,000) -

1,429,645 924,951 364,357 211,298 80,689 74,871 38,763 31,283 23,449 20,671 20,000

$

1,700,002 981,003 367,878 204,401 376,515 46,285 20,331 50,255 (708) 8,056 70,000 25,000

1,243 (2,439) 3,223,881

1,636 (1,338) 3,849,316

2,607,110 552,515 94,034 80,589

-

2,607,110 552,515 94,034 80,589

2,633,706 537,257 137,435 75,538

3,334,248

-

3,334,248

3,383,936

(110,367)

$

4,272,401 $

2015 Total

5,100

1,243 (2,439) 45,000 3,223,881

EXPENSES Rehabilitation and Training Services HUD Residential Services General and Administrative Expenses Fundraising


$

2016 Total

5,100

Interest and Dividend Income Unrealized Loss on Investments Net Assets Released from Restrictions Total Support and Revenues

CHANGE IN NET ASSETS

1,429,645 924,951 364,357 211,298 80,689 29,871 38,763 31,283 23,449 20,671 20,000

Temporarily Restricted

4,162,034

-

$

$

-

(110,367)

$

4,272,401 $

4,162,034

465,380 3,807,021

$


4,272,401

THE ARC OF HILO Consolidated Statement of Functional Expenses For the Year Ended June 30, 2016 (With Comparative Totals For the Year Ended June 30, 2015) Rehabilitation Training and Other Projects Salaries and Wages $ 1,395,621 Depreciation 226,102 Health Insurance and Benefits 287,988 Utilities and Telephone 117,583 Repairs and Maintenance 80,091 Interest 647 Property Management Payroll Taxes 98,460 Supplies 103,660 Insurance 63,345 General Excise Taxes 54,862 Program Expenses 54,579 Professional Fees 17,861 Travel 34,233 Vehicle Expenses 28,199 Rent and Property Taxes 17,895 Dues and Commissions 12,197 Cost of Goods Sold 5,198 Printing and Postage 1,704 Bank Fees 1,832 Other Expenses 5,053 Total Expenses

$ 2,607,110

HUD Residential Services

General and Administrative

Fundraising

$

8,146 110,448 1,033 59,032 86,275 124,250 126,935 601 329 20,113 135 13,908 8 331 18 369 55 529

$

$

552,515

$

$

59,911 3,850 2,893 748 5,684 4,605 6,918 2,490 3,743 25 286 5,562

63,518 130 7,278 797 612

6,164 1,344 71 49 194

1,824 240

44

1,578

165

(6,323)

223

94,034

$

80,589

2016 Total

2015 Total

$ 1,527,196 $ 1,662,176 340,530 193,445 299,192 358,654 178,160 189,442 172,662 156,783 129,502 136,235 126,935 126,847 112,143 121,084 107,823 94,155 87,272 77,965 55,022 65,866 54,914 46,078 37,525 42,111 34,241 34,838 30,023 32,925 18,510 17,466 12,215 17,344 5,198 3,450 3,816 4,629 1,887 2,385 (518) 58 $ 3,334,248


$ 3,383,936

THE ARC OF HILO Consolidated Statements of Cash Flows For the Years Ended June 30, 2016 and 2015

2016

2015

CASH FLOWS FROM OPERATING ACTIVITIES Cash Received Sales and Services Cash Received State of Hawaii Contracts Cash Received Rental, Laundry and Program Revenue Cash Received from Housing Assistance, Federal Grants, Donations, and Other Grants Cash Recevied from Fundraising, Sales and Other Income Interest Received Cash Paid for Interest Cash Paid to Employees and Vendors Net Cash (Used) Provided by Operating Activities (Note 9)

$

1,443,004 885,749 242,581

$

1,688,525 1,169,789 254,683

597,697 44,120 1,243 (128,991) (3,103,185) (17,782)

887,586 7,322 1,636 (136,235) (2,844,213) 1,029,093

CASH FLOWS FROM INVESTING ACTIVITIES Net Purchase/Reinvestment of Certificate of Deposit Purchase of Fixed Assets and Construction in Progress Net Cash Used by Investing Activities

(957) (250,633) (251,590)

(1,367) (847,558) (848,925)

CASH FLOWS FROM FINANCING ACTIVITIES Payments on Notes and Mortgage Payable Net Cash Used by Financing Activities

(137,249) (137,249)

(167,078) (167,078)

(406,621)

13,090

Net (Decrease) Increase in Cash for the Year

CASH BALANCE, BEGINNING OF YEAR CASH BALANCE, END OF YEAR

1,190,562 $

783,941

1,177,472 $

1,190,562


The Arc of Hilo Notes to the Consolidated Financial Statements June 30, 2016

Note 1. ORGANIZATION The Arc of Hilo (Organization) was incorporated in 1954 as a nonprofit corporation under the laws of the State of Hawaii. The Organization’s mission is to provide residential, educational and vocational opportunities for people with developmental disabilities in the County of Hawaii. The Arc also conducts business under the registered trade name Hale Ulu Hoi. In addition, The Arc’s residential facilities are administered through two affiliated corporations, Hilo Arc Housing Corporation No. 1 (Housing Corporation) and Hale Ulu Hoi III. The Arc exerts direct control over the operations of the Housing Corporation and Hale Ulu Hoi III, and the three corporations share a common Board of Directors. Collectively these entities are referred to as the Organization.

Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Consolidation of Related Entity - The Organization has adopted the provisions of the American Institute of Certified Public Accountants (AICPA) Statement of Position No. 94-3 (SOP 94-3), “Reporting of Related Entities by Not-for-Profit Agencies.” SOP 94-3 states that a not-for-profit Organization should consolidate another not-for-profit Organization if the reporting not-for-profit Organization has both control of the other not-for-profit Organization, as evidenced by either majority ownership or a majority voting interest in the board of the other not-for-profit Organization, and an economic interest in the other not-for-profit Organization. All significant intercompany transactions and accounts are eliminated. The related entities are identified as follows: 1. Hale Ulu Hoi 2. Hilo Arc Housing Corporation No. 1 3. Hale Ulu Hoi III Revenue and Expense Recognition - The Organization follows standards of accounting and financial reporting for voluntary health and welfare organizations as described in the American Institute of Certified Public Accountants' "Industry Guide for Audits of Voluntary Health and Welfare Organizations." Accordingly, the consolidated financial statements are prepared on the accrual basis of accounting. Under this method of accounting, revenue is recognized when earned rather than when received, and expenses are recognized when incurred rather than when paid. For contributions and donations, revenue is recognized when the gift is received. For grants, revenue is recognized as the applicable requirements are fulfilled. Receivable - Accounts and Grants Receivable represents revenue earned and not yet received. Management reviews the receivables and charges off accounts when they determine they are uncollectible. Management periodically reviews the accounts receivable to determine the allowance for doubtful accounts based on historical collection rates, industry standards and the composition of the accounts receivable balance. Management has determined an allowance for doubtful accounts of $1,493 at June 30, 2016. Fixed Assets - Fixed assets are stated at cost. The Organization capitalizes amounts with a useful life greater than one year and over $1,000. Depreciation is computed on the straight-line basis over the estimated useful lives of the assets. Donated property and equipment are recorded as revenue at their estimated fair value. Such donations are reported as unrestricted revenue unless the donor has restricted the donated asset to a specific purpose.

Page 8


Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Advertising Expense - The Organization expenses advertising when the expense is incurred. Donated Facilities - The Arc of Hilo occupies land and a building in Hilo, Hawaii, leased from the Department of Human Services, which is leased for annual rental of one dollar ($1.00) per year. In addition, land for the 2 HUD projects are leased from the Department of Land and Natural Resources for an annual lease payment for similar amounts. No amounts have been reflected in the statements for the donated portion of the rent of these facilities inasmuch as no objective basis is available to measure the value of the use of such land and facilities. Cash and Cash Equivalents - For the purpose of the statement of cash flows, cash includes all cash and cash equivalent accounts with maturity dates of three months or less. The Organization’s cash accounts exceed FDIC insured levels from time to time. Management has evaluated this risk and has determined the risk is minimal. Use of Estimates - The preparation of the 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 the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.

Note 3. NET ASSETS The Arc of Hilo has conformed to FASB ASC 958-210-45-9 “Not for profit entities, Classifications of Net Assets”. Accordingly, the Organization is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets and permanently restricted net assets. Grants and other contributions of cash and other assets are reported as temporarily restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. The Organization had no temporarily or permanently restricted net assets at June 30, 2016.

Note 4. PRIOR YEAR SUMMARIZED INFORMATION The consolidated financial statements include prior-year comparative information that is not in 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 Arc of Hilo’s consolidated financial statements as of and for the year ended June 30, 2015, from which the information was derived. Certain amounts in the prior year comparative information have been reclassified to conform to current year presentation.

Page 9


Note 5. NOTES PAYABLE 2016 U.S. Department of Housing and Urban Development, Project No. 140-EH009 - interest rate at 9.25%, monthly installment $5,709, which matures in September 2022. Mortgage is secured by a first mortgage on real property located at 1305 Ululani Street, Hilo, Hawaii. U.S. Department of Housing and Urban Development, Project No. 140-EH053 - interest rate at 8.8755%, monthly installment $7,525, which matures in December 2030. Mortgage is secured by a first mortgage on real property located at 1303 Ululani Street, Hilo, Hawaii. Hawaii Community Reinvestment Corporation - interest rate at 3.50% first interest period commencing on February 1, 2014. Interest rate for second and third interest periods shall be equal to the five year fixed rate plus 1.5%. Payment will be based on a 15-year amortization period in the amount of $2,431.28. Mortgage is secured by real property located at 485 Laukapu Street, Hilo, Hawaii. Housing and Community Development Corporation, Rental Housing Trust Fund interest at 3% per annum. Annual payments are based on 50% residual receipts. Payments are due beginning January 1, 2000. Mortgage is secured by real property located at 485 Laukapu Street, Hilo, Hawaii. Over the years the Organizations residual receipts have not been emough to cover interest accrued on the loan, thus included in this amount is unpaid interest of $203,000 and $193,528 at June 30, 2016 and 2015, respectively. BSH - Note 7 First Hawaiian Bank Loan - interest rate at 5.25%, with monthly principal and interest payment of $875, collateralized with company assets. Notes paid in full during 2016

$

324,270

2015

$

360,924

736,083

759,900

298,487

316,717

710,276 290,428

700,804 290,428

39,024 -

46,994 60,050

Total Long-Term Debts Less Current Installments of Long-Term Debt

$ 2,398,568 (296,473)

$ 2,535,817 (318,456)

Net Long-Term Debt

$ 2,102,095

$ 2,217,361

The following are maturities of long term debt for the next five years: 2017 2018 2019 2020 2021 Thereafter

$

296,473 100,918 108,982 117,751 119,532 1,654,912 $ 2,398,568

Note 6. SUBSEQUENT EVENTS In preparing these consolidated financial statements, the Organization has evaluated events and transactions for potential recognition or disclosure through March 15, 2017, the date the consolidated financial statements were available to be issued.

Page 10


Note 7. BSH NOTE PAYABLE In prior years, the Organization received $290,428 from BSH. The Organization has made several attempts to contact the grantor in an effort to develop a mortgage or promissory note for the funds. The Organization has not had any response from the grantor regarding the repayment of these funds. The ultimate resolution of this matter remains open and is not ascertainable at this time. This amount is classified as a long-term liability because it is unlikely to be resolved within one year of the statement of financial position date.

Note 8. DESIGNATED CASH Reserve for Replacements - Under the HUD regulatory agreements, monthly amounts are to be made to the reserve replacement accounts for the HUD projects administered by The Arc of Hilo. The cumulative balances are maintained in federally insured bank accounts. The balance of the reserve replacement account as of June 30, 2016 amounted to $184,089 for Hale Ulu Hoi I and $117,656 for Hale Ulu Hoi II. Restricted Deposits - Pursuant to HUD regulatory agreements, tenant security deposits collected from tenants are required to be maintained in a separate bank account segregated from other project funds. Interest earned on these funds is to be allocated to each security deposit balance.

Note 9. RECONCILIATION OF CHANGE IN NET ASSETS WITH NET CASH (USED) PROVIDED BY OPERATING ACTIVITIES Change in Net Assets

$

Adjustments to reconcile change in net assets to net cash provided (used) by operating activities Depreciation Unrealized Loss on Investment Change in Grants and Accounts Receivable Change in Other Receivable Change in Prepaid and Other Assets Change in Accounts Payable Change in Deferred Revenue Change in Accrued Payroll and Security Deposit

$

340,530 2,439 (25,843) 18,917 (2,930) (194,451) (5,000) (41,077) $

Net Cash (Used) Provided by Operations

2016 (110,367)

(17,782)

2015 465,380

193,445 1,338 177,309 (11,422) (876) 199,013 (7,000) 11,906 $

1,029,093

Note 10. PURCHASE POWER AGREEMENT During 2016, the Organization entered into a master lease agreement with Technology Credit Corporation (the Lessor). Under the agreement, the Lessor constructed a 67.515 kWpDC system on the Organization’s property. The Organization will make 84 monthly payments of $2,119. At the end of lease the Organization has the option to purchase the system at fair market value.

Page 11


Note 11. FUNCTIONAL ALLOCATION OF EXPENSES The costs of providing the various programs and activities have been summarized on a functional basis in the statement of activities. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Note 12. FAIR VALUE MEASUREMENTS The Organization implemented FASB ASC 820-10-50-1 which establishes a fair value hierarchy for inputs used in measuring fair market value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that market participants would use in pricing the asset or liability based on the best information available in the circumstances. This fair value hierarchy consists of three broad levels. • Level 1 inputs consist of unadjusted quoted prices in active markets such as stock exchanges for identical assets and have the highest priority. • Level 2 inputs consist of significant other observable inputs such as quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset and liability, either directly or indirectly, for substantially the full term of the financial instrument. • Level 3 inputs consist of significant unobservable inputs and include situations where there is little, if any, market activity for the investment. The inputs require significant judgment or estimates, such as those associated with discounted cash flow methodologies and appraisals. Fair values of assets measured on a recurring basis are as follows, there are no liabilities or other assets measured at fair value on a recurring or non-recurring basis.

Assets Equity Securities

Total June 30, 2016

Quoted Prices: Level 1

Significant Other Inputs: Level 2

Significant NonObservable Inputs: Level 3

$

$

$

$

63,047

63,047

-

-

Note 13. RETIREMENT PLAN The Organization established a 401(k) plan effective October 1, 2000. Employee eligibility to participate is based on age and length of service requirements. Employees may contribute a maximum of 15% of compensation. The Organization’s annual contribution to the plan is based on 4% of employee compensation. For the year ended June 30, 2016 The Arc did not contribute to the plan.

Page 12


Note 14. CONTINGENCIES The Organization is involved in a claim arising in the normal course of business. As the outcome of this claim is unknown and the possible amount of loss can not be estimated, no contingent liability associated with this issue has been recorded in the financial statements. Management believes the claim is unfounded and any potential loss associated with this claim is not material to the financial statements. In addition, in the event that they incur a loss due to the claim it is covered by their insurance policy.

Note 15. LEASES COMMITMENTS The Organization leases facilities in various locations. It occupies a 9,894 square foot facility on 5.396 acres on Waianuenue Avenue in Hilo through a lease with the State of Hawaii, Department of Human Services for its vocational training program, Medical Waiver programs and administrative offices. The term of the lease is through June 30, 2027. The Arc of Hilo and the Housing Corporation leases land for the HUD residential projects from the State of Hawaii, Department of Land and Natural Resources. The term for the lease agreement runs through the year of 2064 with annual rent of $1. There will be no reopening of this lease with the stipulation that an annual report be submitted to the Land Board.

Note 16. HOUSING AND URBAN DEVELOPMENT (HUD) RENTAL SUBSIDIES Housing assistance payments are received from the Department of Housing and Urban Development for housing provided by The Arc of Hilo for tenants of Hale Ulu Hoi I and Hale Ulu Hoi II. Total amount received in the year ended amounted to $364,567.

Note 17. INCOME TAXES The Organization & affiliates are exempt from Federal income taxes pursuant to Internal Revenue Code section 501(c)(3), and exempt from State income taxes under Section 237-23 (b) of the Hawaii Revised Statutes. The accounting standard on accounting for uncertainty in income taxes addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements. Under that guidance, the Organization & affiliates may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The Organization files its forms 990 in the U.S. federal jurisdiction and the office of the state's attorney general for the State of Hawai‘i. There were no unrecognized tax benefits identified or recorded as liabilities for fiscal year 2016. Open tax Years: The Organization's Forms 990, Return of Organization Exempt from Income Tax, for the years ending June 30, 2013, 2014, and 2015 are subject to examination by the IRS, generally for 3 years after they were filed. Page 13

THE ARC OF HILO Schedule of Expenditures of Federal Awards As of June 30, 2016 Federal Grantor / Pass-through Grantor/ Program Title

Federal CFDA Number

Grant Number

United States Department of Housing and Urban Development: Office of Community Planning and Development Economic Development Initiative-Special Project

14.251

B-09-SP-HI-0014

Supportive Housing for the Elderly

14.157 14.157

Project No. 140-EH009 Project No. 140-EH053

Lower Income Housing Assistance - Section 8

14.856

DHS-16-VR-3022

Total Department of Education programs passed through the State of Hawaii: United States Department of Health and Human Services: Office of Community Services Hawai'i Health Connector: State Planning and Establishment Grants for the Affordable Care Act; Operated Health Insurance Exchange Adiminstration for Children and Families: Community Services Block Grant - Discretionary Awards

324,270 736,083

24,004 31,921 55,925 39,984 95,909

93.525

HHCMAO01 6HBEIE130159-01-001

63,558

93.570

90EE0954-01-03

13,325

Total Department of Health and Human Services passed through programs: Total Expenditures of Federal awards:

3,806

1,428,515

United States Department of Education: State of Hawaii, Department of Human Services, Division of Vocational Rehabilitation: Rehabilitation Services - Vocational Rehabilitation Grants 84.126A DHS-16-VR-3023 84.126 DHS-16-VR-965

84.187A

$

364,356

Total Department of Housing and Urban Development direct programs:

Supported Employment Service for Individuals with the most Significant Disabilities

Federal Expenditures

76,883 $ 1,601,307

Page 14

The Arc of Hilo Notes to the Schedule of Expenditures of Federal Awards June 30, 2016 Note A. BASIS OF PRESENTATION The accompanying Schedule of Expenditures of Federal Awards includes the Federal grant activity of The Arc of Hilo and Affiliate under programs of the Federal government for the year ended June 30, 2016. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of The Arc of Hilo, it is not intended to and does not present the financial position, changes in net assets, or cash flows of The Arc of Hilo.

Note B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting: Expenditures reported on this Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in OMB Circular A-122, Cost Principles for Non-Profit Organizations, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Indirect Cost Rate: The Organization has elected not to use the 10% de minis rate.

Note C. LOANS OUTSTANDING The Arc of Hilo and Affiliate had the following loan balances outstanding at June 30, 2016. These loan balances outstanding are also included in the federal expenditures presented in the schedule. Federal Grantor/Pass-through Grantor/Program Title U. S. Department of Housing and Urban Development: Supportive Housing for the Elderly Project No. 140-EH009 Project No. 140-EH053 Total:

Page 15

Federal CFDA Number

14.157 14.157

$

324,270 736,083 $ 1,060,353


INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF CONSOLIDATED FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS The Board of Directors and Management of The Arc of Hilo Hilo, Hawaii 96720 We have audited in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the consolidated financial statements of The Arc of Hilo (a nonprofit organization), which comprise the statement of financial position as of June 30, 2016, and the related statements of activities, functional expenses and cash flows for the year then ended, and the related notes to the consolidated financial statements, and have issued our report thereon dated March 15, 2017. Internal Control over Financial Reporting In planning and performing our audit of the consolidated financial statements, we considered The Arc of Hilo’s (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 consolidated financial statements, but not for the purpose of expressing an opinion on the effectiveness of The Arc of Hilo’s internal control. Accordingly, we do not express an opinion on the effectiveness of The Arc of Hilo’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s consolidated financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. We did identify certain deficiencies in internal control, described in the accompanying schedule of findings and questioned costs that we consider to be material weaknesses as noted in Finding 2016-001. Compliance and Other Matters As part of obtaining reasonable assurance about whether The Arc of Hilo’s consolidated financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. Maui: Big Island: Location: 136 Kinoole Street ● Hilo, Hawaii 96720 1885 Main Street, Suite 408 ● Wailuku, Hawaii 96793 310 Ohukai Road, Suite 305 ● Kihei, Hawaii 96753 Mailing: P.O. Box 4372 ● Hilo, Hawaii 96720 Phone: 808.242.5002 www.carbocpa.com Phone: 808.930.9850

The Board of Directors and Management of The Arc of Hilo (continued)

Compliance and Other Matters (continued) 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. The Arc of Hilo’s Response to Findings The Organization’s response to the findings identified in our audit is described in the accompanying schedule of findings and questioned costs. The Organization’s response was not subjected to the auditing procedures applied in the audit of the consolidated financial statements and, accordingly, we express no opinion on it. 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.

Carbonaro CPAs & Management Group Hilo, Hawai‘i March 15, 2017

Page 17


INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE The Board of Directors and Management of The Arc of Hilo Hilo, Hawai‘i 96720 Report on Compliance for Each Major Federal Program We have audited The Arc of Hilo’s compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of The Arc of Hilo’s (Organization’s) major federal programs for the year ended June 30, 2016. The Arc of Hilo’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 Our responsibility is to express an opinion on compliance for each of The Arc of Hilo’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 Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance 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 The Arc of Hilo’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 on The Arc of Hilo’s compliance. Unmodified Opinion on Compliance for Each of the Other Major Federal Programs In our opinion, The Arc of Hilo 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 other major federal programs identified in the summary of auditor’s results section of the accompanying Schedule of Findings and Questioned Costs for the year ended June 30, 2016. Report on Internal Control Over Compliance Management of The Arc of Hilo 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 Maui: Big Island: Location: 136 Kinoole Street ● Hilo, Hawaii 96720 1885 Main Street, Suite 408 ● Wailuku, Hawaii 96793 310 Ohukai Road, Suite 305 ● Kihei, Hawaii 96753 Mailing: P.O. Box 4372 ● Hilo, Hawaii 96720 Phone: 808.242.5002 www.carbocpa.com Phone: 808.930.9850

The Board of Directors and Management of The Arc of Hilo (continued)

Report on Internal Control Over Compliance (continued) audit of compliance, we considered The Arc of Hilo’s internal control over compliance with the types of requirements that could have a direct and material effect on each 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 the Uniform Guidance, 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 The Arc of Hilo’s internal control over compliance. Our consideration of internal control over compliance was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as discussed below, we identified certain deficiencies in internal control over compliance that we consider to be material weaknesses and significant deficiencies. 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. We consider the deficiencies in internal control over compliance described in the accompanying schedule of findings and questioned costs as Finding 2016-001 to be a material weakness. The Arc of Hilo’s response to the internal control over compliance findings identified in our audit is described in the accompanying schedule of findings and questioned costs. The Organization’s response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. 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 the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.

Carbonaro CPAs & Management Group Hilo, Hawai‘i March 15, 2017

Page 19

THE ARC OF HILO Schedule of Findings and Questioned Costs For the Year Ended June 30, 2016

A. SUMMARY OF AUDIT RESULTS Consolidated financial statements Type of Auditor’s report issued:

Unmodified

Internal control over financial reporting: • Significant Deficiency

Yes

• Material Weakness

Yes

Noncompliance which is material to the consolidated financial statements noted:

No

Federal Awards Internal control over Major Programs: • Significant Deficiency

Yes

• Material Weakness

Yes

Type of auditor’s report issued in regards to major program compliance:

Unmodified

The threshold for distinguishing Type A and Type B Programs was

$750,000

The following was tested as major program: Federal Grantor/Pass-through Grantor/Program Title U. S. Department of Housing and Urban Development: Supportive Housing for the Elderly Project No. 140-EH009 Project No. 140-EH053 Total:

Federal CFDA Number

14.157 14.157

Auditee qualified as a low-risk auditee

$

324,270 736,083 $ 1,060,353

Yes

B. FINANCIAL STATEMENT FINDINGS Finding 2016-001 C. FINDINGS AND QUESTIONED COSTS - MAJOR FEDERAL AWARD PROGRAM Finding 2016-001 D. SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS None

Page 20

THE ARC OF HILO Schedule of Findings and Questioned Costs For the Year Ended June 30, 2016 Finding 2016-001 Segregation of Duties – HUD Section 202 - Housing for Elderly or Handicapped Criteria: Government Auditing Standards require adequate internal controls over accounting functions. These internal controls should reduce to a relatively low level the risk that noncompliance with applicable requirements of laws, regulations, contracts, and grants that would be material in relation to a federal program being audited may occur and not be detected in a timely manner by employees in the normal course of performing their assigned functions. Condition: We noted a lack of fiscal oversight and separation of duties in the following areas: •

Cash: The monthly reconciliation reports, bank statements and copies of cancelled checks are not reviewed by management for accuracy or verification. Cash is handled in various occupational training programs and turned into the office in various ways for depositing. There is no reconciliation of the bank deposit slips to the cash log. Recommendation: We recommend a check signer review the cancelled checks, to ensure accuracy and nothing has been submitted unapproved. We recommend the use of cash registers at the various places cash is handled. Daily register tape should be turned into fiscal to be recorded and cash be deposited by people outside the accounting department. And the validated deposit slip should be reconciled to the register tapes at month end.

•

Fiscal Oversight: We noted a lack of separation of duties due to the Chief Executive Officer also holding the Chief Financial Officer position. Recommendation: In an Organization the size of The ARC of Hilo, it is important to separate the approval authority from the accounting responsibility. Therefore, the CEO should not have unlimited access to the accounting system and be a check signer and approver of disbursements. This would provide the CEO with excellent skill for oversight of fiscal but without the ability to do accounting. We also recommend the Treasurer meet with the accountant from time to time.

•

Payroll: We noted there is no review by Management of payroll prior to payroll being processed. Salaries and wages is by far the largest expense to the Organization. Federal cost rules require contemporaneous validation of payroll being reasonable and correct as a Federal expenditure. Recommendation: We recommend a payroll print out and the timesheets be provided to the CEO or other management designee with appropriate knowledge for approval to review payroll prior to processing. The CEO should then initial the print out and compare the totals with the final processed payroll. The accountant should then document proper review and approval occurred before processing payroll.

Cause of Condition: The fiscal team is small and the position of Chief Financial Officer was not filled by another qualified individual.

Page 21

THE ARC OF HILO Schedule of Findings and Questioned Costs For the Year Ended June 30, 2016 Finding 2016-001 Segregation of Duties – HUD Section 202 - Housing for Elderly or Handicapped (continued)

Potential Effect: A lack of separation of duties could result in cash receipts that may not get deposited, erroneous disbursements could be paid out of the Organizations funds without another person in the Organization detecting it in the normal course of their assigned duties. A lack of fiscal oversight may result in payroll errors being processed and bank reconciliation errors not caught timely. Questioned Costs: None Management’s Response & Corrective Action Plan: The Organization will begin to have a Board of Director review bank statements, bank reconciliations, and canceled checks each month as part of is fiscal oversight. In addition, a Board of Director will visit Day-Lum management company on a surprise basis to verify proper cash disbursement procedures are being followed. Management will assign a program director or manager outside of the accounting department who has knowledge of payroll to approve payroll prior to its disbursement by the accounting department. All of the above procedures will be documented by signatures or initials of the persons fulfilling the duties.

Page 22

Supplementary Information

Page 23

THE ARC OF HILO Consolidating Statement of Financial Position As of June 30, 2016 ASSETS

The Arc of Hilo CURRENT ASSETS Cash and Cash Equivalents Reserve for Replacements Cash Tenant Security Deposit Total Cash and Cash Equivalents Accounts Receivable (Net of Allowance of Doubtful Accounts of $1,493 as of June 30, 2016 and June 30, 2015) Grants Receivable Investments Affiliate Accounts Receivable Other Recievables Prepaids and Other Assets Total Current Assets FIXED ASSETS Land Buildings Furniture and Equipment Vehicles Residence Improvements Construction in Progress Accumulated Depreciation Net Fixed Assets TOTAL ASSETS

$

Hale Ulu Hoi I

Hale Ulu Hoi II

Total Before Elimination

Hale Ulu Hoi III

Elimination

Total

287,309 287,309

$ 102,509 184,089 5,207 291,805

222,464

-

729

-

223,193

223,193

500 -

500 -

7,915 -

77,686 63,047 161,173 17,392

(161,173)

77,686 63,047 17,392

820,156

292,305

135,290

78,681

1,326,432

(161,173)

1,165,259

1,485,731 2,904,694 777,879 332,356 26,445 -

822,589 58,536 -

1,316,740 46,165 -

202,645 1,634,786 21,143 -

1,688,376 6,678,809 903,723 332,356 26,445 -

1,688,376 6,678,809 903,723 332,356 26,445 -

(1,221,690)

(824,051)

(1,126,503)

(865,827)

(4,038,071)

(4,038,071)

4,305,415

57,074

236,402

992,747

5,591,638

$ 5,125,571

$ 349,379

$ 371,692

$ 1,071,428

$ 6,918,070

77,686 62,047 161,173 (7,915) 17,392

Page 24

$

12,274 117,656 4,131 134,061

$

3,520 57,832 9,414 70,766

$

405,612 359,577 18,752 783,941

$

-

$ (161,173)

405,612 359,577 18,752 783,941

5,591,638 $ 6,756,897

THE ARC OF HILO Consolidating Statement of Financial Position As of June 30, 2016 LIABILITIES AND NET ASSETS

CURRENT LIABILITIES Accounts Payable Other Payables Accrued Interest Affiliate Accounts Payable Accrued Payroll Current Portion of Mortgage and Notes Payable Tennant Security Deposits Other Deposits Deferred Revenue Total Current Liabilities LONG TERM LIABILITIES Mortgage and Notes Payable Total Long Term Liabilities NET ASSETS Unrestricted Net Assets Temporarily Restricted Net Assets Total Net Assets

TOTAL LIABILITIES AND NET ASSETS

The Arc of Hilo

Hale Ulu Hoi I

$

$

75,093 1,042 69,921 8,402 5,275 -

1,064 3,254 2,500 40,193 5,207 -

Hale Ulu Hoi II $

926 6,073 5,444 32,871 26,018 4,131 -

Hale Ulu Hoi III $

3,485 1,285 2,181 128,302 221,860 9,414 -

Total Before Elimination

Elimination

$

$

80,568 11,654 10,125 161,173 69,921 296,473 18,752 5,275 -

2016 Total

(161,173) -

$

80,568 11,654 10,125 69,921 296,473 18,752 5,275 -

(161,173)

492,768

-

159,733

52,218

75,463

366,527

653,941

321,051

284,076

710,065

786,903

2,102,095

-

2,102,095

321,051

284,076

710,065

786,903

2,102,095

-

2,102,095

4,644,787 -

13,085

(413,836)

(82,002)

4,162,034

-

4,162,034 -

4,644,787

13,085

(413,836)

(82,002)

4,162,034

-

4,162,034

$5,125,571

$ 349,379

Page 25

$ 371,692

$ 1,071,428

$ 6,918,070

$ (161,173)

$ 6,756,897

THE ARC OF HILO Consolidating Statement of Activities and Changes in Net Assets For the Year Ended June 30, 2016 The Arc of Hilo SUPPORT AND REVENUES Sales and Services State of Hawaii Contracts Housing Assistance Rental and Laundry Income Other Federal Grants Private Foundation Income Donations Program Revenue Other Income Fundraising and Sales County of Hawaii Grants

$ 1,429,645 924,951 80,689 74,871 38,763 31,283 22,566 20,671 20,000

Hawaii United Way

$

5,100

Interest and Dividend Income Unrealized Loss on Investments Net Assets Released from Restrictions Total Support and Revenues

1,027 (2,439) 2,647,127

EXPENSES Salaries and Wages Depreciation Health Insurance and Benefits Utilities and Telephone Repairs and Maintenance Interest Property Management Payroll Taxes Supplies Insurance General Excise Taxes Program Expenses Professional Fees Travel Vehicle Expenses Rent and Property Taxes Dues and Commissions Cost of Goods Sold Printing and Postage Bank Fees Other Expenses

1,519,050 230,083 298,160 119,129 86,386 5,251 111,542 107,494 67,159 54,887 54,914 23,616 34,232 30,023 18,180 12,198 5,198 3,447 1,832 (1,055)

Total Expenses CHANGE IN NET ASSETS

Hale Ulu Hoi I

(134,599)


4,779,386


$ 4,644,787

-

$

162,855 56,489 -

34,242 90,041 883 -

$ 1,429,645 924,951 364,357 211,298 80,689 74,871 38,763 31,283 23,449 20,671 20,000

-

-

-

5,100

146 232,174

34 219,378

36 125,202

1,243 (2,439) 3,223,881

2,952 47,512 374 21,777 31,077 66,312 42,390 218 127 7,446 6,691 7 110 7 112 15 396

2,242 56,581 284 12,749 40,372 26,364 30,082 165 67 5,336 72 2,993 1 110 7 151 10 951

1,527,196 340,530 299,192 178,160 172,662 129,502 126,935 112,143 107,823 87,272 55,022 54,914 37,525 34,241 30,023 18,510 12,215 5,198 3,816 1,887 (518)

227,523

178,537

3,334,248

146,462 $

85,712

$

(72,627) $

Page 26

2016 Total

Hale Ulu Hoi III

167,260 64,768 -

2,952 6,354 374 24,505 14,827 31,575 54,463 218 135 7,331 63 4,225 1 110 3 106 30 (810)

2,781,726 $

Hale Ulu Hoi II

13,085

-

$

(8,145)

$

(405,691) $

(413,836)

$

-

(53,335)

$

(110,367)

(28,667)

4,272,401

(82,002)

$ 4,162,034

THE ARC OF HILO (A Hawaii Nonprofit Corporation) AUDITED

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