Louisiana Tax Free Shopping Commissionapp1.lla.la.gov/PublicReports.nsf/08ACB4B014613BC... · * The Louisiana Tax Free Shopping Commission's assets exceeded its liabilities at the

R E P O R T

LOUISIANA TAX FREE SHOPPING COMMISSIONDEPARTMENT OF REVENUE

STATE OF LOUISIANA

JUNE 30, 2007 AND 2006

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

Release Date/0/3/07


STATE OF LOUISIANA

INDEX TO REPORT

JUNE 30, 2007 AND 2006

PAGE

INDEPENDENT AUDITOR'S REPORT 1 - 2

MANAGEMENT'S DISCUSSION AND ANALYSIS 3 - 7

FINANCIAL STATEMENTS:

Balance Sheets 8

Statements of Revenues, Expenses and Changes in Fund Net Assets 9

Statements of Cash Flows 10

Notes to Financial Statements 11-18

REPORT ON INTERNAL CONTROL OVER FINANCIALREPORTING AND ON COMPLIANCE AND OTHER MATTERSBASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMEDIN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 19 - 20

SUMMARY SCHEDULE OF FINDINGS 21

SUPPLEMENTARY INFORMATION:

Office of Statewide Reporting Package 22

tain DUPLANTIER, HRAPMANN,HOGAN & MAHER, L.L.P.

MICHAEL J. O'ROURKE, C.P.A.WILLIAM G. STAMM, C.P .A.CLIFTORDJ.GIFFIN,JR,C.P.A.DAVID A. BURCARD, C.P.A.LINDSAY J. CALUB, C.P.A., L.L.C.GUY L. DUPLANTIER, C.P.A.MICHELLE H. CUNNINGHAM, C.P.ADENNIS W. DILLON, C.P.A.

ANNH.HEBERT,C.P^.ROBIN A. STROHMEYER, C.P.A.GRADY C. LLOYD, III, C.P.A.HENRY L. SILVIA, C.P.A.

St Snite2000 • New Orleans T A 7011231., 3UHC ZUIAJ 1NCW UriedDS, Lrt. /Ul 1Z

(504) 586-8866

FAX (504) 525-5888„ ,

WWW.dhhmCpa.COm

A J. DUPLANTIER JR, C.P.A.(1919-1985)

FELIX J.HRAPMANN,JR,C.P.A.(1919-1990)

WILLIAM R, HOGAN, JR. C.P.A.(1920-1996)

JAMES MAKER, JR, C.PAH921-19W

MEMBERSAMERICAN INSTITUTE OF

CERTIFIED PUBLIC ACCOUNTANTSSOCIETY OF LA C.P.A. 'S

KENNETH J. BROOKS, C.P.A., ASSOCIATE

INDEPENDENT AUDITOR'S REPORT

August 28, 2007

Louisiana Tax Free Shopping CommissionDepartment of RevenueState of LouisianaBaton Rouge, Louisiana

We have audited the accompanying financial statements of the Louisiana Tax Free ShoppingCommission, a component unit of the State of Louisiana, as of and for the years ended June 30,2007 and 2006, as listed in the foregoing index to report. These financial statements are theresponsibility of the Louisiana Tax Free Shopping Commission's management. Our responsibilityis to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in theUnited States of America and the standards applicable to financial audits contained in GovernmentAuditing Standards, issued by the Comptroller General of the United States. Those standardsrequire that we plan and perform the audits to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used and significant estimates made by management,as well as evaluating the overall financial statement presentation. We believe that our auditsprovide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above, present fairly, in all materialrespects, the respective financial position of the Louisiana Tax Free Shopping Commission as ofJune 30, 2007 and 2006, and the respective changes in its net assets and its cash flows for the yearsthen ended in conformity with accounting principles generally accepted in the United States ofAmerica.

PAGE 2

In accordance with Government Auditing Standards, we have also issued a report datedAugust 28, 2007, on our consideration of the Commission's internal control over financialreporting and our tests of its compliance with certain provisions of laws, regulations and contractsand other matters. The purpose of that report is to describe the scope of our testing of internalcontrol over financial reporting and compliance and the results of that testing, and not to provide anopinion on the internal control over financial reporting or on compliance. That report is an integralpart of an audit performed in accordance with Government Auditing Standards and should beconsidered in assessing the results of our audit.

The management's discussion and analysis on pages 3 through 7 is not a required part of thebasic financial statements, but is supplementary information required by the GovernmentalAccounting Standards Board (GASB). We have applied certain limited procedures, whichconsisted primarily of inquiries of management regarding the methods of measurement andpresentation of the supplementary information. However, we did not audit the information andexpress no opinion on it.

Our audits were conducted for the purpose of forming an opinion on the financial statementstaken as a whole. The accompanying Office of Statewide Reporting Package is presented forpurposes of additional analysis and is not a required part of the financial statements of theCommission. Such information has been subjected to the auditing procedures applied in the auditof the financial statements and, in our opinion, is fairly presented, in all material respects, inrelation to the financial statements taken as a whole.

vi, Jbtapmann, 3fogan <£ Mahvt, ££&

PAGE 3


STATE OF LOUISIANAMANAGEMENT'S DISCUSSION AND ANALYSIS

AS OF AND FOR THE YEARS ENDED JUNE 30. 2007 AND 2006

The Management's Discussion and Analysis of the Louisiana Tax Free Shopping Commission's financialperformance presents a narrative overview and analysis of Louisiana Tax Free Shopping Commission'sfinancial activities.for the years ended June 30, 2007 and 2006. This document focuses on the current year'sactivities, resulting changes, and currently known facts in comparison with the prior year's information. Pleaseread this document in conjunction with the information contained in the Louisiana Tax Free ShoppingCommission's financial statements, which begin on page 8.

FINANCIAL HIGHLIGHTS

* The Louisiana Tax Free Shopping Commission's assets exceeded its liabilities at the close of fiscal year2007 by $390,372, which represents an increase from last fiscal year. The net assets increased by$8,920 (or 2%).

* The Louisiana Tax Free Shopping Commission's operating revenues increased by $81,473 (or 39%) andthe net results from activities increased by $132,634 (or 107%).

OVERVIEW OF THE FINANCIAL STATEMENTS

The following graphic illustrates the minimum requirements for Special Purpose Governments Engaged inBusiness-Type Activities established by Governmental Accounting Standards Board Statement 34, BasicFinancial Statements—and Management's Discussion and Analysis—for State and Local Governments.

Management's Discussion and Analysis

Required supplementary information;(other than MD&A) *,"&''.''

These financial statements consist of three sections - Management's Discussion and Analysis (this section), thebasic financial statements (including the notes to the financial statements), and required supplementaryinformation.

PAGE 4



AS OF AND FOR THE YEARS ENDED JUNE 30, 2007 AND 2006

BASIC FINANCIAL STATEMENTS

The basic financial statements present information for the Louisiana Tax Free Shopping Commission as awhole, in a format designed to make the statements easier for the reader to understand. The statements in thissection include the Balance Sheets; the Statements of Revenues, Expenses, and Changes in Fund Net Assets;and the Statements of Cash Flows.

The Balance Sheets (page 8) present the current and long-term portions of assets and liabilities separately. Thedifference between total assets and total liabilities is net assets and may provide a useful indicator of whether thefinancial position of the Louisiana Tax Free Shopping Commission is improving or deteriorating.

The Statements of Revenues, Expenses and Changes in Fund Net Assets (page 9) present information showinghow Louisiana Tax Free Shopping Commission's assets changed as a result of current year operations.Regardless of when cash is affected, all changes in net assets are reported when the underlying transactionsoccur. As a result, there are transactions included that will not affect cash until future fiscal periods.

The Cash Flow Statements (page 10) present information showing how Louisiana Tax Free ShoppingCommission's cash changed as a result of current year operations. The cash flow statement is prepared usingthe direct method and includes the reconciliation of operating income (loss) to net cash provided (used) byoperating activities (indirect method) as required by GASB 34.

FINANCIAL ANALYSIS OF THE ENTITY

Balance Sheetsas of June 30, 2007 and 2006

(in thousands)

2007 2006

Current and other assetsCapital assets

Total assetsOther liabilitiesLong-term debt outstanding

Total liabilitiesNet assets:

Invested in capital assets, net of debtRestrictedUnrestrictedTotal net assets

4096

4224

415 4262916

25 45

6

384

4

377

PAGES



AS OF AND FOR THE YEARS ENDED JUNE 30. 2007 AND 2006

Restricted net assets represent those assets that are not available for spending as a result of legislativerequirements, donor agreements or grant requirements. Conversely, unrestricted net assets are those that do nothave any limitations on how these amounts may be spent. The Louisiana Tax Free Shopping Commission hasno restricted net assets at June 30, 2007 and 2006.

Net assets of Louisiana Tax Free Shopping Commission increased by $8,920 or 2% due primarily to an increasein operating revenues (handling fees) and by a decrease in operating expenses (personnel services and relatedbenefits).

Statement of Revenues, Expenses, and Changes in Fund Net Assetsfor the years ended June 30, 2007 and 2006

(in thousands)

2007 2006

Operating revenues $ 289 $ 207Operating expenses (280) (331)

Operating income(loss) 9_ (124)

Non-operating revenues(expenses) - -

Income(loss) before transfers 9 (124)

Transfers inTransfers out

Net increase(decrease) in net assets $ 9 $ (124)

The Louisiana Tax Free Shopping Commission's total revenues increased by $472,605 or 57%. The total costof ail programs and services increased by approximately $339,971 or 36%. The increase in sales tax refundrevenue and the related expense is attributable to the fact that international tourism to Louisiana has increased asthe City of New Orleans recovers from Hurricane Katrina. Expenses also increased due to unemployment taxesfor staff layoffs after Hurricane Katrina and bad debt related to members that did not re-open after HurricaneKatrina.

PAGE 6




CAPITAL ASSET AND DEBT ADMINISTRATION

Capital Assets

At the end of 2007, the Louisiana Tax Free Shopping Commission had $6,062, net of accumulateddepreciation of $11,120 invested in capital assets, including computer equipment and officeequipment. (See following Table and notes).

Capital Assets at Year-end(Net of Depreciation, in thousands)

2007 2006

Land $ 0 $ 0Buildings and improvements 0 0Equipment 6 4Infrastructure 0 0

Totals $

The year's additions included laptop computers in the amount of $4 (in thousands).

Debt

The Louisiana Tax Free Shopping Commission has no bonds or notes outstanding at year-end, and had no bondsor notes outstanding last year.

The Louisiana Tax Free Shopping Commission has no claims and judgments outstanding at year-end, and hadnone last year. Other obligations include the accrual for future compensated absences.

PAGE?




ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES

The Louisiana Tax Free Shopping Commission's elected and appointed officials considered the followingfactors and indicators when setting next year's budget, rates, and fees. These factors and indicators include:

• Revenue projections that were based on more recent travel and spending trends.• Expenditure projections based on historical information and our expectation of total cost for the program.

The Louisiana Tax Free Shopping Commission expects that next year's results will improve based on thefollowing:

• The anticipation of increased international tourism to Louisiana through:- Conventions visiting Louisiana with international delegates- Cruise ships departing from Port of New Orleans

• Louisiana Tax Free Shopping has concentrated marketing efforts in Shreveport, Louisiana, a city notaffected by Hurricanes Katrina or Rita.

CONTACTING THE LOUISIANA TAX FREE SHOPPING COMMISSION MANAGEMENT

This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditorswith a general overview of the Louisiana Tax Free Shopping Commission's finances and to show theLouisiana Tax Free Shopping Commission's accountability for the money it receives. If you havequestions about this report or need additional financial information, contact Denise Thevenot, Director,New Orleans International Airport, 900 Airline Highway, 2nd Floor, Kenner, Louisiana 70065,(504) 467-0723, mailing address: P. O. Box 20125, New Orleans, Louisiana 70141.


STATE OF LOUISIANABALANCE SHEETS

JUNE 30.2007 AND 2006

PAGES

ASSETS:

Current assets:Cash (Notes 1 and 2)Receivables (Note 4)Due from other governmental units (Note 3)Inventories of supplies (Note 1)

Total current assets

Non-current assets:Capital assets - equipment, net of depreciation (Notes 1 and 5)

TOTAL ASSETS

2007

218,32359,640

126,5925,036

409,591

6,062

2006

$ 257,44266,54290,554

8,140422,678

4,095

$ 415,653 S 426.773

LIABILITIES:

Current liabilities:Accounts payable and accruals (Note 11)Sales tax refunds payable

Total current liabilities

Non-current liabilities:Compensated absences payable (Notes 1 and 8)

Total liabilities

NET ASSETS:Invested in capital assets, net of related debtUnrestricted

Total net assets

TOTAL LIABILITIES AND NET ASSETS

$ 10,5777,408

17,985

7,296

25,281

6,062384,310

390,372

S 415.653

15,26114,17929,440

15,881

45,321

4,095377,357

381,452

S 426.773

See accompanying notes.

PAGE 9

LOUISIANA TAX FREE SHOPPING COMMISSIOIsDEPARTMENT OF REVENUE

STATE OF LOUISIANASTATEMENTS OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS

FOR THE YEARS ENDED JUNE 30, 2007 AND 2006

OPERATING REVENUES: (Note 1)Visitor handling feesMembership feesVoucher salesUse of money and propertyOther

Total operating revenues

OPERATING EXPENSES: (Note 1)Personal services and related benefitsTravelOperating servicesSuppliesProfessional servicesOther charges

Total operating expenses

Operating income (loss)

NONOPERATING REVENUES (EXPENSES)Reimbursement for sales tax refunds (Note 3)Sales tax refunds (Note 3)

Total nonoperating revenues (expenses)

Change in net assets

NET ASSETS - BEGINNING OF YEAR

NET ASSETS - END OF YEAR

2007

197,42771,96214,240

3974,819

288,845

190,9562,380

47,2876,102

16,50716,693

279,925

8,920

1,012,945(1.012,945)

8,920

381,452

$ 390372

2006

122,41670,88113,155

648272

207,372

252,1163,498

54,8136,180

11,7232,756

331,086

(123,714)

621,813(621,813)

(123,714)

505,166

381.452

See accompany ing. notes.

PAGE 10


STATE OF LOUISIANASTATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED JUNE 30. 2007 AND 2006

2007 2006CASH FLOWS FROM OPERATING ACTIVITIES:

Cash received for services $ 290,530 $ 191,023Cash received for other revenue 5,216 920Cash payments to suppliers for goods and services (87,981) (94,154)Cash payments for salaries and related expenses (199,875) (261,235)

Net cash provided (used) by operating activities 7,890 (163,446)

CASH FLOWS FROM NONCAPITALFINANCING ACTIVITIES:Reimbursements for sales tax refunds 778,195 774,514Cash paid for sales tax refunds (821,004) (637,724)

Net cash provided (used) by noncapital financing activities (42,809) 136,790

CASH FLOWS FROM CAPITAL ANDRELATED FINANCING ACTIVITIES:Purchase of capital assets (4,200) ^_

Net cash used by capital and related financing activities (4,200) -

NET DECREASE IN CASH AND CASH EQUIVALENTS (39,119) (26,656)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 257,442 284,098

CASH AND CASH EQUIVALENTS AT END OF YEAR $ 218.323 $ 257.442

RECONCILIATION OF OPERATING INCOME TO NETCASH PROVIDED (USED) BY OPERATING ACTIVITIES:

Operating income (loss) $ 8,920 $ (123,714)Adjustments to reconcile operating income (loss) to net cash

provided (used) by operating activities:Depreciation 2,233 1,571

Changes in assets and liabilities:Receivables 6,902 (15,428)Inventories of supplies 3,104 (5,656)Accounts payable and accruals (4,684) (17,628)Compensated absences payable (8,585) (2,591)

Net cash provided (used) by operating activities $ 7.890 $ (163.446)

See accompanying notes.

PAGE 11


STATE OF LOUISIANANOTES TO FINANCIAL STATEMENTS

JUNE 30.2007 AND 2006

INTRODUCTION

The Louisiana Tax Free Shopping Commission (the commission) established within theDepartment of Revenue, was created under the provisions of Louisiana Revised Statutes (R.S.) 51:1301-1316. The commission is composed of five members who serve without compensation or reimbursementfrom the state and is charged with operating the Louisiana Tax Free Shopping Program, a sales taxrefund program for the purchases of tangible personal property from participating retailers byinternational travelers. The legislature finds that Louisiana, with its many attractions, has anextraordinary opportunity to generate additional revenue in the form of international tourism. Foreignvisitors to the United States represent a more lucrative market than domestic travelers because they usetourism services to a much greater degree than their domestic counterparts. While the Louisiana TaxFree Shopping Program has an initial opportunity cost to state and local governments equal to theamount of sales tax refunded, this loss is offset by additional revenues generated from an increase inforeign tourists, who continue to pay tax on expenditures such as hotels, restaurants, entertainment, rentalcars, riverboat rides, and other attractions. The commission is domiciled in New Orleans.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Basis of Presentation:

The accompanying financial statements have been prepared on the full accrual basis inaccordance with accounting principles generally accepted in the United States of America. TheGovernmental Accounting Standards Board (GASB) is the accepted standard-setting body forestablishing governmental accounting principles and reporting standards. The Commission appliesall GASB pronouncements as well as Financial Accounting Standards (FASB) statements andinterpretations issued on or before November 30, 1989, unless those pronouncements conflict withor contradict GASB pronouncements.

These financial statements were prepared in accordance with GASB Statement 20,Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities thatUse Proprietary Fund Accounting. All activities of the Commission are accounted for within asingle proprietary (enterprise) fund. This fund type is used to report any activity for which a fee ischarged to external users for good and services. In addition, these financial statements include theprovisions of GASB Statement Number 34, Basic Financial Statement - Management'sDiscussion and Analysis-for State and Local Governments and related standards. This standardprovides for significant changes in terminology, recognition of contributions in the Statement ofRevenues, Expenses and Changes in Net Assets, inclusion of a management discussion andanalysis as supplementary information and other changes.

PAGE 12



JUNE 30.2007 AND 2006

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)

Reporting Entity:

GASB Codification Section 2100 has defined the governmental reporting entity to be theState of Louisiana. The Louisiana Tax Free Shopping Commission is considered a componentunit of the State of Louisiana because the state exercises oversight responsibility as follows: (1)commission members are designated by state law; (2) the commission is established in theLouisiana Department of Revenue; (3) commission action for sales tax refunds is governed by theLouisiana Tax Free Shopping Program law; (4) sales tax refunds are provided within theboundaries of the state; and (5) additional revenues generated from an increase in foreign touristsbenefit the state and its political subdivisions. The accompanying statements present informationonly as to the transactions of the Louisiana Tax Free Shopping Commission, a component unit ofthe State of Louisiana. Annually, the State of Louisiana issues general purpose financialstatements, which include the activity contained in the accompanying financial statements.

Basis of Accounting:

Basis of accounting refers to when revenues and expenses are recognized and reported in thefinancial statements. Basis of accounting relates to the timing of the measurements made,regardless of the measurement focus applied.

The commission uses the following practices in recording revenues and expenses:

Revenues

Revenues are recognized using the full accrual basis of accounting; therefore revenuesare recognized in the accounting period in which they are earned and become measurable.Annual membership fees are recognized as revenue in the period due. A portion of each salestax refund is withheld from the visitor as a handling fee. These fees are recognized asrevenue in the month earned. Interest earnings are recorded when the income is earned.

Expenses

Expenses are recognized under the accrual basis of accounting; therefore, expenses,including salaries, are recognized in the period incurred, if measurable.

PAGE 13



JUNE 30.2007 AND 2006

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)

Budget Practices:

In accordance with R.S. 51:1304, the commission has been established in the Department ofRevenue and is authorized to exercise and carry out all powers, duties, and functions to implementthe Louisiana Tax Free Shopping Program. These duties include establishing a budget for theprogram, taking into account anticipated operating revenues and expenditures. The commissionprepares its budget of operating revenues and expenditures on the modified accrual basis ofaccounting and employs it as a management tool throughout the year. The budget is preparedbefore the first meeting of the fiscal year, at which time the budget is adopted by the commission.At year-end, the budget amounts do not lapse. The budgets for the fiscal years ended June 30,2007 and 2006, were approved on July 21, 2006 and June 1, 2005, respectively. There were noamendments made to the fiscal year ended June 30, 2006 budget. The budget for fiscal year endedJune 30,2007 was revised on January 22, 2007.

Cash and Cash Equivalents:

The commission considers cash and cash equivalents to be petty cash, cash on hand, anddemand deposits. Under state law, the commission may deposit funds within a fiscal agent bankorganized under the laws of the State of Louisiana, the laws of any other state in the Union, or thelaws of the United States. Furthermore, the commission may invest in time certificates of depositof state banks organized under the laws of Louisiana and national banks having their principaloffices in Louisiana.

Inventory of Materials and Supplies:

Inventories are valued at cost and are recorded as expenditures at the time the items arepurchased.

Capital Assets:

Capital assets acquired are recorded at cost. Depreciation is charged to expense over theestimated useful lives of the assets and is determined using the straight-line method.

Employee Compensated Absences:

Employees earn and accumulate annual and sick leave at various rates, depending on theiryears of service. The amount of annual and sick leave that may be accumulated by each employeeis unlimited. Upon termination, employees or their heirs are compensated for up to 300 hours ofunused annual leave at the employees' hourly rate of pay at the time of termination. Uponretirement, unused annual and sick leave in excess of 300 hours is used to compute retirementbenefits.

PAGE 14



JUNE 30,2007 AND 2006

2. CASH:

At June 30, 2007 and 2006, the commission has cash (book balances) totaling $218,323 and$257,442, respectively, as follows:

2007 2006Demand deposits $ 133,769 $213,153Cash on hand 84,554 44,289

Total S 218.323 $ 257.442

Under state law, the bank balances of these deposits must be secured by federal depositinsurance or the pledge of securities owned by the fiscal agent bank. The market value of thepledged securities plus the federal deposit insurance must at all times equal the amount on depositwith the fiscal agent. At June 30, 2007 and 2006, the commission has $325,374 and $373,487,respectively, in deposits (collected bank balances). These deposits are secured from risk by federaldeposit insurance and pledged securities.

3. SALES TAX REFUNDS:

For the years ended June 30, 2007 and 2006, $1,012,945 and $621,813, respectively, of salestax refunds were processed for foreign visitors under the Louisiana Tax Free Shopping Program.These amounts (before the handling fee deduction) relate to sales taxes from the following taxingauthorities.

State of LouisianaOrleans ParishJefferson ParishAscension ParishEast Baton Rouge ParishLafayette ParishOther

Total

$2007460,810181,830324,062

17,80921,0412,6364,757

$1.012.945

2006$285,162

98,543208,793

9,60615,6503,750

309$_

At June 30, 2007 and 2006, reimbursements for sales tax refunds were due from thefollowing taxing authorities:

State of LouisianaOrleans ParishJefferson ParishAscension ParishEast Baton Rouge ParishLafayette ParishOther

Total

2007



JUNE 30.2007 AND 2006

PAGE 15

4. RECEIVABLES:

The following is a summary of receivables at June 30,2007 and 2006:

2007 2006

Membership feesVoucher salesHandling feesOther receivables

Total

$ 47,2639,5271,4251,425

$ 59.640

$ 46,80513,9132,7103,114

$ 66.542

5. CAPITAL ASSETS:

Capital activity for the years ended June 30, 2007 and 2006 was as follows:

EquipmentLess: accumulated depreciation

BalanceJulyl,2006

$ 12,983

Additions

$ 4,200(2.233)

Retirements

AdjustedBalanceJune 30

2007

$ 17,183(11.121)

EquipmentLess: accumulated depreciation

BalanceJulyl,2005

$ 21,371(15.705)

Additions

[L571)

Retirements

$ (8,388)8.388

AdjustedBalanceJune 302006

$ 12,983

Depreciation expense for the years ended June 30, 2007 and 2006 was $2,233 and $1,571,respectively.

PAGE 16



JUNE 30, 2007 AND 2006

6. EMPLOYEE RETIREMENT SYSTEM:

Substantially all employees of the commission are members of the Louisiana StateEmployees' Retirement System, a cost-sharing, multiple-employer defined benefit pension plan.The system is a statewide public employee retirement system for the benefit of state employees,which is administered and controlled by a separate board of trustees.

All full-time commission employees are eligible to participate in the system unless they electto continue as a contributing member in any other retirement system for which they remain eligiblefor membership. Benefits vest with 10 years of service. At retirement age, employees are entitledto annual benefits equal to $300 plus 2.5% of then1 highest consecutive 36 months* average salarymultiplied by their years of credited service except for members eligible to begin participation in theDefined Benefit Plan (DBP) on or after July 1, 2006. Act 75 of the 2005 Regular Session changesretirement eligibility and final average compensation for members who are eligible to beginparticipation in the DBP beginning July 1, 2006. Retirement eligibility for these members is limitedto age 60, or thereafter, upon attainment of ten years of creditable service. Final averagecompensation will be based on the member's average annual earned compensation for the highest60 consecutive months of employment. Vested employees eligible to begin participation in theDBP before July 1, 2006 are entitled to a retirement benefit, payable monthly for life at (a) any agewith 30 years of service, (b) age 55 with 25 years of service, or (c) age 60 with 10 years of service.In addition, vested employees have the option of reduced benefits at any age with 20 years ofservice. Those hired on or after July 1,2006 have only a single age option. They cannot retire untilage 60 with a minimum of 10 years of service. The system also provides death and disabilitybenefits and deferred benefit options, within qualifications and amounts defined by statute. Benefitsare established or amended by state statute. The system issues an annual publicly availablefinancial report that includes financial statements and required supplementary information for thesystem. That report may be obtained by writing to the Louisiana State Employees' RetirementSystem, Post Office Box 44213, Baton Rouge, Louisiana 70804, or by calling (225) 922-0600 or(800) 256-3000.

Members hired before July 1, 2006 are required by state statute to contribute 7.5% of grosssalary, and members hired after July 1,2006 are required by state statute to contribute 8.0% of grosssalary. The commission is required to contribute at an actuarially determined rate as required byR.S. 11:102. The contribution rate for the fiscal years ended June 30, 2007 and 2006 was 19.1%foreach year of annual covered payroll. The commission's contributions to the system for the yearsended June 30,2007, 2006 and 2005, were $20,921, $35,127 and $34,110, respectively, equal to therequired contributions for the year.

PAGE 17



JUNE 30.2007 AND 2006

7. POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE BENEFITS:

The commission provides certain continuing health care and life insurance benefits for itsretired employees. Substantially all of the commission's employees become eligible for thesebenefits if they reach normal retirement age while working for the commission. These benefits forretirees and similar benefits for active employees are provided through the state's insuranceprogram whose monthly premiums are paid jointly by the employee and the commission. For theyears ended June 30, 2007 and 2006, there were no costs paid for postretirement health care or lifeinsurance benefits.

8. LONG-TERM LIABILITIES:

Long-term liabilities consist of compensated absences. The following is a summary of thelong-term obligation transactions for the years ended June 30,2007 and 2006:

2007 2006

Long-term liabilities payable at July 1 $ 15,881 $ 18,472Additions - 6,902Deletions (8,585) (9,493)Long-term liabilities payable at June 30 S 7.296 $ 15.881

9. LITIGATION:

There is no pending litigation against the commission at June 30,2007 and 2006.

10. LEASES:

During the years ended June 30, 2007 and 2006, the commission leased office and storagespace on a month-to-month basis for $877 and $1,478 per month, respectively.

During the year ended June 30, 2006, the commission leased office equipment for a period of48 months requiring monthly payments of $233. The lease was cancelled October 2005.

The commission signed a lease for rental of office space effective July 1, 2003 for a period of60 months requiring monthly payments of $1,090. The lease was cancelled October 2005.

Rent expense incurred for each of the years ended June 30, 2007 and 2006 was $8,455 and$15,080, respectively.

PAGE 18



JUNE 30,2007 AND 2006

11. ACCOUNTS PAYABLE AND ACCRUALS:

The following is a summary of accounts payable and accruals at June 30, 2007 and 2006:

2007 2006

Payroll and payroll taxes payable $ 5,967 $ 6,302Accounts payable 4,610 8,959

Total $ 10.577 S 15.261

12. RELATED PARTY TRANSACTIONS:

The commission is composed of five members, one of whom is nominated by the WorldTrade Center. On April 17, 2003, the World Trade Center of New Orleans, Inc., entered into a leaseagreement with the Louisiana Tax Free Shopping Commission for the lease of approximately 1,006square feet on the twentieth floor of the World Trade Center Building at No. 2 Canal Street, NewOrleans, Louisiana. The lease agreement was for a 60-month period effective July 1, 2003, withmonthly rental of $1,090 through June 30, 2008. The lease was cancelled in October 2005.

13. USE OF ESTIMATES:

The preparation of financial statements in conformity with accounting principles generallyaccepted in the United States of America requires management to make estimates and assumptionsthat affect reported amounts of assets and liabilities and disclosure of contingent assets andliabilities at the date of the financial statements and the reported amounts of revenues and expensesduring the reporting period. Actual results could differ from those estimated.

DUPLANTIER, HRAPMANN,HOGAN & MAHER, L.L.P.

MICHAEL J. O'ROURKE, C.P.A. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ A j. DUPLANTIER JR, C.P.A.WILLIAM G. STAMM, C.P.A. ^L^^^ I ^^^^ (1919-1985)CLIFFORD J.GIFFIN,JR,C.P.A. ^^^ • ^^H CERTIFIED PUBLIC ACCOUNTANTS FELIX J.HRAPMANN,JR,C.P.A.DAVID A. BURGARD, C.P.A. • ••IBH (1919-1990)LINDSAY J. CALUB, C.P.A., L.L.C. • • • ™ ™ ™ WILLIAM R. HOGAN, JR. C.P.A.

SûÊ^tkc^ 1340 Poydras St., Suite 2000 • New Orleans, LA 70112 MMES$££&,C.P.A.DENNIS W. DILLON, C.P.A. (504) 586-8866 M921-19991

ANNH.HEBERT,C.P.A. FAX (504) 525-5888 MEMBERSROBIN A. STROHMEYER, C.P.A. ,, i AMERICAN INSTITUTE OFGRADY C. LLOYD, III, C.P.A. WWW.dhhmCpa.COin CERTIFIED PUBLIC ACCOUNTANTSHENRY L. SILVIA, C.P.A. SOCIETY OF LA C.P.A.'S

KENNETH J. BROOKS, C.P.A., ASSOCIATE

REPORT ON INTERNAL CONTROL OVER FINANCIALREPORTING AND ON COMPLIANCE AND OTHER MATTERS BASEDON AN AUDIT OF THE FINANCIAL STATEMENTS PERFORMED IN

ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

August 28, 2007


We have audited the accompanying financial statements of the Louisiana Tax FreeShopping Commission, a component unit of the State of Louisiana, as of and for the year endedJune 30, 2007, and have issued our report thereon dated August 28, 2007. We conducted ouraudit in accordance with auditing standards generally accepted in the United States of Americaand the standards applicable to financial audits contained in Government Auditing Standards,issued by the Comptroller General of the United States.

Internal Control Over Financial Reporting

In planning and performing our audit, we considered the Louisiana Tax Free ShoppingCommission's internal control over financial reporting in order to determine our auditingprocedures for the purpose of expressing our opinion on the financial statements, but not for thepurpose of expressing an opinion on the effectiveness of the Louisiana Tax Free ShoppingCommission's internal control over financial reporting. Accordingly, we do not express anopinion on the effectiveness of the Louisiana Tax Free Shopping Commission's internal controlover financial reporting.

A control deficiency exists when the design or operation of a control does not allowmanagement or employees, in the normal course of performing their assigned functions, toprevent or detect misstatements on a timely basis. A significant deficiency is a controldeficiency, or combination of control deficiencies, that adversely affects the Louisiana Tax FreeShopping Commission's ability to initiate, authorize, record, process, or report financial datareliably in accordance with accounting principles generally accepted in the United States ofAmerica such that there is more than a remote likelihood that a misstatement of the LouisianaTax Free Shopping Commission's financial statements that is more than inconsequential will notbe prevented or detected by the Louisiana Tax Free Shopping Commission's internal control.

PAGE 20

A material weakness is a significant deficiency, or combination of significantdeficiencies, that results in more than a remote likelihood that a material misstatement of thefinancial statements will not be prevented or detected by the Louisiana Tax Free ShoppingCommission's internal control.

Our consideration of internal control over financial reporting was for the limited purposedescribed in the first paragraph of this section and would not necessarily identify all deficienciesin internal control that might be significant deficiencies or material weaknesses. We did notidentify any deficiencies in internal control over financial reporting that we consider to bematerial weaknesses, as defined above.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Louisiana Tax FreeShopping Commission's financial statements are free of material misstatement, we performedtests of its compliance with certain provisions of laws, regulations, and contracts, noncompliancewith which could have a direct and material effect on the determination of financial statementamounts. However, providing an opinion on compliance with those provisions was not anobjective of our audit, and, accordingly, we do not express such an opinion. The results of ourtests disclosed no instances of noncompliance or other matters that are required to be reportedunder Government Auditing Standards.

We noted certain matters that we reported to management of the Louisiana Tax FreeShopping Commission in a separate letter dated August 28, 2007.

This report is intended solely for the information and use of the commission and itsmanagement and the Legislative Auditor, and is not intended to be, and should not be used byanyone other than these specified parties. Under Louisiana Revised Statute 24:513, this report isdistributed by the Legislative Auditor as a public document.

, Mxapmann, Megan <£ Mafiex., ££3*

PAGE 21


STATE OF LOUISIANASUMMARY SCHEDULE OF FINDINGSFOR THE YEAR ENDED JUNE 30,2007

SUMMARY OF AUDITOR'S RESULTS:

1. The opinion issued on the financial statements of Louisiana Tax Free Shopping Commission for theyear ended June 30,2007 was unqualified.

2. Internal ControlMaterial weaknesses: none notedSignificant deficiencies: none noted

3. ComplianceNoncompliance material to financial statements: none noted

FINDINGS REQUIRED TO BE REPORTED UNDER GOVERNMENTAL AUDITINGSTANDARDS GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA:

None noted

SUMMARY OF PRIOR YEAR FINDINGS:

None noted

PAGE 22


STATE OF LOUISIANASUPPLEMENTARY INFORMATION

FOR THE YEAR ENDED JUNE 30,2007

ANNUAL FISCAL REPORT TO THE OFFICE OF THE GOVERNOR,DIVISION OF ADMINISTRATION, OFFICE OF STATEWIDE

REPORTING AND ACCOUNTING POLICY

The supplementary information presents the financial position of the Louisiana Tax Free ShoppingCommission as of June 30, 2007, and the results of its operations for the year then ended. Theinformation is presented in the format requested by the Office of Statewide Reporting and AccountingPolicy for consolidation into the Louisiana Comprehensive Annual Financial Report.

OFFICE OF STATEWIDE REPORTING PACKAGE

LOUISIANA TAX FREE SHOPPING COMMISSIONSTATE OF LOUISIANA

Annual Financial StatementsJune 30, 2007

C O N T E N T S

ACCOUNTANTS COMPILATION REPORT

AFFIDAVIT Statements

MD&A (See audit report pages 3-7)

Balance Sheet A

Statement of Revenues, Expenses, and Changes in Fund Net Assets B

Statement of Activities C

Statement of Cash Flows D

Notes to the Financial StatementsA. Summary of Significant Accounting PoliciesB. Budgetary AccountingC. Deposits with Financial Institutions and Investments (Information in Appendix B)D. Capital Assets - Including Capital Lease AssetsE. InventoriesF. Restricted AssetsG. LeaveH. Retirement SystemI. Post Retirement Health Care and Life Insurance BenefitsJ. LeasesK. Long-Term LiabilitiesL. Contingent LiabilitiesM. Related Party TransactionsN. Accounting ChangesO. In-Kind ContributionsP. Defeased IssuesQ. Cooperative Endeavors (moved to Schedule 16)R. Government-Mandated Nonexchange Transactions (Grants)S. Violations of Finance-Related Legal or Contractual ProvisionsT. Short-Term DebtU. Disaggregation of Receivable BalancesV. Disaggregation of Payable BalancesW. Subsequent EventsX. Segment InformationY. Due to/Due from and TransfersZ. Liabilities Payable from Restricted Assets

AA. Prior-Year Restatement of Net AssetsBB. Net Assets Restricted by Enabling Legislation (Information in Appendix C)CC. Impairment of Capital Assets (Information in Appendix D)DD. Employee Termination Benefits

Schedules1 Schedule of Per Diem Paid to Board Members2 Not Applicable3 Schedules of Long-Term Debt

4 Schedules of Long-Term Debt Amortization15 Schedule of Comparison Figures and Instructions16 Schedule of Cooperative Endeavors

HienzMacaliCertified PubllcllMffilllMits

11°Vetsrans Mflmorial Blvd-suite 17°Metairte, LA 70005

DAV.D V.ERNST (504)837-5434

MEMBERS FAX (504) 837-5435American Inetttut* ot CarfflBd Ruble AccountantsSociety of Louisiana Certified Public Accountants WWW.hienzmacalUSO.com

ACCOUNTANT'S COMPILATION REPORT


We have compiled the balance sheet of the Louisiana Tax Free ShoppingCommission, as of June 30, 2007, and the related statements of revenues, expenses andchange in fund net assets, activities and cash flows for the year then ended included in theaccompanying prescribed form in accordance with Statements on Standards forAccounting and Review Services issued by the American Institute of Certified PublicAccountants.

Our compilation was limited to presenting in the form prescribed by the Divisionof Administration, Office of Statewide Reporting and Accounting Policy information thatis the representation of management.. We have not audited or reviewed the financialstatements referred to above and, accordingly, do not express an opinion or any otherform of assurance on them.

These financial statements including related disclosures are presented inaccordance with the requirements of the Division of Administration, Office of StatewideReporting and Accounting Policy, which differ from generally accepted accountingprinciples. Accordingly, these financial statements are not designed for those who arenot informed about such differences.

^HIENZ & MACALUSO, LLCMetairie, LAAugust 27,2007

STATE OF LOUISIANAAnnual Financial Statements

Fiscal Year Ending June 30, 2007

Louisiana Tax Free Shopping Commission

Schedule Number

Division of AdministrationOffice of Statewide Reportingand Accounting Policy

P. O. Box 94095Baton Rouge, Louisiana 70804-9095

Physical Address:1201 N. Third StreetClaiborne Building, 6th Floor, Suite 6-130Baton Rouge, Louisiana 70802

Legislative AuditorP. O. Box 94397Baton Rouge, Louisiana 70804-9397

Physical Address:1600 N. Third StreetBaton Rouge, Louisiana 70802

Personally came and appeared before the undersigned authority,, £>ef\\ h6*N)dQO I (Name)

(Title) of Louisiana Tax Free Shopping Commission who duly sworn, deposes and says, that the

financial statements herewith given present fairly the financial position of

Louisiana Tax Free Shopping Commission at June 30, 2007 and the results of operations for the year

then ended in accordance with policies and practices established by the Division of Administration

or in accordance with Generally Accepted Accounting Principles as prescribed by the

Governmental Accounting Standards Board. Swom and subscribed before me, this S X T ^ day

of

Signature of Agency Official

Prepared by: Hienz & Macaluso, LLC

Title: Certified Public Accountants

Telephone No,:504 837-5434

Date: August 27, 2007

MICHELLE L. BALLINGER

n is for Life

STATE OF LOUISIANALOUISIANA TAX FREE SHOPPING COMMISSIONBALANCE SHEETAS OF JUNE 30, 2007

ASSETSCURRENT ASSETS:

InvestmentsReceivables (net of allowance for doubtful accounts)(Note U) 186.232Due from other funds (Note Y)Due from federal governmentInventories 5.036PrepaymentsNotes receivableOther current assets

Total current assets 409.591NONCURRENT ASSETS:

Restricted assets (Note F):CashInvestmentsReceivables

Notes receivableInvestmentsCapital assets (net of depreciation)(Note D)

LandBuildings and improvementsMachinery and equipment 6.062InfrastructureConstruction in progress

Other noncurrent assetsTotal noncurrent assets 6.062

Total assets $ 41S.R53

LIABILITIESCURRENT LIABILITIES:

Accounts payable and accruals (Note V) $ 17.985Due to other funds (Note Y)Due to federal governmentDeferred revenues ^^^^^^^_«__Amounts held in custody for othersOther current liabilitiesCurrent portion of long-term liabilities:

Contracts payableCompensated absences payable (Note K)Capital lease obligations - (Note J)Claims and litigation payable (Note K)Notes payableLiabilities payable from restricted assets (Note Z)Bonds payableOther long-term liabilities

Total current liabilities 17.985NON-CURRENT LIABILITIES:

Contracts payableCompensated absences payable (Note K) 7.296Claims and litigation payable (Note K)Notes payableLiabilities payable from restricted assets (Note Z)Bonds payableOther long-term liabilities

Total long-term liabilities 7.296Total liabilities 25.281

NET ASSETSInvested in capital assets, net of related debt 6.062Restricted for:

Capital projects ^^_^^^^^^_«Debt service ^^__^_^^___Unemployment compensationOther specific purposes

Unrestricted 384.310Total net assets 390.372

Total liabilities and net assets $ 415.653

The accompanying notes are an integral part of this financial statement.Statement A

STATE OF LOUISIANALOUISIANA TAX FREE SHOPPING COMMISSIONSTATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETSFOR THE YEAR ENDED JUNE 30, 2007

CPEW1NGRB/BUESSales of cormrjcfties and services $ 283,629fisessrrents

Ufee of money and property 397Licenses, perrrits, and feesOther 4,819Total operating revenues 288,845

GPBW1N3 EXPENSESCost of sales and services 277,692AfrriristrativeDepreciation 2.233MrrtizarjonTotal operating expenses 279,925

Operating irrare(loss) 8,920

NCNCPBW1NG REVENUES(EXPBJSES)State appropriationsIntergcwerrfrEntal neM3nues(expenses)TaxesUse of money and propertyGain on disposal of fixed assetsLoss on Disposal of fixed assetsFederal galsInterest expenseOther revenueOther expenseTotal non-operating revenues(expenses)

lncome(loss) before contributions and transfers 8,920

Capital contributionsExtraordinary item- Loss on iirparmert of capital assetsTransfers inTransfers cut

Change in net assets 8,920

Total net assets-begrring 381,452

Total net assets-ending $ 390.372

The accompanying notes are an integral part of this financial statement.

Statement B

STATE OF LOUISIANALOUISIANA TAX FREE SHOPPING COMMISSIONSTATEMENT OF ACTIVITIESFOR THE YEAR ENDED JUNE 30, 2007

See Appendix A for instructions

Entity $

Expenses

279,925

General revenues:

Taxes

State appropriations

$

Services

283,629 $

Contributions

$

Contributions

Grants and contributions not restricted to specific programs

Interest

Miscellaneous

Special items

Extraordinary item - Loss on impairment of capital assets

Transfers

Total general re\enues, special items, and transfers

Change in net assets

Net assets - beginning

Net assets - ending

Net Assets

3,704

397

4,819

5,216

8,920

381,452

390,372

The accompanying notes are an integral part of this statement.

Statement C

STATE OF LOUISIANALOUISIANA TAX FREE SHOPPING COMMISSIONSTATEMENT OF CASH FLOWSFOR THE YEAR ENDED JUNE 30, 2007

Cash flows from operating activitiesCash received from customers $ 290,530Cash payments to suppliers for goods and services (87.981)Cash payments to employees for services (199,875)Payments in lieu of taxesInternal activity-payments to other funds ~~" ^^~~^^^~~~Claims paid to outsidersOther operating revenues(expenses) 5,216

Net cash provided(used) by operating activities 7,890

Cash flows from non-capital financing activitiesState appropriationsProceeds from sale of bonds "~^^^~~^^~~~^^~Principal paid on bonds ~~~~^~~~^ ^~~~~Interest paid on bond maturities ~~~' ^~~^^^~~~_Proceeds from issuance of notes payable ~~'~^^~~~^^^~~~_Principal paid on notes payable !ZHII I ] ZIIZInterest paid on notes payableOperating grants receivedReimbursements for sales tax refunds 773,195Cash paid for sales tax refunds (821,004)Other '

Net cash provided(used) by non-capital financing activities (42.809)

Cash flows from capital and related financing activitiesProceeds from sale of bondsPrincipal paid on bonds ~~^~^~~~~~~~~~_Interest paid on bond maturities ~~~~~~~~~^~~~Proceeds from issuance of notes payablePrincipal paid on notes payable ~~~~^^~~^^~~~_Interest paid on notes payableAcquisition/construction of capital assets (4,200)Proceeds from sale of capital assetsCapital contributions ~~^~~~~'~' ~~~~~'~Other ~

Net cash provided(used) by capital and related financingactivities (4,200)

Cash flows from investing activitiesPurchases of investment securitiesProceeds from sale of investment securities ' ~~^~~~' ~~~~_Interest and dividends earned on investment securities

Net cash provided(used) by investing activities —*~~~~—^

Net increase(decrease) in cash and cash equivalents (39,119)

Cash and cash equivalents at beginning of year 257,442

Cash and cash equivalents at end of year $ 218.323

Statement D (continued)

STATE OF LOUISIANALOUISIANA TAX FREE SHOPPING COMMISSIONSTATEMENT OF CASH FLOWSFOR THE YEAR ENDED JUNE 30, 2007

Operating income(loss) $ 8.920Adjustments to reconcile operating income(loss) to net cash

Depreciation/amortization 2.233Provision for uncollectible accountsOtherChanges in assets and liabilities:

(Increase)decrease in accounts receivable, net 6,902(Increase)decrease in due from other funds(Increase)decrease in prepayments(Increase)decrease in inventories 3.104(Increase)decrease in other assetsIncrease(decrease) in accounts payable and accruals (4,684)Increase(decrease) in compensated absences payable (8,585)Increase(decrease) in due to other fundsIncrease(decrease) in deferred revenuesIncrease(decrease) in other liabiiities

Net cash provided(used) by operating activities $ 7.890

Schedule of noncash investing, capital, and financing activities:

Borrowing under capital leaseContributions of fixed assetsPurchases of equipment on accountAsset trade-insOther (specify)

Total noncash investing, capital, andfinancing activities: $

The accompanying notes are an integral part of this statement.

Statement D (concluded)

STATE OF LOUISIANALOUISIANA TAX FREE SHOPPING COMMISSIONNotes to the Financial StatementAs of and for the year ended June 30, 2007

INTRODUCTION

The Louisiana Tax Free Shopping Commission(LTFSC) was created by the Louisiana State Legislature under theprovisions of Louisiana Revised Statute 51:1301. The following is a brief description of the operations of LouisianaTax Free Shopping Commission(LTFSC) which includes the parish/parishes in which the LTFSC is located:

A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. BASIS OF ACCOUNTING

In April of 1984, the Financial Accounting Foundation established the Governmental Accounting StandardsBoard (GASB) to promulgate generally accepted accounting principles and reporting standards with respectto activities and transactions of state and local governmental entities. The GASB has issued a Codification ofGovernmental Accounting and Financial Reporting Standards (GASB Codification). This codification andsubsequent GASB pronouncements are recognized as generally accepted accounting principles for state andlocal governments. The accompanying financial statements have been prepared in accordance with suchprinciples.

The accompanying financial statements of Louisiana Tax Free Shopping Commission (LTFSC) presentinformation only as to the transactions of the programs of the Louisiana Tax Free Shopping Commission(LTFSC) as authorized by Louisiana statutes and administrative regulations.

Basis of accounting refers to when revenues and expenses are recognized and reported in the financialstatements. Basis of accounting relates to the timing of the measurements made, regardless of themeasurement focus applied.

The accounts of the Louisiana Tax Free Shopping Commission (LTFSC) are maintained in accordance withapplicable statutory provisions and the regulations of the Division of Administration - Office of StatewideReporting and Accounting Policy as follows:

Revenue Recognition

Revenues are recognized using the full accrual basis of accounting; therefore, revenues are recognized inthe accounting period in which they are earned and become measurable.

Expense Recognition

Expenses are recognized on the accrual basis; therefore, expenses, including salaries, are recognized inthe period incurred, if measurable.

B. BUDGETARY ACCOUNTING

The LTFSC utilizes the following budgetary practices:

Annually, the LTFSC approves a budget. The budget is prepared and reported on the modified accrual basisof accounting. There were no amendments to the budget.

C. DEPOSITS WITH FINANCIAL INSTITUTIONS AND INVESTMENTS (If all agency cash and investments aredeposited in the State Treasury, disregard Note C.) See Appendix B for information related to Note C.

1. DEPOSITS WITH FINANCIAL INSTITUTIONS

For reporting purposes, deposits with financial institutions include savings, demand deposits, time deposits,and certificates of deposit. Under state law the Louisiana Tax Free Shopping Commission (LTFSC) maydeposit funds within a fiscal agent bank selected and designated by the Interim Emergency Board. Further,the (BTA) may invest in time certificates of deposit in any bank domiciled or having a branch office in the state

1


of Louisiana; in savings accounts or shares of savings and loan associations and savings banks and in shareaccounts and share certificate accounts of federally or state chartered credit unions.

For the purpose of the Statement of Cash Flows, all highly liquid investments (including restricted assets witha maturity of three months or less when purchased) are considered to be cash equivalents.

Deposits in bank accounts are stated at cost, which approximates market. Under state law these depositsmust be secured by federal deposit insurance or the pledge of securities owned by the fiscal agent bank. Themarket value of the pledged securities plus the federal deposit insurance must at all times equal the amounton deposit with the fiscal agent. These pledged securities are held in the name of the pledging fiscal agentbank in a holding or custodial bank in the form of safekeeping receipts held by the State Treasurer.

GASB Statement 40, which amended GASB Statement 3, eliminated the requirement to disclose alldeposits by the three categories of risk. GASB Statement 40 requires only the disclosure of deposits that areconsidered to be exposed to custodial credit risk. An entity's deposits are exposed to custodial credit risk ifthe deposit balances are either 1) uninsured and uncollateralized, 2) uninsured and collateralized withsecurities held by the pledging financial institution, or 3) uninsured and collateralized with securities held bythe pledging financial institution's trust department or agent, but not in the entity's name.

The deposits at June 30, 2007, consisted of the following:

Certificates OtherCash of Deposit (Describe) Total

Balance per agency books $ 218.323 $ $ $ 218,323

Deposits in bank accounts per bank $ 325,374 $ $ $ 325,374

Bank balances of deposits exposed to custodial credit risk:

a. Deposits not insured and uncollateralized $ $ $ $ -b. Deposits not insured and collateralized with

securities held by the pledging institution. $ $ $ $ -

c. Deposits not insured and collateralized with

securities held by the pledging institution's trustdepartment or ageny but not in the entity's name. $ $ $ $ -

NOTE: The "Deposits in bank accounts per bank" will not necessarily equal the "Balance per agency books"due to outstanding items.

The following is a breakdown by banking institution, program, account number, and amount of the "Deposits in bankaccounts per bank" balances shown above:


Banking Institution Program Amount

1. Chase LTFSC $ 85,322

2. Whitney National Bank LTFSC 237,671

3. Capital One LTFSC 2,381

4.

Total $ 325,374

Cash in State Treasury and petty cash are not required to be reported in the note disclosure. However, to aidin reconciling amounts reported on the balance sheet to amounts reported in this note, list below any cash intreasury and petty cash that are included on the balance sheet.

Cash on hand in refund $ 84,404centersPetty cash 150

$ 84,554

2. INVESTMENTS - NOT APPLICABLE

3. DERIVATIVES - NOT APPLICABLE

4. CREDIT RISK, INTEREST RATE RISK, CONCENTRATION OF CREDIT RISK, AND FOREIGN CURRENCYRISK DISCLOSURES - NOT APPLICABLE

5. POLICIES - NOT APPLICABLE

6. OTHER DISCLOSURES REQUIRED FOR INVESTMENTS - NOT APPLICABLE


D. CAPITAL ASSETS - INCLUDING CAPITAL LEASE ASSETS

The fixed assets used in the Special Purpose Government Engaged only in Business-Type Activities areincluded on the balance sheet of the entity and are capitalized at cost. Depreciation of all exhaustible fixedassets used by the entity is charged as an expense against operations. Accumulated depreciation is reportedon the balance sheet. Depreciation for financial reporting purposes is computed by the straight line methodover the useful lives of the assets.

Balance Period Balance Balance6/30/2006 Adjustment 7/1/2006 Additions Transfers' Retirements 6/30/2007

12,983 $(8.888)4,095

4,095 $

12,983 !(8.888)

4,200 $(2.233)

4.095 1,967

Capital assets not being depreciatedLandNon-depreciable land improvementsCapitalized collectionsConstruction in progress

Total capital assets not beingdepreciated

Other capital assetsFurniture, fixtures, and equipment

Less accumulated depreciationTotal furniture, fixtures, and equipment

Buildings and improvementsLess accumulated depreciationTotal buildings and improvements

Depreciable land improvementsLess accumulated depreciationTotal depreciable land improvements

InfrastructureLess accumulated depreciationTotal infrastructure

Total other capital assets

Capital Asset Summary:Capital assets not being depreciatedOther capital assets, at cost

Total cost of capital assetsLess accumulated depreciation

Capital assets, net

* Should be used only for those completed projects coming out of construction-in-progress to fixed assets; not associatedwith transfers reported elsewhere in this packet.

17,183(11.121)

6,062

4,095 $ 1,967 $ .. $ .. $ 6,062

.. $12,98312,983

(8,888)

4,095 $

* t-- * -- »12,98312,983(8,888)

- $ 4,095 $

.. $ .. $4,2004,200

(2,233)

1,967 $ -- $

- $17,18317,183

(11.121)

-- $ 6,062

E. INVENTORIES

The Louisiana Tax Free Shopping Commission's inventories are valued at cost. These are perpetualinventories and are expensed when used.

F. RESTRICTED ASSETS - NOT APPLICABLE


G. LEAVE

1. COMPENSATED ABSENCES

The Louisiana Tax Free Shopping Commission (LTFSC) has the following policy on annual and sick leave:

Employees earn and accumulate annual and sick leave at various rates depending on their years of service.The amount of annual and sick leave that may be accumulated by each employee is unlimited. Upontermination, employees or their heirs are compensated for up to 300 hours of unused annual leave at theemployee's hourly rate of pay at the time of termination. Upon retirement, unused annual leave inexcess of 300 hours plus unused sick leave is used to compute retirement benefits.

The cost of leave privileges, computed in accordance with GASB Codification Section C60, is recognized as acurrent year expenditure in the fund when leave is actually taken; it is recognized in the enterprise fundswhen the leave is earned. The cost of leave privileges applicable to general government operations notrequiring current resources is recorded in long-term obligations.

2. COMPENSATORY LEAVE

Employees who are considered having non-exempt status according to the guidelines contained in the FairLabor Standards Act may be paid for compensatory leave earned (K-time). Upon termination or transfer, anemployee will be paid for any time and one-half compensatory leave earned and may or may not be paid forany straight hour-for-hour compensatory leave earned. Compensation paid will be based on the employees'hourly rate of pay at termination or transfer. The liability for accrued payable compensatory leave at June 30,2007 computed in accordance with the Codification of Governmental Accounting and Financial ReportingStandards, Section C60.105 is estimated to be $0. The leave payable is not recorded in the accompanyingfinancial statements.

H. RETIREMENT SYSTEM

Substantially all of the employees of the LTFSC are members of the Louisiana State Employees RetirementSystem (LASERS), a cost-sharing, multiple-employer defined benefit pension plan. The System is a statewidepublic employee retirement system (PERS) for the benefit of state employees, which is administered andcontrolled by a separate board of trustees.

All full-time LTFSC employees are eligible to participate in the System unless they elect to continue as acontributing member in any other retirement system for which they remain eligible for membership. Certainelected officials and officials appointed by the governor may, at their option, become members of LASERS.Normal benefits vest with 10 years of service. Generally, retirement age employees are entitled to annualbenefits equal to $300 plus 2.5% of their highest consecutive 36 months' average salary multiplied by theiryears of credited service except for members eligible to begin participation in the Defined Benefit Plan (DBP) onor after July 1, 2006. Act 75 of the 2005 Regular Session changes retirement eligibility and final averagecompensation for members who are eligible to begin participation in the DBP beginning July 1, 2006.Retirement eligibility for these members is limited to age 60, or thereafter, upon attainment of ten years ofcreditable service. Final average compensation will be based on the member's average annual earnedcompensation for the highest 60 consecutive months of employment.

Vested employees eligible to begin participation in the DBP before July 1, 2006, are entitled to a retirementbenefit, payable monthly for life at (a) any age with 30 years of service, (b) age 55 with 25 years of service, or(c) age 60 with 10 years of service. In addition, these vested employees have the option of reduced benefits atany age with 20 years of service. Those hired on or after July 1, 2006 have only a single age option. Theycannot retire until age 60 with a minimum of 10 years of service. The System also provides death and disabilitybenefits and deferred benefit options, with qualifications and amounts defined by statute. Benefits areestablished or amended by state statute. The System issues a publicly available annual financial report thatincludes financial statements and required supplementary information for the System. For a full description ofthe LASERS defined benefit plan, please refer to the LASERS 2006 Financial Statements, specifically,

5


footnotes A - Plan Description and C - Contributions. That report may be obtained by writing to the LouisianaState Employees Retirement System, Post Office Box 44213, Baton Rouge, Louisiana 70804-4213, or bycalling (225) 922-0608 or (800) 256-3000. The footnotes to the Financial Statements contain additional detailsand is also available on-line at:http://\Aww.lasers.state.la.us/PDFs/Publications and Reports/Fiscal Documents/Comprehensive Financial Reports/Comprehensive%20Financial%20Reports 06.pdf

Members are required by state statute to contribute with the single largest group ("regular members")contributing 7.5% of gross salary, and the (BTA) is required to contribute at an actuarially determined rate asrequired by R.S. 11:102. The contribution rate for the fiscal year ended June 30, 2007 remained at 19.1% ofannual covered payroll from the 19.1% and 17.8% required in fiscal years ended June 30, 2006 and 2005,respectively. The LTFSC contributions to the System for the years ended June 30, 2007, 2006, and 2005, were$20,921, $35,127 and $34,110, respectively, equal to the required contributions for the year.

I. POST RETIREMENT HEALTH CARE AND LIFE INSURANCE BENEFITS

LTFSC has no retirees at June 30, 2007.

J. LEASES

NOTE: Where five-year amounts are requested, list the total amount (sum) for the five-year period, notthe annual amount for each of the five years.)

1. OPERATING LEASES

The total payments for operating leases during fiscal year 2007 amounted to $8,455. A schedule ofpayments for operating leases follows:

FY 2013- FY 2018-Nature of lease FY 2008 FY 2009 FY 2010 FY2011 FY2012 2017 2022Office Space $ $ $ $ $ $ $

WTC lease has beencancelled sinceOctober 2005.

Total

2. CAPITAL LEASES - NOT APPLICABLE

3. LESSOR DIRECT FINANCING LEASES - NOT APPLICABLE

4. LESSOR - OPERATING LEASE - NOT APPLICABLE


K. LONG-TERM LIABILITIES

The following is a summary of long-term debt transactions of the entity for the year ended June 30, 2007:(Balances at June 30th should include current and non-current portion of long-term liabilities.)

Year ended June 30. 2007Balance BalanceJune 30, June 30,

2006 Additions Reductions 2007Notes and bonds payable:

Notes payable $ $ $ $Bonds payable —

Total notes and bonds — — — —Other liabilities:

Contracts payableCompensated absences payable 15,881 8,585 7,296Capital lease obligationsClaims and litigationLiabilities payable from restricted assetsOther long-term liabilities -

Total other liabilities 15,881 ^ 8,585 7.296 ~__

Total long-term liabilities $ 15,881 $ -- $ 8.585 $ 7.296 $

(Send OSRAP a copy of the amortization schedule for any new debt issued.)

L. CONTINGENT LIABILITIES - NOT APPLICABLE

M. RELATED PARTY TRANSACTIONS

The LTFSC has the following related party transaction as per FASB 57.

The Commission is composed of five members, one of whom is nominated by the World Trade Center. OnApril 17, 2003, the World Trade Center of New Orleans, Inc., entered into a lease agreement with theLouisiana Tax Free Shopping Commission for the lease of approximately 1,006 square feet on the twentiethfloor of the World Trade Center Building at No. 2 Canal Street, New Orleans, Louisiana. The leaseagreement was for a 60-month period effective July 1, 2003, with monthly rental of $1,090 through June 30,2008. The lease was cancelled in October 2005.

N. ACCOUNTING CHANGES - NOT APPLICABLE

O. IN-KIND CONTRIBUTIONS - NOT APPLICABLE

P. DEFEASED ISSUES - NOT APPLICABLE

Q. COOPERATIVE ENDEAVORS - SEE SCHEDULE 16 AND APPENDIX E FOR INSTRUCTIONS ANDREPORTING REQUIREMENTS - NOT APPLICABLE


R. GOVERNMENT-MANDATED NONEXCHANGE TRANSACTIONS (GRANTS) - NOT APPLICABLE

S. VIOLATIONS OF FINANCE-RELATED LEGAL OR CONTRACTUAL PROVISIONS - NOT APPLICABLE

T. SHORT-TERM DEBT - NOT APPLICABLE

U.

V.

DISAGGREGATION OF RECEIVABLE BALANCES

Receivables at June 30, 2007, were as follows:

Gross receivablesLess allowance for

uncollectible accountsReceivables, net

126,592 $

126,592 $

Amounts not scheduledfor collection during the

subsequent year $

DISAGGREGATION OF PAYABLE BALANCES

Payables at June 30T 2007, were as follows:

Fund Vendors

Salaries

and

Benefits

Sales Tax

Refunds

LTFSC 4.610 $ 5,967 $ 7,408 $

Total payables 4,610 $ 5,967 $ 7,408 $

W. SUBSEQUENT EVENTS - NOT APPLICABLE

59,640 $ 186.232

59,640 $ 186,232

Other TotalPayables Payables

$

- $

17.985

17,985

X. SEGMENT INFORMATION - NOT APPLICABLE


Y. DUE TO/DUE FROM AND TRANSFERS - NOT APPLICABLE

Z. LIABILITIES PAYABLE FROM RESTRICTED ASSETS - NOT APPLICABLE

AA. PRIOR-YEAR RESTATEMENT OF NET ASSETS - NOT APPLICABLE

BB. NET ASSETS RESTRICTED BY ENABLING LEGISLATION (GASB STATEMENT 46) - NOT APPLICABLE

CC. IMPAIRMENT OF CAPITAL ASSETS - NOT APPLICABLE

DD. EMPLOYEE TERMINATION BENEFITS - NOT APPLICABLE

STATE OF LOUISIANALOUISIANA TAX FREE SHOPPING COMMISSION

SCHEDULE OF PER DIEM PAID TO BOARD MEMBERSFor the Year Ended June 30, 2007

NOT APPLICABLE

Name Amount

Note: The per diem payments are authorized by Louisiana Revised Statute, and are presented in compliance withHouse Concurrent Resolution No. 54 of the 1979 Session of the Legislature.

SCHEDULE 1


SCHEDULE OF NOTES PAYABLEJUNE 30, 2007

NOT APPLICABLE

IssueDate ofIssue

OriginalIssue

PrincipalOutstanding

6/30/PYRedeemed

(Issued)

PrincipalOutstanding

6/30/CYInterestRates

InterestOutstanding

6/30/CY

Total

*Send copies of new amortization schedules

SCHEDULE 3-A


SCHEDULE OF BONDS PAYABLEJUNE 30, 2007

NOT APPLICABLE

Principal Principal InterestDate of Original Outstanding Redeemed Outstanding Interest Outstanding

Issue Issue Issue 6/30/PY (Issued) 6/30/CY Rates 6/30/CY

Total

*Send copies of new amortization schedules

SCHEDULE 3-B

STATE OF LOUISIANALOUISIANA TAX FREE SHOPPING COMMISSIONSCHEDULE OF CAPITAL LEASE AMORTIZATION

For The Year Ended June 30, 2007

NOT APPLICABLE

Fiscal YearEnding: Payment Interest Principal Balance

2008

2009

2010

2011

2012

2013-2017

2018-2022

2023-2027

2028-2032

Total

SCHEDULE 4-A


SCHEDULE OF NOTES PAYABLE AMORTIZATIONFor the Year Ended June 30,2007

NOT APPLICABLE

Fiscal YearEnding: Principal Interest

2008

2009

2010

2011

2012

2013-2017

2018-2022

2023-2027

2028-2032

Total

SCHEDULE 4-B


SCHEDULE OF BONDS PAYABLE AMORTIZATIONFor The Year Ended June 30, 2007

NOT APPLICABLE

Fiscal YearEnding:

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

Total

Principal interest

SCHEDULE 4-C

STATE OF LOUISIANA

LOUISIANA TAX FREE SHOPPING COMMISSION

COMPARISON FIGURES

To assist OSRAP in determining the reason for the change in financial position for the State, please completethe schedule below. If the change is greater than $1 million, explain the reason for the change.

1) Revenues

Expenses

2) Capital assets

Long-term debt

Net Assets

Explanation for change:

2007

$ 288,845

279,925

6,062

7,296

390,372

2006

$ 207,372

DifferencePercentage

Change

$ 81,473

331,086

4,095

15,881

381,452

(51,161)

1,967

(8,585)

8,920

$ 39.29%

(15.45%)

48.03%

(54.06%)

2.34%

SCHEDULE 15

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RmDUPLANTIER, HRAPMANN,

HOGAN & MAHER, L.L.P.

_ _ _ _ _ _ CERTIFIED PUBLIC ACCOUNTANTSMICHAEL J. O'ROURKE, C.P.A. •••••• A» DUPLANTIER, JR., CRA.WILLIAM G. STAMM, C.P.A. • • • • • • (191M985)CLIFFORD J. GIFFIN, JR., CRA. FELIX J. HRAPMANN, JR^ CRA.DAVID A. BURGARD, CRA. (1M9-1990)LINDSAYJ.CALUB,CP^,L.L,C. 134Q Poydras St., Suite 2000 • New Orleans, LA 70112 WILLIAMR.HOGAN,JR.CPA.GUY U DUPLANTIER, CKA. J . {1920.1996)MICHELLE H. CUNNINGHAM, CP.A. (3V*) OO6-OO6b JAMES MAKER, JR., CRA.DENNIS W.DILLON, C.P.A. FAX (504) 525-5888 W21-1999)

ANN H. HEBERT, CRA. www.dhhmcpa.comROBIN A. STROHMEYER, CP.A. r MEMBERSGRADY C LLOYD, til, C.P.A. AMERICAN INSTITUTE OFHENRY L. SILVIA, CRA. CERTIFIED PUBLIC ACCOUNTANTS

SOCIETY OF LA. CP.A J)KENNETH J. BROOKS, CRA* ASSOCIATE

August 28, 2007

Board of CommissionersLouisiana Tax Free Shopping CommissionDepartment of RevenueState of Louisiana

In planning and performing our audit of the financial statements of the Louisiana Tax FreeShopping Commission (the Commission) as of and for the year ended June 30, 2007, in accordancewith auditing standards generally accepted in the United States of America and the standardsapplicable to financial audits contained in Government Auditing Standards, issued by the ComptrollerGeneral of the United States of America, we considered the Commission's internal control overfinancial reporting (internal control) as a basis for designing our auditing procedures for the purpose ofexpressing our opinion on the financial statements, but not for the purpose of expressing an opinion onthe effectiveness of the Commission's internal control.

Our consideration of internal control was for the limited purpose described in the precedingparagraph and would not necessarily identify all deficiencies in internal control that might besignificant deficiencies or material weaknesses. However, during our audit, we noted certain mattersinvolving internal control and other operational matters that are presented for your consideration. Thisletter does not affect our report dated August 28, 2007 on the financial statements of the Commission.We will review the status of these comments during our next audit engagement. Our comments andrecommendations, all of which have been discussed with management, are intended to improve theinternal control or result in other operating efficiencies. We will be pleased to discuss these commentsin further detail at your convenience, perform any additional study of these matters, or assist you inimplementing the recommendations. Our comments are summarized as follows:

2007-01: Cash on Hand:

During our audit procedures, there appeared to be an excessive amount of cash on hand at theRiverwalk location in relation to the amount of activity. The cash on hand is replenished on a monthlybasis. We recommend that an analysis of cash on hand be prepared and reviewed by management todetermine an appropriate amount of cash to maintain. We also recommend that an imprest balance ofcash on hand be established and replenished as needed.

Board of CommissionersLouisiana Tax Free

Shopping Commission -2- August 28,2007

2007-02: Theft of Cash on Hand:

During our audit, we became aware of an immaterial instance of theft of cash on hand.Controls were in place to detect this theft; however, to further prevent this type of theft fromhappening, we recommend that more frequent surprise counts of cash on hand be performed bymanagement.

It was also noted that although cash in the vault was counted periodically, the bank bands werenot removed from the individual packs of money during the count and therefore each individual billwas not accounted for. We recommend that each bill be counted separately when verifying the amountof cash on hand within the vaults.

2007-03: Safeguarding of Blank Vouchers:

During our review of internal controls and audit procedures, it was noted that all employeeshave access to blank vouchers that have not been sold or distributed to the members (stores). Werecommend that blank vouchers be kept in a secure location accessible only by authorized personnel.We also recommend that the number of vouchers within each book be verified before distributing themto the members (stores).

2007-04: Sequence of Sales Tax Refund Transactions:

During our audit procedures, it was noted that there were many gaps within the sequence ofsales tax refund transactions generated by the computer system. Through inquiry of management, itwas determined that ticket numbers had to be estimated each month for the Riverwalk location so thatthey would not overlap with the Airport location. We recommend that a separate sequence of sales taxtransactions be maintained for all locations.

2007-05: Accounts Receivable Collections:

It was noted that the membership fee and voucher sales aged trial balance indicates that a largepercentage of receivables are over 90 days old. We recommend that management continue to reviewaccounts receivable for old accounts and make efforts to collect on delinquent accounts.

We believe that the implementation of these recommendations will provide the Commissionwith a stronger system of internal control while also making its operations more efficient. We will behappy to discuss the details of these recommendations with you and assist you in anyway possible withtheir implementation.

Board of CommissionersLouisiana Tax Free

Shopping Commission -3- August 28,2007

This communication is intended solely for the information and use of management and theBoard of Commissioners and is not intended to be and should not be used by anyone other than thesespecified parties.

Very truly yours,

DUPLANTIER, HRAPMANN, HOGAN & MAKER, LLP

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Lindsayfl/Calub, CPAPartner

LJC/ckr

LouisianaTax FreeShopping

Refund CenterP.O. Box20125New Orleans, LA70141

(504) 467-0723Fax (504) 471-2777

August 28, 2007Legislative AuditorState of LouisianaP.O. Box 94397Baton Rouge, LA 70804-9397

Ladies and Gentlemen:

Following is the Corrective Action Plan for Audit recommendations 2007-01through 2007-05 reported in the management letter for the year ended June 30,2007.

2007-01: Cash on Hand:

The Riverwalk Marketplace has cash delivered to the office once or twice a month.We keep enough money on hand to assist customers on a daily basis. We are charged foreach delivery of cash from Loomis Armored. In addition, if the Riverwalk office shouldrun out of money, there would be no way for us to replenish the cash on hand immediately.Whitney bank requires that we order the money to be delivered 48 hours prior to delivery.The Riverwalk Refund center operates with the same amount of cash on hand as the airportoffice.

2007-02: Theft of Cash on Hand:

Our contracted accounting firm of Hienz and Macaluso has made similarsuggestions. In addition, a representative from that firm will come in and do random countsof vaults at both locations. New rules have been implemented that required Refund Centeremployees to verify each bill in the safe at the beginning and end of each work shift. Wealso acquired a money counting machine which will reduce errors in counting.

2007-03: Safeguarding of Blank Vouchers:

Verifying the voucher range in each book before mailing has been implemented, butuntil we are able to open and staff an additional office specifically for administration, weare forced to print the vouchers at the airport office and because of the volume involved, allstaff members must assist in making the voucher books for sales to member merchants

2007-04: Sequence of Sales Tax Refund Transactions:

Until LTFS is able to purchase a new database for processing customers, we willunfortunately have to have the ticket number range be in sequence with each office.

2007-05: Accounts Receivable Collections:

We have begun sending past due invoices periodically, but, we will begin to sendthem on a quarterly basis.

Yours,

Der5se"frr7evenot, Director

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