Golden Gate Regional Center Inc.

“The center serves as representative payee for a majority of its clients in residential care. In this fiduciary capacity, it receives social security benefits and other sources of income and makes payments on behalf of certain developmentally disabled clients who are deemed unable to administer the funds themselves. Client trust transactions are not considered revenue or expenses of the center. The cash that is received and outstanding receivables, net of interfund liabilities are reported as assets and there is a corresponding liability, net assets held for others. The center outsourced the representative payee functions to the third party on september 1, 2013 and the transition is not completed as of june 30, 2014.”

“The center is a qualified organization exempt from federal income taxes and state franchise taxes under section 501(c)(3) of the internal revenue code (irc) and under section 23701d of the california revenue and taxation code, respectively. Accordingly, it is exempt from federal and california income taxes and is not liable for federal unemployment taxes. The center has adopted the accounting standard on accounting for uncertainty in income taxes, which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken, or expected to be taken, in a tax return and requires the affirmative evaluation that is more-likely-than-not, based on the technical merits of a tax position, that an organization is entitled to economic benefits resulting from tax positions taken in income tax returns. For tax-exempt entities, favorable tax status itself is deemed to be an uncertainty, as events could potentially occur to jeopardize their tax-exempt status. If a tax position does not meet the more-likely-than-not recognition threshold, the benefit of that position is not recognized in the financial statements. The center's evaluation on june 30, 2014 revealed no tax positions that would have a material impact on the financial statements. The 2010 through 2013 tax years remain subject to examination by the internal revenue service. In addition, the 2009 through 2013 tax years remain subject to examination by the california franchise tax board. The center does not believe that any reasonably possible changes will occur within the next twelve months that will have a material impact on the financial statements.”

“Furniture and equipment purchased with contract funds belong to the state of california. Furniture and equipment are stated at cost. As long as the center continues in operation, the state of california has granted the center a beneficial interest in the furniture and equipment. Accordingly, these assets are not depreciated.”