Summit Pointe Audit

Summit Pointe
Community Mental Health Authority

Financial Statements
September 30, 2015
Table of Contents
Section
Page
Independent Auditors Report
1-1
Managements Discussion and Analysis
2-1
Basic Financial Statements

Government-wide Financial Statements
Statement of Net Position
Statement of Activities
Fund Financial Statements
Governmental Funds
Balance Sheet
3-1
3-2
3-3
Reconciliation of the Balance Sheet of

Governmental Funds to the Statement of Net Position
3-4
Statement of Revenues, Expenditures and Changes in

Fund Balances
3-5
Reconciliation of the Statement of Revenues, Expenditures

and Changes in Fund Balances of Governmental Funds
to the Statement of Activities
3-7
Proprietary Fund
3-8
Statement of Revenues, Expenses, and Changes in Net Position
3-9
Statement of Cash Flows
3 - 10
Notes to the Financial Statements
3 - 11
Section
4
Page
Required Supplementary Information
Fund Balance Budget and Actual General Fund
4-1

Fund Balance Budget and Actual Children Pooled Funding
4-3

Fund Balance Budget and Actual DD Children Pooled Funding
4-4
Schedule of Employer Contributions
4-5
Schedule of Changes in Net Pension Liability (Asset) and Related Ratios
4-6
Schedule of Employers Net Pension Liability (Asset)
4-7
Other Reports
Report on Internal Control over Financial
Reporting and on Compliance and Other Matters Based on
an Audit of Financial Statements Performed in
Accordance with Government Auditing Standards
5-1
Schedule of Findings and Responses
5-3
Summary Schedule of Prior Audit Findings
5-8
Corrective Action Plan
5-9

Board of Directors and Management
Summit Pointe
Battle Creek, Michigan
Report on the Financial Statements
We have audited the accompanying government-wide and the major governmental fund statements of net position, balance sheet
and reconciliation of the balance sheet of governmental funds to the statement of net position and the proprietary fund statements of
Summit Pointe (The Authority), as of September 30, 2015, and we were engaged to audit the related statements of activities,
statement of revenues, expenditures, and changes in fund balances and the reconciliation of the statement of revenues
expenditures, and changes in fund balances of governmental funds to the statement of activities and the related notes to the financial
statements, which collectively comprise the Authoritys basic financial statements as listed in the table of contents.
Managements Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting
principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal
control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due
to fraud or error.
Auditors Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance
with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained
in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The
procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the
financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant
to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. Accordingly,
we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the
1-1
reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the
accompanying government-wide and governmental fund statements of net position, balance sheet and reconciliation of the balance
sheet of governmental funds to the statement of net position and the proprietary fund statements.
Adoption of New Accounting Standards
As described in Note 1 to the financial statements, during the year ended September 30, 2015, the government adopted GASB
Statement No. 68 Accounting and Financial Reporting for Pensions and Statement No. 71 Pension Transition for Contributions Made
Subsequent to the Measurement Date. Our opinions are not modified with respect to these matters.
Basis for Disclaimer of Opinion
Written representations are required from those with overall responsibility for financial and operating matters. This includes
individuals who are knowledgeable about (directly or through others in the organization) the matters covered by the representations,
including the preparation and fair presentation of the financial statements and the design, implementation, and maintenance of
internal controls. We were unable to obtain these written representations from management regarding the statements of activities,
statement of revenues, expenditures, and changes in fund balances and the reconciliation of the statement of revenues
expenditures, and changes in fund balances of governmental funds to the statement of activities and the related notes to the financial
statements.
Disclaimer of Opinion
Because of the significance of the matter described in the Basis for Disclaimer of Opinion paragraph, we have not been able to
obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, we do not express an opinion on the
financial statements listed in the previous paragraph.
Opinions
In our opinion, the accompanying government-wide and governmental fund statements of net position, balance sheet and
reconciliation of the balance sheet of governmental funds to the statement of net position and the proprietary fund statements
present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of Summit
Pointe, as of September 30, 2015, in accordance with accounting principles generally accepted in the United States of America.
1-2
Emphasis of Matter
We draw attention to the Contingency note in the notes to the financial statements which describe the uncertainty related to the
outcome of an ongoing compliance investigation.
Other Matters:
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the managements discussion and analysis and
budgetary comparison information, schedule of employer contributions, schedule of changes in net pension liability (asset) and
related ratios, and schedule of employers net pension liability (asset), as identified in the table of contents, be presented to
supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the
Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic
financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the
required supplementary information in accordance with auditing standards generally accepted in the United States of America, which
consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency
with managements responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of
the basic financial statements. We do not express an opinion or provide any assurance on the information, because the limited
procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated July 13, 2016 on our consideration of
Summit Pointes internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal
control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over
financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing
Standards in considering the Summit Pointes internal control over financial reporting and compliance.
Kalamazoo, Michigan
July 13, 2016
1-3
Summit Pointe
September 30, 2015
Management of Calhoun County Community Mental Health Authority (CMHA), also known as Summit Pointe, presents the following discussion
and analysis of financial activities during fiscal year 2015. This discussion and analysis is designed to assist the reader in focusing on significant
financial issues and activities, and to identify material changes in financial position and results of operations. Please read this section in
conjunction with the auditors report and with our financial statements, notes to financial statements and supplemental information taken as a
whole.
Effective January 1, 2014, Summit Pointe relinquished its role as the Prepaid Inpatient Health Plan (PIHP) for five counties to Southwest Michigan
Behavioral Health (SWMBH) which is now one of Michigans ten Medicaid Prepaid Inpatient Health Plans, responsible for benefits management
in eight counties Barry, Berrien, Branch, Calhoun, Cass, Kalamazoo, St. Joseph and Van Buren.
As a contractor with the Michigan Department of Community Health (MDCH), SWMBHs affiliate Community Mental Health Service Provider
(CMHSP) partners are: Barry County CMH, Pines Behavioral Health, Woodlands Behavioral Healthcare Network, Riverwood Center, Van Buren
County CMH, Kalamazoo CMH, St. Joseph County CMH and Summit Pointe. Additionally SWMBH is the Substance Abuse Treatment
Coordinating Agency for the 8 county region and a Duals Demonstration beginning 1/1/15.
2-1
Summit Pointe
September 30, 2015
Revenue that used to flow through Summit Pointe to the five counties now flows through SWMBH reducing the scale of Summit Pointe operations.
PIHP funds held in reserve on behalf of the five counties were transferred to SWMBH in FY 2015 as those operations are closed out.
Summit Pointe continues to provide services within Calhoun County as it has done in the past. It contracts with the MDCH for the State General
Fund services for priority population residing in Calhoun County. In addition, Summit Pointe also provides behavioral health services to other
segments of population. First and third party payers, contractual agreements and other non-MDCH sources of income accounted for 19.7% of
Summit Pointe revenues as a direct provider of services.
Summit Pointe continued pooling funds with local courts to provide services for children and youth in a unique publicly operated managed care
system organized under the auspices of Calhoun County Community Mental Health in fiscal year 2015. The goal is to serve youth with severe
mental health and/or behavioral needs, referred through the juvenile justice or child welfare systems, who would otherwise be placed in
psychiatric hospitals, residential treatment centers or juvenile correctional facilities. In fiscal year 2015 the pooled funding programs were
discontinued and replaced with grant funded programs that provide essentially the same services.
Another of our main priorities is primary care integration. We are paneled with Medicaid HMOs in Calhoun County. This allows us to provide
physical health services to the customers that are being served on the mental health side of our business.
FINANCIAL HIGHLIGHTS
Summit Pointe continued to experience significant changes in financial position and operations as a result of the discontinuance of PIHP
operations in fiscal year 2014. Fiscal year 2015 was the first full year of operations as a CMHSP without the additional activities associated with
being the PIHP.
Summit Pointe has adopted Governmental Accounting Standards Board (GASB) Statements No. 68 Accounting and Financial Reporting for
Pensions and amendment of GASB Statement N0. 27 and No.71 Pension Transition for Contributions Made Subsequent to the Measurement
Date and amendment of GASB no. 68 effective October 1, 2014. The impact of the adoption of these Statements is a $10.6 million increase
in Long Term Assets and Restricted Net position.
OVERVIEW OF FINANCIAL STATEMENTS
Basic financial statements, in accordance with generally accepted accounting principles (GAAP) - GASB 34, require the presentation of two
types of financial statements. These are authority wide financial statements and fund financial statements.
2-2
Summit Pointe
September 30, 2015
Authority-wide financial statements include the statement of net assets and the statement of activities. These provide both long-term and
short-term information, and present a broad view of the overall financial status in a manner similar to a private sector business. Information
presented in these statements is on the accrual basis of accounting. Long-term assets are capitalized and depreciated. Long-term debt is
recorded as a liability. Revenues are recorded when earned and expenses recorded when incurred, without regard to the timing of cash
receipts or disbursement.
The statement of net assets includes all of the assets and liabilities, with the difference between the two reported as net assets. Over time,
increases or decreases in net assets may serve as a useful indicator of improving or deteriorating financial position. The statement of activities
presents information showing how net assets changed during the year as a result of operating activity.
Fund financial statements contain individual groups of related accounts and are used to report current assets, current liabilities, fund balance,
revenues and expenditures for specific activities or funds segregated for legal requirements or other governmental objectives. These are
presented in more detail as compared to the authority-wide statements. The fund financial statements are reported on the modified accrual basis
of accounting. Only those assets that are measurable and currently available are reported. Liabilities are recognized only to the extent that
they are normally expected to be paid with current financial resources. Purchased capital assets are reported as expenditures in the year of
acquisition. Issuance of debt is recorded as a financial resource with current year payment of principal and interest recorded as expenditure.
Fund financial statements are essentially identical in presentation, format and content to the prior year annual financial reports.
Fund financial statements are divided into two categories. These are special revenue fund financial statements and proprietary fund financial
statements.
Special revenue fund financial statements show how the community mental health supports and services programs were financed in the short
term as well as what remains for future spending.
Proprietary fund financial statements show internal service funds reserved for risk management. These funds are held as a self-funded insurance
risk reserve to protect against unanticipated current and future financial exposures related to specialty supports and services at-risk contracts.
FINANCIAL POSITION
The discontinuance of PIHP operations at Summit Pointe on December 31, 2013 and initiation of PIHP operations at SWMBH on January 1,
2014 produced significant changes in financial position. Most significant were the transfers from Summit Pointe to SWMBH of Medicaid Shared
2-3
Summit Pointe
September 30, 2015
Savings amounting to $4,500,000 and Medicaid Internal Risk Reserves of $7,700,000. The $12,200,000 transfer to SWMBH is reflected on the
Statement of Activities as a reduction in Net Position and an increase in amounts due to SWMBH as of January 1, 2014.
The Changes in Changes in Capital Assets included $373,073 of acquisitions offset by annual Depreciation Expense of $811,139. The
acquisitions were primarily for improvements to existing building and computer equipment. The loans payable beyond one year decreased by
the current year principal payments. There were no additional borrowing or changes in credit ratings during FY 2015.
In addition, Summit Pointe has adopted Governmental Accounting Standards Board (GASB) Statements No. 68 Accounting and Financial
Reporting for Pensions and amendment of GASB Statement N0. 27 and No.71 Pension Transition for Contributions Made Subsequent to the
Measurement Date and amendment of GASB no. 68 effective October 1, 2014. The impact of the adoption of these Statements is a $10.6
million increase in Long Term Assets and Restricted Net position.
2-4
Summit Pointe
September 30, 2015
Condensed Statement of Net Position Governmental Activities
Illustration of Effects of Discontinuance of PIHP Business and adoption of GASB 68 and 71
Changes from 2014 to 2015
Other
2015
Total current assets
Capital Assets, Land
Capital Assets, Depreciable
14,361,821
572,356
5,609,132
Increase
Transfer
Adoption of
(Decrease)
to SWMBH
GASB 68 & 71
28,792
(4,417,779)
18,750,808
572,356
(438,069)
6,047,201
Other noncurrent assets
10,626,702
Total assets
24,988,523
28,792
(4,417,779)
Total current liabilities

Loans payable due beyond
one year
12,764,503
1,622,963
(4,417,779)
Total liabilities
13,459,411
694,908
10,626,702
10,626,702
18,750,808
15,559,319
(125,319)
1,497,644
2014
820,227
(4,417,779)
16,379,546
Total net position

Net Investment in Capital
Restricted Funds
Unrestricted Net Position
TotalNetPosition
CurrentRatio
5,361,259
(272,605)
11,483,348
(207,753)
865,993
(1,426,563)
17,710,600
(1,906,921)
1.13
5,633,864
10,626,702
1,064,399
2,292,556
10,626,702
8,990,819
1.21
SUMMARY OF ACTIVITIES
The discontinuance of PIHP operations meant that Summit Pointe no longer distributed the revenue and processed external claims for the other
four counties covered by the Medicaid contract. The PIHP arrangement was in effect for 3 months of 2014 and not at all in 2015. This resulted
2-5
Summit Pointe
September 30, 2015
in reductions of $20,350,000 of revenue and $16,100,000 of external claims expense and other costs from 2014 to 2015. These results were
anticipated in the 2015 budget.
Federal grants decreased by $600,000 from 2014 to 2015 due to the end of the Michigan Works grants in June 2015. These programs continued
in the community with another agency.
Salaries and fringes decreased by a net cost of $750,000 primarily due to reduced administrative and general salaries as a result of turnover in
many leadership positions offset by increased clinical salary increases as many independent contractors were converted to employee status.
As a result of these changes, the excess of revenue over expenses decreased by $2,900,000 from a positive of $2,100,000 to a negative
$800,000. The deficit in 2015 will be covered by the prior years positive fund balance.
CondensedStatementofRevenuesandExpenses
2014
Increase
Actual
(Decrease)
2015
Actual
Revenues
TotalMediciad,StateAppropriationsandGrants
TotalFederalContracts
CountyFunding
TotalEarnedContractsandOtherRevenue
TotalGeneralRevenues
TotalRevenues
56,611,865
1,096,845
265,000
9,113,450
574,306
67,661,466
(20,349,758)
(612,046)
100
(655,479)
395,014
(21,222,169)
36,262,107
484,799
265,100
8,457,971
969,320
46,439,297
Expenditures
ExternalHealthcareServices
SalariesandFringeBenefits
AllOtherExpenditures
TotalExpenditures
31,480,805
11,790,859
21,650,056
64,921,720
(11,086,356)
(451,330)
(5,589,492)
(17,127,178)
20,394,449
11,339,529
16,060,564
47,794,542
2,739,746
(4,094,991) (1,355,245)
ExcessofRevenuesOverExpenses
2-6
Summit Pointe
September 30, 2015
BUDGET VARIANCES
Due to turnover in the majority of the Leadership positions a fiscal year 2015 Budget Amendment was not done. Consequently, there are numerous
variances from the budget. The primary drivers of the variances included the turnover in several Leadership positions reducing Salary costs, the
discontinuation of certain Fringe Benefits, and the discontinuation of a number of programs that were heavily grant funded.
FUTURE OUTLOOK
Because all of the former PIHP activity had ended by September 30, 2015 the Balance Sheet is expected to remain relatively unchanged in
2016. In addition, the 2016 activities are expected to be reasonably consistent with the 2015 results. However, steps have been taken to eliminate
the excess of expenses over revenues through cost reductions and the elimination of unprofitable grants and earned contracts. Accordingly the
2016 budget includes revenues of $47,300,000 and Expenses of $47,200,000 for an excess of revenues over expenses of $100,000.
Summit Pointe is under examination by the State of Michigan related to the propriety of expenses included in its Financial Status Reports for
fiscal years 2012 through 2014. Adverse findings may require restatement of those filings and repayment of any amounts ultimately deemed to
be nonallowable. No determination of the contingent liability has been made at this time.
2-7
Summit Pointe
September 30, 2015
Assets
Current assets
Cash and investments
Cash and investments - restricted
Accounts receivable, net
Due from other governmental units
Prepaid items
Noncurrent assets
Net pension asset
Capital assets - land
Capital assets - depreciable, net
10,626,702
572,356
5,609,132
31,170,011
Total assets
Liabilities
Current liabilities
Accounts payable
Consumer claims liability
Accrued expenditures
Accrued wages and other payroll liabilities
Unearned revenue
Due to other governmental units
Noncurrent liabilities
Compensated absences
Debt due within one year
Debt due in more than one year
Total liabilities
1,477,429
2,000,000
36,538
723,521
127,578
7,808,065
463,149
125,321
694,908
13,456,509
Deferred Inflows of Resources

Deferred amount on net pension asset
2,902
Total liabilities and deferred inflows of resources

Net position
Net investment in capital assets
Restricted for net pension asset
Restricted for risk management
Unrestricted
Total net position
8,795,238
856,646
1,840,060
2,642,842
227,035
13,459,411
5,361,259
10,626,702
856,646
865,993
See Accompanying Notes to the Financial Statements
3-1
$ 17,710,600
Summit Pointe
Statement of Activities
Year Ended September 30, 2015
Program Revenues
Expenses
Functions
Governmental activities
Health & Welfare - Mental Health
47,794,542
Operating
Grants and
Contributions
Charges
for Services
8,457,971
37,012,006
Net (Expense)
Revenue and
Changes
in Net Position
General revenues
Unrestricted investment earnings
Other
(2,324,565)
152,705
816,615
969,320
Total general revenues

Change in net position
(1,355,245)
19,065,845
Net position - beginning of year, as restated

$
Net position - end of year

3-2
17,710,600
Summit Pointe
Governmental Funds
Balance Sheet
September 30, 2015
General Fund
Assets
Cash and investments
Cash and investments - restricted
Accounts receivable, net
Due from other funds
Due from other governmental units
Prepaid items
Total assets
Liabilities
Accounts payable
Consumer claims liability
Accrued expenditures
Accrued wages and other payroll liabilities
Unearned revenue
Due to other funds
Due to other governmental units
DD Children
Pooled Funding
8,795,238
649,023
1,840,060
268,923
2,642,842
227,035
14,423,121
1,477,429
2,000,000
36,538
723,521
127,578
61,300
7,808,065
Total liabilities
Fund balances
Non-spendable
Prepaid items
Restricted
Assigned
Unassigned
Total fund balances
Total liabilities and fund balances
Major Funds
Children Pooled
Funding
$
(61,300)
61,300
-
Total
268,923
-
8,795,238
856,646
1,840,060
330,223
2,642,842
227,035
268,923
14,692,044
268,923
-
1,477,429
2,000,000
36,538
723,521
127,578
330,223
7,808,065
12,234,431
268,923
12,503,354
227,035
649,023
227,035
649,023
463,149
849,483
463,149
849,483
2,188,690
2,188,690
14,423,121

3-3
268,923
14,692,044
Summit Pointe
Reconciliation of the Balance Sheet of Governmental Funds
to the Statement of Net Position
September 30, 2015
$
Total fund balance - governmental funds
2,188,690
Amounts reported for governmental activities in the statement of

net assets are different because
Capital assets used in governmental activities are not current financial resources
and therefore are not reported in the funds.
Add: capital assets
Deduct: accumulated depreciation
The net pension assets are not current financial resources and are
therefore not reported in the funds
Deferred outflows (inflows) of resources
Deferred inflows of resources resulting from net pension assets
Some liabilities are not due and payable in the current period and
therefore are not reported in the funds. Those liabilities consist of
Long-term debt
16,335,437
(10,153,949)
10,626,702
(2,902)
(820,229)
(463,149)
$ 17,710,600
Net position of governmental activities

3-4
Summit Pointe
Governmental Funds
Statement of Revenues, Expenditures and Changes in Fund Balances
Revenues
State grants
Capitation revenue
Medicaid
General fund
Health Michigan
MI Child
Total capitation revenue
OBRA / PASARR grant
General Fund
Major Funds
Children Pooled
Funding
DD Children
Pooled Funding
30,385,541
2,559,501
2,870,658
85,810
35,901,510
55,642
35,957,152
Total state grants
304,955
304,955
304,955
Total
30,690,496
2,559,501
2,870,658
85,810
36,206,465
55,642
36,262,107
Federal grants
484,799
484,799
Contributions - local units

County appropriations
265,000
100
265,100
5,391,500
2,153,910
63,221
89,484
912,561
372,037
397,105
47,473
5,391,500
2,153,910
63,221
89,484
912,561
816,615
8,982,713
397,105
47,473
9,427,291
45,689,664
702,160
47,473
46,439,297
Earned contracts and other revenue

Contract revenue
Net patient service revenue
Interest income
Investment revenue and net gains (losses)
Rent income
Other
Total earned contracts and other revenue
Total revenues

3-5
Summit Pointe
Governmental Funds
Statement of Revenues, Expenditures and Changes in Fund Balances
Expenditures
Inpatient
Residential
Contract programs
Support and other services
Salaries and fringes
Clinical contracts
Client support
Contract consultants
Community education
Employee development
Facilities
General and administrative
Local funds paid to DCH
Miscellaneous
Small equipment
Debt payments - principal
Debt payments - interest
Capital outlay
General Fund
Major Funds
Children Pooled
Funding
DD Children
Pooled Funding
46,519,446
Total expenditures
Net change in fund balance
(829,782)
3,018,472
Fund balance (deficit), beginning of year, as restated

Fund balance, end of year
2,618,466
6,532,466
1,573,586
9,377,713
11,034,190
2,983,702
3,427,626
4,793,014
152,186
752,755
1,727,259
474,527
335,292
69,755
103,493
165,463
24,880
373,073
2,188,690
4,460
287,758
223,276
965
48,392
98,157
3,978
-
6,496
484
4,708
737
-
666,986
12,425
35,174
35,048
(35,174)
(35,048)

3-6
Total
2,622,926
6,532,466
1,573,586
9,665,471
11,034,190
3,206,978
3,428,591
4,841,406
152,186
857,408
1,727,743
483,213
335,292
69,755
104,230
165,463
24,880
373,073
47,198,857
(759,560)
2,948,250
2,188,690
Summit Pointe
Reconciliation of the Statement of Revenues, Expenditures and Changes in
Fund Balances of Governmental Funds to the Statement of Activities
Net change in fund balances - total governmental funds
(759,560)
Amounts reported for governmental activities in the statement of activities

are different because
Governmental funds report capital outlays as expenditures. However,
in the statement of activities, the cost of those assets is allocated over
their estimated useful lives as depreciation expense.
Add: capital outlay
Deduct: depreciation expense
The statement of net position reports the net pension asset and deferred outflows and deferred
inflows of resources related to the net pension asset and pension expense. However, the amount
recorded on the governmental funds equals actual pension contributions
Net change in net pension asset
Net change in the deferred inflow of resources related to the net pension asset
Some expenses reported in the Statement of activities do not require the use of
current financial resources and therefore are not reported as expenditures in the funds.
Add: Principal paid on long-term debt
Deduct: increase in accrual for compensated absences
Change in net position of governmental activities

3-7
373,073
(811,139)
1,721,649
(1,739,392)
165,463
(305,339)
$ (1,355,245)
Summit Pointe
Proprietary Fund
Assets
Liabilities
Net Position

3-8
Summit Pointe
Proprietary Fund
Statement of Revenues, Expenses, and Changes in Net Position
Revenues
Expenses
Net position, beginning of year
Net position, end of year

3-9
Summit Pointe
Proprietary Fund
Statement of Cash Flows
Cash flows from operating activities

Cash payments to other governmental units
$ (4,417,779)
4,417,779
Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of year

3 - 10
Summit Pointe
September 30, 2015
type activities, which rely to a significant extent on fees and charges
for support.
Note 1 Summary of Significant Accounting Policies

The accounting policies of Summit Pointe (the Authority) conform to
accounting principles generally accepted in the United States of
America as applicable to governmental units. The Governmental
Accounting Standards Board (GASB) is the accepted standardsetting body for establishing governmental accounting and financial
reporting principles. The following is a summary of the significant
accounting policies used by the Authority.
The statement of activities demonstrates the degree to which the

direct expenses of a function are offset by program revenues. Direct
expenses are those that are clearly identifiable with a specific
function. Program revenues include charges to consumers who
purchase, use or directly benefit from services provided by a given
function. Program revenues also include grants and contributions that
are restricted to meeting the operational or capital requirements of a
particular function.
Other items not properly included among
program revenues are reported instead as general revenues.
Resources that are dedicated internally are reported as general
revenues rather than as program revenues.
Reporting Entity
The Authority operates as a Community Mental Health Authority
under the provisions of Act 258 Public Acts of 1974, as amended.
The Authority provides funding for services in the areas of mental
illness, developmental disabilities, and other related mental health
needs for residents of Calhoun County.
Net position is restricted when constraints placed on them are either

externally imposed or are imposed by constitutional provisions or
enabling legislation. Internally imposed designations of resources
are not presented as restricted net position. When both restricted
and unrestricted resources are available for use, generally it is the
Authoritys policy to use restricted resources first, then unrestricted
resources as they are needed.
The accompanying financial statements have been prepared in

accordance with criteria established by the Governmental Accounting
Standards Board for determining the various governmental
organizations to be included in the reporting entity. These criteria
include significant operational financial relationships that determine
which of the governmental organizations are a part of the Authoritys
reporting entity, and which organizations are legally separate,
component units of the Authority. Based on the application of the
criteria, the Authority does not contain any component units.
Separate financial statements are provided for governmental funds

and proprietary funds. Major individual governmental funds are
reported as separate columns in the fund financial statements.
Measurement Focus, Basis of Accounting and Financial
Statements Presentation
Government-Wide Financial Statements The government-wide
financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting. Revenues
are recorded when earned and expenses are recorded when a
liability is incurred, regardless of the timing of related cash flows.
Grants and similar items are recognized as revenue as soon as all
eligibility requirements imposed by the provider have been met.
Government-Wide and Fund Financial Statements

The government-wide financial statements (i.e. the statement of net
position and the statement of activities) report information on all of
the non-fiduciary activities of the Authority. For the most part, the
effect of interfund activity has been removed from these statements.
Governmental activities, which normally are supported by taxes and
intergovernmental revenues, are reported separately from business3 - 11
Summit Pointe
September 30, 2015
revenues of the internal service fund are charges to other funds for
insurance services. Operating expenses for internal service funds
include the cost of claims, administration and reinsurance. Any
revenues and expenses not meeting this definition are reported as
non-operating revenues and expenses.
Governmental Fund Financial Statements The governmental fund

financial statements are reported using the current financial
resources measurement focus and the modified accrual basis of
accounting. Revenues are recognized as soon as they are both
measurable and available. Revenues are considered to be available
when they are collectible within the current period or soon enough
thereafter to pay liabilities of the current period. For this purpose, the
Authority considers revenues not related to charges for service to be
available if they are collected within 60 days of the end of the current
fiscal year end. Expenditures generally are recorded when a liability
is incurred, as under accrual accounting. However debt service
expenditures, as well as expenditures related to compensated
absences and severance pay, are recorded only when payment is
due.
Fund Accounting
The financial statements of the Authority are recorded in individual
funds, each of which is deemed to be a separate accounting entity.
The Authority uses fund accounting to report on its financial position
and results of operations. Fund accounting is designed to
demonstrate legal compliance and to aid financial management by
segregating transactions related to certain government functions or
activities. A fund is a separate accounting entity with a self-balancing
set of accounts.
Intergovernmental revenue, charges for services and other revenues

associated with the current fiscal period are all considered
susceptible to accrual and have been recognized as revenue of the
current fiscal period. All other revenue items are considered to be
measurable and available only when cash is received by the
government.
The Authority reports the following major governmental and

proprietary funds:
Governmental Funds
General Fund This fund is the Authoritys primary operating fund. It
accounts for all financial resources of the Authority, except those
required to be accounted for in other funds.
Proprietary Fund Financial Statements The financial statements of

the proprietary funds are reported using the economic resources
measurement focus and the accrual basis of accounting, similar to
the government-wide statements described above.
Children Pooled Funding This fund represents amounts set aside

by Summit Pointe and Calhoun County Court to serve youth with
severe mental health and/or behavioral needs, referred through the
juvenile justice or child welfare systems, who would otherwise be
placed in psychiatric hospitals, residential treatment centers or
juvenile correctional facilities.
As a general rule the effect of interfund activity has been eliminated

from the government-wide financial statements.
Proprietary funds distinguish operating revenues and expenses from
non-operating items. Operating revenues and expenses generally
result from providing services and producing and delivering goods in
connection with a proprietary funds principal ongoing operations.
Revenues and expenses not meeting this definition are reported as
non-operating revenues and expenses. The principal operating
DD Children Pooled Funding This fund represents amounts set

aside by Summit Pointe and Calhoun County Public Health
Department to provide an array of services for children with a
diagnosis of autism spectrum disorder. Service is provided in a
multidisciplinary team framework where professionals from multiple
3 - 12
Summit Pointe
September 30, 2015
measurements primarily apply to investments. The statement
enhances fair value application guidance and related disclosures in
order to provide information to financial statement users about the
impact of fair value measurements on an authoritys financial
position. This statement requires additional disclosures about fair
value measurements, the level of fair value hierarchy, and valuation
techniques. Statement 72 is effective for the year ending September
30, 2016, although earlier application is allowed.
service domains collaborate together to provide a comprehensive

treatment package addressing all of the needs of the
developmentally disabled children. This collaboration is a dynamic
opportunity to increase access and provide services to youth and
families who would otherwise be unable to access the full continuum
of available services.
Proprietary Funds
Internal Service Fund This funds represent amounts set aside to
fund the net uninsured exposure of potential shortfalls of contract
revenues. The balance of this fund was transferred to Southwest
Michigan Behavioral Health (SWMBH) during the year ended
September 30, 2015.
In addition, the Governmental Accounting Standards Board has

released the following Statements.
Statement No. 73 Accounting and Financial Reporting for Pensions
and Related Assets That Are Not within the Scope of GASB
Statement No. 68, and Amendments to Certain Provisions of GASB
Statement 67 and 68. The purpose of this Statement is provide the
readers of the financial statements information about the effects of
the pension-related transactions on the financial statements of state
and local government employers. It will assist in assessing the
relationship between a governments inflows of resources and its
total cost (including pension expense) of providing government
services each period in addition to providing information about the
governments pension obligation. The first objective of this Statement
is to improve the information about financial support provided by
certain nonemployer entities for pensions that are provided to the
employees of other entities that are not within the scope of Statement
No. 68. These requirements are effective for the fiscal year ending
September 30, 2017. The second objective is to improve the quality
of information associated with governments that hold assets
accumulated for purposes of providing defined benefit pensions that
are not within the scope of Statement 68 and the third objective is to
clarify the application of certain provisions of Statement No. 67 and
68. These two requirements are effective for the fiscal year ending
September 30, 2016.
Adoption of New Accounting Standards

The Governmental Accounting Standards Board (The GASB) has
issued Statement No. 68 Accounting and Financial Reporting for
Pensions, and Statement 71 Pension Transition for Contributions
Made Subsequent to the Measurement Date. Statement 68 requires
authorities participating in public employee pension plans to
recognize their portion of the long-term obligation of the pension
benefits as a liability and to measure the annual costs of the pension
benefits. The net pension liability is recorded on the government-wide
statements and the applicable proprietary fund statements.
Statement 71 amends Statement 68 to address an issue concerning
transition provisions related to certain pension contributions made to
defined benefit pension plans prior to implementation of Statement
68 by employers and non-employer contributing entities. Statements
68 and 71 are effective for the year ending September 30, 2015.
Upcoming Accounting and Reporting Changes
The Governmental Accounting Standards Board (The GASB) has
issued Statement No. 72 Fair Value Measurements and Applications.
Statement 72 addresses accounting and financial reporting issues
related to fair value measurements. Fair value is defined as an exit
price (what a government would get to sell the asset), and fair value
3 - 13
Summit Pointe
September 30, 2015
Statement No. 75 Accounting and Financial Reporting for
Postemployment Benefits Other Than Pensions establishes
standards for recognizing and measuring liabilities, deferred outflows
of
resources,
deferred
inflows
of
resources,
and
expense/expenditures. For defined OPEB plans, this Statement
identifies the methods and assumptions that are required to be used
to project benefit payments, discount projected benefit payments to
their actuarial present value, and attribute that present value to
periods of employee services. It also requires additional note
disclosures and required supplementary information. Statement No.
75 is effective for the fiscal year ending September 30, 2018.
Restricted and Cash Equivalents

The Authority has charged to the Department of Community Health
the vested portion of compensated absences as of September 30.
Cash has been restricted for future payment of the compensated
absence liability as well as to fund the net uninsured exposure of
potential shortfalls of risk contract revenues. These restricted assets
are held in separate cash accounts with local financial institutions.
Receivables and Payables between Funds
Activity between funds that are representative of lending/borrowing
arrangements outstanding at the end of the fiscal year are referred to
as either due to/from other funds (i.e. the current portion of interfund
loans) or advances to/from other funds (i.e. the non-current portion
of interfund loans). Any residual balances outstanding between the
governmental activities are reported in the government-wide financial
statements as internal balances.
The Authority is evaluating the impact GASB Statements 72, 73, and
75 will have on its financial reporting.
Budgetary Data
Budgets are adopted by the Authority for all governmental funds.
The budget is adopted and prepared on the modified accrual basis of
accounting. The budget is also adopted at the functional level. The
budgeted revenues and expenditures for governmental fund types,
as presented in this report, include any authorized amendments to
the original budget as adopted.
Receivables
Accounts receivable in all funds report amounts that have arisen in
the ordinary course of business and are stated net of allowances for
uncollectible amounts of $646,127 as of September 30, 2015.
Due from other governmental entities consist primarily of amounts
due from the State of Michigan and other Community Mental Health
Agencies.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenditures during the reporting
period. Actual results could differ from those estimates.
Inventories
The Authority does not recognize as an asset inventories of supplies.
The cost of these supplies is considered immaterial to the financial
statements and the quantities are not prone to wide fluctuation from
year to year. The costs of such supplies are expensed when
purchased.
Cash and Cash Equivalents

The Authoritys cash and cash equivalents are considered to be cash
on hand, money market funds, demand deposits and short-term
investments.
3 - 14
Summit Pointe
September 30, 2015
Prepaid Items
Certain payments to vendors reflect costs applicable to future
accounting periods and are recorded as prepaid items in both
government-wide and fund financial statements.
Capital assets of the Authority are depreciated using the straight line
method over the following estimated useful lives:
Capital Assets
Capital assets, which include property, plant and equipment, are
reported in the governmental column in the government-wide
financial statements. Capital assets are defined by the government
as individual assets with an initial cost equal to or more than $ 5,000
and an estimated useful life in excess of one year. Such assets are
recorded at historical cost or estimated historical cost if purchased or
constructed. Donated capital assets are recorded at estimated fair
value at the date of donation.
Equipment and furnishings

Computers
Buildings and improvements
The costs of normal maintenance and repairs that do not add to the
value of the asset or materially extend assets lives are not
capitalized.
The Authority does not receive actual billings for these services until
several months after the service date. Therefore, the liability is not
liquidated within the normal 60 day period after year end. Also, the
actual cost may vary from the estimated amount due to
reimbursements from third parties that are applied to the total cost
before the billings are sent to the Authority.
Assets
Years
37
3
2 25
Inpatient Liability
The amount recorded for inpatient liability is based on managements
estimate. This estimate is based on (1) the number of clients at each
facility, (2) the number of days each client is at each facility, and (3)
the daily rate charged for each facility.
The Authority does not have infrastructure type assets.

Major outlays for capital assets and improvements are capitalized as
projects are constructed. Interest incurred during construction of
capital assets is not capitalized. No interest expense was incurred
during the current year.
Unearned Revenue
Unearned revenue arises when resources are received by the
Authority before it has a legal claim to them. In subsequent periods,
when the revenue recognition criterion is met, or when the Authority
has a legal claim to the resources, the liability for unearned revenue
is removed from the fund financial statements and government-wide
financial statements, and revenue is recognized.
Capital assets utilized in the governmental funds are recorded as

expenditures in the governmental fund financial statements.
Depreciation expense is recorded in the government-wide financial
statements.
Compensated Absences
The Authority allows employees to carryover into the following year,
any unused, paid time off. Upon termination of employment, annual
leave balances are paid at the current rate of pay. The governmental
fund financial statements record expenditures when employees are
3 - 15
Summit Pointe
September 30, 2015
paid for leave. The government-wide financial statements present
the cost of accumulated vacation leave as a liability.
Non-spendable assets that are not available in a spendable

form.
Deferred Outflows/Inflows of Resources

In addition to assets, the financial statements will sometimes report a
separate section for deferred outflows of resources. This separate
financial statement element, deferred outflows of resources,
represents a consumption of net position that applies to a future
period(s) and so will not be recognized as an outflow of resources
(expense/expenditure) until then. The Authority has no items that
qualify for reporting in this category.
Restricted amounts that are legally imposed or otherwise

required by external parties to be used for a specific purpose.
Committed amounts constrained on use imposed by the
Authoritys highest level of decision-making, its Board of
Directors. A fund balance commitment may be established,
modified, or rescinded by a resolution of the Board of
Directors.
In addition to liabilities, the financial statements will sometimes report

a separate section for deferred inflows of resources. This separate
financial statement element, deferred inflows of resources,
represents an acquisition of net position that applies to a future
period(s) and so will not be recognized as an inflow of resources
(revenue) until that time.
Assigned amounts intended to be used for specific

purposes, as determined by Authority or the budget or finance
committee. Residual amounts in governmental funds other
than the general fund are automatically assigned by their
nature.
Unassigned all other resources; the remaining fund
balances after non-spendable, restrictions, commitments and
assignments.
The Authority reports deferred inflows of resources as a result of

pension earnings. This amount is the result of a difference between
what the plan expected to earn from plan investments and what is
actually earned. This amount will be amortized over the next four
years and included in pension expense.
When expenditure is incurred for purposes for which both restricted

and unrestricted fund balance is available, the Authoritys policy is to
consider restricted funds spent first.
Net Position and Fund Balance

Restricted net position shown in the government-wide financial
statements will generally be different from amounts reported as
reserved/designated fund balances in the governmental fund
financial statements. This occurs because of differences in the
measurement focus and basis of accounting used in the governmentwide and fund financial statements and because of the use of funds
to imply that restrictions exist.
When expenditure is incurred for purposes for which committed,

assigned, or unassigned amounts could be used, the Authoritys
policy is to consider the funds to be spent in the following order: (1)
committed, (2) assigned, (3) unassigned.
Note 2 Budgetary Information
Annual budgets are adopted at the functional level and on a basis
consistent with generally accepted accounting principles for all
governmental funds. All annual appropriations lapse at fiscal year-
Fund Balance In the fund financial statements, governmental funds

report fund balance in the following categories:
3 - 16
Summit Pointe
September 30, 2015
end. The Authority does not maintain a formalized encumbrance
accounting system. The budgeted revenues and expenditures, as
presented in this report, include any authorized amendments to the
original budget as adopted.
As of year end, the government had the following investments:

Investment
During the current year, the Authority incurred expenditures in excess

of the amounts appropriated as shown on the schedule in the
required supplementary information as unfavorable variances. In
these circumstances, the Authority uses prior year Medicaid savings
and General Fund carryforward as an additional source of revenues
according to the contract with MDCH.
Certificates of Deposit
US Governmental Bonds
Asset backed securities
8,795,238
856,646
9,651,884
The breakdown between deposits and investments is as follows:
Bank deposits (checking and savings accounts,

money markets and certificates of deposit)
Investments in securities, mutual funds and

similar vehicles
7,744,704
1,906,005
Petty cash and cash on hand
1,175
$
Varies
Callable
340,064 December, 2015
629,623 Varies
NA
NA
AAA
Aaa
Moody
Moody
Credit risk State statutes and the Authoritys investment policy

authorize the Authority to deposit and invest in the accounts of
Federally insured banks, credit unions, and savings and loan
associations; bonds, securities and other direct obligations of the
United States, or any agency or instrumentality of the United States;
United States government or Federal agency obligations repurchase
agreements; bankers acceptance of United States banks;
commercial paper rated by two standard rating agencies within the
two highest classifications, which mature not more than 270 days
after the date of purchase; obligations of the State of Michigan or its
political subdivisions which are rated investment grade; and mutual
funds composed of investment vehicles which are legal for direct
investment by local units of government in Michigan. Financial
institutions eligible for deposit of public funds must maintain an office
in Michigan.
Total
$
936,318
Interest rate risk The Authority manages its exposure to declines in

fair value by keeping investments sufficiently liquid to meet all
operating requirements that may be reasonably anticipated.
At year end the governments deposits and investments were

reported in the financial statements in the following categories:
Restricted Cash
and Investments
Maturities
$ 1,906,005
Note 3 Deposits and Investments
Cash and
Investments
Fair Value
Rating
Rating Organization
9,651,884
Concentration of credit risk The Authoritys investment policy

requires diversification by security type and institutions in order that
potential losses on individual securities do not exceed the income
generated from the remainder of the portfolio.
3 - 17
Summit Pointe
September 30, 2015
Note 5 Capital Assets
Custodial credit risk deposits In the case of deposits, this is the
risk that in the event of a bank failure, the Authoritys deposits may
not be returned to it. The Authority believes that due to the dollar
amounts of cash deposits and the limits of FDIC insurance, it is
impractical to insure all bank deposits. As a result, the Authority
evaluates each financial institution with which it deposits government
funds and assesses the level of risk of each institution. Only those
institutions with an acceptable estimated risk level are used as
depositories. At year end, $9,376,411 of the Authoritys bank balance
of $10,156,144 was exposed to credit risk, because it was uninsured
and uncollateralized.
A summary of changes in capital assets is as follows:

Beginning
Balance
Capital assets not being depreciated
Land
572,356
Increases
$
Ending
Balance
Decreases
$
572,356
Capital assets being depreciated

9,855,559
174,747
10,030,306

Computers
1,800,446
3,734,003
52,848
145,478
1,853,294
3,879,481
15,390,008
373,073
15,763,081
4,323,746
519,771
4,843,517

Computers
1,386,708
3,632,356
172,211
119,157
1,558,919
3,751,513
Total capital assets being depreciated

Less accumulated depreciation for
Note 4 Due from Other Governmental Units

As of September 30, this receivable consisted of the following:
Department of Human Services
$
42,134
Southwest Michigan Behavioral Health
2,537,477
Other
63,231
Total accumulated depreciation
9,342,810
811,139
10,153,949
Net capital assets being depreciated
6,047,198
(438,066)
5,609,132
(438,066) $
Capital assets, net
$ 2,642,842
6,619,554
6,181,488
Depreciation expense was charged to the Health & Welfare Mental

Health Program.
3 - 18
Summit Pointe
September 30, 2015
Note 6 Due to Other Governmental Units
Note 9 Long Term Liabilities
As of September 30, this liability consists of the following:
The changes in long term liabilities during the 2015 fiscal year are as
follows:
State of Michigan - Inpatient

State of Michigan - DCH
Southwest Michigan Behavioral Health
Total
432,948
211,516
7,163,601
Beginning
Balance
7,808,065
Note 7 Unearned Revenue
Total
$ 1,143,502
Loan
Description
County Pines
Beachfield
Pennfield
Territorial
Boyer Home
Note 8 Interfund Receivables and Payables

The outstanding balances between funds result mainly from the time
lag between the dates that 1) interfund goods and services are
provided or reimbursable expenditures occur, 2) transactions are
recorded in the accounting system, and 3) payments between funds
are made.
Amount
$
268,923
61,300
$
985,692
157,810
Decreases
Ending
Due within
Balance
one year
305,339
165,463
-
820,229
463,149
$ 125,321
-
$ 305,339
165,463
$ 1,283,378
$ 125,321
Loans
The terms of the loans are detailed in the following chart:
Unearned revenue represents amounts received in advance of the

period in which they were earned. Local contributions received but
not yet earned were $127,578.
Receivable Fund
Payable Fund
General Fund
DD Children Pooled Funding
Children Pooled Funding General Fund
Loans
Additions
330,223
3 - 19
Date of Loan
8/28/2008
8/28/2008
8/28/2008
6/15/2011
8/28/2008
Length of Amount of
Loan
Loan
180 months $ 685,000
124 months
243,866
124 months
221,286
120 months
423,055
83 months
106,580
Monthly
Principal
Payment Interest Rate
$
3,817
2.72%
1,572
2.72%
1,427
2.72%
3,525
2.72%
1,448
2.72%
Summit Pointe
September 30, 2015
The entire vested amount is considered long-term as the amount
expended each year is expected to be offset by annual leave time
earned for the year.
Annual debt service requirements to maturity for the above loan

obligations are as follows:
Year Ending
September 30,
2016
2017
2018
2019
2020
2021 - 2025
Principal
$
Note 10 Leases
Interest
125,321
124,098
124,098
124,098
124,098
198,516
820,229
The Authority has entered into various operating leases for the use of
real and personal property. Operating leases do not give rise to
property rights or lease obligations, and therefore, the lease
agreements are not reflected in the financial statements. Monthly
payments range from $425 per month to $7,475 per month.
20,834
17,445
14,054
10,666
7,277
6,552
At September 30, the Authority was committed, subject to

cancellation provisions, for rental payments under operating leases
as follows:
Year Ending
Amount
September 30,
76,828
Compensated Absences
The Authority's policy allows employees to accumulate up to 40
hours of scheduled time off in addition to their annual accrual. Any
excess accumulation shall be forfeited. Amounts accumulated are to
be paid to an employee and recognized as an expense either when
vacations are actually taken or upon termination of employment. At
the end of the current fiscal year the vacation pay liability was
$350,765.
2016
2017
2018
2019
146,877
114,186
11,419
4,163
276,645
Note 11 Compliance Audits and Contingencies
The Authority's policy allows employees 48 hours of unscheduled

time off per year. Employees under a union agreement may carry
these hours into future years, but no more than 112 hours may be
accumulated at any one time. Amounts accumulated are to be paid to
an employee and recognized as an expense when time is taken.
Upon termination of employment, employees are paid for their
unused time on a pro-rated basis based on their years of service. At
the end of the current fiscal year the unscheduled time off liability
was $112,384.
All governmental grants are subject to a transactional and

compliance audit by the grantors or their representatives. Therefore,
an indeterminable contingency exists for expenditures, which may be
disallowed by the granting agencies. Additionally, the organization
has an indeterminable contingency relating to usage of Medicaid
dollars by former employees, and is currently undergoing an audit by
the Michigan Department of Health and Human Services. As of the
date of this report, the potential amounts that may be required to be
repaid are not estimable, and are therefore not reflected in the
3 - 20
Summit Pointe
September 30, 2015
financial statements.
normal retirement at age 65. Early retirement is available after age

55.
Note 12 Risk Management

When early or normal retirement age is reached the vesting
percentage automatically is 100%. The vesting percent will also
become 100% if the plan terminates. If an employee leaves the job
before age 65, dies, or becomes disabled, vesting will be based on
years of service. If an employee has less than 1 year of service they
are 0% vested. If an employee has more than 1 year of service they
are 100% vested.
Michigan Municipal Risk Management Authority

The Authority is exposed to various risks of loss related to theft of,
damage to, and destruction of assets; errors and omissions; injuries;
and natural disasters. The Authority participated in the public entity
risk pool Michigan Municipal Risk Management Authority (MMRMA)
for auto and general liability, property and crime and vehicle physical
damage coverage. The Authority is also subject to additional risk
associated with the Managed Care Specialty Supports and Services
Contract as further described in these notes.
Funding Policy
Each member may direct up to $16,500 of his or her compensation to
the plan on a pre-tax basis. The maximum percentage may vary from
year to year because it is based on the average of the contributions
made by all employees. Salary deferrals may not be distributed to the
employees before they reach age 59 1/2 except for death, disability,
termination of employment, or hardship.
The MMRMA, a separate legal entity, is a self-insured association

organized under the laws of the State of Michigan to provide selfinsurance protection against loss and risk management services to
various Michigan governmental entities. As a member of this pool,
the Authority is responsible for paying all losses, including damages,
loss adjustment expenses and defense cost, or for each occurrence
that falls within the members self-insured retention. If a covered loss
exceeds the Authoritys limits, all further payments for such loss are
the sole obligation of the Authority. If, for any reason, the MMRMA
resources available to pay losses are depleted, the payment of all
unpaid losses of the Authority is the sole obligation of the Authority.
The Authority will contribute to the plan, a matching contribution

equal to $.60 for each $1.00 of salary deferrals made by the
employee up to a maximum contribution for each plan year of 5% of
the employee's compensation for the plan year. The Authority has no
additional liability beyond these contributions.
FICA Alternative Plan
Plan Description
The effective date of the plan is November 4, 1996. The primary
purpose of the plan is to provide for pension contributions for
participants. The plan is maintained as an alternative to the Social
Security system. The plan and related trust are intended to satisfy the
requirements for tax qualification as a money purchase pension plan
under sections 401(a) and 501(a) of the Internal Revenue Code of
1986 as applied to governmental plans and the requirements for a
retirement system under section 312(b)(7)(F) of the Code as applied
to governmental employees. All employees are eligible to participate.
The Authoritys coverage limits are $15,000,000 for liability and

$1,500,000 for vehicle physical damage.
Note 13 Employee Retirement and Benefit Systems
Defined Contribution Pension Plan
Plan Description
The employees of the Authority are covered under a defined
contribution (401k) retirement plan. Each employee is eligible to be a
member of this plan after one year of service. The plan provides for
3 - 21
Summit Pointe
September 30, 2015
Employees covered by benefit terms At the December 31, 2014
valuation date, the following employees were covered by benefit
terms:
Funding Policy
The employer and employee both contribute 6.2% each of the
participants compensation for the plan year. Participants are fully
vested at all times. All funds are placed into a pooled account and
invested. The current investment manager is Northern Trust. The
current third party administrator is Watkins Ross.
Inactive employees or beneficiaries

currently receiving benefits
Active employees
Defined Benefit Pension Plan

Plan Description
The effective date of the plan was September 30, 2008. The primary
purpose of the plan is to provide pension benefits to participants and
beneficiaries. The plan and related trust satisfy the requirements for
tax qualification as a pension plan under sections 401(a) and 501(a)
of the Internal Revenue Code of 1986 as applied to governmental
plans and the requirements for a retirement system under section
312(b)(7)(F) of the Code as applied to governmental employees. The
plan year is the 12 month period ending on December 31st.
3
14
17
Normal Retirement Benefit

A credit of 7% of compensation was earned by each participant for
the years beginning after 1999 and ending before 2013; A credit of
1.6% of compensation was earned by each participant for the years
2013 and 2014. A participants monthly benefit is equal to the sum of
their benefit credits, divided by 12.
Funding Policy
The employer shall make contributions as financial conditions permit
to provide benefits under the plan. During the year ended September
30, 2015 the Authoritys did not make a contribution to the plan.
Employees are not required or permitted to make other contributions
to the plan.
Eligibility
Employees who have attained the age of 21 and completed at least
one year of service are eligible to participate. However, employees
who are members of a collective bargaining unit are not eligible to
participate in the plan unless otherwise provided in a collective
bargaining agreement, or otherwise required by the law of collective
bargaining, subject in both cases to the terms of the plan and the
discretionary authority of the plan administrator. Eligible employees
can participate in the plan as of the employees first day of
employment or the employees first day of eligibility, whichever day is
later.
All funds are placed into a separate trust account and invested.
Actuarial Methods and Assumptions
The total pension liability was determined by an actuarial valuation as
of December 31, 2014 and the following actuarial assumptions
applied to all periods included in the measurement: 1) Inflation of
.50%, 2) Salary increases of 0%, and 3) Investment rate of return of
5% net of investment experience including inflation.
Mortality equal to the SOA RP-2014 sex-distinct mortality table with
improvement scale MP-2014 for white collar workers, with no precommencement mortality assumed.
3 - 22
Summit Pointe
September 30, 2015
same present value of benefits is calculated. This discount rate is
used to determine the Total Pension Liability. September 30, 2015 is
the first year of required compliance with GASB 68, so there is no
required discount rate change to disclose.
The long-term expected rate of return on retirement plan investments

was determined using a building-block method in which best-estimate
ranges of expected future real rates of return (expected returns, net
of retirement plan investment expense and inflation) are developed
for each major asset class. These ranges are combined to produce
the long-term expected rate of return by weighting the expected
future real rates of return by the target asset allocation percentage
and by adding expected inflation. Best estimates of arithmetic real
rates of return for each major asset class included in the retirement
plans target asset allocation as of September 30, 2015 (see the
discussion of the retirement plans investment policy) are
summarized in the following table:
Asset class
Global equity
Global fixed income
Real assets
Diversifying strategies
Target
Allocation
57.5%
20.0%
12.5%
10.0%
Changes in Net Pension Liability

Total Pension Liability
Service cost
Benefit payments and refunds
859,473
9,248,530
Net change in total pension liability
Long-term
expected real
rate of return
Total pension liability - beginning

Total pension liability - ending (a)
5.02%
2.18%
4.23%
6.56%
506,902
459,747
(107,176)
Interest on the total pension liability
10,108,003
1,736,490
Plan Fiduciary Net Position

Employer contributions
952,033
Pension plan net investment income
(107,176)
(225)

Pension plan administrative expense
Summit Pointe, as Plan Sponsor and Investment Fiduciary, has

indicated that the asset mix as of the measurement date was
expected to return 5.00%.
2,581,122
18,153,583
Net change in plan fiduciary net position

Plan fiduciary net position - beginning
The discount rate used to measure the total pension liability was
5.00%. The projection of cash flows used to determine the discount
rate assumed that the employer did not make any additional
contributions to the plan. Based on those assumptions, the retirement
plans fiduciary net position was projected to be sufficient to make all
projected future benefit payments of current plan members. For
projected benefits that are covered by projected assets, the long-term
expected rate was used to discount the projected benefits. From the
year that benefit payments were not projected to be covered by the
projected assets (the depletion date), projected benefits were
discounted at a discount rate reflecting a 20-year AA/Aa tax-exempt
municipal bond yield. A single equivalent discount rate that yields the
Plan fiduciary net position - ending (b)
Net pension liability (asset) (a-b)
$ (10,626,702)
Plan fiduciary net position as a percentage of total pension liabilit

Covered employee payroll
Net pension liability as a percentage of covered employee payrol
3 - 23
20,734,705
205.10%
2,774,113
-383.10%
Summit Pointe
September 30, 2015
Sensitivity of the net pension liability to changes in the discount rate
The following presents the net pension liability of the employer,
calculated using the discount rate of 5.0%, as well as what the
employers net pension liability would be using a discount rate that is
1% point lower (4%) or 1% higher (6%) than the current rate.
1% decrease
Current
discount rate
Amounts reported as deferred inflows of resources related to

pensions will be recognized in pension expense as follows:
Year ended,
2016
2017
2018
2019
1% increase
Total pension liability

Fiduciary net position
$ 11,289,140 $ 10,108,003 $ 9,113,688

(20,734,705)
(20,734,705)
(20,734,705)
Net pension liability
$ (9,445,565) $ (10,626,702) $ (11,621,017)
Health Care Reimbursement Plan

Plan Description
Summit Pointe established the Summit Pointe Retiree Health Care
Reimbursement Account Plan to provide for reimbursement of
qualified health care expenses to the plan participants. The plan is
intended to satisfy the requirements of sections 105 and 106 of the
Internal Revenue Code of 1986 for tax-qualification as a health
reimbursement arrangement.
Excess (deficit) investment returns
Deferred
outflows of
inflows of
resources
resources
(727)
(725)
(725)
(725)
$ (2,902)
Pension expense and deferred inflows of resources related to

pensions For the year ended September 30, 2015, the employer
recognized pension expense of $29,663. The employer reported
deferred inflows of resources related to pensions from the following
sources:
Deferred
Eligibility
An employee is eligible to participate in the plan if they have
completed 3 years of eligibility service.
(2,902)
Contributions
The employer shall contribute to the plan on behalf of each
participant who is a full-time employee on the last day of the plan
year, unless the board determines, in its discretion, that the
contribution will be a higher or lower amount for the plan year, or that
no contribution will be made for the plan year. The contribution for
part-time employees will be equal to 40% of the contributions made
for the full-time employees. Summit Pointe does not have any
additional liability beyond these annual contributions. No
contributions were made for the fiscal year ended September 30,
2015
3 - 24
Summit Pointe
September 30, 2015
statements in the amount of $500,000. Several settlements were
recorded as liabilities relating to prior fiscal years in the amount of
$1,066,517 that impacted both the Governmental Funds and the
Government-Wide funds. Finally, the liability for compensated
absences was recorded in the Governmental Fund statements. As it
is not considered due and payable as of September 30, it should
have only been recorded in the Government-Wide statements in the
amount of $157,812. The impact of these changes was to reduce the
restated beginning net position of $19,632,362 to $19,065,845.
Additionally the Governmental Funds fund balances were reduced
from $3,856,955 to $2,948,250.
Benefit Payments
Qualified health care expenses are expenses incurred by the
participant for health care of a covered person, but only if the
expenses are incurred after the participant's account is distributable,
and only if the health care qualifies as medical care within the
meaning of section 213(d) of the Internal Revenue Code.
Retirement Age / Distributable
A participants account is distributable at any time after the participant
has attained age 62, but only if the participants employment has
terminated. A participant's account is distributable at any time after
the participant has retired from employment, but only if the participant
retires after the participant has attained age 55 and after the
participant's account has become vested.
Note 16 Subsequent Event

Subsequent to year end, a legal opinion was issued impacting the
calculation of the liabilities, resulting in a decrease in the pension
liability from $10,108,003 to $8,788,268. Additionally, one of the
individuals included in the Defined Benefit Plan signed a waiver of
benefits from the plan. This decreased the pension liability from
$8,788,268 to $7,131,443. As noted in Note 11, any potential
repayment of the excess funding is not estimable, and therefore is
not recorded in the financial statements as of September 30, 2015.
Vesting
100% vested after 5 years.
Note 14 Change in Accounting Principle
As indicated in Note 1, the Authority has adopted Governmental
Accounting Standards Board Statements 68 and 71.
These
statements require the Government to record their net pension
liability or asset and pension expense. Previously these amounts
were not recorded on the governments statements. The standards
require this change be applied retroactively. The impact of this
change is to increase beginning net position in the statement of
activities as of October 1, 2014, by $10,641,543, restating it from
$8,990,819 to $19,632,362. Additional prior period adjustments
resulted in an additional restatement as noted in Note 15.
Also subsequent to year end, the former CEO pled guilty to three
felonies and was ordered to pay more than a million dollars in
restitution, with $510,000 identified as payable to Summit Pointe.
Management has not accrued a receivable as of September 30,
2015, as they view this settlement as a contingency gain with
uncertainties as to the collectability of the amount.
Note 15 Prior Period Adjustments

During the current year, adjustments were identified as a result of the
cleanup of several accounts. A loan guarantee that should not have
been recorded as a liability in the Government-Wide Financial
3 - 25
Summit Pointe
Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual
General Fund
Budgeted Amounts
Original
Final
Revenues
State grants
Capitation revenue
Medicaid
General fund
Health Michigan
MI Child
Total capitation revenue
OBRA / PASARR grant
35,533,254
2,610,664
2,751,893
11,148
40,906,959
-
35,533,254
2,610,664
2,751,893
11,148
40,906,959
-
Actual
30,385,541
2,559,501
2,870,658
85,810
35,901,510
55,642
Variances with
Final Budget
(5,147,713)
(51,163)
118,765
74,662
(5,005,449)
55,642
40,906,959
40,906,959
35,957,152
(4,949,807)
1,296,688
1,296,688
484,799
(811,889)
265,000
265,000
265,000
5,073,683
3,462,320
255,000
1,750
1,030,310
361,487
5,073,683
3,462,320
255,000
1,750
1,030,310
361,487
5,391,500
2,153,910
63,221
89,484
912,561
372,037
317,817
(1,308,410)
(191,779)
87,734
(117,749)
10,550
Total earned contracts and other revenue
10,184,550
10,184,550
8,982,713
(1,201,837)
Total revenues
52,653,197
52,653,197
45,689,664
(6,963,533)
Total state grants

Federal grants
Contract revenue
Net patient service revenue
Interest income
Investment revenue and net gains (losses)
Rent income
Other
4-1
Summit Pointe
General Fund
Budgeted Amounts
Original
Final
Expenditures
Inpatient
Residential
Contract programs
Salaries and fringes
Clinical contracts
Client support
Community education
Facilities
Local funds paid to DCH
Miscellaneous
Small equipment
Debt payments - principal
Debt payments - interest
Capital outlay
Total expenditures
Fund balance, beginning of year, as restated
4-2
2,859,953
5,502,628
2,206,313
10,873,605
12,483,049
3,794,442
3,234,249
5,362,499
228,736
830,559
1,712,305
377,008
335,292
79,165
267,419
21,250
-
2,859,953
5,502,628
2,206,313
10,873,605
12,483,049
3,794,442
3,234,249
5,362,499
228,736
830,559
1,712,305
377,008
335,292
79,165
267,419
21,250
-
50,168,472
50,168,472
2,484,725
2,484,725
3,018,472
3,018,472
5,503,197
5,503,197
Actual
2,618,466
6,532,466
1,573,586
9,377,713
11,034,190
2,983,702
3,427,626
4,793,014
152,186
752,755
1,727,259
474,527
335,292
69,755
103,493
165,463
24,880
373,073
Variances with
Final Budget
46,519,446
(3,649,026)
(829,782)
(3,314,507)
3,018,472
$
2,188,690
(241,487)
1,029,838
(632,727)
(1,495,892)
(1,448,859)
(810,740)
193,377
(569,485)
(76,550)
(77,804)
14,954
97,519
(9,410)
(163,926)
165,463
3,630
373,073
(3,314,507)
Summit Pointe
Children Pooled Funding
Budgeted Amounts
Original
Final
Revenues
State grants
Capitation revenue
Medicaid

500,000

Other
Total revenues
Expenditures
Inpatient
Clinical contracts
Client support
Total expenditures
Variances with
Final Budget
Actual
500,000
304,955
100
397,105
(2,895)
900,000
900,000
702,160
(197,840)
4,460
287,758
223,276
965
48,392
98,157
3,978
4,460
287,758
223,276
965
48,392
98,157
3,978
666,986
666,986
(864,826)
900,000
35,174
Fund balance (deficit), beginning of year
(35,174)
(35,174)
(35,174)
4-3
100
400,000
900,000
(195,045)
400,000
864,826
864,826
(864,826)
Summit Pointe
DD Children Pooled Funding
Budgeted Amounts
Original
Final
Revenues
State grants
Capitation revenue
Medicaid

Other
Total revenues
Expenditures
Facilities
Small equipment
Total expenditures
Fund balance (deficit) , beginning of year
4-4
55,000
Variances with
Final Budget
Actual
55,000
(55,000)
45,000
45,000
47,473
2,473
100,000
100,000
47,473
(52,527)
6,496
484
4,708
737
6,496
484
4,708
737
12,425
12,425
100,000
100,000
35,048
(64,952)
(35,048)
(35,048)
(35,048)
64,952
64,952
(64,952)
Summit Pointe
Schedule of Employer Contributions
September 30, 2015
Actuarial
Valuation
Date
12/31/2012
12/31/2013
12/31/2014
Annual
Determined
Contribution
$
2,109,531
3,206,685
-
Contribution
Deficiency
(Excess)
Actual
Contribution
$
2,109,531
3,206,685
1,736,490
$
(1,736,490)
Covered
Payroll
3,042,702
2,848,919
2,774,113
Notes: Actuarially determined contribution amounts are calculated as of December 31 each year, which is
9 months prior to the beginning of the fiscal year in which contributions are reported.
Methods and assumptions used to determine contribution rates:

Actuarial cost method
Amortization method
Remaining amortization period
Asset valuation method
Inflation
Salary increases
Investment rate of return
Retirement age
Mortality
Individual entry-age
Level-dollar closed
9.14
Equal to market value of assets
0.50%
0.00%
5.00%
65
SOA RP-2014 sex-distinct mortality table with improvement scale MP-2014
for white collar workers, with no=precommencement mortality assumed
4-5
Actual
Contribution
as a % of
Covered Payroll
69.33%
112.56%
62.60%
Summit Pointe
Schedule of Changes in Net Pension Liability (Asset) and Related Ratios
September 30, 2015
Fiscal year ended September 30,
2015
Total Pension Liability

Service cost
Interest on the total pension liability
Net change in total pension liability

Total pension liability - beginning
506,902
459,747
(107,176)
859,473
9,248,530
Total pension liability - ending (a)

Plan Fiduciary Net Position
Employer contributions
Pension plan net investment income
Pension plan administrative expense
10,108,003
1,736,490
952,033
(107,176)
(225)
2,581,122
18,153,583
Net change in plan fiduciary net position

Plan fiduciary net position - beginning
Plan fiduciary net position - ending (b)
20,734,705
Net pension liability (asset) (a-b)
(10,626,702)
205.1%
2,774,113
-383.1%
Plan fiduciary net position as a percentage of total pension liability

Covered employee payroll
Net pension liability as a percentage of covered employee payroll
*GASB Statement No. 68 was implemented for the fiscal year ended September 30, 2015 and does not require retroactive impleme
Data will be added as information is available until 10 years of such data is available.
4-6
Summit Pointe
Schedule of Employers' Net Pension Liability (Asset)
September 30, 2015
Fiscal year
ending September 30,
2015
Total pension
liability
$
10,108,003
Plan net
position
$
Net pension
liability (asset)
20,734,705 $
(10,626,702)
Plan net position

as a % of total
pension liability
205.13% $
Covered
payroll
2,774,113
Net pension liability

(asset) as a % of
covered payroll
-383.1%
*GASB Statement No. 68 was implemented for the fiscal year ended September 30, 2015 and does not require retroactive implementation.
Data will be added as information is available until 10 years of such data is available.
4-7
Report on Internal Control Over Financial Reporting and on Compliance

and Other Matters Based on an Audit of Financial Statements Performed in
Accordance with Government Auditing Standards
Management and the Board of Directors
Summit Pointe
We have been engaged to audit, in accordance with the auditing standards generally accepted in the United States of America and
the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the
United States, the financial statements of the governmental activities, and each major fund of Summit Pointe as of and for the year
ended September 30, 2015, and the related notes to the financial statements, which collectively comprise Summit Pointes basic
financial statements, and have issued our report thereon dated July 13, 2016.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered Summit Pointes internal control over financial
reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing
our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Summit Pointes
internal control. Accordingly, we do not express an opinion on the effectiveness of Summit Pointes internal control.
Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to
identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material
weaknesses or significant deficiencies may exist that were not identified. However, as described in the accompanying schedule of
findings and questions costs, we identified certain deficiencies in internal control that we consider to be material weaknesses and
significant deficiencies.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the
normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material
weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a
material misstatement of the entitys financial statements will not be prevented, or detected and corrected on a timely basis. We
5-1
consider the deficiencies 2015-001 through 2015-003 described in the accompanying schedule of findings and responses to be
material weaknesses.
A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material
weakness, yet important enough to merit attention by those charged with governance. We consider the deficiencies 2015-004 and
2015-005 described in the accompanying schedule of findings and responses to be significant deficiencies.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Summit Pointes financial statements are free from material misstatement,
we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance
with which could have a direct and material effect on the determination of financial statement amounts. However, providing an
opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion.
The results of our tests disclosed instances of noncompliance or other matters that are required to be reported under Government
Auditing Standards and which are described in the accompanying schedule of findings and responses as items 2015-006 and 2015007.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that
testing, and not to provide an opinion on the effectiveness of the entitys internal control or on compliance. This report is an integral
part of an audit performed in accordance with Government Auditing Standards in considering the entitys internal control and
compliance. Accordingly, this communication is not suitable for any other purpose.
Kalamazoo, Michigan
July 13, 2016
5-2
Summit Pointe
September 30, 2015
SECTION I SUMMARY OF AUDITORS RESULTS

Type of auditors report issued on the financial statements: Modified - Disclaimed
Internal control over financial reporting:
Material weakness(es) identified?
Significant deficiency(ies) identified that are
not considered to be material weaknesses
Noncompliance material to financial
statements noted?
__X__Yes
_____No
__X__Yes
_____None reported
__ X _Yes
_____No
Federal Awards: Federal revenues were under $500,000, therefore no single audit was required
SECTION II GOVERNMENT AUDITING STANDARDS FINDINGS
2015-001, 2014-001 Material Weakness Adjusting Journal Entries and Passed Adjustments
Criteria Management is responsible for maintaining its accounting records in accordance with generally accepted accounting
principles (GAAP).
Condition Internal controls did not detect certain adjustments necessary to properly record year-end balances.
Cause and Effect The Authoritys accounting records were initially misstated by amounts material to the financial statements.
Necessary adjustments were brought to the attention of management and were subsequently recorded in the Authoritys general
ledger. This was due, in part, to
1) Staffing changes during the year.
2) Lack of cross-training of the accounting staff.
3) Lack of timely review and reconciliation of significant general ledger accounts.
5-3
Summit Pointe
September 30, 2015
Recommendation We recommend that the Authority review internal control policies and procedures and make necessary changes
to ensure that all account reconciliations are completed timely and that the related activity is recorded in the general ledger in
accordance with GAAP.
In addition, we recommend that the Authority cross-train personnel within the accounting staff. Cross-training simply means
improving employees proficiency levels in roles outside their current responsibilities. Employees who have been trained on a variety
of tasks better understand how the entire organization works and they can provide valuable assistance when others are absent. Their
knowledge of other functions within the accounting department also helps to limit the disruptions during the transition period when a
member of the accounting staff leaves.
View of Responsible Officials We are in agreement with the above recommendation.
Corrective Action Plan See attachment.
2015-002, 2014-002 Material Weakness Preparation of Account Reconciliations and Prior Period Adjustments
Criteria Michigan governments are required to prepare financial statements in accordance with GAAP. This is a responsibility of
the Authoritys management. The preparation of financial statements in accordance with GAAP requires internal controls over both
(1) recording, processing, and summarizing accounting data (i.e., maintaining internal books and records), and (2) reporting fund
financial statements including the related footnotes (i.e., external financial reporting).
Condition At year end there were numerous account balances that were not reconciled to supporting documentation. This
occurred in the prior year as well, thus resulting in several prior period adjustments that were recorded in the current year. In
addition, although bank reconciliations were performed timely, unreconciled items identified were not timely addressed.
Cause and Effect As a result, account balances, including cash accounts, were not properly reflected in financial records in
accordance with GAAP in a timely manner.
Recommendation We recommend that the Authority review internal control policies and procedures and make necessary changes
to ensure that all significant accounts are reconciled timely and that the related activity is recorded in the general ledger in
accordance with GAAP.
5-4
Summit Pointe
September 30, 2015
2015-003, 2014-003 Material Weakness Bank Reconciliations
Criteria Management is responsible for maintaining its accounting records in accordance with generally accepted accounting
principles (GAAP). This includes the preparation of bank reconciliations and the timely recording of the necessary adjustments to
the general ledger to properly reflect the reconciled balance.
Condition Bank reconciliations were prepared for all accounts in a timely manner. However, for several accounts, there were
unreconciled differences that were identified but remained on the bank reconciliations for several months.
Cause and Effect These account balances were not properly reflected in financial records in accordance with GAAP in a timely
manner.
Recommendation We recommend that the Authority review their internal control policies and procedures and make necessary
changes to ensure that all unreconciled differences are addressed and the related adjustments are timely recorded in the general
ledger to properly reflect the reconciled balances.
2015-004 Significant Deficiency Procurement Policy
Criteria Management is responsible for following the approved procurement policy.
Condition The procurement policy indicates that checks should have two signatures. We noted several transactions over the
threshold that only contained one signature. The procurement policy also indicates that purchase orders should be used to approve
purchases. We noted several instances in our testing where no purchase order was used, and the approval was not received until
after the purchase was made.
Cause and Effect Procurement policy is not being followed, and therefore transactions are not receiving proper approval.
5-5
Summit Pointe
September 30, 2015
changes to ensure that all transactions are being properly approved prior to purchase and that two signatures are obtained for
purchases over $5,000.
2015-005 Significant Deficiency Ability to Pay Consideration
Criteria Prior to a service visit, patients should be completing forms determining their ability to pay for the services received.
Condition During our testing, we noted five instances where the ability to pay form was not completed.
Cause and Effect When a patients ability to pay is not considered, there is the potential to record service revenue at an incorrect
amount.
changes to ensure that all patients have been evaluated for their ability to pay for services received.
2015-006 Material Noncompliance Policies
Criteria MCL 124.301-305 and PA 738 of 2002 Indicate that Governmental organizations must have written electronic transactions
policy or an ACH policy. Also, MCL 129.221-224 states that a resolution must be adopted to allow acceptance of credit cards for
payment of fees.
Condition The required policies and resolutions were unable to be located. The Authority has written procedures relating to
investments, but not an actual policy.
Cause and Effect Lack of these policies and resolutions result in noncompliance with Michigan Law.
5-6
Summit Pointe
September 30, 2015
Recommendation We recommend that the Authority review their internal control policies and adopt the required policies to be in
compliance with Michigan Law.
2015-007, 2014-005 Material Noncompliance Report Filing
Criteria Section 7(4) (MCL 141.427[4]) of the Uniform Budgeting and Accounting Act requires that a copy of the audit report shall
be filed with the state treasurer within six months after the end of the fiscal year.
Condition The audit report was not filed by the due date.
Cause and Effect Penalties for late audit filing may be initiated. The Department of Treasury will notify the local unit that their audit
is delinquent as follows: The first and final notice to the local unit will inform them of the delinquency, indicate 30 days for them to file
the audit, encourage them to respond to the letter, and indicate that failure to respond to this letter may result in imposition of the
penalties.
changes to ensure that the annual audit is filed in a timely manner.
5-7
Summit Pointe
Summary Schedule of Prior Audit Findings
September 30, 2015
2014-001 Material Weakness Adjusting Journal Entries

Status This continues to be an issue and is reported in finding 2015-001
2014-002 Material Weakness Preparation of Account Reconciliations
.
2014-003 Material Weakness Bank Reconciliations
2014-004 Material Noncompliance Deficit Fund Balance
Status These funds have been closed out as of September 30, 2015.
2014-005 Noncompliance Report Filing
5-8
5-9

Summit Pointe Audit

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Summit Pointe

Community Mental Health Authority

Independent Auditors Report

Managements Discussion and Analysis

Basic Financial Statements

Reconciliation of the Balance Sheet of

Statement of Revenues, Expenditures and Changes in

Reconciliation of the Statement of Revenues, Expenditures

Statement of Revenues, Expenses, and Changes in Net Position

Statement of Cash Flows

Notes to the Financial Statements

Statement of Revenues, Expenditures and Changes in

Statement of Revenues, Expenditures and Changes in

Schedule of Employer Contributions

Schedule of Changes in Net Pension Liability (Asset) and Related Ratios

Schedule of Employers Net Pension Liability (Asset)

Schedule of Findings and Responses

Summary Schedule of Prior Audit Findings

Corrective Action Plan

Independent Auditors Report

Other noncurrent assets

Total current liabilities

Total net position

Deferred Inflows of Resources

Total liabilities and deferred inflows of resources

Total general revenues

Net position - beginning of year, as restated

Net position - end of year

See Accompanying Notes to the Financial Statements

See Accompanying Notes to the Financial Statements

Total fund balance - governmental funds

Amounts reported for governmental activities in the statement of

Net position of governmental activities

See Accompanying Notes to the Financial Statements

Total state grants

Contributions - local units

Earned contracts and other revenue

See Accompanying Notes to the Financial Statements

Fund balance (deficit), beginning of year, as restated

See Accompanying Notes to the Financial Statements

Amounts reported for governmental activities in the statement of activities

See Accompanying Notes to the Financial Statements

See Accompanying Notes to the Financial Statements

Net position, beginning of year

Net position, end of year

See Accompanying Notes to the Financial Statements

Cash flows from operating activities

Cash and cash equivalents, beginning of year

See Accompanying Notes to the Financial Statements

Note 1 Summary of Significant Accounting Policies

The statement of activities demonstrates the degree to which the

Net position is restricted when constraints placed on them are either

The accompanying financial statements have been prepared in

Separate financial statements are provided for governmental funds

Government-Wide and Fund Financial Statements

Governmental Fund Financial Statements The governmental fund

Intergovernmental revenue, charges for services and other revenues

The Authority reports the following major governmental and

Proprietary Fund Financial Statements The financial statements of

Children Pooled Funding This fund represents amounts set aside

As a general rule the effect of interfund activity has been eliminated

DD Children Pooled Funding This fund represents amounts set

service domains collaborate together to provide a comprehensive