COUNTY OF LOS ANGELES

DEPARTMENT OF AUDITOR-CONTROLLER
KENNETH HAHN HALL OF ADMINISTRATION
500 WEST TEMPLE STREET, ROOM 525
LOS ANGELES, CALIFORNIA 90012-3873
PHONE: (213) 974-8301 FAX: (213) 626-5427
ASST. AUDITOR-CONTROLLERS
WENDY L. WATANABE
AUDITOR-CONTROLLER ROBERT A. DAVIS
JOHN NAIMO
MARIA M. OMS JUDl E. THOMAS
CHIEF DEPUTY

February 26,201Q

TO: Supervisor Gloria Molina, Chair

Supervisor Mark Ridley-Thomas
Supervisor Zev Yaroslavsky
Supervisor Don Knabe
Supervisor Michael D. Antonovich /---

FROM: Wendy L. Watanabe k ? ! ? ! $ ~ -

SUBJECT: INSTITUTE FOR MULTICULTURAL COUNSELING AND EDUCATION

SERVICES, INC. CONTRACT REVIEW A DEPARTMENT OF -
CHILDREN AND FAMILY SERVICES AND MENTAL HEALTH SERVICE
PROVIDER

We completed a program and fiscal review of Institute Multicultural

for Counseling and
Education Services, Inc. (IMCES or Agency), to determine the Agency's compliance
with two separate County contracts. The Agency contracts with the Department of
Children and Family Services (DCFS) to operate the Wraparound Approach Services
(Wraparound) Program and the Department of Mental Health (DMH) to provide mental
health services.

Backaround

Under the DCFS Wraparound Program, IMCES provides individualized services to

children and their families such as therapy, housing, educational and social assistance.
Under the contract with DMH, IMCES provides mental health services, which include
interviewing program participants, assessing their mental
health needs and developing
and implementing a treatment plan. The Agency's headquarters is located in the
Second District.

DCFS paid IMCES on a fee-for-service basis at $4,184 per child a month (less
placement costs) or approximately $292,000 and $455,000 for Fiscal Years (FY) 2007-
08 and 2008-09, respectively. DMH paid IMCES on a cost reimbursement basis

Help Conserve Paper - Print Double-Sided

"To Enrich Lives Through Effective and Caring ServiceJ'
Board of Supervisors
February 26, 2010
Page 2

between $1.70
$3.50 perand minute of staff $210
timeper ($102
hour) toor
approximately FYs 2007-08
for $1.2 and 2008-09, respectively.
million

The purpose of the program review of the the

mental he
appropriateness the services of providedon availablebased documentation.
This
included review aof the Agency's billings, and personnel
participant andcharts payro
records. We also interviewed a number of Agency's staff.

The purpose
of the fiscal of review
DCFS' Wraparound and mentalProgram health
services was to determine IMCES
whether
appropriately foraccounted
and spent
Wraparound and DMH funds providing the services outlined
We also evaluated the of the
adequacy
Agency's accounting records,
and compliance with federal, State and County guidelin

Results of Review

DMH Program Review

IMCES properly recorded and deposited staff assigned

revenue the DMH to and
Program possessed the required
In addition, qualifications.
IMCES' salaries
appropriately the
charged
DMH and Wraparound
to and
Programs
the Agency
maintained personnel
as required. files

However, the did not

Agency always comply with County contra
Specifically, IMCES:

Did not provide documentation

support 665 (17%) ofto the 3,895 minutes sa
The Agency subsequently bill
adjusted
accordingly. the As a noresult, the
questioned costs.

Did not adequately the symptoms

describe and behaviors exhibited
support the Agency's clinical diagnosis
(47%) of the for
15 clients seven sampled
on
their Assessments.

Did not complete Clientthe

Care Plans for ten (67%) of the 15 clients sampled
in
accordance with the County the Client
contract.
Care Plans did
Specifically,
not
contain specific goals.

Did not complete six (17%) of the 35 Progress sampled

Notes in accordance with
the County contract. six
Specifically,
Progress Notes
the
for mentalbilled health
services did not describe
the clients what
or service and/or
staff attempted
accomplished the clients'
towards goals.
Board of Supervisors
February 2010 26,
Page 3

DMH and DCFS Wraparound Fiscal Review

IMCES return
should$56,676 in excess Wraparound DCFS. At Program
the
end of DCFS
each Wraparound Year
Program
(PY), the Agency is allowed to retain
unspent upfunds
to ten percent
of their program expenditures for future
Program Theuse.
Agency is required to returnin excessany funds
of ten percent
the County.
For the PY ending
April 30, 2008, IMCES' unspent Wrapa
totaled $78,918program expenditures
and $222,422.
totaledAs a result,
IMCES is
allowed to reserve of $22,242
$222,422) for future(10% Wraparound
use and is
required return to$56,676 ($78,918 - $22,242) in excess funds to DCFS as required
the County contract.

In addition, IMCES charged DMH $201,652DCFS $76,200 and ($54,000 PY 2007-

for
08 and $22,200 for PY 2008-09)
for unpaid donated services
unallowable which
expenditures per the County contract. As a result, IMCES
program expenditures
the Wraparound for DMH Programs and and
the County
repay
for excess amounts DMH pays received.
IMCES a negotiated rate for the
reimbursement contract.
end of the contract
At the if the year,
Agency's revenues
exceed the actual expenditures onthe Agency
their mustCostrepay DMH
Report, for
the excess
amount received.

The details of our review along with recommendations

for corrective action
attached.

Review of Report

We discussed
the results of our review with
DMH and
IMCES,DCFS.
In their attached
response, IMCES agreed to maintain documentation the service to support
minutes
billed but disagreed of the recommendations.
with a few IMCES
the belie
Agency's Assessments, Plans and Client Progress Care in Notes
compliance were with
the County andcontract
the DMH Provider Manual.

Our findings
were based on the County contract requirements
the Agency
and DMH staff on several occasions. For the
in theircase file
letter, the Progress Notes
what thedid
client or
notservice
describe staff attempted
and/or accomplished towardsgoal. In theaddition,
client's DMH agreed ourwith
findings and recommendations.

IMCES indicated that the donated

the Wraparound
services
and DMH charged
Programs are allowable expenditures since the e
recognized fair value.at IMCES recognized
appropriately
the donated services in
accounting However,
records. the County contract
and the federal cost forprinciples
non-profits governed of Management
by theand Budget,
Office Circular
A-122, do not
allow Agencies
to charge donated as program
services expenditures. There
Board of Supervisors
February 26, 201 0
Page 4

costs associated to the donated

be removed from
services
the DMH1s and
should
DCFS1Cost Reports. DCFSDMH
indicatedand
that they will request repayment
total disallowed expenditures.

We thank IMCES management for their

and assistance
cooperation during
review. this
Please mecallif you have any or your
questions
staff may contact Chadwick
Don at
(213) 253-0301 .

Attachment

c: William T Fujioka, Chief Executive Officer

Dr. J. Southard,
Marvin Director, of Mental
DepartmentHealth
Patricia S. Ploehn, Director, of Children
Department
and Family Services
Tara Ph.D.,
Pir, Board President Director,
and IMCES
Executive
Public Information Office
Audit Committee
 DEPARTMENT OF MENTAL HEALTH AND WRAPAROUND PROGRAMS
INSTITUTE FOR MULTICULTURAL COUNSELING & EDUCATION SERVICES,
FISCAL YEARS 2007-08 AND 2008-09

BILLED SERVICES

Objective

Determine whether
for Multicultural
Institute Counseling and
Inc. Education
(IMCES Agency)
or provided the services billed in accordance with with
the Department of Mental Health (DMH).

Verification

We reviewed 35 billings totaling

3,895 minutes from 86,660 service minu
Medi-Cal billings from January We reviewedand the February
Assessments, 2009.
Client Care Plans and Progress
in the clients' Notes for
charts
themaintained
selected
billings. The 3,895 minutes represent
15 program services
participants. provide

Results

IMCES not did

provide documentation
to support 665 of the(17%)
3,895 minutes
sampled. Agency Theadjusted the billings accordingly
the day the samplewas listing
provided to the Agency. no As
questioned
a result, costs.
there are

In addition, the Agency did not always complete Client Assessments,

Care Plans and
Progress in accordance
Notes the County
with contract requirements.

Assessments

IMCES not adequately

did describe the symptoms by the clientand behav
to support the Agency's clinical diagnosisthe 15 clients
for seven
sampled
on (47%)
their Assessments. An Assessment is a diagnostic
to document the clinical
tool used
evaluation of each client and establish the The client's
County contract requires the Diagnostic
Agencies and Statistical
to follow of Manual
Mental Disorders (DSM) when diagnosing clients.

Client Plans
Care

IMCES not complete

did the Client Care tenPlans
(67%) of thefor15 clients sampled
in
accordance the County
with contract. Specifically, did not the contain
Client
specific goals.

AUDITOR-CONTROLLER
COUNTY OF LOS ANGELES
Institute for Multicultural& Education Services,
Counseling
Inc. Paae 2

Pronress Notes

The Agency did not(17%)completeof35 Progress

six the Notes in sampled
accordance the County
with contract. the six
Specifically,
Progress Notes bill
mental health services did not or describe
service staff
what attempted
the
and/or accomplished the clients'
towards goals.

Recommendations

IMCES management:

1. Monitor to
billings
ensure that billing errors are detected.

2. Ensure Assessments,
that Client Care Plans and Progress Notes are
completed in accordance with the County contract.

STAFFING LEVELS

Objective

Determine thewhether
Agency maintained the appropriate staffin
services.

We did not performin this test

section work
Agencyas didthe
not provide services
required staffing particular
ratios for program.
this

Recommendation

None.

STAFFING QUALIFICATIONS

0biective

Determine whether staff

IMCES'possessed treatment the requiredto qualif
provide the services.

Verification

We reviewed
the California of Behavioral
Board website
Sciences'
and/or the personnel
files for 10 of 35 IMCES treatment
staff who provided services to DMH c
January and February 2009.

AUDITOR-CONTROLLER
COUNTY OF LOS ANGELES
Institute for Counselinn & Education
Multicultural Services, Pane 3Inc.

Results

Each employee in our sample the

possessed
qualifications requiredthe to
services billed.

Recommendation

None.

UNSPENT WRAPAROUND REVENUE

IMCES' Wraparound Approach Services (Wraparound)

Children and Family Servicesthat the Agency
(DCFS) is indicates
allowed to
unspent upfunds
to ten percent of their program
for future Wraparound
expenditures
Program and use
return any in excess
funds of ten percentthe County.to the For
program year ending April 30, 2008, IMCES' unspe
$24,918 and program expenditures totaled $276,422.
year, IMCES charged the Wraparoundfor donated Program services, $54,000 w
were unallowable the
expenditures
County contract.per As a result, IM
reduce their program expenditures
$222,422 ($276,422by - $54,000)
$54,000and to
report $78,918 + $54,000)
($24,918
in unspent revenue.

In addition, the County

per contract, is allowed
IMCES
to reserve
$22,242 (10% of
$222,422) for future Wraparound is required
use
to return
and $56,676 - ($78,918
$22,242) in excess funds to DCFS.

Recommendations

IMCES management:

3. Reduce the Wraparound Program expenditures for the contract year

ending April 30, 2008 by $54,000 unallowable
in expenditures.

4. Reserve $22,242
to ensure thethat
funds are used provide
to
Wraparound Program services in subsequent years.

5. Repay
DCFS $56,676.

Objective

Determine whether cash receipts and therevenue

Agency's were
financial records and in their
depositedbank account.
In
timely
addition, determine
whether arethere
adequate controls over cash and other liquid

AUDITOR-CONTROLLER
COUNTY OF LOS ANGELES
Institute for Multicultural& Education Services,
Counseling
Inc. Pane 4

Verification

We interviewed IMCESand reviewed

management
the Agency's financial
We reco
also reviewed 2009 bank
their March reconciliation.

Results

IMCES maintained toadequate

ensure thatcontrols
revenue was
and properly
deposited in a timely manner.

Recommendation

None.

COST ALLOCATION PLAN

Obiective

Determine whether IMCES' Cost in compliance

Allocation the Planwith is
County contract and the the
Plan Agency
to appropriately
used allocate
expenditures.

Verification

We reviewed the Agency's Cost Allocation Plan, inter

their financial records.

Results

IMCES' Cost Allocation Plan was the County

prepared contract
andin complianc
the costs were appropriately
to the programs.allocated

Recommendation

None.

EXPENDITURES

Obiective

Determine DMH
whether
and Wraparound Program related expend
under their County contracts, and accurately
properly documented
billed.

AUDITOR-CONTROLL ER
COUNTY OF LOS ANGELES
Institute for Multicultural &Counseling
Education Services, Inc. Page 5

Verification

We interviewed Agency personnel, andreviewed

documentation to financial
support five Wraparound $2,597
expenditures
and 15 DMH expenditures
totaling
totaling $1 8,692 between
and March August2009. 2008

The sampled expenditures were generally allowable,

accurately to DMH
billed and DCFS. in JuneHowever, 2008,
IMCES charged DMH
$201,652 and DCFS
for donated $22,200 services by the Agency's
provided board
members. The Countynot allowcontract
Agencies
charge
doesdonated
to services
program expenditures. the Agency
As a result,
to
needs
reduce their program
expenditures for the Wraparound and DMH Programs
for excess and
amounts received.

During the contract year, DMH pays

IMCES a negotiated for their
rate cost
reimbursement At the
contract.
end theof contract year, if the Agency's revenues
exceed the actual expenditures Cost Report, onthe Agency
their must for
repay D
the excess amount received.

As indicated
in the Unspent Wraparound IMCES
Revenue
is required section,to
reserve their unspent Wraparound and repay revenue DCFS
for excess atfunds
the
end of their contract For the year.
contract year ending April
2009, IMCES
30, needs t
reduce their Wraparound Program by $22,200
expendituresand repay the DCFS
excess amount received
what needs to bebeyond
reserved the Agency.
at

Recommendations

IMCES management:

6. Revise their DMH Fiscal

Year (FY) 2007-08 Cost Report to reduce the
reported program
expenditures by $201,652 in unallowable
expenditures and repay DMH for any excess amount
received.

7. Reduce the Wraparound Program expenditures by $22,200 for the

contract year ending April 30, 2009 and repay
DCFS for any excess
amount received.

8. Ensure that only

allowable program expenditures are billed to the
DMH and DCFS Wraparound Programs.

AUDITOR-CONTROLLER
COUNTY OF LOS ANGELES
Institute for Multicultural Counseling & Education Services, Inc. Page 6

FIXED ASSETS

Objective

Determine whether fixedcosts charged

asset to thedepreciation
DMH and Wraparound
Programs were allowable
the County under
contract, properly
and docum
accurately billed.

Verification

We interviewed Agency personnel and reviewed the

to fixed assets. In addition, we reviewed the fixed assets with depreciation of costs
$664 that the Agency to the
charged
DMH
and Wraparound in FY 2007-08.
Programs

Results

IMCES' depreciation costs were and

allowable,
accurately properly
billed.

Recommendation

None.

PAYROLL PERSONNEL
AND

Objective

Determine whether payroll expenditures to the DMHwere

and appropr
Wraparound Programs. In addition, determine whether personnel
as required.

Verification

We traced the payroll expenditures $49,516

for to 12
the payroll
employees
records and time
for the pay
reports period ending March also 31, 20
interviewed and reviewed personnel
the 12 employees.
files for

Results

Generally, IMCES'
were appropriately
salaries charged to the DMH
Programs and the Agency maintained required.
personnel files as

Recommendation

None.

AUDITOR-CONTROLLER
COUNTY OF LOS ANGELES
Institute for Multicultural Counselinq & Education Services, Paqe 7Inc.

COST REPORT

Objective

~ e t e r m i n ewhether FY 2007-08
IMCES' Cost Report the Agency's
reconciled
financial records.

Verification

We traced the Agency's FY 2007-08 Cost Report the Agency's

to general ledger.

Results

The Agency's total expenditures

Cost Report listed
reconciled
the on
Agency's
their to
accounting However,
records. as previously indicated,
the Agency charged DMH
unallowable expenditures
FY 2007-08. during
IMCES needs
FY 2007-08
to revise
Cost Report by $201,652 and repay DMH for any ex

Recommendation

9, IMCES ensure their

that
Cost Reports are accurate and include only
allowable expenditures.

PRIOR YEAR FOLLOW-UP

0biective

Determine the status the of

recommendations in the prior
reportedmonitoring revi
completed by the Auditor-Controller.

Verification

We verified whether the outstanding FY 2004-05

recommendations
monitoring
reviews were implemented. issued on December 9,2005.
report wasThe

Results

Our prior monitoring report containedIMCES four implemented

recommenda
three recommendations not implement and did
one recommendation.
indicated, the outstanding recommendation 1 contained in relates
this report.

Recommendation

10. IMCES management implement the outstanding recommendation

from our prior monitoring
report.

AUDITOR-CONTROLLER
COUNTY OF LOS ANGELES
 Attachment
Page 1 of 5

<.&stitUtefor L&lticultural
-3
*-
Gunseiing and .-a u c a t i o n -
%&rvices, inc.
A non-profit NGO 1DPI 1United Nation
organization,
3580 Wilshire Boulevard, Suite Los
2000Angeles, California 90010
431 N. Brand Blvd. #202 Glendale, CA 91203
Tel: (213) 381 -1250 Fax: (213) 383 - 4803

Date: November
10,2009

Wendy L. Watanabe
Auditor- controller
500 West Room 525 Street,
Temple
Los Angeles, 2-3 873
California 9001

Dear Watanabe:
Ms.

Institute For Multicultural (LMCES) has Counseling

reviewed the auditor-controller
of rep
our DCFS and DMI-I programs for the fiscal year of 2007-2008.

We are pleased that IMCES's strengths

auditor-controller inverified
with
compliance
the county
contracts standard
and of by indicating "No Recommendation" on the
practice following
categories of program and fiscal review including;

bb Staffing Levels
b) Staffing Qualifications
bb Cash /Revenue
B, Cost Allocation Plan
bb Fixed Assets
bb Payroll and Personnel

The following is our responses

recornnlendations oftootherthe categories.
IMCES will ensure
to follow the standard
of practice and our commitment and accountability
demonstrate to
fulfilling the contractual the DMHagreement
and DCFS
the Programs.
with
 Attachment
Page 2 of 5

institute For Multicultural & Education

Counseling (I.M.C.E.S.)
Services.
County Los Angeles
of
Auditor-Controller Keview
Page 2 of 5

Responses and Action Plans

Billed Services

#1
Although we were told this item was removed from the finding recommendations based on
providing proper IS documentation, IMCES will monitor our IS input closely in order to avoid
possible errors also we would ensure proper
that documentation is provided for services.

#2
In regards to the recommendation #2: "Ensure that Assessments, Client Care Plans and Progress
Notes are completed in accordance with the County contract" we would like respectfully
to
disagree with these findings as we believe that the Auditor's view of utilization of DSM-IV was
subjective. IMCES supports assessments utilizing diagnostic material straight from the DSM-IV
and the diagnostic criteria qualifLing each client for the diagnosis given is clearly demonstrated
in the documentation of the Initial Assessment. Regarding client case plans, our care plans are
supported by symptoms documented in the lnitial Assessment and each goal is S.M.A.K.'I'.;
specific, measurable, attainable, realistic and timely making it very clear to each client what our
services are to help them with and providing e d h staff with direction in their service
intended
provided to the client. Regarding Progress Notes, it is clear that each service provided to
clientele directly benefited that client's progress toward their goal in the care plan. There was
one isolated situation which was taken out of context regarding a client who, ironically, happens
to be a client with a significant success story where the client even complimented IMCES to the
Board of Supervisor. This client had been homeless for 30 years, suffering fi-om severe
functional impairments which were a hazard to himself and the community. IMCES FSP team
were able to support this client in improving his level of functioning from a place where he spent
his days and nights sitting on the streets, harassing tourists and store owners to the point that he
has been successful in maintain housing consistently over a 12 month period of time. This client
had an immediate, unforeseeable, one time need after his release from jail (during which time he
lost his SSI coverage) which our clinical staff provided a targeted intervention which was
allowed through proper documentation in the intesvention section of the client care coordination
plan.

We believe after reviewing the notes sampled by Auditor Controller that IMCES is in complete
compliance with our County contract and the DMH Provider manual. IMCES constantly strives
to maintain the highest levels of competency and excellence in our training of staff as well as
service delivery to the underserved population we service. Our plan for the hture will entail a
continuation of this attitude and commitment as well as increasing the already high number of
trainings and quality supervision to our staff
regarding each aspect of client
care and
documentation of this care
according to the
County and State requirements.
 Attachment
Page 3 of 5

Institute For Multicultural Counseling & Education Services. (I.M.C.E.S.)

County of I,os Angeles
Auditor-Contsoller Review
Page 3 of 5

Unspent Wraparound Revenue

IMCES was presented

an opportunity with to benefit from contribution of
We did consult with appropriate CPNAuditors who are
authorities specializing
on the
including
non profit organizations financial our DMHmanagement.
contract under
Also, financial
requirement; page
2 indicates
16 item
the that
agency can use Statement of financial
Accounting Standards (SPAS) as a principle of financial recording.
We followed the exact
procedure of documentation by recording both the revenue theand
county expenditure.
auditor acknowledged
this principle of asrecording
acceptable method.

-
#3
TMCES management the followed
accounting and financial ofreporting
the SFAS requiremen
116 related to donated services.
In response to audit
the recommendation,
subject the $54,000
charged the Wraparound
to Program represents the fair market value
was recognizedin the period in which the services of financial
were received.
Accounting Standards
(SFAS) 116 defines
contiibuted services as those that ".,.create
enhance non assetsfinancial
or require specialized byskills,
individuals are provided
possessing
those skills, and would
need to be typicallypurchased
if not provided
by donation. Services
requiring specialized
skills are providedby accountants, carpenters,
architects, doctors,
electricians, plumbers, tcachers,
lawyers, nurses, and other professionals and cr
Contributed services to give and servicespromises
that do not meet the above criteria
are not to
be recognized." the serviceAlso,
hours were not perfolmed
only and properly documented;
DMH Program the
received
benefit of all of these sesvices at the expense of hours volunteered
by
the qualified individuals.

Based on the foregoing SFAS description, IMCES management

has appropriately believes t
recognized the Donated Services
and was justified thetofair include
market of thevalue
chasges
in the Wraparound program expenditures.
TMCES would like
Therefore,
to request that
Wraparound programbe considered
expenditure
as allowable expenditure.

-
#4
IMCES management the auditor's
agrees
reconlmendation
with to maintain a 10% reserve for
subsequent years expendituses. However,
Wraparound program IMCES management
the 10% reserve be based
should on the $276,422 totalat the expendituses
reposted program year
ending 30,2008.
April Therefore resellrethe
of $27,642 beshould
maintained by IMCES.

-
#5
Since is to maintain a rcservc of $27,642
IMCES for subsequent Wraparound
and
the total excess had
revenue
at 04130108 program
it year was
end $24,918, there anywill not be
available for repayment
funds to the DCFS.
 Attachment
Page 4 of 5

Institute For Multicultural& Education Counseling

Services.
(1.M.C.E.S.)
County Angeles
of Los
Auditor-Controller Review
Page 4 of 5

Expenditures
In This
section, Auditor-Controller indicated that "the sampled expenditures were generally
allowable, properly documented and accurately billed to DMH and DCFS" however Auditors
recommended that IMCES do not include donated services to the programs.

IMCES was presented with an opportunity to benefit from contribution of professional services.
We did consult with appropriate authorities including CPNAuditors who are specializing the on
non profit organizations financial management. Also, our DMH contract under financial records
requirement; page 16 item 2 indicates thc agency
that can use Statement of financial Accounting
Standards (SFAS) as a principle of financial recording. We followed the exact procedure of
documentation by recording both the revenue and expenditure. In fact county
the auditor
acknowledged this principle of recording acceptableas method.

-
#6
IMCES management followed the accounting and financial reporting requirements of the SFAS
1 16 related to donate services. In response to the subject audit recommendation, the $20 1,652
charged to the DMH Program represents fair market
the value of the donated services that was
recognized in the period in which the services were received. SFAS 116 defines contributed
services those thatas "...create nonorfinancial
enhance
assets or require specialized skills, are
provided by individuals possessing those
and would skills,
typically need to be purchased if not
provided by donation. Services requiring
specialized skills provided
are by accountants,
architects, carpenters, doctors, electricians, lawyers, nurses, plumbers, teachers, and other
professionals and craftsmen. Contributed services and promises to give services that do not meet
the above criteria are not to be recognized." Also, the service
hours were not only performed and
properly documented; the DMH Program received the benefit of all of these services at the
expense of hours volunteered by the qualified
individuals.

Based on the foregoing SFAS description, IMCES managelnent believes that it has appropriately
recognized the donated services and was justified to include the fair
market value of the charges
in the DMH program expenditures DMHandFY 2007-08
the Cost Report. Thcrcfore, IMCES
would like to request that the expenditure be considered as allowable expenditure.

-
#7
IMCES management followed the accounting and financial reporting requirements of the SFAS
116 related to donated services. In response to the subject audit recommendation, the $22,200
charged to the Wraparound Program represents the fair market value 01the donated sei-vices that
was recognized in the period in which the services
were received. SFAS 116 defines contributed
services those that
as "...create ornonenhance
financial assets requireor specialized skills, are
provided by individuals possessing those
and would skills,
typically need to be purchased if not
provided by donation. Services requiring
specialized skills are provided by accountants,
architects, carpenters, doctors, electricians, lawyers, nurses, plumbers, teachers, and other
professionals and craftsmen. Contributed services and promises give services to that do not meet
 Attachment
Page 5 of 5

Institute For Multictlltural Counseling & Education Services. (I.M.C.E.S.)

County of Los Angeles
Auditor-ControllerReview
Page 5 of 5

the above criteria

not to be recognized."
are Also, the service hours were not only performed and
properly documented,
the DCFS Program received the benefit of all of these services
at the
expense of hours volunteered by the qualified
individuals.

Based on the foregoing

SFAS description, IMCES management believes that hasit appropriately
recognized the Donatcd Services and was justifiedinclude the to
fair market value of the charges
in the Wraparound program expenditures. In addition, a 10% reserve based on the total 2008-09
expenditures of $382,912 was established at $38,291, therefore no excess amount
is to be repaid
to the DCFS.

#8
IMCES management believes that it billed for allowable program expenditures DMH andto the
the DCFS contracts. IMCES followed independent
its Certified Public Accountant's
recommendation to record and recognize
Donated Services in its financial reporting to its
funding sources.
IMCES will ensure that only allowable expenditures are billed to the
programs.

Cost Report
-
#9

As previously indicated IMCES followed the acceptable accounting principle recorded

and both
revenue and allowable expenditure.
IMCES will ensure that the cost reports accurately
are
reflecting the allowable expenditures.

Prior year follow-up

-
#lo

We believe we have implemented all of the recommendations fiom prior monitoring report. The
one item indicated
should not be an outstanding as it was caused by IS in error.