1-Aid to Adoption of Special Kids Arizona Auditors 2024 letter - Copy.pdf

LOHMAN COMPANY, PLLC

Certified Public Accountants & Business Consultants

AID TO ADOPTION OF SPECIAL KIDS/

ARIZONA

AUDITOR’S COMMUNICATION WITH

THOSE CHARGED WITH

GOVERNANCE

JUNE 30, 2024

1630 South Stapley Drive, Suite 108, Mesa, Arizona 85204 Phone: 480-355-1100 Fax: 480-355-1130 Toll-Free: 888-793-1375 www.lohmancompany.com

LOHMAN COMPANY, PLLC

Certified Public Accountants & Business Consultants

To Management and the Board of Directors Aid to Adoption of Special Kids/ Arizona

We have audited the consolidated financial statements of Aid to Adoption of Special Kids/ Arizona and its subsidiaries (“the Organization”) for the year ended June 30, 2024, and have issued our report thereon dated January 29, 2025. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our engagement letter dated August 5, 2024. Professional standards also require that we communicate to you the following information related to our audit.

Significant Audit Findings

Qualitative Aspects of Accounting Practices

Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the Organization are described in Note 1 to the financial statements. As described in Note 2, the Organization adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments—Credit Losses, which requires measurement and recognition of expected credit losses at the point a loss is probable to occur, rather than expected to occur, which will generally result in earlier recognition of allowances for credit losses. Within the scope of the new standard includes a wide-variety of financial instruments, including trade receivables that result from transactions within the scope of Topic 606 on revenue. This updated standard will be effective for annual reporting periods beginning after December 31, 2022, including interim periods withing those fiscal years. The Organization adopted ASU 2016-13 in the first quarter of fiscal year 2024.

Accounting estimates are an integral part of the consolidated financial statements and are based on your knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the consolidated financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the consolidated financial statements are estimated useful lives of property and equipment and allowance for doubtful accounts. We evaluated the key factors and assumptions used to develop these estimates in determining that they are reasonable in relation to the consolidated financial statements taken as a whole.

The consolidated financial statement disclosures are neutral, consistent, and clear.

Difficulties Encountered in Performing the Audit

We encountered no significant difficulties in performing and completing our audit.

Corrected and Uncorrected Misstatements

Professional standards require us to accumulate all misstatements identified during the audit of the consolidated financial statements, other than those that are clearly trivial, and communicate them to the appropriate level of management. Uncorrected misstatements of the consolidated financial statements were communicated in the management representation letter dated January 29, 2025. Management has determined that their effects are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. In addition, attached are misstatements detected as a result of audit procedures, which were corrected by management.

Disagreements with Management

For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the consolidated financial statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit.

Management Representations

We have requested certain representations from management that are included in the management representation letter dated January 29, 2025.

Management Consultations with Other Independent Accountants

In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the Organization’s consolidated financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants.

Other Audit Findings or Issues

We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the Organization’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.

This communication is intended solely for the information and use of management, the members and others within the Company, and is not intended to be, and should not be, used by anyone other than these specified parties.

If you have any questions concerning any of these items or if we can be of further assistance, please contact us.

Mesa, Arizona January 29, 2025