73^^'
The Louisiana Forestry Association
Alexandria, Louisiana
Financial Statements
December 3 L 2009
Under provisions of state law. this report IS a public document. Acopy ofthe 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 Legislative Auditor and, where appropriate, at the office of theparish clert< of court.
Release Date
Table of Contents
Independent Auditors'Report 1
Statement of Financial Position 3
Statement of Activities 4
Statement of Cash Flows 5
Notes to Financial Statements 6
Supplementary Data
Schedule of Revenues and Support 13
Schedule of Expenses 14
Report on Internal Control over Financial Reporting and on Comphance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards 17
Schedule of Findings and Responses 19
Managements Corrective Action Plan 24
< < Knight Masden
A Professional Accounting Corporation
K. Martin Masden, CPA
John E. Therlot II, CPA
Dona C. Manual, CPA
Coan I. Knight, Jr., CPA ,
Stephanie R. Lemoine, CPA
March 1,2010
Independent Anditors* Report
Board of Directors The Louisiana Forestry Association Alexandria, Louisiana
We have audited the accompanying statement of financial position of The Louisiana Forestry Association (a nonprofit organization) as of December 31, 2009, and the related statement of activities and cash flows for the year then ended. These financial statements are the responsibility ofthe Louisiana Forestry Association's management Our responsibihty is to express an opinion on these financial statements based on our audit. The prior year summarized comparative information has been derived fi-om Louisiana Forestry Association's 2008 financial statements and, in our report dated March 24, 2009 we expressed an unqualified opinion on those financial statements.
We conducted the audit in accordance with auditing standards generally accepted in the United States.of America and the standards apphcable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States of America, Those standards require that we plan and perform the audit to obtain reasonable assurance about whetha* the financial statements are free of materia] misstatement An audit includes examining, on a test basis, evidence supporting the ainounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statem^it presentation. We beheve that our audit provides a reasonable basis for our opinion.
In our opinion, the fmancial statements referred to above present fairly, in all material respects, the financial position of The Louisiana Forestry Association as of December 31, 2009, and the changes in net assets and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated March 1,2010 on our consideration ofthe Association's internal control over financial reporting and our tests of its comphance 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 infernal control over financial reporting and con^)liance and the results of that testing, and not to provide an opinion on the intemal control over financial
5615 J Jackson Street
Alexandria, Louisiana 71303
PH: 318-445-9334
FAX: 318-445-0996
www.knightmasden.com
reporting or on compliance. That report is an integral part of an audit preformed in accordance with Government Auditing Standards and should be considered in assessing the results of oxu* audit.
Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplementary data schedules are presented for the purpose of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied m the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole.
^ W KnightMasden Accoufitlnfl CoTpomBon
The Louisiana Forestry Association Statement of Financial Position
December 31,2009
Assets
Current Assets Cash and cash equivalents Certificates of deposit Accounts receivable - advertising Accounts receivable - other Prepaid expenses Accrued interest receivable
Total Current Assets
Property and Equipment, net
Other Assets Cash surrender value Marketable securities
Total Other Assete
Total Assets
2009
$ 242,926
310,153
7,656
48,870
242 1,142
610,989
212,802
152,283
99,732
252,015
$ 1,075,806
2008
Summarized
$
—
$_
Tot^i
263,535
296,203
7,899
38,228
3,781
2,999
612,645
234,039
104,243
76,456
180,699
1,027,383
Liabihties and Net Assets
Current Liabilities Accounts payable Accrued payroll taxes Payable to Children's Miracle Network Deferred revenues
Total Current Liabilities
$ 8,164 $
1,678
2,295
146,725
21,533
1,981
2.655
131,037
158,862 157,206
Net Assets Unrestricted Temporarily restricted
Total Net Assets
891,701 25,243
916,944
858,439
11,738
870,177
Total Liabilities and Net Assets $ 1,075,806 $ 1,027,383
The accompanying notes are an integral part ofthe financial statements.
The Louisiana Forestry Association Statement of Activities
For the Year Ended December 31,2009
evenues and Support Membership dues Annual meetmg Programs Programs - donated services Tree farm Public information Forests & People magazine Legislative Investment income Other revenue Sustained forestry initiative Logging council
Total Revenue and Support
Unrestncted
$ 383,086 118,095
8,334 -
18,072 -
50,579 -
62,573 4,032
118,165 44,815
807,751
2009 Temporarily Restricted
$ -
290,971 336,221
-5,106
-4,500
-7,674
--
644,472
Total
$ 383,086 118,095 299,305 336,221
18,072 5,106
50,579 4,500
62,573 11,706
118,165 44,815
1,452,223
2008 Summarized
Total
$ 424,982 147,051 160,727 74,758 22,199 4,861
58,475 4,210
(79,123) 8,050
116,603 43,708
S 986,501
Net Assets Released from Restrictions
Expense Program Services
Annual meeting Programs Tree farm Pubhc information Forests <& People magazine Legislative Sustained forestry initiative Logging council
Total Program Services Management, general and membership development
Total Expenses
630,967 (630,967)
140,849 644,245 51,881 47397 95,257 49,613
138,037 52,024
1,219,303 186,153
1.405,456
140,849 644,245 51,881 47,397 95,257 49,613
138,037 52,024
- 1,219,303 186,153
- 1,405,456
139,795 263,780
52,689 47,901 88,447 43,684
148,058 37,866
822,220 205,800
1,028,020
Changes in Net Assets
Net Assets, Beginning of Year
33,262 13,505 46,767 (41,519)
858,439 11,738 870,177 911,696
Net Assets, ̂ d of Year $ 891,701 $ 25,243 $ 916,944 $ 870,177
The accompanying notes are an integral part ofthe fmancial statements.
The Louisiana Forestry Association Statement of Cash Flows
For the Year Ended December 31,2009
Cash flows from operating activities Change m net assets Adjustments to reconcile change in net assets to
net cash from operating activities: Depreciation expense Net unreahzed (gain) loss on investments Decrease in accoimts receivable - advertising Increase in accounts receivable - other Decrease (increase) in prepaid expenses Decrease in accrued interest receivable Increase (decrease) in accounts payable Decrease in accrued payroll taxes Increase (decrease) in payable to Children's Miracle Network Increase in deferred revenue
Net cash provided by operating activities
2008 Summarized
2009 Total
$ 46,767 $ (41,519)
25,090
(54,218)
243 (10,642)
3,539
1,857
(13,369)
(303)
(360)
15,688
22,037
99,812
2,917
(29,430)
(3,581)
2,032
6,193
(2,162)
1,800
3,681
14,292 61,780
Cash flows from investing activities Purchase of plant and equipment Purchase of certificates of deposit Purchase of investments
Net cash used in investing activities
(3,853) (58,556) (13,950) (90,185) (17,098) (28,792)
(34,901) (177,533)
Net decrease in cash and cash equivalents (20,609) (115,753)
Cash and cash equivalents at beginning of year: 263,535 379,288
Cash and cash equivalents at end of year $ 242,926 $ 263,535
Si^)plemental disclosure of cash paid during the year: Interest
Income Tax ^ i
The accompanying notes are an integral part of the financial statements.
The Louisiana Forestry Association Notes to Financial Statements
December 31,2009
Note 1 - Summary of Significant Accounting Policies
Organization The Louisiana Forestry Association (the Association) is a nonprofit organization. Its purpose is to
advance the cause of forestry and the wood products industry in Louisiana. One ofthe Association's major programs is the implementation of Louisiana's Sustainable Forestry Initiative developed to meet the needs ofthe present forestry industry without compromising the fixture ofthe industry. Financial Statement Presentation
The Association is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted, temporarily restricted and permanently restricted. Temporarily restricted net assets are reclassified to unrestricted net assets upon satisfaction ofthe time or purpose restrictions.
Revenue and Expense Recognition Program service fees and unrestricted revenues are recorded when earned and expenses are
recorded when incurred. Unrestricted contributions and contributions restricted by donor for particular operating purposes are deemed to be eamed and reported as support when received. Grant revenues are reported as support when awarded in the case of non-reimbursable grants. For reimbursable grants, revenues are reported as support when the terms ofthe grant have been met.
Dues are assessed on a calendar year basis. Dues received for fiiture years are reported as deferred revenues. Revenues of Forests & People magazine are from non-member subscriptions and advertising. Advertising revenues are recorded when earned. Members automatically receive a magazine subscription but none ofthe m^nbership dues are allocated to magazine revenues for financial statement purposes.
Estimates The preparation of financial statements in conformity with generally accepted accounting principles
require management to make estimates and assumptions that affect certain rq)orted amounts and disclosures. Accordingly, actual results could differ from those estimates.
Propertv and Depreciation Property, equipment, major rq)lacements and repairs are c^italized at cost. Repairs, maintenance
and minor replacements are charged to operations as incurred. Depreciation is provided over the estimated usefiil hves ofthe respective assets on a straight-line basis. Contributed assets are recorded at fan: value.
Accounts Receivable Based on past experience, the management of the Association considers all accounts receivable as
collectible; therefore, no allowance for doubtful accoimts has been estabUshed. Receivables are considered past due after thirty days. Infi^ueaifly, a receivable does become uncollectible and it is written off at that time. Accounts receivable are recorded net of any apphcable discounts.
The Louisiana Forestry Association Notes to Financial Statements
December 31,2009
Note 1 - Summary of Significant Accounting Policies, continued
Income Taxes The Association is a 501(c)(6) nonprofit organization and does not incur federal or state income
taxes, except for any unrelated business income which would occur as a result of Forests & People magazine operations. For 2009, a small tax loss was incurred on the magazine. The Association does incur a proxy tax on any quahfying Section 162(e) lobbying expenses.
Cash and Cash Equivalents The Association considers all highly liquid investments available for current use with an initial
maturity of less than three months to be cash equivalents.
Investments The Association currently has two types of investments; Certificates of deposit and marketable
securities. The certificates of deposit are held at various banks, with an initial maturity of three to twelve months.
The marketable securities, with readily determinable fair values and all investments in debt securities, are valued at their feir values in the statement of financial position. Unreahzed gains and losses are included m the change in net assets. The cost basis of maricetable securities is reflected in Note 11, There are no known material unrecorded permanent maricet value declines in marketable securities. The poUcy set by the board of directors is to invest aU money received for fifetime members into maiketable securities.
Note 2 - Property and Equipment
Description
Land Building Building improvements Furniture and equipment Automobiles Total
Life Cost
$11,720 40yrs 41,717 10-39 yrs 181,389 5-10 yrs 92,089 5vrs 30,413
$357,321
Accumulated Depreciation
$ 41,717 42,754 48,650 11,405
$144,526
Net
$11,720 -
138,635 43,439 19,008
$212,802
Depreciation expense for the year was $25,090.
The Louisiana Forestry Association Notes to Financial Statements
December 31,2009
Note 3 - Deferred Revenues
This amount represents membership dues and other revenues collected in advance for calendar year 2009. The total deferral will be taken into income in 2010.
Type of Revalue Amount
Membership dues $133,916 Subscription 25 Advertising 559 Sustahied Forestry Initiative 500 Logging Council dues 1L725
Total Deferred Revenues $146.725
Note 4 - Cash and Cash Equivalents
The cash and cash equivalents as of December 31,2009 are as follows:
Issuer and Tvpe of Account Amount Interest Rate
Cash on Hand $ 100 Red River Bank - Checking - Logging Council 99,427 Red River Bank - Checking - Operating 19,320 Red River Bank - Sweep - Operating 123,940 Earnings Subject to Market AG Edwards - Money Market 139 Earnings Subject to Market
Total Cash $242.926
Cash and cash equivalent balances include monies designated to specific programs controlled by committees estabhshed by the Board of Directors.
Note 5 - Contributed Services
Substantial numbers of unpaid volunteers have made significant contributions of their time to the Association. The value of this contributed time is not reflected in these statements since it is not susceptible to objective measurement or valuation.
In connection with Project Leammg Tree and Wildland Urban Interface Project, the Louisiana Department of Agriculture and Forestry provided in kind services valued at $336,221. This is reflected in the statement of activities as donated services. The corresponding expenses are reflected in the statement of activities as program services.
The Louisiana Forestry Association Notes to Financial Statements
December 31,2009
Note 6 - Related Party
The Association and the Louisiana Forestry Foundation have many of the same Board Members. Both organizations are involved in the Forestry Industry. In addition, the Association and the Southern Forest Heritage Museum and Research Center share several Board Members and the Association was instrumental in estabhshing the Museum, The Association continues to provide administrative support to both the Museum and the Foundation.
Note 7 - Pension Plan
The Association has adopted a simpUfied employee pension plan (profit-sharing) for all employees with more than one year of service. The Association is under no obligation to make annual contributions to the plan. In 2009, the Association made voluntary contributions of $31,944 to tiie plan, which is included in fiinge benefit expense.
Note 8 - Deferred Compensation Program
The Association has adopted an Executive Retention Program in which the Executive Director participates. At the discretion ofthe Board of Directors, the Association may make a contribution on behalf ofthe OTiployee. In 2009, tiie Association made a $12,000 contribution to a hfe insurance policy for the Executive Director. The Louisiana Forestry Association is the beneficiary. It is the intention ofthe Board of Directors that the cash value of this policy be transferred to the Executive Director in the event of his retirement or the proceeds to his spouse in the event of his death. The yearly contribution is included in the cash surrender value of this policy which is $152,283 and is reflected in other assets. In 2009, the cash surrender value increased by $36,040, excluding the $12,000 payment. This is recorded as an unrealized gain on investments.
Note 9 - Concentration of Risk
Financial instruments that potentially subject the Association to credit risk include investments in Money Market and mutual funds. Future changes in economic conditions may make the investments less valuable.
The Association maintains its cash and cash equivalents and certificates of deposit in several local banks. These balances are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. Cash and cash equivalents and certificates of deposit balances at December 31, 2009 exceeded FDIC insurance at one institution by $3,200. However, as of the report date, the financial mstitution was m operation and the FDIC insurance had not been utiHzed.
The Association's primary source ofincome is fix)m the forestry, timber and logging industries. It is dependent on sustained activity in these industries. In 2009, nineteen member companies made up 45.4% of total dues revenues
The Louisiana Forestry Association Notes to Financial Statements
December 31,2009
Note 10 - Restricted Net Assets
Temporarily restricted net assets consist of $25,243 of donor restricted contributions which reflect $6,761 for Teachers Tour and $18,482 for PLT grants from Am^can Forest Foundation, The contributions were not spent and are temporarily restricted for the future. As of December 31, 2009 the Association has no permanently restricted net assets.
In addition, the Board of Directors does voluntarily set aside funds for future equipment replacement and any surplus monies eamed by Sustained Forestry Initiative, Project Learning Tree, and the Logging Council. As of December 31, 2009 the remaining surplus for equipment replacement is $6,185, SFI surplus is $63,289, PLT is $55,106 and Loggmg Council is $114,427. The PLT amount includes tiie temporarily restricted amount of $25,243 and the remaining funds are part of unrestricted net assets.
Note 11 - Investments
Certificates of Deposit The Certificates of Deposit held by the Association at December 31,2009 are as follows:
Issuer
Wells Fargo Union Bank Union Bank Chase Sabine State Bank Capital One Bank Capital One Bank
Amount Interest Rate MaturitvDate
$ 27,000 39,493 55,620 55,588 15,549 49,440 67,463
1.10% 2.00% 2.00%
.20% 1.70% 1.00% .80%
10/29/2010 06/10/2010 12/09/2010 08/14/2010 01/22/2010 05/22/2010 09/15/2010
Total Certificates of Deposit $310.153
Marketable Securities Investments held by the Association at December 31,2009 are as follows:
Mutual Funds Cost JP Morgan Portfoho Holdings $ 63,320 Legg Mason Value Trust Fund 28,307 Vanguard 500 Mdex Fund 25,990
Totals $117.617
Market Value $60,962
16,577 22,193
$99.732
JPMorgan Portfoho Holdings, Legg Mason Value Trust Fund and Vanguard 500 Index Fund are recorded at market value which decreased $18,178 in 2009 excluding purchases and the reinvested dividends. This is recorded as unreahzed gain on investments.
10
The Louisiana Forestry Association Notes to Financial Statements
December 31,2009
Note 11 - Investments, continued
Marketable Securities, continued Total portfoho income for 2009 consists ofthe following:
Interest income $ 6,257 Dividend distributions from mutual funds 2,098 Unreahzed gain on investments 18,178 Unrealized gain on cash surrender value 36.040
Presented in the Statement of Activities as: Investment income and unrealized gains $62^573
Note 12 - Subsequent Events
The Louisiana Forestry Associations has no material subsequent events that would require disclosure. Subsequent events have been evaluated through March 24,2010.
Note 13 - Fair Value Measurements
Statement of Financial Accounting Standards No. 157, 'Tair Value Measurements" (FAS 157) requires disclosures for financial assets and habilities that are re-measured at fair value at lease annually. FAS 157 estabUshes a three-tier fair value hierarchy, which prioritizes the inputs used m measuring feir value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets: Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirecfly observable: and Level 3, defined as unobservable inputs in which Httle or no market data exists, therefore requiring an entity to develop its own assumptions. All uivestments are valued using quoted market prices (referred to as Level 1).
11
SUPPLEMENTARY DATA
12
The Louisiana Forestry Association Schedule of Revenues and Support
For the Year Ended December 31,2009
Membership dues
Annual meeting
Programs Project Learning Tree and Teachers Tour Donated services, materials and other Lower MS Watershed Project Grant WFUI Grant Forest Awareness and other
Total
Tree farm
Pubhc information
Forests & People magazine Non-member subscriptions Advertising income
Total
Legislative
Other Revenue and Support Investment income Unreahzed gain (loss) on investment Executive meetings Other revenue
Total
Sustained Forestry Initiative
Logging Council
Unrestricted
$ 383,086
118,095
5,932
2,402
8,334
18,072
-
728 49,851
50,579
-
8,355 54,218
4,032
66fi05
118,165
44,815
20Q9
Temporarily Restricted
$ - $
-
57,825 336,221 25,085
204,961 3,100
627,192
-
5,106
-
-
4,500
7,674
7,674
-
_
Total
383,086
118,095
63,757 336,221 25,085
204,961 5,502
635,526
18,072
5,106
728 49,851
50,579
4,500
8,355 54,218 7,674 4,032
74,279
118,165
44,815
2008
Summarized Total
$ 424,982
147,051
47,664 74,758 26,909 80,873 5,281
235,485
22,199
4,861
924 57,551
58,475
4,210
20,689 (99,812)
8,025 25
(71,073)
116,603
43,708
Total Revenues and Support $ 807,751 $ 644,472 $ 1,452,223 $ 986,501
13
The Louisiana Forestry Association Schedule of Expenses
For the Year Ended December 31,2009
Armual Meeting Annual meeting expenses Fringe benefits Payroll taxes Postage Salaries Travel
Total
2009
$ 87,766 8,498 2,917 2,878
38,010 780
2008 Summarized
$
Total
90,899 6,519 2,763 3,336
35,503 775
140,849 139,795
Programs Fringe benefits Lower MS Watershed Project WFUI Grant Expenses Payroll taxes Postage Project Learning Tree and Teachers Tour Salaries Special projects & Forest Awareness Week Travel
Total
7,436 22,585
509,644 2,917
600 60,454 35,086
5,523 -
6,948 24,418
121,597 2,551
936 67,000 32,772 7,087
471
644,245 263,780
Tree Farm Fringe benefits Payroll taxes Postage Salaries Telephone Travel Tree farm expenses
Total
4,249 2,244
700 32,162
440 2.508 9,578
3,970 2,338
700 30,041
420 1,785
13,435
51,881 52,689
Public Information Fringe benefits Payroll taxes Postage Printing and photography Public information Salaries Travel
Total
4,912 1,439 8,533 3,722 4,927
23,391 473
4,721 1,561 9,910 4,906 3,952
21,848 1,003
47,397 47,901
14
1,212 7,130 2,231 2,466
10,134 30,733 39,717
440 1,194
-6,452 1,922 2,551
10,875 32,096 32,772
580 1,199
The Louisiana Forestry Association Schedule of Expenses
For the Year Ended December 31,2009
Forests & People Magazine Equipment Rental Fringe benefits Miscellaneous Payroll taxes Postage Printing and photography Salaries Telephone Travel
Total 95,257 88,447
Legislative Expenses Education and information Fringe benefits Payroll taxes Postage Salaries Travel Telephone
Total 49,613 43,684
Sustained Forestry Initiative Computer and website expense Equipment maintenance Fringe benefits Meeting OfiHce suppUes and postage Outreach Payroll taxes Program and materials Salaries Telephone Travel
Total 138,037 148,058
7,559 7,643 2,261
400 29,238
1,776 736
4,304 6,948 2,125
200 27,310
1,896 901
286 1,905 2,995
70 4,253
33,325 3,700
33,087 50,922
2,075 5,419
3,083 4,920 2,812
985 3,822
37,578 3,708
28,665 51,890
1,762 8,833
15
The Louisiaim Forestry Association Schedule of Expenses
For the Year Ended December 31,2009
Logging Council Area concept Awards and memorials Equipment maintenance Meetings Miscellaneous Office supplies aiid dues Postage Printing and photography Special projects and MLC program Telephone Travel
Total
465 474 348
1,104 4,425 4,916 3,349
12,788 12,511
982 10,662
-1,046
859 705
4,783 4,729 7,451
11,057 2,587
901 3,748
52,024 37,866
Management, General and Membership Development Area concept Awards and memorials Bad debts Bank and credit card charges Computer expenses Depreciation Dues and subscriptions Equipment rent Executive and other meetings Fringe benefits Insurance Janitor and lawn maintenance Maintenance and repairs Miscellaneous Office supplies Payroll taxes Postage Printing and photography Professional services Salaries Telephone Training and professional development Travel and entertainment Utihties
Total
Total Expenses
4,012 1,836
429 4,506 3,915
25,090 4,357 2,073
13,267 12,720 9,741 5,917 1,390 2,372 7,909 3,289 9,513
409 6,956
44,017 1,771
-15,129 5,535
186,153
$1,405,456
6,237 3,096
432 5,112 5,193
22,037 4,705 5,461
15,152 8,941
10,440 4,080
186 6,513 9,437 3,388 6,527
409 15,970 43,983
1,522 240
20,362 6,377
205,800
$ 1,028,020
16
< <
K. Martin Masden, CPA John E. Thertot II, CPA Dona C. Manuel, CPA
A Professional Accounting Corporation ^
KnightMasden
Coan I. Knight, Jr., CPA . Stephanie R. Lemoine, CPA
Report on Intemal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards
March 1,2010
Louisiana Forestry Association P.O. Box 5067 Alexandria, LA 71301
To the Board of Directors and Buck Vandersteen, Executive Director of Louisiana Forestry Association
We have audited the basic financial statements of Louisiana Forestry Association as of and for the year ended December 31, 2009 and have issued our report thereon dated March I, 2010. We conducted our audit in accordance with auditing standards generally accepted in the United Sates of America and the standards applicable to financial audits contained in Government Auditing Standards, issue by the Comptroller General of the United States.
Intemal Control Over Financial Reporting
In planning and performing our audit, we consid«^d Louisiana Forestry Association's intemal control over financial reporting (intemal control) as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial istatements, but not for the purpose of expressing an opinion on the effectiveness of the Organization's intemal control. Accordingly, we do not express an opinion on the effectiveness of the Organization's intemal control over financial reporting.
Our consideration of intemal control over financial reporting was for the Umited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in intemal control over financial reporting that might be significant deficiencies or material weaknesses. However, as discussed below, we identified certain deficiencies in intemal control over fmancial reporting that we consider to be significant deficiencies.
A control deficiency 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 misstatements on a timely basis. A significant deficiency is a control deficiency or combination of control deficiencies, that adversely affects the organization's ahihty to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the organization's financial statements that is more than inconsequential will not he prevented or detected by the organization's intemal control. We consider the deficiencies described in the accompanying schedule of findings and responses to be significant deficiencies in intemal control over fmancial reporting.
B615 J Jackson Street Alexandria, Louisiana 71303 PH: 316-445-9334 FAX: 318-445-0996
17 www.knlghtnnasden.com
A material weakness is significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the entity's intemal control.
Our consideration of the intemal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in intemal control that might be significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses. However, we believe that none of the significant deficiencies described above is a material weakness.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Louisiana Forestry Association's basic 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 of compliance with those provisions was not an objective of our audit and, accordingly, we do not express such and opinion. The results of our tests disclosed no instances of noncon^liance or other matters that are required to be reported under Government Auditing Standards.
This report is intended solely for the information and use of management, the Board of Directors, others within the entity, the Legislative Auditor, and is not intended to be and should not be used by anyone other than these specified parties. Under Louisiana statutes, this report is distributed by the Legislative Auditor a public document.
^ ^ KnightMasden 18 . . . . .y, , . . . I Accounting Corporation
The Louisiana Forestry Association Schedule of Findings and Responses
For file Year Ended December 31,2009
Summary of Auditors' Results
1. The auditors' report expresses an unqualified opinion on the financial statements of The Louisiana Forestry Association.
2. Five control deficiencies disclosed during the audit ofthe financial statements are reported in the 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. None of these conditions are considered material weaknesses.
3. No instances of noncompliance material to the financial statements of The Louisiana Forestry Association, which would be required to be reported in accordance with Government Auditing Standards^ were disclosed during the audit.
19
The Louisiana Forestry Association Schedule of Findings and Responses
For the Year Ended December 31,2009
B. Findings - Financial Statement Audit
INTERNAL CONTROL FINDINGS
2009-01 Grant Activity
Condition: The year end financial statements for audit are not prepared in accordance with generally accepted accounting principles in respect to the recording of grants.
Criteria:
The year end fmancial statements for audit should record ail non - reimbursable grants when awarded m accordance with generally accqjted accounting principles.
Effect:
Financial statements used m management flmctions and decisions do not properly reflect the financial position ofthe Association in accordance with generally accepted accounting principles.
Cause:
Entries necessary for financial statements to be presented in accordance with generally accepted accoimting principles are not being posted. Specifically entries related to record all non - reimbursable grants not being made.
Recommendation:
The Association should have a quahfied staff member record all grants in according to generally accepted accounting principles.
Response:
See Management's Corrective Action Plan for their response.
2009-02 Recording of Temporarilv Restricted Net Assets
Condition:
The Association does not have procedures in place for recording Temporarily Restricted Net Assets.
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The Louisiana Forestry Association Schedule of Findings and Responses
For die Year Ended December 31,2009
Criteria:
The Association must monitor, track and record restrictions placed on funds by donors and grantors.
Effect:
The Association does not record the temporarily restricted funds that are remaining for certain purposes as required by donors or grantors.
Cause:
Procedures for recording restrictions are not in place.
Recommendation:
Develop a method for recording restrictions and report to the Board on a regular basis.
Response:
See Management's Corrective Action Plan for their response.
2009-03 Segregation of Duties
Condition:
Most accounting functions are being performed in one position.
Criteria:
Organizations should create and implement controls including separation of duties that will allow for review and monitoring by someone other than the person who performed the work.
Effect:
Financial functions and reporting lack controls that could cause inaccuracies to go undetected.
Cause:
There is only one employee who essentially does most ofthe accounting functions.
21
The Louisiana Forestry Association Schedule of Findings and Responses
For tiie Year Ended December 31, 2009
Recommendation:
The Association should explore ways to separated the accounting duties and strengthen controls.
Response:
See Management's Corrective Action Plan for their response.
2009-04 Compensated Absences Not Recorded
Condition:
Compensated absences are not being recorded according to generally accepted accounting principles.
Criteria:
There should be a set of well written procedures for the vacation and sick pay policies ofthe Association.
Effect:
Compensated absences are not being recorded due to a lack of a detailed poticy.
Cause:
The Association does not have a detailed pohcy that addresses the payment of any unused vacation time in the case of a termination or resignation nor does it address sick leave for employees.
Recommendation:
The Association should rewrite their compensated absences policy and have it approved by the Board of Directors.
Response:
See Management's Corrective Action Plan for their response.
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The Louisiana Forestry Association Schedule of Findings and Responses
For die Year Ended December 31,2009
2009-05 Control over Cash Receipts and Deposits
Condition:
Deposits are bemg made only a few times a month. In addition, policies to insure better controls over cash receipts are not being followed on all deposits.
Criteria:
A large volume of receipts are collected by the Association on a monthly basis. PoUcies have been instituted by the Association to insure better controls over cash; however, these policies are not always followed and documented.
Effect:
Control over cash not complete.
Cause:
Procedures set up to improve controls not always being followed.
Recommendation:
The Association should make deposits more frequently. In addition, policies instituted to hnprove control over receipts should be carried through all on deposits.
Response:
See Management's Corrective Action Plan for their response.
23
The Louisiana Forestry Association Management's Corrective Action Plan
For the Year Ended December 31,2009
2009-01 Grant Activity
Recommendation:
The Association should have a qualified staff member record all grants in according to generally accepted accounting principles.
Response:
The accountant will carefully review all grants awarded and record m accordance with generally accepted accounting principles.
Implementation Date:
January 1,2010
Contact:
Charles Vandersteen, Executive Du-ector (318) 443-2558
2009-02 Recording of Temporarilv Restricted Net Assets
Recommendation:
Develop a method for recording restrictions and report to the Board on a regular basis.
Response:
The accountant will try to develop a way to report the temporarily restricted assets to the Board using the sofiware they currently have.
Implementation Date:
June 1,2010
Contact:
Charles Vandersteen, Executive Durector (318) 443-2558
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The Louisiana Forestry Association Management's Corrective Action Plan
For die Year Ended December 31, 2009
2009-3 Segregation of Duties:
Recommendation:
The Association should explore ways to separated the accounting duties and strengthen controls.
Response:
Management has developed a policy for one employee to open all the mail and make a Hsting of aU large checks. Another employee will make the deposits and record in tiie general ledger. Procedures are m place to compare the deposits made to the general ledger postmgs to the original list to insure all large checks are accounted for.
Implementation Date:
April 1,2009
Contact:
Charles Vanderteen, Executive Director (318) 443-2558
2009-4 Compensated Absences Not Recorded
Recommendation:
The Association should rewrite their compensated absences pohcy and have it approved by the Board of Directors.
Response:
The Executive Director has rewritten the compensated absences pohcy and is m the process of havmg it approved by the Board of Directors.
Implementation Date:
April 1,2010
Contact:
Charles Vandersteen, Executive Dkector (318) 443-2558
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The Louisiana Forestry Association Management's Corrective Action Plan
For the Year Ended December 3 L 2009
2009-5 Control over Cash Receipts and Deposits
Recommendation:
The Association should make deposits more frequently. In addition, poficies instituted to improve control over receipts should be carried through all on deposits.
Response:
The accountant will try to do this more effectively.
Implementation Date:
April I, 2010
Contact:
Buck Vandersteen, Executive Director (318) 443-2558
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