Alliance ForEducation. , Inc. Shreveport, louisiana. FinancialStatements W ith Audit ors'report. Asofand forthe YearEnded J une 30,2001

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1 Alliance ForEducation, Inc. Shreveport, louisiana FinancialStatements W ith Audit ors'report Asofand forthe YearEnded J une 30,2001 Underprovisions ofstate law,this reportis a public docum ent.a copy ofthe reportha.~bc,~n subm itted t~ the entity and otherappropriate public oficial~;.-[he report is available forpl~hiic inspection atthe Baton Rouge office ofthe Legislative Auditorand,w here appropriate,att.he office ofthe parish clerk ofcou~ R elease D ate dan g 70g~

2 A lianceforeducation,inc. TableofContents P.~ageNo. ndependentauditars'report 1 FinancialStatements StatementsofFinancialPosition Statements ofactivities FortheYearEnded June 30,2001 StatementsofCash Flow s Notesto FinancialStatements Reportsin Accordance W ith GevernmentAuditing Standards ReportonComplianceandonInternalControloverFinancialReporting Based onan AuditofFinancialStatementsPerformed inaccordance WithGovernmentAuditing Standards Summary Schedule ofauditfindings ForLouisiana Legislative Auditor

3 C O O K & M O R EH A R T Cerlified PublicAccountants 215 AW N AVENUE ~SHREVEPORT.LOUISIANA 71107~P.O.BOX ~SI[REVEPORT,LOUISIANA TRAVIS IIbtOREIIART,CPA A EDW ARD BALL,CPA RAYEBURN G COOK (RE] M I1ON E KILLEY (RET) VICKIE D NOBLE.CPA TED D GREER,CPA C BRYAN COYLE.CPA M EigIBER AEIEP-.ICAN INSTITU1 E CERTIFIED PUBLIC ACCOUNTAN]S SOCIETY OF LOUISIANA CERTIFIED public ACCOUNTANTS ndeoendeotauditors'read TotheBoardofDirectors A lianceforeducation,inc W ehaveauditedtheaccompanyingstatementoffinancialpositionofa lianceforeducation,inc.,asofjune30,2001, andtherelatedstatementsofactivitiesandcashflowsfortheyearthenended.thesefinancialstatementsarethe responsibilityofthea lianceforeducation,inc.'smanagement.ourresponsibilityistoexpressanopiniononthese financialstatementsbased onouraudits. W econductedourauditsinaccordancewithauditingstandardsgeneraly acceptedintheunitedstatesofamerica and thestandardsapplicableto financialauditscontained in GovernmentAuditing Standards,issued by thecomptroler Generalofthe United States.Thosestandardsrequirethatwe plan and perform the auditsto obtain reasonable assuranceaboutwhetherthefinancialstatementsarefreeofmaterialmisstatement.anauditincludesexamining, on a testbasis,evidence supporting the amountsand disclosuresin thefinancialstatements.an auditalso includes assessing the accounting principlesused and significantestimatesm ade by management,aswelasevaluating the overalfinancialstatementpresentation.w e believe thatouraudits provide areasonablebasisforouropinion. Inouropinion,thefinancialstatementsreferredtointhefirstparagraphpresentfairly,inalmaterialrespects,the financialpositionofa lianceforeducation,inc.,asofjune30,2001,andthechangesinitsnetassetsanditscash flowsfortheyearthenendedinconformitywithaccountingprinciplesgeneralyacceptedintheunitedstatesof Ameriea. InaccordancewithGovernmentAuditing Standards,wehavealsoissuedareportdatedDecember4,2001onour considerationofa lianceforeducation,inc.'sinternalcontroloverfinancialreportingandourtestsofitscompliance withcertainprovisionsoflaws,regulations,contractsandgrants.thatreportisanintegralpartofanauditperformed inaccordancewithgovernmentauditing Standardsandshouldbereadinconjunctionwiththisreportinconsideringthe results ofouraudit. Cook& Morehart Certified PublicAccountants December4,2001

4 AlianceForEducation,Inc. StatementofFinancialPosition June30,2001 Assets Currentassets Cash Furnitureandequipment: Officefurnitureandequipment Accumulated depreciation Netfurnitureandequipment $ ,574 (9,446) TotalAssets $ LiabilitiesandNetAssets Currentliabilities: Accountspayable Netassets: Unrestricted: Operating Fixedassets Temporarily restricted Totalnetassets ,695 11,128 4, TotalLiabilitiesandNetAssets Theaccompanyingnotesareanintegralpartofthefinancialstatements

5 A lianceforeducation,inc. StatementofActivities FortheYearEndedJune30,2001 Temporarily Restricted Tota RevenuesendOtherSupport: Grants Contributions Miscelaneous Interestincome Totalrevenuesandothersupport 155, ,702 1,895 9, , $ 155, ,099 1,895 9,139 Expenses: Program services: Teacherminigrants Identify futureprograms Afterschoolacademy Leadership institute Goodneighborproject Pathtoexcelence W eatherwatch Totalprogram services 149, , , ,950 51, , , , , ,950 51, ,571 Supportingservices: Develepmeni-fundraising Generaloperations Totalsupportingservices 91,936 32, , Totalexpenses 567, ,023 Changein netassets 78,904 4,397 83,301 Netassetsasofbeginningofyear 84,116 84,116 Transferredassetsmerged 78, Netassetsasofend ofyear $ 241,823 $ 4,397 $ 246,220 Theaccompanyingnotesareanintegralpartofthefinancialstatements.

6 A lianceforeducation,inc. StatementsofCashFlows FortheYearsEndedJune30, Changeinnetassets Adjustmentstoreconcilechargeinnetassetsto netcashprovidedbyoperatingactivities: Depreciation Increaseinoperatingliabilities: Accountspayable Netcashprovidedby operatingactivities $ 83,301 3,086 3,519 89,906 nvesting Activities Cashfrom mergedentity Paymentsforpropertyandequipment Netcash provided by in investing activities Netincreaseincashandcashequivalents Cashasofbeginningofyear 69,966 (5,566) ,306 84,305 Cashasofendof'year The accompanyingnotesare an integralpartofthefinancialstatements. 4

7 A liance ForEducation,Inc. NotestoFinancialStatements June30,2001 (1) SummaryofSignificantAccountingPolicies A. NatureofActivities AlianceForEducation,Inc.,(Aliance),isaprivatenonprofitorganizationincorporatedunderthelaws ofthestateoflouisiana.themissionandpurposeofalianceistoimprovethequalityofeducation in Louisiana public schools by marshaling independent,private donations and resources ofthe community,andby facilitatingthecoordinationofprivateandpublicresources, AnagreementofmergerwasenteredintobetweentheAlianceForEducation,Inc.andanothernonprofitorganizationCaddoPublicEducationFoundation.TheBoardsofbothnon-profitorganizations agreedtobemergedwitha liancebeingthesurvivingnon-profitcorporation.theeffectivedateof themergerwasaugust,2000. B. BasisofAccounting ThefinancialstatementsofA liancehavebeenpreparedantheaccrualbasisofaccounting C. BasisofPresentation Financialstatementpresentationfolowstherecommendationsofthe FinancialAccountingStandards BoardinitsStatementofFinancialAccountingStandards(SFAS)No.117 FinancialStatementsofNotfor-Profit Organizations. UnderSFAS No.117,the Organization is required to reportinformation regarding itsfinancialposition and activitiesaccordingto three classesofnetassets:unrestricted net assets,temporarily restrictednetassets,andpermanentlyrestrictednetassets. D. IncomeTaxStatus A lianceisanon-profitcorporationandisexemptfrom stateandfederalincometaxesundersection501 (c)(3)oftheinternalrevenuecode. However,incomefrom certainactivitiesnotdirectlyrelatedto Aliance'stax-exemptpurposeissubjecttotaxationasunrelatedbusinessincome.Aliancehadnosuch incomefartheseauditperiods. UseofEstimates Managementusesestimatesendassumptionsinpreparingfinancialstatements. Thoseestimatesand assumptionsaffectthereported amountsofassetsand liabilities,thedisclosureofcontingentassetsand liabilitiesandthereportedrevenuesandexpenses.actualresultscoulddifferfrom thoseestimates. (Continued) 5

8 A liance ForEducation,Inc. NotestoFinancialStatements June30,2001 (Continued) F. CashandCashEquivalents ForpurposesoftheStatementofCashFlows,A lianceconsidersalunrestrictedhighlyliquidinvestments withaninitialmaturityofthreemonthsorlesstobecashequivalents. G. OfficeFurnitureandEquipment Officefurnitureandequipmentarecarriedatcostor,ifdonated,attheapproximatefairvalueatthedate ofdonation. Depreciationiscomputedusingthestraight-linemethodovertheestimatedusefullifeof eachasset.depreciationexpensefortheyearendedjune30,2001was$3,086. H. RevenueandSupport Contributionsreceived are recordedasunrestricted,temporarily restricted,orpermanently restricted support,dependingontheexistenceand/ornatureofany donorrestrictions.contractualgrantrevenue isreportedasunrestrictedsupportduetotherestrictionsplacedonthosefundsby thefundingsources beingmetinthesamereportingperiodastherevenueisearned. Supportthatis restricted by the donoris reported as an increase in unrestricted netassets ifthe restrictionexpiresinthereportingperiod inwhichthesupportisrecognized.alotherdonor-restricted supportisreportedasanincreaseintemporarily orpermanently restrictednetassets,dependingonthe natureoftherestriction.whenarestrictionexpires(thatis,whenastipulatedtimerestrictionendsor purposerestrictionisaccomplished),temporarilyrestrictednetassetsarereclassifiedtounrestrictednet assetsand reported in the statementofactivitiesasnetassets releasedfrom restrictions. I. RetirementObligations TheemployeesofA liancearemembersofthesocialsecurity System. Therearenootherretirement plansavailablethrougha liance. J. FunclionalA locationofexpenses Thecostsofprovidingthevariousprogramsandactivitieshavebeensummarizedonafunctionalbasis inthestatementofactivities.accordinglycertaincostshavebeenalocatedamongtheprogramsand supportingservicesbenefited. Continued 6

9 A lianceforeducation,inc. NotestoFinancialStatements June30,2001 (Continued) 2) ConcentrationsofCreditRisk FinancialinstrumentsthatpotentialysubjectAliancetoconcentrationsofcreditriskconsistprincipalyof temporary cashinvestments.a liancemaintainscashbalancesatthreefinancialinstitutions.theaccounts attheseinstitutionsatjune30,2001,coveredbyfederaldepositinsurancecorporation(fdic)was$16,697 and$221,914 wasataninstitutionwhichisamemberofsecuritiesinvestorprotectioncorporation(sipc). (3) TemporarilyRestrictedNetAssets Thetemporarily restrictednetassetsrepresentdonationsreceivedwithdonorimposedrestrictionswhichwil bemetinthesubsequentyear. (4) ThirdPartyReimbursements DuringtheyearendedJune30,2001,Aliancereceivedrevenueundercontractualarrangementsasfolows LouisianaStateUniversity inshreveport,forenhancementofclassroom instructioninelementaryandsecondaryschools 2001 $ 81,481 StateofLouisiana,DepartmentofEducation,passedthroughtheCaddo ParishSchoolBoard,forteachermini.grants/schoolimpactgrants $ 73,710 (5) AgreementWithCommunity FoundationofShreveport-Bossier DuringJanuary,1993 anagreementwasmadebetweencaddopubliceducationfoundation(cpef)andthe CommunityFoundationofShreveport-Bossier(CFS-B).ThisagreementwastoestablishafundinCFS-B in thenatureofanendowmenttoprovidecurrentincomeandlongterm protectionfortheoperationsofcpef. ThefundwasestablishedonthebooksofCFS-B andknownasthe "CaddoPublicEducationFoundationFund (thefund)". TheFundisthepropertyofCFS-B. CFS-B hastheultimateauthorityandcontroloveral property inthefund.thefundwilbeusedforthesupportofthecharitableoreducationalpurposesofcpef. Incomefrom thefundwilbepaidanddistributedtocpefatleastannualy.thealianceisthesuccessorin interestby mergertocpef. Continued 7

10 A lianceforeducation,inc. NotestoFinancialStatements June30,2001 (Continued) Since1993,theFoundationbeganfund-raisingdrivestocapitalizetheFund.Substantialpledgeshavebeen received,withmostcontributionstobemadeoveraseveralyearperiodoftime.theamountssocolectedare remittedby thefolowing month tothecommunity Foundation ofshreveport-bossierand in turnhelp increase thefund.thefund'sincome,subjecttonominalcfs-b administrativefees,wilbereturnedtoalianceinthe form ofgrants.duringtheyearendedjune30,2001,a liancereceivedfrom thefund$42,897. ContributionsmadetothefundduringtheyearendedJune30,2001wereapproximately$47,694.Thefair marketvalueofthefundatjune30,2001wasapproximately$1,264,618. A lianceleasescertainofficeequipmentunderoperatingleases.rentalcostsforthoseleasesfortheyear endedjune30,2001,was$3,383. Commitmentsunderleaseagreementshavinginitialorremainingnoncancelabletermsinexcessofoneyearareasfolows: June $ 3,690 3,690 3,690 1,230 $ 12,300

11 C O O K & M O R EH A R T Cerdfied PublicA ccountants 1215 IIAW N AVENUE ~SIIREVE PaR'I[',LO UISIANA ~P.O.BOX ~SIIREVEPO RT,LOUISIANA 'IRAVISH MOREIIART,CPA A EDW ARD BALL. CPA RAYEBURN G COOK (RE1 M ILTON E K[LLEY (RET) VICKIE D NOBLE,CPA TED D GREER~CPA C BRYAN COYLE.CPA MEMBER AMERICAN INSTITUTE CERTIFIED PUBLIC ACCOUNTANTS SOCIETY OF LOUISIANA CERTIFIED PUBLIC ACCOUNTANTS ReoortonComalianceandanInternalControloverFinancialReeortinaBasedonanAud StatementsPerformedinAccordanceWithGovernmentAuditin~ Standards TotheBoardofDirectors A lianceforeducation,inc W ehaveauditedthefinancialstatementsofa lianceforeducation,inc.asofandfortheyearendedjune30,2001, andhaveissuedourreportthereondated December4,2001.Weconductedourauditinaccordancewithauditing standards generaly accepted in the United States of America and the standards applicable to financialaudits containedingovernmentauditing Standards,issuedbytheComptrolerGeneraloftheUnitedStates. Compliance AspartofobtainingreasonableassuranceaboutwhethertheA lianceforeducation,inc.'sfinancialstatementsare freeo1materialmisstatement,weperformed testsofitscompliance with certainprovisionsoflaws,regulations, contracts and grants,noncompliance w ith w hich could have a directand materialeffecton the determination of financialstatementamounts.however,providinganopiniononcompliancewiththeseprovisionswasnotanobjective ofourauditand,accordingly,wedonotexpresssuch anopinion.theresultsofourtestsdisclosednoinstancesof noncompliancethatarerequiredtobereportedundergovernmentauditing Standards. nternalcontroloverfinancialreeortino In planningandperformingouraudit,weconsideredthea lianceforeducation,inc.internalcontroloverfinancial planning in orderto determine ourauditing procedures forthe purpose ofexpressing ouropinion on the financial statementsandnottoprovideassuranceontheinternalcontroloverfinancialreporting.ourconsiderationonthe internalcontroloverfinancialreportingwouldnotnecessarilydisclosealmattersintheinternalcontroloverfinancial reporting thatmightbematerialweakness.a materialweaknessisacondition in which thedesign oroperationofone ormoreofthe internalcontrolcomponents doesnotreducetoa relatively low leveltherisk thatmisstatementsin amountsthatwouldbematerialinrelationtothefinancialstatementsbeingauditedmayoccurandnotbedetected withinetimelyperiodbyemployeesinthenormalcourseofperforming theirassignedfunctions.wenotednomatters involving theinternalcontroloverfinancialreportinganditsoperation thatweconsidertobematerialweakness. However,wenotedonematterinvolvinginternalcontroloverfinancialreportingthatwehavereportedtomanagement ofthea lianceforeducation,inc.inaseparatemanagementletterdateddecember4,2001.

12 Thisreportisintendedsolely fortheinformationanduseofmanagement,theboardofdirectorsandawardingagencies andpass.throughentitiesandisnotintendedtobeandshouldnotbeusedby anyoneotherthanthesespecifiedparties. Cook& M orehart CertifiedPublicAccountants December4,

13 A lianceforeducation,inc. SummaryScheduleofAuditFindings ScheduleforLouisianaLegislativeAuditor June30,2001 TheauditfortheyearendedJune30,2001isthefirstauditforthisentity P TherewasonefindingormanagementlettercommentforthecurrentyearendedJune30,2001.Management's responsetothiscommentislistedbelow: Wearerevisingourpolicy regardingtheissuanceofreceiptsfordonationsofrestrictedfunds.wewilprepareaform foreachdonorof$1,000 ofmoreindicatinganyandalrestrictionsonthedonatedmoney.wewilaskthedonorto signtheform indicatingtheirunderstandingofhow themoney wilbeused.theseformswilbemaintainedalongwith anylettersofinstructionfrom donorsspecifyingany restrictionsan theirmoney.itisourintenttoaccuratelyreflect andcomplywiththewishesofourdonors.

14 C O O K & M O R EH AR T Cetlifi ed Public.4 ccountants 215 I[AW N AVENUE *SHREVEPORT.LOUISIANA 71107~P,O,BOX 78240~SIIREVEPORT,LOUISIANA?1137~8240 TRAVIS IIMOREIIART.CPA A EDW ARD BALL.CPA RAYEBURN G COOK (RE1.) MtLTON E KELLEY (RE1} VICKIE D NOBLE,CPA llio D GREE~ CPA C BRYAN COYLE. CPA MEMBER AM ERICAN INSTITUTE CERTIFIED PUBLIC ACCOLINTAN]S SOCIETY OF LOUISIANA CERTIFIED PUBLIC ACCOUNTANTS M anagementletter December4,2DO1 BoardofDirectors A lianceforeducation,inc WehaveauditedthefinancialstatementsofA lianceforeducation,inc.(aliance),fortheyearendedjune30,2001, endhaveissued ourreportthereon dateddecember4,2001. In planning and performingourauditofthetinaneial statements ofa liance ForEducation,Inc.,we considered itsinternalcontreloverfinancialreporting in orderto determine ourauditing proceduresforthe purpose ofexpressing ouropiniononthe financialstatementsand netto provideassuranceon theinternalcontroloverfinancialreporting, Burin~ outauditthe foltnwin~ item w asneted invenin~ ktem alcontroloverfinancialrepartin~ and othero~erational matterswhichappeartomerityourattentionforconsiderationtoimprovetheinternalcontroloverfinancialreporting oroperationsofaliance,thiscommenthasbeen discussedwith theappropriatemembersofmanagement. During ourauditweselected numerouscontributionsto determineifthedonorhadrestricteditsuse in somemanner ortosometimeperiod.documentationwasnotavailableforseverallargecontributions. W e recommend thatdocumentation and supporting information be maintained in orderto providesupportconcerning restrictionsby donorsoncontributions. WeexpresssincerethankstoAliancepersonnelforthecooperationandassistanceprovidedusduringouraudit.We ereavailabletoprovideyouassistanceandconsultationintheimplementation oftheabovementioneditem.thisletter isfurnishedsolelyfortheuseofmanagementandtheboardofdirectorsandisnotintendedtobeusedforanyother purpose. Cook& Morehart CertifiedPublicAccountants