Title: NOTE 1: ORGANIZATION
Accounting Policies: BASIS OF ACCOUNTING Cen-Tex uses the accrual basis of accounting. Contracts and grants are recorded as revenue when the funds are considered earned, regardless of when cash is received. Cost reimbursement contracts are recorded as revenue when the costs are incurred and contributions are recorded as support when the funds are awarded. Expenses are recorded when incurred regardless of when cash is disbursed. A significant portion of Cen-Tex’s revenue is derived from cost reimbursable federal
grants, which are conditioned upon certain performance requirements and/or the incurrence
De Minimis Rate Used: N
Rate Explanation: Auditee did no elect to use the 10% deminimis cost rate
Cen-Tex Family Services, Inc. (Cen-Tex) is a not-for-profit organization incorporated in the State of Texas on 31 January 1992 under 501(c)(3) of the Internal Revenue Code. Specifically, the corporation is organized to provide child development services to children 0-5 years of age; provide social, health, and nutrition services to enrolled families; providing training opportunities for enrolled families; offer intergenerational experiences for the elderly; and make distributions to organizations that qualify as exempt.
Head Start Program is Cen-Tex’s largest program. The program provides educational and support services to low-income children and children with disabilities who have not reached the compensatory school age. The program’s goals are to bring about a greater depth of social competence in children by considering the total development of the child. Health, nutrition, education, and parental involvement services enable a child to function at an optimum level in his environment. Cen-Tex is also funded through the Child Adult Care Food Program (CACFP).
Cen-Tex depends significantly on third party reimbursement from the U.S. Department of Health and Human Services - Head Start Program, and its expenses relate mainly to providing the Head Start Program. The cost of providing the program has been summarized in the statement of functional expenses. Certain costs have been allocated between program activities and administrative services benefitted.
The governing body of Cen-Tex is its Board of Directors (Board). The Board appoints an Executive Director to administer the affairs of Cen-Tex. Cen-Tex is not considered a component of a city, county, or any government body. The governing board independently oversees Cen-Tex operations.
As required by Head Start, Cen-Tex has a Policy Council consisting of parents and community members. Operating responsibility for Cen-Tex is the responsibility of the Board. However, the Policy Council has the responsibility to approve or disapprove certain general procedures, planning, and human resource management decisions.
Title: NOTE 2:SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Policies: BASIS OF ACCOUNTING Cen-Tex uses the accrual basis of accounting. Contracts and grants are recorded as revenue when the funds are considered earned, regardless of when cash is received. Cost reimbursement contracts are recorded as revenue when the costs are incurred and contributions are recorded as support when the funds are awarded. Expenses are recorded when incurred regardless of when cash is disbursed. A significant portion of Cen-Tex’s revenue is derived from cost reimbursable federal
grants, which are conditioned upon certain performance requirements and/or the incurrence
De Minimis Rate Used: N
Rate Explanation: Auditee did no elect to use the 10% deminimis cost rate
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FINANCIAL STATEMENT PRESENTATION
Net assets are classified based on the existence or absence of donor-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 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. 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.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
Cen-Tex uses the accrual basis of accounting. Contracts and grants are recorded as revenue when the funds are considered earned, regardless of when cash is received. Cost reimbursement contracts are recorded as revenue when the costs are incurred and contributions are recorded as support when the funds are awarded. Expenses are recorded when incurred regardless of when cash is disbursed.
SUBSEQUENT EVENTS
Management of Cen-Tex has evaluated subsequent events for disclosure through the date of the Independent Auditor’s Report, the date the financial statements were available to be issued.
ESTIMATES
The preparation of the financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
FUNCTIONAL EXPENSE ALLOCATION
The financial statements report certain categories of expenses that are attributed to more than one program or supporting function. Accordingly, expenses have been allocated among the programs and supporting services benefitted. Expenses require allocation on a reasonable basis that is consistently applied. Expenses that are identifiable to a program are allocated to that specific program. Personnel and depreciation expenses are allocated based on management’s estimate of time and effort. All other expenses are allocated based on management’s analysis of individual accounts and transactions.
FIXED ASSETS
Fixed assets are stated at cost if purchased or fair market value at the date of receipt if donated. Purchases are capitalized if the cost exceeds $5,000 and there is a useful life greater than one year. Depreciation is computed using the straight-line method based on the estimated useful life of the asset, which is 3-10 years for vehicles, furniture and fixtures, and 15 to 40 years for buildings and improvements.
INCOME TAXES
In accordance with Section 501(c)(3) of the Internal Revenue Code, Cen-Tex is exempt from federal income taxes. Consequently, no provision for Federal income taxes is included in the accompanying financial statements.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE AND RECEIVABLES
A significant portion of Cen-Tex’s revenue is derived from cost reimbursable federal grants, which are conditioned upon certain performance requirements and/or the incurrence of allowable qualifying expenses. Amounts received are recorded as revenue when Cen-Tex has incurred expenditures in compliance with specific contract or grant provisions. Amounts received prior to incurring qualifying expenditures are reported as unearned revenue in the statement of financial position. Cen-Tex has contracts for cost reimbursable grants of $2,601,400 for which qualifying expenditures have not been incurred and accordingly have not been recognized at year-end. Cen-Tex considers all recorded receivables to be fully collectible. Accordingly, no allowance for doubtful accounts is required.
Title: NOTE 3: CONCENTRATIONS
Accounting Policies: BASIS OF ACCOUNTING Cen-Tex uses the accrual basis of accounting. Contracts and grants are recorded as revenue when the funds are considered earned, regardless of when cash is received. Cost reimbursement contracts are recorded as revenue when the costs are incurred and contributions are recorded as support when the funds are awarded. Expenses are recorded when incurred regardless of when cash is disbursed. A significant portion of Cen-Tex’s revenue is derived from cost reimbursable federal
grants, which are conditioned upon certain performance requirements and/or the incurrence
De Minimis Rate Used: N
Rate Explanation: Auditee did no elect to use the 10% deminimis cost rate
For the year ended 31 January 2024, funding provided by two governmental agencies represented 87% of total revenue. Grants receivable due from one of these funding sources represented 95% of total receivables at year-end.
Title: NOTE 4:EMPLOYEE BENEFIT PLAN
Accounting Policies: BASIS OF ACCOUNTING Cen-Tex uses the accrual basis of accounting. Contracts and grants are recorded as revenue when the funds are considered earned, regardless of when cash is received. Cost reimbursement contracts are recorded as revenue when the costs are incurred and contributions are recorded as support when the funds are awarded. Expenses are recorded when incurred regardless of when cash is disbursed. A significant portion of Cen-Tex’s revenue is derived from cost reimbursable federal
grants, which are conditioned upon certain performance requirements and/or the incurrence
De Minimis Rate Used: N
Rate Explanation: Auditee did no elect to use the 10% deminimis cost rate
Cen-Tex has a 401(k) defined contribution plan. Employees meeting certain eligibility requirements can participate in the plan to the extent allowable under IRS rules. Cen-Tex contributed approximately $42,000 for the year ended 31 January 2024.
Title: NOTE 5:LIQUIDITY AND AVAILABILITY
Accounting Policies: BASIS OF ACCOUNTING Cen-Tex uses the accrual basis of accounting. Contracts and grants are recorded as revenue when the funds are considered earned, regardless of when cash is received. Cost reimbursement contracts are recorded as revenue when the costs are incurred and contributions are recorded as support when the funds are awarded. Expenses are recorded when incurred regardless of when cash is disbursed. A significant portion of Cen-Tex’s revenue is derived from cost reimbursable federal
grants, which are conditioned upon certain performance requirements and/or the incurrence
De Minimis Rate Used: N
Rate Explanation: Auditee did no elect to use the 10% deminimis cost rate
Financial assets available for general expenditure, within one year of the statement of financial position date, comprise the following:
Cash $48,734
Federal awards and other receivables 699,995
$748,729
As part of Cen-Tex’s liquidity management, it has a policy to structure its financial assets to be available as its general expenditures, liabilities and other obligations come due. The policy is that monthly revenues are to cover monthly expenses. Monthly revenues and expenditures are deposited in and deducted from Cen-Tex’s operating accounts.
Title: NOTE 6:CONTINGENCY
Accounting Policies: BASIS OF ACCOUNTING Cen-Tex uses the accrual basis of accounting. Contracts and grants are recorded as revenue when the funds are considered earned, regardless of when cash is received. Cost reimbursement contracts are recorded as revenue when the costs are incurred and contributions are recorded as support when the funds are awarded. Expenses are recorded when incurred regardless of when cash is disbursed. A significant portion of Cen-Tex’s revenue is derived from cost reimbursable federal
grants, which are conditioned upon certain performance requirements and/or the incurrence
De Minimis Rate Used: N
Rate Explanation: Auditee did no elect to use the 10% deminimis cost rate
Cen-Tex receives most of its funding under cost reimbursement government grants. Any of the funding sources may, at their discretion, request reimbursement for expenses or return of funds as a result of noncompliance with the terms of the grant contracts. Management believes requests for reimbursement, if any, would not be significant. Cen-Tex does not maintain collateral for its receivables and does not believe significant risk existed at 31 January 2024.
Title: NOTE 7:FIXED ASSETS
Accounting Policies: BASIS OF ACCOUNTING Cen-Tex uses the accrual basis of accounting. Contracts and grants are recorded as revenue when the funds are considered earned, regardless of when cash is received. Cost reimbursement contracts are recorded as revenue when the costs are incurred and contributions are recorded as support when the funds are awarded. Expenses are recorded when incurred regardless of when cash is disbursed. A significant portion of Cen-Tex’s revenue is derived from cost reimbursable federal
grants, which are conditioned upon certain performance requirements and/or the incurrence
De Minimis Rate Used: N
Rate Explanation: Auditee did no elect to use the 10% deminimis cost rate
Land $49,500Construction in progress 1,072,784
Buildings and improvements 3,038,754
Furniture and fixtures 1,787,643
Vehicles 383,264
Accumulated depreciation (3,675,249)
$2,656,696
Included in total fixed assets is $1,072,784 purchased with U.S. Department of Health and Human Resources grant resources. As such, the grantor has a reversionary interest in the buildings and improvements purchased with these funds.
Title: NOTE 8:CONTRIBUTED GOODS, SERVICES AND SPACE
Accounting Policies: BASIS OF ACCOUNTING Cen-Tex uses the accrual basis of accounting. Contracts and grants are recorded as revenue when the funds are considered earned, regardless of when cash is received. Cost reimbursement contracts are recorded as revenue when the costs are incurred and contributions are recorded as support when the funds are awarded. Expenses are recorded when incurred regardless of when cash is disbursed. A significant portion of Cen-Tex’s revenue is derived from cost reimbursable federal
grants, which are conditioned upon certain performance requirements and/or the incurrence
De Minimis Rate Used: N
Rate Explanation: Auditee did no elect to use the 10% deminimis cost rate
For the year ended 31 January 2023, Cen-Tex received approximately $819,000 in contributed goods, services and space, as part of the Head Start Program, which is carried out at local school and school district buildings. Contributed goods, services and space did not have donor-imposed restrictions.
Cen-Tex received approximately $394,000 in contributed facilities, which were recognized as occupancy expense in the statement of activities. Contributed space was valued and recorded at fair market value in the financial statements based on an independent market study performed by a certified property appraiser.
Cen-Tex received approximately $374,000 in contributed personnel services, which were recognized as personnel expense, in the statement of activities. Contributed personnel services were valued and recorded at fair market value in the financial statements based on an estimate of the retail value of similar services provided.
Cen-Tex received approximately $51,000 in contributed goods, which were recognized as other expense in the statement of activities. Contributed goods were valued and recorded at fair market value in the financial statements based on comparable prices for similar goods.
Cen-Tex receives donated services from a variety of unpaid volunteers including parents and other local volunteers. These volunteers provide assistance through the Head Start Programs offered by Cen-Tex. Services valued at approximately $70,000 have not been recognized in the accompanying statement of activities, as they do not meet the requirements for recognition.
Title: NOTE 9:COMMITMENTS
Accounting Policies: BASIS OF ACCOUNTING Cen-Tex uses the accrual basis of accounting. Contracts and grants are recorded as revenue when the funds are considered earned, regardless of when cash is received. Cost reimbursement contracts are recorded as revenue when the costs are incurred and contributions are recorded as support when the funds are awarded. Expenses are recorded when incurred regardless of when cash is disbursed. A significant portion of Cen-Tex’s revenue is derived from cost reimbursable federal
grants, which are conditioned upon certain performance requirements and/or the incurrence
De Minimis Rate Used: N
Rate Explanation: Auditee did no elect to use the 10% deminimis cost rate
During 2024, Cen-Tex entered into multiple construction and renovation contracts for work to be performed at the Head Start locations. At year end, Cen-Tex has remaining commitments of $759,770.