AFFINITY CARE GROUP, LLC
Memphis, Tennessee
Report on Audit of Financial Statements
For the Year Ended
June 30, 2023
AFFINITY CARE GROUP, LLC
Memphis, Tennessee
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITORS' REPORT
................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
FINANCIAL STATEMENTS:
Balance Sheet
................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
4
Statement of Comprehensive Income
................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
5
Statement of Member's Equity
................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
6
Statement of Cash Flows
................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
7
INDEX TO NOTES TO THE FINANCIAL STATEMENTS
................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
8
NOTES TO THE FINANCIAL STATEMENTS
................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
9 - 13
SUMMARY OF PRIOR YEAR FINDINGS
................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
14
INDEPENDENT AUDITOR’S 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 - 16
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Affinity Care Group, LLC
Report on the Financial Statements
Opinion
We have audited the accompanying financial statements of
Affinity Care Group, LLC
(a
Tennessee Limited Liability Company), which comprise the balance sheet as of
June 30, 2023
,
and the related statements of comprehensive income, member's equity and cash flows for the year
then ended, and the related notes to the financial statements.
In our opinion, the financial statements present fairly, in all material respects, the financial
position of
Affinity Care Group, LLC
as of
June 30, 2023
, and the 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.
Basis for Opinion
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. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Statements section of our report. We are required to be independent of
Affinity Care
Group, LLC
and to meet our other ethical responsibilities, in accordance with the relevant ethical
requirements relating to our audit. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit opinions.
Responsibilities of Management 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, and
for 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.
In preparing the financial statements, management is required to evaluate whether there are
conditions or events, considered in the aggregate, that raise substantial doubt about
Affinity Care
Group, LLC
’s ability to continue as a going concern within one year after the date that the
financial statements are available to be issued.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but
is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance
with generally accepted auditing standards and Government Auditing Standards will always
detect a material misstatement when it exists. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.
Misstatements are considered material if there is a substantial likelihood that, individually or in
the aggregate, they would influence the judgment made by a reasonable user based on the
financial statements.
In performing an audit in accordance with generally accepted auditing standards and Government
Auditing Standards, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the financial statements, whether due
to fraud or error, and design and perform audit procedures responsive to those risks. Such
procedures include examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements.
Obtain an understanding of internal control relevant to the audit 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
Affinity Care Group, LLC
’s internal control. Accordingly, no
such opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluate the overall
presentation of the financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the
aggregate, that raise substantial doubt about
Affinity Care Group, LLC
’s ability to continue
as a going concern for a reasonable period of time.
-
2
-
We are required to communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit, significant audit findings, and certain internal
control-related matters that we identified during the audit.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
March
29, 2024
, on our consideration of
Affinity Care Group, LLC
'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 solely 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
Affinity Care Group, LLC
'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
Affinity Care
Group, LLC
's internal control over financial reporting and compliance.
Memphis, Tennessee
March 29, 2024
-
3
-
AFFINITY CARE GROUP, LLC
Balance Sheet
As of
June 30, 2023
ASSETS
2023
CURRENT ASSETS:
Cash and cash equivalents
$
550,335
Total Current Assets
550,335
FIXED ASSETS:
Furniture and fixtures
31,632
Automobiles
22,698
Total
54,330
Less accumulated depreciation
(23,970)
Total Fixed Assets, net
30,360
OTHER ASSETS:
Right of use asset - Office Space
169,387
TOTAL ASSETS $ 750,082
LIABILITIES AND MEMBER'S EQUITY
CURRENT LIABILITIES:
Accrued payroll and related expenses
$
14,988
Lease Liability - Current Portion
34,722
Total Current Liabilities
49,710
Lease Liability-Long-term Portion
134,913
Notes payable
-
Total Liabilities
184,623
MEMBER'S EQUITY:
Member's Equity
565,459
Accumulated other comprehensive income
-
Total Member's Equity
565,459
TOTAL LIABILITIES AND MEMBER'S EQUITY $ 750,082
See accompanying notes to the financial statements
-
4
-
AFFINITY CARE GROUP, LLC
Statement of Comprehensive Income
For the Year Ended
June 30, 2023
2023
OPERATING INCOME:
Revenue
$
3,345,748
Revenue adjustments
-
Gross Profit
3,345,748
OPERATING COSTS:
Salaries and wages
1,706,542
ADMINISTRATIVE EXPENSES:
Salaries and wages
426,636
Depreciation
11,186
Facility, equipment and lease expenses
93,993
Insurance
33,936
Payroll taxes
143,441
Marketing
13,333
Membership dues/fees
328
Office expenses
13,964
Postage and shipping
195
Professional fees
61,360
Supplies
26,568
Taxes - other
17,355
Telephone and internet
22,809
Temporary/contract labor
877
Training and development
4,307
Travel and meetings
37,543
Amortization
4,480
Interest expenses
-
Program expenses
72,190
Utilities expense
6,105
Total Expenses
2,697,148
NET INCOME $ 648,600
See accompanying notes to the financial statements
-
5
-
AFFINITY CARE GROUP, LLC
Statement of Member's Equity
For the Year Ended
June 30, 2023
Members'
Capital
Account
Accumulated
Other Comprehensive
Income Total
BALANCE, July 1, 2022
$
285,110
$
-
$
285,110
Net Income (Loss):
Net income (loss) for period
648,600
-
648,600
Net change in unrealized gains (losses)
-
-
-
Total Comprehensive Income (Loss)
648,600
-
648,600
Partner Capital Accounts
-
-
-
Member contributions
-
-
-
Member distributions
(368,251)
-
(368,251)
Total Capital Accounts
(368,251)
-
(368,251)
BALANCE, June 30, 2023 $ 565,459 $ - $ 565,459
Affinity Care Group, LLC
is organized as a limited liability company with two members each
owning a 50% share of the company. The table above presents the changes in member equity for
the period ending
June 30, 2023
.
See accompanying notes to the financial statements
-
6
-
AFFINITY CARE GROUP, LLC
Statement of Cash Flows
For the Year Ended
June 30, 2023
June 30,
2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash receive from other exchange transactions
$
3,345,748
Cash paid to suppliers and employees
(2,694,082)
Interest
(7,376)
Other cash received (paid)
22,372
Net Cash Provided (Used) By Operating Activities
666,662
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment
(19,835)
Right-of-use asset
(163,800)
Other
(5,722)
Net Cash Provided (Used) By Investing Activities
(189,357)
CASH FLOWS FROM FINANCING ACTIVITIES:
Lease liability
161,174
Payments on debt
(16,573)
Partner withdrawals
(368,329)
Net Cash Provided (Used) By Financing Activities
(223,728)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
253,577
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
296,758
CASH AND CASH EQUIVALENTS, END OF YEAR $ 550,335
SUPPLEMENTAL DISCLOSURES:
Interest paid for the year $ 7,376
RECONCILIATION OF CHANGE IN NET ASSETS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net Income
$
648,600
Adjustments to Reconcile Change in Net Assets
to Net Cash Provided by Operating Activities:
Depreciation and amortization
11,186
Other accrued liabilities
6,876
Net Cash (Used) Provided by Operating Activities $ 666,662
See accompanying notes to the financial statements
-
7
-
AFFINITY CARE GROUP, LLC
Memphis, Tennessee
INDEX TO NOTES TO THE FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
9 - 11
NOTE 2 - ACCRUED LIABILITIES
................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
11
NOTE 3 - FIXED ASSETS
................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
12
NOTE 4 - DESCRIPTION OF LEASING ARRANGEMENTS
................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
12 - 13
NOTE 5 - CONCENTRATIONS
................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
13
NOTE 6 - SUBSEQUENT EVENTS
................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
13
-
8
-
AFFINITY CARE GROUP, LLC
Notes to the Financial Statements
June 30, 2023
NOTE
1
- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Nature of Activities
Affinity Care Group, LLC
(the "
Company
") provides professional, affordable, and caring in-
home living ) assistance for seniors and adults with intellectual and developmental disabilities in
the West Tennessee area. The
Company
receives revenue for these services both from the general
public (private-pay) and through a state-funded contract with the Tennessee Department of
Intellectual and Development Disabilities (DIDD).
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting
principles 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 financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the
Company
considers all investment securities
with a maturity of less than one year to be cash equivalents.
Trade Accounts and Notes Receivable
Trade accounts receivable are reported at the amount management expects to collect from
outstanding balances. Differences between the amount due and the amount management expects
to collect are reported in the results of operations of the year in which those differences are
determined, with an offsetting entry to a valuation allowance for trade accounts receivable.
Depreciation
Depreciation is computed using the straight-line method over the estimated useful lives of the
assets which is 5 to 39 for financial reporting purposes and the modified accelerated cost
recovery system for federal income tax purpose.
Income Taxes
Affinity Care Group, LLC
, with the consent of its members, has elected under the Internal
Revenue Code to be a partnership. In lieu of corporate income taxes, the members of the
partnership are taxed on their proportionate share of the
Company
's taxable income. Therefore,
no provisions or liability for federal income taxes has been included in the financial statements.
Affinity Care Group, LLC
is liable for state taxes in the State of Tennessee, therefore a provision
for Tennessee state taxes has been recognized in the financial statements.
-
9
-
Compensated Absences
Compensated absences are not reflected in the financial statements because the obligation relates
to rights that do not vest or accumulate and the amount cannot be reasonably estimated.
Revenue Recognition
Patient care service revenue is reported at the amount that reflects the consideration to which the
Affinity Care Group LLC expects to be entitled in exchange for providing patient care. These
amounts are due from patients, third-party payors (including health insurers and government
payors), and others and includes variable consideration for retroactive revenue adjustments due
to settlement of audits, reviews, and investigations. Generally, the Affinity Care Group LLC bills
the patients and third-party payors several days after the services are performed. Revenue is
recognized as the performance obligations are satisfied.
Affinity Care Group LLC determines the transaction price based on standard rates provided by
the state of Tennessee depending on the services provided. The state of Tennessee assigns
patients to Affinity Care Group LLC to provide daily services to. Therefore, performance
obligations are considered to be complete once the daily services and been rendered. Affinity
Care Group LLC believes that this method provides a faithful depiction of the transfer of services
over the term of the performance obligation based on the inputs needed to satisfy the obligation.
The Organization determines the transaction price based on standard rates provided by the state
of Tennessee.
Leases
The Company elected not to evaluate whether certain sales taxes and other similar taxes are
lessor costs or lessee costs. Instead, these costs will be accounted for as if they are lessee costs.
Consequently, the Company excludes from the consideration in the contract and from variable
payments not included in the consideration in the contract all collections from lessees of taxes
within the scope of the election and provides certain disclosures. The accounting policy election
includes sales, use, value added, and some excise taxes but excludes real estate taxes.
Affinity Care Group, LLC
accounts for leases in accordance with Accounting Standards
Codification (ASC) 842, Leases. Leases are classified as either operating leases or finance leases.
Affinity Care Group, LLC
currently leases office space under an operating lease. Whether a lease
is classified as an operating lease or a finance lease, the
Affinity Care Group, LLC
must record a
right-of-use asset and a lease liability at the commencement date of the lease, other than for
leases with an initial term of 12 months or less. A lease liability is initially and subsequently
reported at the present value of the outstanding lease payments determined by discontinuing
those lease payments over the remaining lease term using the incremental borrowing rate of the
legal entity entering into the lease as of the commencement date. A right-of-use asset is initially
reported at the present value of the corresponding lease liability plus any prepaid lease payments
and initial direct costs of entering into the lease, and reduced by any lease incentives.
-
10
-
Subsequently, a right-of-use asset is reported at the present value of the lease liability adjusted
for any prepaid or accrued lease payments, remaining balances of any lease incentives received,
unamortized direct costs of entering into the lease and any impairments of the right-of-use asset.
Affinity Care Group, LLC
tests for possible impairment of the right-of-use asset annually or
more frequently whenever events or changes in circumstances indicate that the carrying value of
a right-of-use asset may exceed its fair value. If the carrying value of the right-of-use asset
exceeds its fair value, then the carrying value of the right-of-use asset is reduced to its fair value
and the expense is recorded in other expenses in the statement of income. Subsequent to an
impairment, the carrying value of the right-of-use asset is amortized on a straight-line basis over
the remaining lease term. There was no impairment of the right-of-use asset for the year ended
June 30, 2023
.
Lease liabilities and right-of-use assets based on variable lease payments that depend on an index
or rate are initially measured using the index or rate at the commencement date with any
subsequent changes in variable lease payments reported in other expenses (net) as incurred. Most
lease agreements for office space that are classified as operating leases contain renewal options,
rent escalation clauses or other lease incentives provided by the lessor. Lease expense is accrued
to recognize lease escalation provisions and renewal options that are reasonably certain to be
exercised, as well as lease incentives provided by the lessor, on a straight-line basis over the lease
term and is reported in other expenses (net) as the straight-line amortization of the right-of-use
asset and accretion of the lease liability, thereby transitioning to a front-loaded expense
recognition profile for the associated lease.
Date of Management's Review
Subsequent events were evaluated through
March 29, 2024
, which is the date the financial
statements were available to be issued.
NOTE
2
- ACCRUED LIABILITIES:
Accrued liabilities outstanding at
June 30, 2023
is
$15,028
. All were incurred in the normal
course of business. The
Company
expects to have sufficient revenue to settle the accounts
payable when they become due.
-
11
-
NOTE
3
- FIXED ASSETS:
Fixed Assets
Beginning
Balance Additions Disposals
Ending
Balance
Computers and
Software
$
7,185
$
3,524
$
-
$
10,709
Furniture & Fixtures
4,612
14,885
-
19,497
Leasehold
Improvements
-
1,426
-
1,426
Vehicles
22,698
-
-
22,698
Total $ 34,495 $ 19,835 $ - $ 54,330
Accumulated Depreciation
Beginning
Balance Additions Disposals
Ending
Balance
Computers and
Software
$
651
$
3,569
$
-
$
4,220
Furniture and
Fixtures
3,054
3,077
-
6,131
Leasehold
Improvements
-
-
-
-
Vehicles
9,079
4,540
-
13,619
Right-of-Use Assets
-
-
-
-
Total Accumulated
Depreciation $ 12,784 $ 11,186 $ - $ 23,970
Net Fixed Assets $ 30,360
Depreciation expense for the period ending
June 30, 2023
was
$11,186
.
NOTE
4
- DESCRIPTION OF LEASING ARRANGEMENTS:
The
Company
leases office space under a long-term noncancelable operating lease that will
expire in October of 2027. In accordance with FASB ASC 842 Affinity Care Group, LLC has
recognized a right-of-use asset and a corresponding lease liability related to this lease. The right-
of-use asset and lease liability established on Affinity Care Group, LLC's books are equal to the
present value of all future lease payments using a discount rate of 7% which is Affinity Care
Group, LLC's incremental borrowing rate.
-
12
-
The following is a schedule of future minimum lease payments required under the leases:
Year Ending
June 30, Amount
2024
$
34,722
2025
37,232
2026
39,923
2027
42,809
Thereafter
14,949
Total $ 169,635
NOTE
5
- CONCENTRATIONS:
As of
June 30, 2023
, the
Company
's cash in bank did exceed the Federal Deposit Insurance
Corporation (FDIC) limit of
$250,000
by
$300,335
. The Company does not believe this excess
of cash over the FDIC limit poses a significant risk.
The
Company
receives a substantial portion of its income from its contract with Tennessee
Department of Intellectual and Developmental Disabilities (DIDD) and is dependent upon the
State for continued support of its programs.
NOTE
6
- SUBSEQUENT EVENTS:
Affinity Care Group, LLC has evaluated subsequent events occurring after the balance sheet date
through
March 29, 2024
, the date the financial statements were available for release. Based upon
this evaluation, the Organization has determined that there are no subsequent events that have
occurred which require adjustment to or disclosure in the financial statements.
-
13
-
AFFINITY CARE GROUP, LLC
Summary of Prior Year Findings
Year Ended
June 30, 2023
NONE
-
14
-
INDEPENDENT AUDITOR’S 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
To the Board of Directors
Affinity Care Group, LLC
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
Affinity Care Group, LLC
(a nonprofit organization), which comprise the balance
sheet as of and for the year ended
June 30, 2023
, and the related statements of comprehensive
income, member's equity and cash flows for the year then ended and the related notes to the
financial statements, and have issued our report thereon dated
March 29, 2024
.
Report on Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered
Affinity Care
Group, LLC
’s internal control over financial reporting (internal control) as a basis for designing
audit procedures that are appropriate in the circumstances for the purpose of expressing our
opinion on the financial statements, but not for the purpose of expressing an opinion on the
effectiveness of
Affinity Care Group, LLC
’s internal control. Accordingly, we do not express an
opinion on the effectiveness of
Affinity Care Group, LLC
’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 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 or significant deficiencies may exist that were not identified.
-
15
-
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the
Affinity Care Group, LLC
’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 financial statements. 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.
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 Organization’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.
Memphis, Tennessee
March 29, 2024
-
16
-