Audit MBAC 07
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Audit MBAC 07

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...................................................................................................................... MONTANA BUSINESS ASSISTANCE CONNECTION, INC. Audited Financial Statements For Years Ended December 31, 2007 and 2006 ...................................................................................................................... Prepared by Wayne E. Hintz, PSC Certified Public Accountant MONTANA BUSINESS ASSISTANCE CONNECTION, INC. Helena, Montana TABLE OF CONTENTS Board of Directors .................................................................................................................Page 1 Independent Auditor's Report ...............................................................................................Page 2 Statement of Financial Position ............................................................................................Page 3 Statement of Activities and Changes in Net Assets ..............................................................Page 4 Statement of Cash Flows ......................................................................................................Page 5 Notes to Financial Statements ...............................................................................................Page 6-10 Supplemental Information .............................................................................................. ...

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...................................................................................................................... MONTANA BUSINESS ASSISTANCE CONNECTION, INC. Audited Financial Statements For Years Ended December 31, 2007 and 2006 ...................................................................................................................... Prepared by Wayne E. Hintz, PSC Certified Public Accountant MONTANA BUSINESS ASSISTANCE CONNECTION, INC. Helena, Montana TABLE OF CONTENTS Board of Directors .................................................................................................................Page 1 Independent Auditor's Report ...............................................................................................Page 2 Statement of Financial Position ............................................................................................Page 3 Statement of Activities and Changes in Net Assets ..............................................................Page 4 Statement of Cash Flows ......................................................................................................Page 5 Notes to Financial Statements ...............................................................................................Page 6-10 Supplemental Information ....................................................................................................Page 11 Statement of Activities – Budget and Actual – 2007 ............................................................Page 12 Statement of Activities – Budget and Actual – 2006 ............................................................Page 13 Statement of Expense Allocations ........................................................................................Page 14-15 Report On Compliance And On Internal Control Over Financial Reporting Based On An Audit Of Financial Statements Performed In Accordance With Government Auditing Standards ..................................................................................Page 16 Report on Prior Years Audit Comments................................................................................Page 17 MONTANA BUSINESS ASSISTANCE CONNECTION, INC. Helena, Montana BOARD OF DIRECTORS January 1, 2007 - December 31, 2007 President Bob Fusie Vic Prsident KathyErnst Treasurer Tony Murnion Secretary Mike Mundt ast President Eric Shindler Meagher County Commissioner Director Jame Doggett Broadwater County Commissioner Director Jim Hohn City of Helena Commissioner Alan Puera Lewis & Clark County Commissioner Mike Murray of Townsend Mary Alice Upton East Helena Anthony Strainer of Tim Burton Lewis & Clark County Ron Alles Elected Members: Sheila Hogan Pat Schlauch Michelle Steele Howard Skjervem Lisa Cordingly John Grant C. W. “Skip” Hatveldt Mark Huber Hal Jacobson Steve Mandeville Patrick E. Melby Bruce Messinger Ron Merc Jim Maierl Terry Myhre Thomas J.Trebon, Ph.D. ick Hays Gary Be Spalinger Linda Kindrick Mignon Waterman Dave Gallik Jim Cotril im Solheim Daniel Bingham Andy Fitzghugh im Stipch Mike Grove Montana Business Assistance Connection, Inc. - 1 INDEPENDENT AUDITOR'S REPORT Board of Directors Montana Business Assistance Connection, Inc. Helena, Montana 59601 I have audited the accompanying financial statements of Montana Business Assistance Connection, Inc. (a nonprofit organization) as of December 31, 2007 and 2006, as listed in the table of contents. These financial statements are the responsibility of Montana Business Assistance Connection, Inc.’s management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with auditing standards generally accepted in the United States 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 I 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 significant estimates made by management, as well as evaluating the overall financial 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 material respects, the financial position of Montana Business Assistance Connection, Inc. as of December 31, 2007 and 2006, and the changes in net assets and cash flows for the years then ended in conformity with generally accepted accounting principles accepted in the United States of America. In accordance with Government Auditing Standards, I have also issued my report dated February 9, 2008 on my consideration of Montana Business Assistance Connection, Inc.’s internal control over financial reporting and my tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of my 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 is assessing the results of my audit. Wayne E. Hintz, PSC, CPA Helena, Montana February 9, 2008 Montana Business Assistance Connection, Inc. - 2 MONTANA BUSINESS ASSISTANCE CONNECTION, INC. Helena, Montana STATEMENT OF FINANCIAL POSITION December 31, 2007 and 2006 2007 2006 ASSETS CURRENT ASSETS: Cash and Cash Equivalents $ 1 ,132,822 $ 788,302 Funded Loan Loss Reserve 5 8,390 49,839 Accounts Receivable 7 1,126 47,247 Accrued Interest Receivable 5 3,003 44,375 Prepaid Assets 4,255 - Current Portion Loans Receivable 1 ,051,413 771,806 Total Current Assets 2 ,371,008 1,701,569 PROPERTY, PLANT AND EQUIPMENT: Land 67 ,500 67,500 Building 443 ,152 443,152 Other 32,200 8,381 542,852 519,033 Accumulated Depreciation (191,515) (176,939) 351 ,337 342,094 OTHER ASSETS: Loans Receivable (Net of Current Portion above) 4 ,335,580 3,830,834 Loan Loss Reserve (221,805) (165,975) 4 ,113,775 3,664,859 TOTAL ASSETS $ 6,836,120 $ 5,708,522 LIABILITIES AND NET ASSETS CURRENT LIABILITIES: Accounts Payable $ 2 6,369 $ 30,689 Accrued Expenses 8,802 10,918 Current Portion-Loans Payable 193 ,266 96,765 228 ,437 138,372 LONG TERM LIABILITIES: Deferred Revenue - DEQ Buydown 929 1,360 Loans Payable 3 ,770,568 3,297,952 TOTAL LIABILITIES 3,999,934 3,437,684 NET ASSETS Temporarily Restricted 179,785 182,035 Unrestricted 2,656,401 2,088,803 TOTAL NET ASSETS 2,836,186 2,270,838 TOTAL LIABILITIES AND NET ASSETS $ 6,836,120$ 5,708,522 Montana Business Assistance Connection, Inc. - 3 MONTANA BUSINESS ASSISTANCE CONNECTION, INC. Helena, Montana STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS For The Years Ended December 31, 2007 and 2006 2007 2006 PUBLIC SUPPORT AND REVENUES RECEIVED Grant Revenue $ 579,551 $ 82,747 Membership Dues 55,833 29,050 Rent & Utility Income75,31061,451 Contributions 3,972 3,750 In-Kind Contributions 97,200 79,506 Economic Development Services/Administration 367,030 358,306 Loan Origination fees and Closing Costs 40,851 38,158 Interest Income 431,263 344,263 Miscellaneous Income - 1,101 Total Revenue 1,651,010 998,332 EXPENSES: Program Expense Micro Business Development Corporation 102,071 147,848 Small Business Deve 101,808 104,110 Helena Revolving Loan Fund 67,940 53,211 Broadwater Revolving Loan Fund36,23546,134 Lewis & Clark Revolving Loan Fund 18,512 33,727 USDA Intermediary & Revolving Loan Fund #118,88517,779n & Loan Fund #2 57,186 45,247 Wildfire 2,07915,465 DEQ Revolving Loan Fund 19,330 13,288 Board of Investments39,85738,274 Bonvestments II 9,917 - MBAC, Inc. Revolving Loan Fund 55,214 50,582 EDA Revolving Loan Fund59,241 Building 51,799 44,560 Economic Development Services/Administration 445,588 401,703 TOTAL EXPENDITURES 1,085,662 1,011,928 CHANGE IN NET ASSETS 565,348 (13,596) Net Assets - Beginning of Year 2,270,838 2,284,434 Net Assets - End of Year $ 2,836,186 $ 2,270,838 Montana Business Assistance Connection, Inc. - 4 MONTANA BUSINESS ASSISTANCE CONNECTION, INC. Helena, Montana STATEMENT OF CASH FLOWS For The Years Ended December 31, 2007 and 2006 2007 2006 OPERATING ACTIVITIES: Increase (Decrease) in Net Assets $ 565,348 $ (13,596) Land Donation included in Revenues Adjustments to reconcile Increase in Net Assets to net cash provided by operating activities: Depreciation 13,788 11,671 Decrease (Increase) in Funded Loan Loss Reserve 8,551 3,495 Increase (Decrease) in Loan Loss Reserve 55,830 (111,256) Decrease (Increase) in Accounts Receivable (23,879) (32,455) Decrease (Increase) in Interest Receivable (8,628) 24,259 Decrease (Increase) in Prepaid Assets (4,255) - (Decrease) Increase in Accounts Payable (4,320) 13,204 Increase (Decrease) in Accrued Expenses (2,116) 7,436 (Decrease) in Deferred Revenue (431) (343) Net cash provided by Operating Activities 599,888 (97,585) FINANCING ACTIVITIES: New Debt Incurred 759,990 1,115,736 Debt Retired (190,873) (236,484) Net cash provided by Financing Activities 569,117 879,252 INVESTING ACTIVITIES: Building Improvements (23,819) - Loan Fees 789 (7,881) New Loans Issued (2,200,456) (1,551,718) Principal payments received on loans 1,399,001 1,180,087 Net cash (utilized) by Investing Activities (824,485) (379,512) Net Increase (Decrease) in Cash and Cash Equivalents 344,520 402,155 Cash and Cash Equivalents - beginning 788,302 386,147lents - ending $ 788,3021,132,822 $ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest paid during the year 69,271 61,948 Interest received during the year 369,779 431,263 Montana Business Assistance Connection, Inc. - 5 MONTANA BUSINESS ASSISTANCE CONNECTION, INC. Helena, Montana NOTES TO FINANCIAL STATEMENTS December 31, 2007 and 2006 A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1. Reporting Entity In October 2006, there was a name change from Gateway Economic Development Corporation to Montana Business Assistance Connection, Inc. Montana Business Assistance Connection, Inc. is a non-profit corporation, incorporated in the State of Montana. Montana Business Assistance Connection, Inc. filed and received tax-exempt status under Section 501(c)(6) of the Internal Revenue Code and is exempt from state and federal taxation. Montana Business Assistance Connection, Inc. is not a private foundation. The mission of the program is to support retention of existing jobs and promote creation of new jobs in Lewis and Clark, Broadwater, and Meagher Counties. 2. Basis of Presentation The financial statements of Montana Business Assistance Connection, Inc. have been prepared on the accrual basis. Net assets and revenues, expenses, gains and losses are classified based on the existence or absence of donor-imposed restrictions. Accordingly, net assets of Montana Business Assistance Connection, Inc. and changes therein are reported as follows: Contributions that are restricted by the donor are reported as increases in unrestricted net assets if the restrictions expire (that is, when a stipulated time restriction ends or purpose restriction is accomplished) in the reporting period in which the revenue is recognized. All other donor-restricted contributions are reported as increases in temporarily or permanently restricted net assets, depending on the nature of the restrictions. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the Statement of Activities as net assets released from restrictions. 3. Property, Plant and Equipment Property, Plant and Equipment purchases that exceed $5,000 are capitalized and recorded at original cost. Depreciation is taken on a straight-line basis over their estimated useful lives of 5 to 40 years. There was an addition to of Property, Plant and Equipment of $23,819 for 2007. Depreciation for 2007 and 2006 was $13,788 and $11,671 respectively. 4. Loan Loss Reserves Montana Business Assistance Connection, Inc. uses the allowance method for bad debts. The Loan Loss Reserve allowance account is determined by monthly status reviews of outstanding loans. Specific reserves for the IRP and Montana Board of Investment funds are to be 6 percent of outstanding loans and to be accumulated over 3years and then maintained. 5. Compensated Absences Montana Business Assistance Connection, Inc. recognizes a liability for the cost of unused personal leave benefits at year-end. This amount at December 31, 2007 and 2006 was $5,408 and $6,400, respectively, payable in the event of employee termination. 6. Grants and Contracts Support received under grants and contracts with federal, state, county and local governmental entities and private foundations are recorded as public support when received. Montana Business Assistance Connection, Inc. - 6 MONTANA BUSINESS ASSISTANCE CONNECTION, INC. Helena, Montana NOTES TO FINANCIAL STATEMENTS December 31, 2007 and 2006 Notes to Financial Statements (continued) 7. Advertising Advertising costs are expensed in the year incurred. Advertising expense for the year 2007 and 2006 totaled $8,128 and $3,132, respectively. 8. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 expenditures during the reported period. Actual results could differ from those estimates. 9. Cash and Cash Equivalents For purposes of the Statement of Cash Flows, Montana Business Assistance Connection, Inc. considers all highly liquid investments available for current use with a maturity of six months or less to be cash equivalents. B. CONCENTRATIONS OF CREDIT RISK Cash balances are maintained in financial institutions located in Helena, Montana, and White Sulphur Springs, Montana. The balances are insured by the Federal Deposit Insurance Corporation up to $100,000. All balances at December 31, 2006 were fully insured. At December 31, 2007, the Federal Deposit Insurance Corporation insured all balances except for $180,346, which was collateralized with Wells Fargo Bank, Mountain West Bank and American Federal Savings Bank. C. LOANS RECEIVABLE Loans are stated at the principal amount outstanding, net of unearned income. Interest is computed daily based on the principal amount outstanding. Revolving loan funds provide risk capital financing to businesses in the corporation’s area of operations. The revolving loan funds have been capitalized with Montana Community Development Block Grant (CDBG) loans transferred by the City of Helena, Broadwater County and Lewis & Clark County. Additional sources for RLF’s come from borrowing from various public and private financing sources. The list is on page 9. Montana Business Assistance Connection, Inc. has entered into an agreement with the State of Montana Department of Commerce that certifies Montana Business Assistance Connection, Inc. as a Micro Business Development Corporation. The corporation provides loans to qualifying businesses in the area of its operations. The program provides that 60% of funds available will be loaned out. As of December 31, 2007, 100% of funds available were loans receivable. Montana Business Assistance Connection, Inc. - 7 MONTANA BUSINESS ASSISTANCE CONNECTION, INC. Helena, Montana NOTES TO FINANCIAL STATEMENTS December 31, 2007 and 2006 Notes to Financial Statements (continued) C. LOANS RECEIVABLE-continued stLoans as of December 31 consist of the following: Fund 2003 2004 2005 2006 2007 Micro Business Development Corporation 350-352 $ 354,294 $ 629,909 $ 780,077 $ 590,182 $ 596,147 Broadwater Revolving Loan Fund 353 150,657 255,897 295,549 205,551 353,967 Helena Revolving Loan Fund 354 892,604 1,031,459 1,041,976 974,846 853,576 Lewis & Clark Revolving Loan Fund 355 60,938 206,388 221,913 231,503 159,007 USDA Intermediary & Revolving Loan Fund #1 356 293,435 265,084 317,386 241,147 257,721 USDA Intermediary & Re Loan Fund #2 35,610 - 424,390 685,805 589,495 715,444 Wildfire Multi Jurisdictional Revolving Loan Fund 357-358 228,437 202,058 159,791 75,587 18,866 DEQ Revolving Loan Fund 359 35,437 43,609 68,561 407,111 773,258 Board of Investments Revolving Loan Fund 360 - 116,244 504,584 481,443 465,340 Board of Investments II Revolving Loan Fund 2,710 - - - - 179,332 MBAC Revolving Loan Fund 361 - - 155,367 355,775 595,567 EDA Revolving Loan Fund 362 - - - 150,000 418,768 Total Loan Receivable $ 3,12,015,802$ 4,23175,038$ 4,009 $ ,302,640 $ 5,386,993 Current Portion $ 513,623 $ 771,806 $ 1,051,413 Long Term Portion 3,717,386 3,830,834 4,335,580 Total $ 44,231,009 $ ,602,640 $ 5,386,993 D. LOAN LOSS RESERVE Due to the high degree of loan collection risk associated with economic development loans, Montana Business Assistance Connection, Inc. maintains a significant allowance for loan losses. The Loan Loss Reserve at December 31, 2007 and 2006 was $ 221,805 and $165,975 respectively. E. IN-KIND REVENUE AND EXPENSE During the years ended December 31, 2007 and 2006, the value of contributed services meeting the requirements for recognition in the financial statements were $97,200 and $79,506 respectively Montana Business Assistance Connection, Inc. - 8