North Bay Developmental Disabilities Services Inc.

“During the year ended june 30, 2014, management discovered an embezzlement involving a former case worker which transpired during the time period of 2006 through 2012 that is estimated at $385,000. The embezzlement involves client trust funds for which the center has a fiduciary duty to oversee. Accordingly, it is management's intent to financially restore the impacted clients. Once the embezzlement was discovered, management reported this incident to various authorities including, but not limited to, those charged with governance, adult protection services, dds, and the santa rosa police department (srpd). On the advice from the srpd, management undertook an internal investigation to produce evidence and to quantify the loss by reviewing all available supporting documents. Because of the unavailability of certain records, losses prior to 2006 may exist but are not quantifiable. In management's opinion, the estimated loss is reasonable and the embezzlement is an isolated case. The former employee suspected of the embezzlement was arrested and has pleaded no contest. The center will seek restitution through a combination of actions including, but not limited to, restitution from the former employee and claims against financial institutions and the center's insurance carrier covering employee dishonesty coverage. At june 30, 2014 and 2013, the operating fund includes the accrual for the loss of $385,000 and a payable to the client trust fund. When the center receives restitution, it will recognize income and will then use the proceeds to reimburse the impacted clients by transferring the funds to the client trust fund. Because of the limitations on recognizing gain contingencies, the operating fund will recognize restitution as it is received. As a result, there is an unrestricted accumulated deficit as of june 30, 2014 and 2013. Subsequent to june 30, 2014, the center has received $200,000 from its insurance carrier.”

“A draft of the form 990 is reviewed and approved by the management team. Before filing, the form 990 is approved and forwarded to the entire board of directors.”

“The board members are required to sign a conflict of interest form annually.”

“The executive director is evaluated by key staff members and by the board of directors. His performance and compensation is reviewed annually. The compensation package is negotiated between the committee and the executive director and is then presented to the full board for approval.”

“AVAILABLE UPON REQUEST.”

“The center receives funding on an annual basis from the state of california. The center contracts with the department of developmental services to provide or coordinate services and support for individuals with developmental disabilities. There is no money spent by the center for fundraising from private donors.”

“The center was orgainzed in accordance with the provisions of the lanterman developmental disabilities services act (the act) of the welfare and institutions code of the state of california. The act includes governance provisions regarding the composition of the center's board of directors (the board). The act states that the board shall be comprised of individuals with demonstrated interest in, or knowledge of, developmental disabilities, and other relevant characteristics, and requires that a minimum of 50 percent of the governing board be persons with developmental disabilities or their parents or legal guardians; and that no less than 25 percent of the members of the governing board shall be persons with developmental disabilities. In addition, a member of a required advisory committee composed of persons representing the various categories of providers from which the center purchases client services, shall serve as a member of the center's board. The center's board includes persons with developmental disabilities, or their parents or legal guardians, who receive services from the center, and a client service provider of the center.”

“Pursuant to the terms of the dds contract, equipment purchases become the property of the state of california and, accordingly, are charged as expenses when incurred. The center is required to track acquisitions of furniture and equipment with a cost or value in excess of $5,000 and with an estimated life beyond one year. For the years ended june 30, 2014 and 2013, equipment purchases totaled $0 and $34,526, respectively. The aggregate capitalized equipment costs at june 30, 2014 and 2013, totaled $299,439 and $337,656, respectively.”

“There have been no changes to the process from the prior year.”