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
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.
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.
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 $669,935 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 2025, funding provided by two governmental agencies represented 90%
of total revenue. Grants receivable due from one of these funding sources represented 100% of total
receivables at year-end.
At year end, bank deposits exceeded FDIC coverage by $199,840. Cen-Tex has not experienced any
losses related to deposits exceeding FDIC coverage.
Title: NOTE 4: 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 $422,864
Federal awards receivable 145,539
$568,403
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 5: 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 2025.
Title: NOTE 6: 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
$59,000 for the year ended 31 January 2025.
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 $49,500
Buildings and improvements 5,130,432
Furniture and fixtures 2,052,060
Vehicles 422,023
Accumulated depreciation (3,725,327)
$3,928,688
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 2025, Cen-Tex received approximately $938,000 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 $409,000 in contributed facilities, which were recognized as
occupancy expense in the financial statements. 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 $467,000 in contributed personnel services, which were recognized
as personnel expense, in the financial statements. 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 $62,000 in contributed goods, which were recognized as other
expense in the financial statements. 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 $72,000 have not been recognized in the accompanying
statement of activities, as they do not meet the requirements for recognition.