Central Louisiana Business Incubator

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1 /^3J^ Central Louisiana Business Incubator (A Program ofthe Alexandria Metropolitan Foundation) Alexandria, Louisiana April 30, 2010 UnccTprovision;", c: State law. tmisiepoilisa puclio document.acopy of the report has been submitted to the entity and other appropriate public officials. The report is available for public inspection at the Baton Rouge office ofthe LegislativeAuditor and, where appropriate, at the office of the parish clerk of court. Release Date NOV

2 Central Louisiana Business Incubator (A Program ofthe Alexandria Metropolitan Foundation) April 30, 2010 Table of Contents Exhibits Page Independent Auditor's Report, 1-2 Basic Financial Statements Statement of Financial Position A 3 Statement of Activities B 4 Statement of Cash Flows C 5 Notes to Financial Statements 6-9 Other Report and Information Required by Govemment Auditing Standards 10 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^ Schedule of Findings and Responses 13-14

3 'X- T-'iiTj-Li.:-.-^.ac^iS^a^i^ PAYNE, AK.)ORr & IHiRRINGTON, LLI^ CERTIFIfDPUBilCACCOONTANTS Independent Auditor's Report The Board of Directors ofthe Alexandria Metropolitan Foundation and The Honorable Mayor and City Council ofthe City of Alexandria, Louisiana We have audited the accompanying statement of financial position of the Central Louisiana Business Incubator (CLBl), a program of the Alexandria Metropolitan Foundation (AMF) (a nonprofit organization), as of April 30, 2010, and the related statements of activities and cash flows for the year then ended. These financial statements are the responsibility of the Incubator's management. Our responsibility is to report 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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our report. As discussed in Note 1, the financial statements present only the Central Louisiana Business Incubator, a program of the Alexandria Metropolitan Foundation, and do not purport to, and do not, present fairly the financial position of the Alexandria Metropolitan Foundation as of April 30, 2010, and the changes in its financial position, or its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. The cooperative endeavor agreement (CEA) between the City of Alexandria, Louisiana and Alexandria Metropolitan Foundation (d/b/a Central Louisiana Business Incubator) provides, in part, that the CLBl may collect rent from CLBl tenants and retain a management fee equal to the net tenant rent proceeds actually collected which sums shall be retained by CLBl subject to the accounting and budget provisions of the CEA. In accordance with the AMF's management's understanding of the temns the CEA, the AMF's management recorded a liability on CLBI's books of $186,538 due to the Alexandria Metropolitan Foundation during the term of the CEA, of which $80,936 occurred during the current year and the remaining $105,602 relates to prior years. The. management of the City of Alexandria, Louisiana interprets the CEA differently and does not believe that any amount is due to the AMF as management fees. The City believes that the amount represents unused operating advances from the City and, therefore, should be returned to the City. Effective May 1, 2010, administration of the Incubator was transferred to the City of Alexandria, Louisiana. MAEym UlNUU. LP.A. Emsif.Sii.ssiit.C.P.ii. ltob[iiiiv.dvflm,c.p.a. RlBiCCIi B. HSKRIS. t.p.ii. HiciiAEi I mm. ih. JAMfS I Mm. Ui mn.ummi.ui otaomyyhii.c.p.ji. < :*> M19 MtlRO DRIVE P.O. BOX UfXAIIDIIIA. lu131b-32l]q Pll: (310) 443-1B93 fax: (31B)

4 PrSYNE. MOORE & MERRINGTON, U-P The Board of Directors of the Alexandria Metropolitan Foundation and The Honorable Mayor and City Council ofthe City of Alexandria, Louisiana We were unable to obtain written representations from management of the Alexandria Metropolitan Foundation as required by generally accepted auditing standards. Because ofthe significance ofthe matters deschbed in the preceding two paragraphs, we are unable to express, and we do not express, an opinion on the financial statements referred to in the first paragraph. In accordance with Government Auditing Standards, we have also issued our report dated October 12, 2011, on our consideration of The Central Louisiana Business Incubator's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, 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 the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Certified Public Accountants October 12, 2011

5 Central Louisiana Business Incubator (A Program ofthe Alexandria Metropolitan Foundation) Statement of Financial Position April 30, 2010 Current Assets Cash and cash equivalents Accounts receivable, net Prepaid expenses Total Current Assets Noncurrent Assets Computer and office equipment Accumulated depreciation Net Total Assets Assets Exhibit A $ 202,860 2, ,588 12,915 (12,915) - $ Liabilities and Net Assets Current Liabilities Accounts payable Due to the Alexandria Metropolitan Foundation Other current liabilities Security deposits Total Current Liabilities $ 11, , , Net Assets Unrestricted Total Liabilities and Net Assets $ The accompanying notes are an integral part ofthe financial statements.

6 Central Louisiana Business Incubator (A Program of the Alexandria Metropolitan Foundation) Statement of Activities Year Ended April 30, 2010 Exhibit B Unrestricted Revenues and Other Support Economic development grants $ 200,000 Rental income and related fees 123,748 Interest income 203 Other income 1,003 Total Revenues and Other Support Expenses Payroll and related expenses 45,643 Management fees 80,936 Estimated facility rental expense 70,000 Insurance 6,831 Legal and other professional 20,025 Repairs and maintenance 1,068 Office and administration Marketing 6,644 Travel 1,911 Provision for doubtful accounts 1,679 Utilities 60,076 Total Expenses 324,954 Change in Net Assets Net Assets, Beginning of Year - Net Assets, End of Year $ - The accompanying notes are an integral part ofthe financial statements.

7 Central Louisiana Business Incubator (A Program of the Alexandria Metropolitan Foundation) Statement of Cash Flows Year Ended April 30, 2010 Exhibit C Cash Flows from Operating Activities Change In net assets Adjustments to reconcile change in net assets to cash provided by operating activities: Provision for doubtful accounts Change in operating assets and liabilities: Accounts receivable Prepaid expenses Accounts payable Due to Alexandria Metropolitan Foundation Other current liabilities Security deposits Net Cash Provided by Operating Activities , ,936 (485) (2,858) Cash Flows from Investing Activities Cash Flows from Financing Activities Increase in Cash and Cash Equivalents Cash and Equivalents, Beginning of Year Cash and Equivalents, End of Year 97, ,860 Additional Required Disclosures 1. There was no interest paid during the fiscal year. 2. There were no income taxes paid during the fiscal year. 3. There were no material noncash investing or financing activities during the fiscal year that affected recognized assets or liabilities. The accompanying notes are an integral part ofthe financial statements.

8 ,t^*j»«mn «w fc^. Mjj4fcj->^'-^*"--*-T*:VJ-_I4_L''"**"^T'^-' '" ' ''"-_r_t'-^^' Central Louisiana Business Incubator (A Program ofthe Alexandria Metropolitan Foundation) April 30, 2010 Notes to Financial Statements 1. Nature of Activities and Significant Accounting Policies Nature of Activities The Central Louisiana Business Incubator (the Incubator) is a program of the Alexandria Metropolitan Foundation (the Foundation) created as an economic development tool designed to accelerate the growth and success of entrepreneurial companies through an array of business support resources and services. Major revenue sources are economic development grants from the City of Alexandria, Louisiana and rental income from tenant companies. The Incubator facility is owned by the City of Alexandria, Louisiana. The City provides the facility to the Incubator rent free as part of its economic development activities. The financial statements contained herein present only The Central Louisiana Business Incubator and are not intended to present fairly the financial position and results of operations of the Alexandria Metropolitan Foundation, in conformity with accounting principles generally accepted in the United States of America. Significant Accounting Policies The significant accounting policies followed are described below to enhance the usefulness of the financial statements to the reader. Basis of Accounting The Incubator utilizes the accrual basis of accounting. Under this method, revenues are recognized when earned and expenses are recorded at the time liabilities are incurred. Basis of Presentation The accompanying financial statements are prepared in conformity with accounting principles generally accepted in the United States of America as applied to nonprofit entities. The Financial Accounting Standards Board (FASB) is the accepted standard-setting body for establishing these accounting and financial reporting principles. In accordance with these principles, the Incubator is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. At year-end, the Incubator did not have any temporarily or permanently restricted net assets. Cash and Cash Equivalents Cash and cash equivalents include amounts in demand deposits as well as highly liquid investments with maturity dates of three months or less when acquired.

9 Central Louisiana Business Incubator (A Program ofthe Alexandria Metropolitan Foundation) April 30,2010 Notes to Financial Statements Recognition of Donor Restricted Contributions Support that is restricted by the donor is reported as an increase in unrestricted net assets if the restriction expires in the reporting period in which the support is recognized. All other donor-restricted support is reported as an increase in temporarily or permanently restricted net assets depending on the nature ofthe restriction. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets. When the Incubator has a choice of using restricted or unrestricted net assets, restricted net assets are used first. Accounts Receivable and Bad Debts Accounts receivable are shown net of the estimated allowance for doubtful amounts. Amounts due are recognized as bad debts when, in the opinion of management, they are considered doubtful of collection. Computer and Office Equipment Computer and office equipment is stated at cost. Donations of property, plant, and equipment are recorded as support at their estimated fair value. Such donations are reported as unrestricted support unless the donor has restricted the donated asset to a specific purpose. Assets donated with explicit restrictions regarding their use and contributions of cash that must be used to acquire property, plant, and equipment are reported as restricted support. Absent donor stipulations regarding how long those donated assets must be maintained, the Incubator reports expirations of donor restrictions when the donated or acquired assets are placed in service as instructed by the donor. The Incubator reclassifies temporarily restricted net assets to unrestricted net assets at that time. The Incubator did not receive any donated assets in the fiscal year. asset. Depreciation is computed using the straight-line method over the estimated.useful life of the Donated Facilities In accordance with the cooperative endeavor agreement (CEA) between the City of Alexandria, Louisiana and the Incubator, the city furnishes rent free to the Incubator the facility in which the Incubator is located. The CEA provides that the estimated annual rental value of the facility is $70,000 per annum. This amount is recognized as estimated facility rental expense and Included in economic development grants in the Statement of Activities. The CEA expired on April 30, Advertising Advertising costs are expensed the first time the advertising takes place.

10 Central Louisiana Business Incubator (A Program ofthe Alexandria Metropolitan Foundation) April 30, 2010 Notes to Financial Statements Income Taxes The Foundation and, therefore, the Incubator, is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code and from state income taxes under applicable Louisiana Revised Statutes. The Foundation is not a private foundation. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 2. Accounts Receivable Accounts receivable - tenants $ 4,603 Allowance for doubtful accounts (1.679) $ Computer and Office Equipment Computer equipment $ 11,242 Office equipment Total 12,915 Accumulated depreciation (12.915) Net $ There was no depreciation expense for the year ended April 30, Related Party Transactions As stated previously the Incubator is a program of the Alexandria Metropolitan Foundation. The Foundation charges the Incubator a management fee related to the operation of the Incubator. The Foundation charged the Incubator $80,936 for administration of the program for the year ended April 30, At year end, the Incubator owed the Foundation $186, Rental Income and Related Fees Rental income and related fees are rental charges for use of facility space and certain related charges. Remaining leases are on a month to month basis. There are no contingent rentals. 6. Concentration of Funding The Incubator receives a significant part of its funding from economic development grants from the City of Alexandria, Louisiana. 8

11 Central Louisiana Business Incubator (A Program ofthe Alexandria Metropolitan Foundation) April 30, 2010 Notes to Financial Statements 7. Significant Concentrations of Credit Risk The Incubator extends credit in the ordinary course of business to its tenants, which are located in Alexandria, Louisiana. 8. Uncertainty The cooperative endeavor agreement (CEA) between the City of Alexandria, Louisiana and Alexandria Metropolitan Foundation (d/b/a Central Louisiana Business Incubator) provides, in part, the Incubator may collect rent from the Incubator's tenants and retain a management fee equal to the net tenant rent proceeds actually collected which sums shall be retained by the Incubator subject to the accounting and budget provisions of the CEA. In accordance with management's understanding of the terms the CEA, management has recorded a liability of $186,538 due to the Alexandria Metropolitan Foundation The management of the City of Alexandria, Louisiana interprets the CEA differently and does not believe that any amount is due to the Foundation as management fees. The City believes that the amount represents unused operating advances from the City and, therefore, should be returned to the City. As of the date of issuance of this report, management has not been able to resolve the dispute with the City in regards to the amount of management fees due to the Foundation. 9. Subsequent Events Effective May 1, 2010, administration of the Incubator was transferred to the City of Alexandria, Louisiana.

12 Other Report and Information Required by Government Auditing Standards 10

13 PAYNE. MOORE& IIERRiNGTON, LLP MlflEDPyBLICfiCCOllllMS 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 The Board of Directors ofthe Alexandria Metropolitan Foundation and The Honorable Mayor and City Council ofthe City of Alexandria. Louisiana We have audited the basic financial statements of The Central Louisiana Business Incubator (CLBl) as of and for the year ended Ap'ril 30, and have issued our report thereon dated October 12, We did not express an opinion on the financial statements because we unable to determine the existence and valuation of the amount recorded on the books of the CLBl as due to the Alexandria Metropolitan Foundation and were unable to obtain written representations from management as required by generally accepted auditing standards. Except as discussed in the preceding sentence, 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 ofthe United States. Internal Control over Financial Reporting In planning and performing our audit, we considered the Incubator's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the CLBI's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of The Central Louisiana Business Incubator's internal control over financial reporting. 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 entity's financial statements will not be prevented, or detected and corrected on a timely basis. 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. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. HmillVillN[JlU.C.P.II. [I;H[SI Hitm l.pi IIDD[II[ t QVORU. U l lt[bi[c)ie.hoitllls.[.p.ii. MICHJIU A. JDIiaU. C.P.il. MHis I Mm. Ul CINDY I. HOMPymtS. U l [l[3dbaii II OUNH. C.P.A. 11 <» 1413 KEIRD QBm P.O. BOK I3?{I0 JtlEXANDRIA. LA/13I5-3?DI] PU: (310) lax: (310)

14 'if-i I I r-nr-art-.tir'--" " --"^"- P/ViTME. MOOr^E ik HERRINGTON. LLP The Board of Directors of the Alexandria Metropolitan Foundation and The Honorable Mayor and City Council ofthe City of Alexandria, Louisiana Compliance and Other Matters As part of obtaining reasonable assurance about whether The Central Louisiana Business Incubator's financial statements are free of 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 one instance of noncompliance or other matters that are required to be reported under Government Auditing Standards and which is described in the accompanying schedule of findings and questioned costs as Finding This report is intended solely for the information and use of the Board of Directors and management of The Central Louisiana Business Incubator, the City of Alexandria, Louisiana, and the Legislative Auditor of the State of Louisiana, It is not intended to be and should not be used by anyone other than these specified parties. However, under Louisiana Revised Statute 24:513. this report is in fact a public document. Certified Public Accountants October

15 The Central Louisiana Business Incubator Schedule of Findings and Responses Year Ended April 30, 2010 Part I - Summary of Auditor's Results Financial Statements Type of auditor's report issued: Internal control over financial reporting: Material weakness(es) identified? Significant deficiency(les) identified not considered to be material weaknesses? Noncompliance material to the financial statements noted? Federal Awards Prior Year Audit Findings Management's Corrective Action Plan Other Comments and Recommendations Part II - Findings Related to the Financial Statements Part III - Findings and Questioned Costs for Federal Awards Disclaimer Yes X No Yes X None reported X Yes No Not Applicable Not Applicable Attached Not Applicable Attached Not Applicable 13

16 rn Central Louisiana Business Incubator (A Program of the Alexandria Metropolitan Foundation) Schedule of Findings and Responses for the Year Ended April 30, 2010 Finding Failure to File Audit Report by Due Date Criteria: Louisiana Revised Statutes (LSA-RS) 24:513 provides in part that audits of governmental entities shall be completed within six (6) months of the close of the entity's fiscal year and shall be filed with the office of the Legislative Auditor within that time period. Condition: Time and other restraints prohibited completion of the audit report within the required due date of October 31, Due to the delay, an extension was requested and approved by the Louisiana Legislative Auditor to file the report as of January 31, Due to the continued dispute between the City of Alexandria and the Central Louisiana Business Incubator over the interpretation of the terms of the cooperative endeavor agreement between the two parties, the report was not issued until October 12, Management's Response: Manage did not provide a response to the finding. 14

HENDERSHOT, BURKHARDT & ASSOCIATES CERTIFIED PUBLIC ACCOUNTANTS

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