NORTHEAST LOUSIANA ECONOMIC ALLIANCE,...

NORTHEAST LOUSIANAECONOMIC ALLIANCE, INC.

FERRTOAY, LOUISIANA

FINANCIAL REPORT

AS OF AND FOR THE YEAR ENDED JUNE 30,2007

Under provisions of state law, this report is a publicdocument. Acopy of the report has been submitted tothe entity and other appropriate public officials. Thereport is available for public inspection at the BatonRouge office of the Legislative Auditor and, whereappropriate, at the office of the parish clerk of court.

Release Date

BYJBMMIE SELF, CPA

A PROFESSIONAL ACCOUNTING CORPORATION2908 CAMERON STREET, SUITE - C

MONROE, LA 71201Phone 318/323-4656 • Fax 318/388-0724

NORTHEAST LOUISIANAECONOMIC ALLIANCE, INC.

FEKRIDAY, LA

FINANCIAL REPORT

AS OF AND FOR THE YEAR ENDED JUNE 30,2007

BYJTMMIE SELF, CPA

A PROFESSIONAL ACCOUNTING CORPORATION2908 CAMERON STREET, SUITE - C

MONROE, LA 71201Phone 318/323-4656 • Fax 318/388-0724

NORTHEAST LOUISIANA ECONOMIC ALLIANCE, INC.

FERRTOAY, LA

For the Year Ended June 30,2007

TABLE OF CONTENTS

Independent Auditor's Report

Financial Statements

Statement of Financial Position

Statement of Activities

Statement of Functional Expenses

Statement of Cash Flows

Notes to the Financial Statements

Required Supplementary Information

Report on Internal Control Over Financial Reporting and on ComplianceAnd Other Matters Based on an Audit of Financial StatementsPerformed in Accordance with Government Auditing Standards

Additional Supplementary Information

Schedule of Findings and Responses

PAGE

1-2

4

5

6

7

8-16

18-19

21-23

NEEL07Contents

Jimmie L. Self, CPAA Professional Accounting Corporation

2908 Cameron Street, Suite CMonroe, LA 71201

Phone (318) 323-4656 • FAX (318) 388-0724

Independent Auditor's Report

Board of DirectorsNortheast Louisiana Economic Alliance, Inc.Ferriday, Louisiana

I have audited the accompanying statement of financial position of Northeast LouisianaEconomic Alliance, Inc. (a not-for-profit organization - the Corporation) as of June 30,2007, and the related statements of activities, functional expenses, and cash flows for theyear then ended as listed in the accompanying Table of Contents. These financialstatements are the responsibility of management of the Corporation. My responsibility isto express an opinion on these financial statements based on my audit.

I conducted my audit in accordance with auditing standards generally accepted in theUnited States of America; the standards applicable to financial audits contained inGovernment Auditing Standards, issued by the Comptroller General of the United States,and the Louisiana Governmental Audit Guide published by the Society of LouisianaCertified Public Accountants and the Louisiana Legislative Auditor. Those standardsrequire that I plan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. An audit includes examining, on atest basis, evidence supporting the amounts and disclosures in the financial statements.An audit also includes assessing the accounting principles used and significant estimatesmade by management, as well as evaluating the overall financial statement presentation.I believe that my audit provides a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all materialrespects, the financial position of the Corporation as of June 30, 2007, and the changes inits net assets and its cash flows for the year then ended in conformity with accountingprinciples generally accepted in the United States of America.

In accordance with Government Auditing Standards, I have also issued my report datedDecember 27,2007 on my consideration of the Corporation's internal control over

NEEL07IndAudRep

financial reporting and my tests of its compliance with certain provisions of laws,regulations, contracts, grant agreements, and other matters. The purpose of that report isto describe the scope of my testing of internal control over financial reporting andreporting on compliance and the results of that testing, and not to provide an opinion onthe internal control over financial reporting or on compliance. That report is an integralpart of an audit performed in accordance with Government Auditing Standards andshould be read in conjunction with this report in considering the results of my audit.

(/Jimmie Self, CPAMonroe, LouisianaDecember 27, 2007

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Financial Statements

NORTHEAST LOUISIANA ECONOMIC ALLIANCE, INC.Ferriday, Louisiana

Statement of Financial PositionJune 30, 2007

AssetsCurrent Assets:

Cash and Cash EquivalentsAccounts ReceivableGrants Receivable

Total Current Assets

Non Current AssetsCertificates of DepositLoans Receivable, net of Allowancefor loan losses of $197,004 (Note # 4)

Interfund TransfersOtner Assets (Note 7)

Total Non-Current Assets

Property and EquipmentFixed Assets, Net (Note 6)

TOTAL ASSETS

LIABILITIES AND NET ASSETS

Current Liabilities:Accounts PayableAccrued LiabilitiesCompensated AbsencesOther LiabilitiesNotes Payable-Current Portion

Total Current Liabilities

Long-term Liabilities:

Notes PayableTotal Liabilities

Net Assets:UnrestrictedTemporarily Restricted

Total Net Assets

TOTAL LIABILITIES AND NET ASSETS

Unrestricted Restricted

$ 42,040 $6,736

72,224121,000

250,000250,000

11,980$ 132,980 $ 250,000

$ 25,159 $

25,159

25,159

107,821250,000

107,821 250,000

LoanPrograms

$1,083,193

1,083,193

252,773

732,418167,800

1,152,991

1,927$2,238,111

$ 40,1592,935

25,59312,07843,189

123,954

1,831,3361,955,290

282,821282,821

Total

$ 1,125,2336,736

72,2241,204,193

252,773

732,418167,800250,000

1,402,991

13.907$ 2,621,091

$ 65,3162,935

25,59312,07843,189

149,113

1,831.3361,980,449

107,821532,821640,642

$ 132.980 $ 250.000 $2.238.111 $ 2.621.091

See accompanying notes to financial statements

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Statement of ActivitiesFor the Year Ended June 30, 2007

Support and RevenueContracts:

Louisiana Department of Economic Development:Cooperative EndeavorsRenewal Commmunity

ContributionsInterest IncomeLoan Interest IncomeLoan Application FeeMiscellaneous Income

Total Support and Revenue

Renewal CommunityLoan ProgramsEconomic Development

Total Programs

Management and General

Total Expenses

Provision for Loan Losses

Total Expenses and LossesChanges in Net Assets

Net Assets at Beginning of YearNet Assets at End of Year

Unrestricted Restricted

$ 391,045 $139,25066,227

51--

73,830670,403

138,756-

326,020464,776

148,766

613,542

613,54256,861

50,960 250,000

LoanPrograms

$--

17,03657,9583,078

-78,072

.

72,486-

72,486

_

72,486

18,494

90,980(12,908)

295,729

Total

$ 391,045139,25066,22717,08757,9583,078

73,830748,475

138,75672,486

326,020537,262

148,766

686,028

18,494

704,52243,953

596,689$ 107.821 $ 250.000 $ 282.821 $ 640,642

See accompanying notes to financial statements.

NEEL07StmtOfActiv


STATEMENT OF FUNCTIONAL EXPENSESFor the Year Ended June 30, 2007

Adverts! ng-PromotionalSalaries and WagesMiscellaneous Salary RelatedFringe BenefitsPublication and PrintingEquipment and Building MaintenanceInterest ExpenseOffice MaintenanceDues and SubscriptionsTelephonePostageUtilitiesOther ExpenseGeneral Office SuppliesProfessional ServicesCDC Professional ServicesKisatchie Delta-Professional ServicesTravelLoan DepartmentAuditing FeesDepreciation ExpenseLoans Rec-for Bad Debt AllowanceProvision for Loan Loss

SUPPORTINGPROGRAM SERVICES SERVICES

RenewalCommunity$

37,873-

17,4285,0407,552

-7,137

624,050

4691,561

-2,488

19,0969,000

17,00010,000

-----

Economic ManagementLoan Development and General

$ '-16,567

-5,3041,037

-18,9611,241

3427

13281244346

2,069--

3395,177

--

40,00418,494

$ 1,033 $111,299

1050,011

1,20110,429

-8,2551,8867,0101,7802,5245,3548,035

28,559--

43,715-

15,00010,392

--

1,200 $7,398

3093,031

--

9191,307

3541263232

7,702307

106,017--

1,9761,970

-15,589

--

Total2,233

173,137319

75,7747,277

17,98119,88017,9411,955

12,0282,5254,599

13,30011,177

155,7419,000

17,00056,0317,147

15,00025,98140,00418,494

$ 138,756 $ 110.509 $ 326.020 $ 148.766 $ 704.523


NEEL07StmtFuncExp


Statement of Cash FlowsFor the Year Ended June 30, 2007

Cash Flows from Operating Activities:Change in Net AssetsAdjustments to Reconcile Changes in Net Assets to NetCashProvided (Used) by Operating Activities:DepreciationAllowance for Loan LossesChanges in:Certificate of Deposit-GeneralGrants ReceivableAccounts Payable

Net Cash Provided (Used) by Operating Activities

Cash Flows from Investing Activities:Payments Received on Loans to OthersEquipment Purchase

Net Cash Provided (Used) by Investing Activities

$ 43,953

25,98158,527

(220)75,79212,872

216,905

123,159(4.300)

118,859

Cash Flows from Financing Activities:Loans Payable

Net Cash Provided by Financing Activities

Increase In Cash and Cash Equivalents

Cash and Cash Equivalents, Beginning of Year

CASH AND CASH EQUIVALENTS, END OF YEAR

(138.244)(138.244)

197,520

927.713

$ 1,125.233


NEEL07StmtCashFlow

Notes to Financial Statements


Notes to the Financial StatementsAs of and for the Year Ended June 30,2007

NOTE 1. NATURE OF ACTIVITIES AND SUMMARY OF SIGNIFICANTACCOUNTING POLICIES

Nature of Activities

North Louisiana Economic Alliance, Inc. (the Corporation) is a non-profit organization whosemembership consists of municipalities and economic development organizations located inNortheast Louisiana. The Corporation's mission is economic development, industrialrecruitment and readiness, and job creation. The Corporation is recognized as a tax-exempt(non-profit) organization under section 501 (c) (3) of the Internal Revenue Service Code, and isexempt from federal and state income taxes

In December, 1994, the Corporation's application for a Rural Enterprise Community wasapproved by the United States Department of Agriculture (USD A). Approval as an EnterpriseCommunity was coupled with a three-year USDA grant in the amount of $2,950,000. In 1998,this contract was renewed for an additional three years of operations. The purpose of theEnterprise Community program is to implement a strategic plan formulated for revitalizing theeconomy of portions of certain parishes within the Corporation's domain.

USDA also approved a $2,000,000 loan to the Corporation to establish a revolving loan fund forbusiness and economic development within the Enterprise Community, as well as throughout theCorporation's entire area. In May, 2001, an additional $750,000 loan was approved to furtherfund this revolving loan program. These loans were obtained through USDA's IntermediaryRelending Program.

In August, 1995, the USDA approved a $300,000 Rural Enterprise Grant to allow theCorporation to operate a small business loan program solely for the Enterprise Community. Twoadditional $300,000 grants were approved in March, 1998, and April, 2001, to continue thisprogram.

Periodically, the Corporation implements, on a contractual basis, other programs designated foreconomic and industrial development and job training.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generallyaccepted in the United States of America requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities and disclosure of contingentassets and liabilities at the date of the financial statements and the reported amounts of revenuesand expenses during the reporting period. Actual results could differ from those estimates.

NEEL07Notes



Basis of Accounting

The financial statements of the Corporation have been prepared on the accrual basis ofaccounting and, accordingly, reflect all significant receivables and payables.

Basis of Presentation

The Corporation has adopted Statement of Financial Accounting Standards (SFAS) No. 116,Accounting for Contributions Received and Made, and SFAS No. 117, Financial Statements ofNot-for-Profit Organizations.

SFAS No. 117 establishes standards for external financial reporting by not-for-profitorganizations and requires that resources be classified for accounting and reporting purposes intothree net asset categories according to externally (donor) imposed restrictions. SFAS No. 116requires that unconditional promises to give (pledges) be recorded as receivables and revenuesand requires the organization to distinguish between contributions received for each net assetcategory in accordance with donor-imposed restrictions. A description of the three net assetcategories follows:

Unrestricted Net Assets - Net assets subject to donor-imposed stipulations.

Temporarily Restricted Net Assets - Net assets subject to donor-imposed stipulations thatmay or will be met either by actions of the Corporation and/or the passage of time.

Permanently Restricted Net Assets - Net assets subject to donor- imposed stipulationsthat they be maintained permanently by the Corporation. Generally, the donors of theseassets permit the Corporation to use all or part of the income earned on relatedinvestments for general or specific purposes. As of June 30,2007, the Corporation hasno permanently restricted net assets.

Allowance for Loan Losses

The allowance for loan losses is maintained at a level which, in management's judgement, isadequate to absorb credit losses inherent in the loan portfolio. The amount of the allowance isbased on management's evaluation of the collectibility of the loan portfolio, including the natureof the portfolio, credit concentrations, trends in historical loss experience, specific impairedloans, economic conditions, and other risks inherent in the portfolio. Allowances for impairedloans are generally determined based on collateral values or the present value of estimated cashflows. The allowance is increased by a provision for loan losses, which is charged to expenseand reduced by charge-offs, net of recoveries. Changes in the allowance relating to impairedloans are charged or credited to the provision for loan losses. Because of uncertainties inherentin the estimation process, management's estimate of credit losses inherent in the loan portfolio

NEEL07Notes 10



and the related allowance may change in the near term. However, the amount of the change thatis reasonably possible cannot be estimated.

Cash and Cash Equivalents

The Corporation considers all highly liquid investments with an original maturity of threemonths or less to be cash equivalents.

Grants Receivable

Grants receivable represent amounts that have been expensed for grant purposes and are to bereimbursed in full by the grantor and have been promised over the next twelve months.

Property and Equipment

Property and equipment having estimated useful lives greater than one year are recorded at costor, if donated, at the approximate fair value at the date of donation. Depreciation is computedusing the straight-line method over the estimated useful lives of the property and equipment.

Maintenance and repairs are charged to operations; significant improvements are capitalized.The cost and related accumulated depreciation of assets retired or otherwise disposed areeliminated from the accounts and the resulting gain or loss is included in income.

Certain property and equipment are restricted as to use and disposition by grant agreements andby contractual agreements.

Expense Allocation

The costs of providing various programs and other activities have been summarized on afunctional basis in the Statement of Activities and in the Statement of Functional Expenses.Accordingly, certain costs have been allocated among the programs and supporting servicesbenefited.

NOTE 2. CASH AND CASH EQUIVALENTS

Cash at June 30,2007, consisted of the following:

Unrestricted $ 42,040Loan Program 1,083,193

TOTAL $ 1,125,233

NEEL07Notes



Certificates of Deposit at June 30, 2007, consisted of the following:

Restricted:Intermediary Relending Program (Loan Program) $ 242,773Rural Business Enterprise Grant Program (Loan Program) 10,000

TOTAL $ 252,773

Cash and certificates of deposit in the Intermediary Relending Program accounts are restrictedfor lending purposes, for the program's administrative costs and for repayment of debt to USDA.Cash and certificate of deposit in the Rural Business Enterprise Grant Program loan accounts arerestricted for lending purposes and for the program's administrative costs. Cash in the RuralBusiness Enterprise Grant Program building renovation accounts is restricted for renovationpurposes.

The Corporation maintains cash balances at several financial institutions located in NortheastLouisiana. Accounts at each institution are insured by the Federal Deposit InsuranceCorporation (FDIC) up to $100,000, plus collateral held by the pledging banks or their agentswith a market value of $1,516,844. At June 30,2007, all of the Corporation's cash balanceswere covered by FDIC insurance or by collateral held by the pledging banks or their agents.

NOTE 3. GRANT RECEIVEBLE - RENEWAL COMMUNITY PROGRAM

Grants receivable include unreimbursed costs of approximately $72,224 incurred in operating theRenewal Community Program and the Cooperative Endeavors Program. Both grants receivableare due from the Louisiana Department of Economic Development.

NOTE 4. LOANS RECEIVABLE

During 1996, the Corporation began making loans to business entities through USDA'sIntermediary Relending Program. Under this program, loans of up to $150,000 may be made tobusiness entities in the Corporation's eleven-parish operating area. However, a maximum oftwenty-five percent of the total loan portfolio may be loans of up to $250,000 to recipients whoqualify. Loan recipients are required to fund twenty-five percent of their approved project costs.

At lease sixty percent of the total Intermediary Relending Program funds available must beloaned to businesses within the Enterprise Community, and a maximum of forty percent of thefunds available may be loaned to businesses outside of the Enterprise Community.

During 1996, the Corporation began making loans to business entities under the Rural BusinessEnterprise Grant Program. This program allows loans of up to $25,000 to be made to businesseswithin the Enterprise Community.

NEEL07Notes 12



Principal payments and interest received on loans made under the Intermediary RelendingProgram can be used only for the following purposes: for payment of the debt to USDA; forpayment of reasonable administrative costs of the program; and for lending purposes. Principalpayments and interest received on loans under Rural Business Grant Programs can be utilizedonly for the payment of reasonable administrative costs and for relending purposes.

Loans Receivable as of June 30, 2007, is summarized as follows:

Intermediary Relending Program $ 536,235Intermediary Relending Program #2 173,437Rural Business Grant Program 144,125Rural Business Grant Program #2 75,225

Total Loans Receivable 929,422Less - Allowance for Loan Losses (197,004)

Net Loans Receivable $ 732,418

During the year ended June 30,2007, no loans were in loans receivable, pending Board approval.

NOTE 5. TEMPORARILY RESTRICTED NET ASSETS

At June 30,2007, Temporarily Restricted Net Assets consist of the headquarters building with animpaired value of $250,000. (See note 7)

NOTE 6. PROPERTY AND EQUIPMENT

The major classes of owned property and equipment at June 30,2007, are summarized below:

Furniture and Fixtures $ 10,036Equipment 185,550

195,586Less - Accumulated Depreciation (159,998)

Balance @ June 30, 2007 35,588Additions 2007 - Laptop Computer 4,300

39,888Less - Current Depreciation (25,981)

Net Property and Equipment $ 13,907

NEEL07Notes 13



NOTE 7. OTHER ASSETS

The Corporation is planning to move its headquarters to a more centralized location to betterserve its member parishes. Part of this strategy includes moving from its current headquarters inFerriday, Louisiana, and listing the building there for sale with a local realtor. Due to variousfactors, including the local economic conditions in Ferriday and the surrounding areas, thebuilding has been listed for sale at an amount which is below its carrying value of $339,199. Asa result, the Corporation has recorded an impairment loss of $89,199 to reduce the carrying valueof the building to an amount that reflects managements' best estimate of proceeds to be receivedfrom the sale of the building. Due to management's decision to relocate corporate headquarters,any provision for depreciation has been discontinued effective June 30,2006. Additionally, thisasset has been reclassifled from Property and Equipment to Other Assets in the amount of$250,000 on the Statement of Financial Position. (See Note 5)

Included in Other Assets is reposed property with a carrying value of $167,800.

NOTE 8. NOTES PAYABLE

The notes payable represents the balance due to USDA and to a local bank at June30,2007. Thetotal amount of funds borrowed from the USDA is under the Intermediary Relending Program.In accordance with the loan agreement, up to $2,750,000 may be borrowed by the Corporationfor relending purposes to business entities within its eleven parish operational area. The balanceoutstanding under the two USDA loans at June 30, 2007 is $1,874,525.

Under the terms of the loan agreement, interest at rate of 1.00% is accrued on the outstandingbalance. In December, 1998, the Corporation began making annual principal and interestpayments of $113,210, which is to continue until the note matures in December, 2025.

The notes payable are collateralized by an Assignment of Security Interest for each loan madethat is collateralized by personal property. Also, the notes payable are collateralized by anAssignment of Mortgage for each loan made that is collateralized by real estate.

The Corporation has a line of credit, (which is basically a withdrawal account) with a local bank.At June 30, 2007, the prior year balance of $113, 022.37 had been paid, with no outstandingbalance. At October 31, 2007, the Corporation had withdrawn $78,177. This account iscollateralized by real estate and matures in calendar year 2007.

THIS PORTION OF THIS PAGE IS INTENTIONALLY LEFT BLANK.

NKLOTNotes 14



The payments of principal and interest due over the next 5 years are as follows:

Year Payment Remaining AccumPaid Amount Interest Principal Balance Interest

2008 113,637.03 18,255.63 95,381.40 1,730,181.57 37,455.632009 113,637.03 17,301.82 96,335.21 1,633,846.36 54,757.452010 113,637.03 16,338.46 97,298.57 1,536,547.79 71,095.912011 113,637.03 15,365.48 98,271.55 1,438,276.24 86,461.392012 113,637.03 14,382.76 99,254.27 1,339,021.97 100,844.15

2013-2017 568,185.15 56,825.67 511,395.48 827,662.49 157,669.822018-2022 568,185.15 30,741.19 537,443.96 290,218.53 188,411.012023-2025 295,592.17 5,373.44 290,218.53 - 193,784.45

The interest expense for the year ended June 30, 2007 totaled $19,880.

NOTE 9. EMPLOYEE BENEFIT PLANS

The Corporation has established a retirement plan for its employees in accordance with Section401 (k) of the Internal Revenue Code. For employees that have been employed for one year, theCorporation matches up to 3% of an employee's salary under this plan. The Corporationcontributed approximately $5,194 to the plan during the year ended June 30,2007.

The Corporation also has an employer's discretionary contribution retirement plan in which theCorporation contributes 10% for each employee that has been employed for one year. TheCorporation contributed approximately $17,312 under this plan during the year ended June 30,2007.

NOTE 10. RELATED PARTY TRANSACTIONS

The Corporation's Vice-president provides building maintenance services in addition to herduties as an officer. Compensation for these services was $1,800 for the year ended June 30,2007.

NOTE 11. FINANCIAL INSTRUMENTS

Concentration of Credit Risk

The corporation operates its Enterprise Community Program and other contractual programsunder a cost reimbursement contract which results in amounts due from the LouisianaDepartment of Economic Development - Office of Community Services at various times duringthe performance of the contract. (See Note 3)

NEEL07Notes 15



Collateralization Policy

Unless otherwise disclosed, the Corporation does not obtain collateral or other security tosupport financial instruments subject to credit risk.

NOTE 12. OTHER POST EMPLOYMENT BENEFITS

The corporation makes no provision for other post employment benefits except as outlined inNote 9.

NOTE 13. EMPLOYEE TERMINATION BENEFITS

Employees leaving the employment of Northeast Louisiana Economic Alliance, Inc. will be paidtheir unused annual leave, not to exceed 80 hours. Payment will be made on the employee'sregular paycheck at the end of the month

Employees will not be paid for unused sick leave or personal leave upon termination ofemployment.

Each employee taking annual leave will record the date and hours taken on "Request for Leave"form.

NOTE 14. RISK MANAGEMENT

The Corporation is exposed to various risk of loss related to torts: theft of, damage to, anddestruction of assets, and injuries to employees. To handle such risk of loss, the Corporationcarried insurance coverage with two insurance Companies in 2007; Stone Trust in Ruston,Louisiana, and EMC Insurance Co. - Davis Insurance, agent, Ferriday, Louisiana. The policiescover property, liability, crime and fidelity, employee liability, and others. No claims have beenpaid on any of the policies during the past three years that exceeds the policies' coverageamounts. There were no significant reductions in insurance coverage during the year ended June30, 2007.

NEELOTNotes 16

Required Supplementary Information

Jimmie Self, CPAA Professional Accounting Corporation

2908 Cameron Street, Suite CMonroe, Louisiana 71201

Phone (318) 323-4656 FAX (318) 388-0724

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTINGAND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDITOF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH

GOVERNMENT AUDITING STANDARDS

Board of Directors ofNortheast Louisiana Economic Alliance, Inc.Ferriday, Louisiana

I have audited the basic financial statements of Northeast Louisiana Economic Alliance, Inc., (anon-profit organization - the Corporation), as of and for the year ended June 30, 2007, and haveissued my report thereon dated December 27, 2007, which collectively comprise the NortheastLouisiana Economic Alliance, Inc.'s basic financial statements. I conducted my audit inaccordance with auditing standards generally accepted in the United States of America and thestandards applicable to financial audits contained in Government Auditing Standards, issued bythe Comptroller General of the United States; and the Louisiana Governmental Audit Guide,issued by the Louisiana Society of Certified Public Accountants and the Louisiana LegislativeAuditor.

Internal Control Over Financial Reporting

In planning and performing my audit, I considered the Corporation's internal control overfinancial reporting as a basis for designing my audit procedures for the purpose of expressing myopinion on the financial statements, but not for the purpose of expressing an opinion on theeffectiveness of the Corporation's internal control over financial reporting. Accordingly, I do notexpress an opinion on the effectiveness of the Corporation's internal control over financialreporting.

A control deficiency exists when the design or operation of a control does not allow managementor its employees, in the normal course of performing their assigned functions, to prevent or detectmisstatements on a timely basis. A significant deficiency is a control deficiency, or combinationof control deficiencies, that adversely affects the Corporation's ability to initiate, authorize,record, process, or report financial data reliably in accordance with generally accepted accountingprinciples such that there is more than a remote likelihood that a misstatement of the Alliance'sfinancial statements that is more than inconsequential will not be prevented or detected by theCorporation's internal control.

A material weakness is a significant deficiency, or combination of significant deficiencies, thatresults in more than a remote likelihood that a material misstatement of the financial statementswill not be prevented or detected by the Corporation's internal control.

My consideration of the internal control over financial reporting was for the limited purposedescribed in the first paragraph of this section and would not necessarily identify all deficiencies

NEEL07ComplianceGAS

in internal control that might be significant deficiencies or material weaknesses. I did not identifyany deficiencies in internal control over financial reporting that I consider to be materialweaknesses, as defined above.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Corporation's financial statementsare free of material misstatement, I performed tests of its compliance with certain provisions oflaws, regulations, contracts, and grants agreements, noncompliance with which could have adirect and material effect on the determination of financial statement amounts. However,providing an opinion on compliance with those provisions was not an objective of my audit and,accordingly, I do not express such an opinion. The results of my tests disclosed instances ofnoncompliance or other matters that are required to be reported under Government AuditingStandard and which are described in the accompanying schedule of findings and responses asitems which are included in the accompanying Schedule of Findings as item 07-01.

This report is intended solely for the information of the management of the Corporation, otherswithin the Corporation, and the Louisiana Legislative Auditor, and is not intended to be andshould not be used by anyone other than these specified parties. Under Louisiana Revised Statute24:513, this report is distributed by the Legislative Auditor as a public document.

Jimmie Self, CPAMonroe, LouisianaDecember 27,2007

NEEL07ComplianceGAS j 9

r

Additional Supplementary Information



Phone (318) 323-4656 Fax (318) 388-0724


SCHEDULE OF FINDINGS AND RESPONSESFYE June 30,2007

AndPrior Year Findings FYE June 30,2006

CURRENT YEAR FINDINGS FYE JUNE 30,2007

2007-01 Financial Statements were not audited and timely submitted to the properagency.

Finding:The United States Department of Agriculture requires the filing of thefinancial statements of the Corporation by September 30, 2007 for theyear ended June 30, 2007. This deadline was not met.

Recommendation:The report should be submitted in a timely manner.

Management's Corrective Action Plan:The expanded CPA services and new personnel will enable the Corporation to beable to issue the report in a timely manner henceforth.

PRIOR YEAR FINDINGS FYE JUNE 30,2006

2006-01 Accounting and Principal Reporting Function

Finding:In performing our audit of the financial statements of the Northeast LouisianaEconomic Alliance, Inc. (the Corporation), we determined the Corporation did notmaintain accurate accounting records and could not produce financial statementsand reports in an accurate and timely manner, both for purposes of externalfinancial reporting and internal decision making.

No transactions were recorded in the general ledger for any of the Corporation'sloan programs, which are primarily funded by the United States Department ofAgriculture. This omission results in material misstatement of loans receivable,the allowance for uncollectible loans, and the related interest income.

NEEL07FindingsResponses 21



Phone (318) 323-4656 Fax (318) 388-0724

State Grants Receivable were not adjusted during the year, creating a risk thatGrant Revenue and Grants Receivable could be misstated in an amount that couldbe material to the financial statements.Failure to reconcile balance sheet clearing accounts resulted in a clearing accountcarrying a balance of $15,000 at June 30, 2006 which required audit adjustment.

Several payroll-related deduction accounts that are expected to have creditbalances have debit balances, which require more time than would be expected toreconcile the accounts and could lead to penalties for failure to properly remitamounts withheld from employees' pay.

Personnel at the Corporation were unable to produce reports by function or fundfrom the Quick Books accounting software.

Net Assets were not reconciled and did not roll forward from the prior period,resulting in material misstatement of balances on the Statement of Activities andcomplicating demonstration of compliance with restrictions imposed by grantors.

While there is evidence of management review and approval of transactions, therecontinues to be inadequate segregation of duties in the accounting function.

Status:The Corporation has expanded control amongst their own staff to involve morepersonnel in a cross-check function. They have also replaced their bookkeepingstaff with a competent bookkeeper who works closely with the CPA, in order toimplement more cross-checking and internal control. The accounting records areadequate for reporting.

2006-02 Financial Statements were not audited or timely submitted to the properagencies.

Finding:Louisiana Revised Statute 24:513 requires that the Corporation prepare andsubmit its audited financial statements to the Louisiana Legislative Auditor nolater than six months after the end of its most recent fiscal year.

The United States Department of Agriculture requires the filing of the financialstatements of the Corporation by September 30, 2007 for the year ended June 30,2007.




Phone (318) 323-4656 Fax (318) 388-0724

Status:The requirement by the Louisiana Revised Statue 24:513 concerning auditedfinancial statements has been corrected. The report will be issued on or beforeDecember 31,2007.

The requirement by the United States Department of Agriculture was not timelyfiled. Management has stated that this will definitely be corrected by the nextdeadline. Meanwhile, the audited financial statement dated December 27,2007,will be filed with the United States Department of Agriculture immediately.


NORTHEAST LOUSIANA ECONOMIC ALLIANCE,...

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