Area Resources for Community and Human Services (ARCHS) begins the new year with important news about its financial and programmatic success and stability.

The news is especially welcome in the recent climate both locally and nationally of increased public scrutiny shining more light on not-for-profit accountability and transparency practices.

For the past ten fiscal years (2002-2011) ARCHS’ financial statements have earned unqualified or “clean,” audits from independent auditors.

ARCHS’ FY11 (July 1, 2010-June 30, 2011) audit was reviewed and approved by ARCHS’ Board of Directors at their December 20, 2011 meeting.

Issuance of an “unqualified opinion” means an auditor, upon review of an organization’s financial statements and accompanying notes, concluded that the financial statements and accompanying notes are presented fairly, conform to generally accepted accounting principles and fairly represent the true financial picture of the organization.

The FY11 audit also highlighted that ARCHS’ “administrative overhead” costs are only 11.2 percent, substantially below the national average of 25 percent as calculated by the national United Way. This means that ARCHS is able to directly allocate at least 89 cents out of every dollar it manages to provide vital social services with a focus on early childhood, K-12 and family and community education. The remaining 11 cents provide necessary support services that help oversee and monitor the programs and assure their long-term success.

"The audit opinion is more than an approval of accounting controls and principles. It assures our federal, state, private and philanthropic funders that ARCHS is responsibly and properly managing, spending and reporting the funds entrusted to us to serve the region’s most vulnerable residents,” says Wendell E. Kimbrough, ARCHS’ Chief Executive Officer. “Each month, ARCHS’ staff visits each program we fund and support, to provided a real time “audit” of how things are going, and if there are any issues, find ways to make improvements.”

Over the past three years, ARCHS also successfully completed federal A-133 audits for its work with federal grants. An A-133 audit is required for any organization that expends more than $500,000 or more in a year in funding from the federal government. In December 2011, ARCHS successfully completed a U.S. Department of Justice audit of its “Second Chance Prisoner Re-entry Mentoring Program.”ARCHS is also annually audited (financially and programmatically) by the State of Missouri Department of Elementary and Secondary Education and the Missouri Department of Social Services’ Children’s Division for specific work related to after school and early childhood programs.

Another example of ARCHS’ strong focus on its fiduciary responsibilities are the efforts being made by its subsidiary, Leveraged Resources Management, Inc.

Over the past year, LRM has been taking big steps to strengthen client relationships by voluntarily submitting its financial bookkeeping records for Statement on Auditing Standards (SAS 70)/Statement on Auditing Standards for Attestation Engagements (SSAE 16) certification. LRM has already achieved Type 1 certification, and is looking to earn Type 2 certification within 2012.

This achievement done to ensure clients of quality service makes LRM the only finance bookkeeping agency in the St. Louis region with SAS70/SSAE 16 certification.

“This will give reasonable assurance that our clients’ data is secure,” said LRM President Terry Blake. “The data is reviewed quarterly to make sure it and the policies are followed accordingly. Obtaining the SAS 70/SSAE 16 is a completely voluntary measure, yet we believe it is necessary to maintain a healthy relationship between a service provider and their funder.”

LRM achieved Type 1 certification on June 30, 2011. The process to earn Type 2 certification has begun and is expected to be issued within a year. Type 2 certification requires auditors to look at LRM’s records quarterly.

“Type 1 certification evaluates the design and effectiveness of a service provider’s controls and then confirms that these controls have been place in operation as of a specific date. Type 2 tests and confirms the effectiveness of the controls,” said Tom Helm, audit supervisor with Huber, Ring, Helm and Co. P.C. “Certification is a greater level of assurance of the services an organization provides. It makes sure that the controls in place are actually effective.”

Throughout the certification process, the American Institute of Certified Public Accountants (AICPA) will review LRM’S financial service and bookkeeping data quarterly to make sure there is adequate control and safeguards in place for clients’ records. Section 404 of the Sarbanes-Oxley Act of 2002 outlines the strict standards that ensure businesses are fairly handling their clients’ data, and maintaining a transparent relationship.

ARCHS’ LRM provides a full spectrum of financial bookkeeping services to 18 area not-for-profits across the State of Missouri.

ARCHS and LRM currently manage $28 million in funding that supports crucial social service programs with a focus on early childhood, K-12 education and family and community programs.