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CHENNAULT INTERNATIONAL AIRPORT AUTHORITYLAKE CHARLES, LOUISIANA

ANNUAL FINANCIAL REPORT

KJNE 30,2007

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 9! the parish clerk of court.

Release Date

CHENNAULT INTERNATIONAL AIRPORT AUTHORITY

Lake Charles, Louisiana

BOARD OF COMMISSIONERS

June 30, 2007

Dr. George H. Vincent President

Jonald J. Walker, in Vice President

Jane Dufrene Secretary/Treasurer

James G. Gobert Commissioner

Louis H. Haxthausen Commissioner

Glen A, James Commissioner

Russell T. Tritico, Sr. Commissioner

EXECUTIVE DIRECTOR

George L. Heard(Retired June 30, 2007)

CHENNAULT INTERNATIONAL AIRPORT AUTHORITYLAKE CHARLES, LOUISIANA

ANNUAL FINANCIAL REPORTYear Ended June 30, 2007

TABLE OF CONTENTS

INTRODUCTORY SECTION

Tide PageBoard of Commissioners and Executive DirectorTable of Contents

FINANCIAL SECTION

Independent Auditors' Report 1-2Management's Discussion and Analysis 3-7Governmental Funds Balance Sheets and

Statement of Net Assets 8-9Reconciliation of Governmental Fund Balances to Net Assets 10Statement of Revenues, Expenditures, and Changes in

Fund Balances and Statements of Activities 11-12Reconciliation of Statement of Revenues, Expenditures, and

Changes in Fund Balances and Statement of Activities 13Notes to Financial Statements 14-24

SUPPLEMENTARY INFORMATIONBudgetary Comparison Schedule-Required Supplementary Information 25-26Note to Required Supplementary Information 27Schedule of Expenditures of Federal Awards 28Note to Schedule of Expenditures of Federal Awards 29Schedule of pier Diem Paid Commissioners 30

INDEPENDENT AUDITORS' REPORT ON COMPLIANCE ANDINTERNAL CONTROL OVER FINANCIAL REPORTING ON ANAUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCEWITH GOVERNMENT AUDITING STANDARDS. 31-32

REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TOEACH MAJOR PROGRAM AND INTERNAL CONTROL OVERCOMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 33-34

Schedule of Findings and Questioned Costs 35-36

Stulb & Associates, APACCtrtified Public

James E Stulb, GPAKrisrine S. Carter, C.P.A.

INDEPENDENT AUDITORS' REPORT

Board of CommissionersChennault International Airport AuthorityLake Charles, Louisiana

We have audited the accompanying financial statements of the governmental activities, major funds, andremaining fund information, which collectively comprise the basic financial statements, of ChennaultInternational Airport Authority as of and for the year then ended June 30, 2007, as listed in the table ofcontents. These financial statements are the responsibility of the Authority's management. Ourresponsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standardsissued by the Comptroller General of the United States. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amountsand disclosures in the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, thefinancial position of governmental activities, major funds, and remaining fund information of ChennaultInternational Airport Authority as of June 30,2007, and the changes in financial position, thereof for theyear then ended in conformity with accounting principles generally accepted in the United States ofAmerica.

In accordance with Government Auditing Standards, we have also issued a report dated January 17,2008 on our consideration of the Authority's internal control over financial reporting and on our tests ofits compliance with laws, regulations, contracts and grants. The purpose of that report is to describe thescope of our testing of internal control over financial reporting and compliance and the results of thattesting, 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 Standardsand should be read in conjunction with this report in considering the results of our audit.

The management's discussion and analysis and budgetary comparison information on pages 3 to 7 andpages 25 to 26 are not a required part of the basic financial statements but are supplementaryinformation required by accounting principles generally accepted in the United States of America. Wehave applied certain limited procedures, which consisted principally of inquiries of managementregarding the methods of measurement and presentation of the supplementary information. However,we did not audit the information and express no opinion on it.

Member AICPA • Member LCPAMember PCPS/The AICPA Alliance for CPA Firms

BOO Ryah Street • Suite 200 / P.O. Box 1117 • Lake Charles, Louisiana70602(337)494-1240 • (337)494-1040 Fax

Our audit was performed for the purpose of forming an opinion on the basic financial statements ofChennault International Airport Authority, taken as a whole. The accompanying schedule ofexpenditures of federal awards is presented for purposes of additional analysis as required by U. S.Office of Management and Budget Circular A-l 33, Audits of States, Local Governments, and Non-ProfitOrganizations and is not a required part of the basic financial statements of Chennault InternationalAirport Authority. Such information has been subjected to the auditing procedures applied in the auditof the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation tothe basic financial statements taken as a whole.

January 17,2008

Stulb fie Associates

Management's Discussion and Analysis

As management of the Chennault International Airport Authority, we offer readers of theChennault International Airport's financial statements this narrative overview and analysis of thefinancial activities for the Authority for the fiscal year ended June 30,2007.

Financial Highlights

• The Authority was granted approval by the Louisiana State Bond Commission for theissuance, sale, and delivery of Excess Revenue Certificates of Indebtedness (FacilitiesEnhancement Project), Series 2006. On May 2, 2006, an issue in the amount of$10,000,000 was sold to Capital One, National Association. The proceeds are to be usedto finance construction, improving and refurbishment of the existing facilities, as well asacquisition of other facilities necessary for the Authority's operations. The Authorityshall repay the indebtedness in semi-annual payments at a rate of interest ranging from4.06% to 4.29% with the final payment due May 1, 2014. The Authority has madeinterest payments as due and a principal payment of $1,045,000 on May 1, 2007 toreduce the amount of the debt to $8,955,000.

• The Authority is eligible for funding from Federal Emergency Management Agency(FEMA) through the Hurricane Rita recovery program. The Authority received$3,181,037 from FEMA for the fiscal year ending June 30, 2007 and $601,817 for thefiscal year ending June 30, 2006. The Authority anticipates additional funding for thefiscal year ending June 30, 2008 as several large construction projects for hangar repairsand structural upgrades are scheduled to be completed. The additional FEMAreimbursements are expected to be approximately $6,000,000 with the actual amountdepending on what the final construction contract amounts are and on the successfulcompletion of an audit by FEMA.

• The Authority reached final settlement on June 4,2007 with the insurance companies thatprovided property insurance on the premises at the time of Hurricane Rita. The totalpaid to Chennault for insurance claims for Hurricane Rita was $33,159,378 with$26,816,582 reported for the fiscal year ending June 30, 2006 and $6,342,7% reportedfor the fiscal year ending June 30,2007.

• The Authority is nearing completion of more than $46,500,000 of construction and repairprojects for either storm damage repairs and replacement or structural upgrades and otherupgrades to bring them into compliance with current building codes. The Authorityanticipates completing this work with approximately $43,000,000 funded from acombination of property insurance proceeds and FEMA reimbursements and theremaining less than $4,000,000 from Authority funds.

• The Authority entered into sublease with a term of 10 years in July 2005 with FreemanHoldings of Louisiana for property to be used for fixed base operations. The Authoritycompleted construction of an expansion of the FBO building in June 2007 for a cost of'$1,645,142. The monthly rent paid by Freeman Holdings increased upon completionfrom $3,000 per month to $10,000 per month. In addition, Freeman Holding collected$102,134 for fuel flowage fees for the airport from its activities during the year. Thesefees are expected to increase as business activities at the FBO increase.

3

The Authority has a $1,500,000 grant from the Louisiana Economic Development AwardProgram ("EDAP") that will be matched by $1,500,000 of local funds to constructimprovements to hangars and support buildings and to acquire tooling and tail docks formaintenance of large aircraft. These improvements and equipment will be used toexpand business activities at Chennault The EDAP reimbursement for fiscal year endedJune 30,2007 was $420,283. In previous years the Authority received $692,834 from theEDAP program. There remains $386,883 of potential EDAP reimbursements under theprogram and the Authority entered into an amendment to the EDAP agreement to give ituntil December 31, 2008 to complete the construction of an additional tail maintenancedock that would result in Chennault being reimbursed the remaining funds in the EDAPagreement.

The Authority has entered into a Cooperative Endeavor Agreement with the Division ofAdministration of the State of Louisiana for a $1,600,000 cash line of credit. Thereimbursement for the fiscal years ended June 30, 2006 and 2005 were $74,456 and$684,782, respectively. Total reimbursements received to date are $759,238. TheAuthority plans to use the remaining funds under this agreement to construct a 11,475square foot office/shop annex to Hangar C. The opening of bids for the construction ofthe new annex project was delayed until late in 2007 to allow for the Hangar C stormdamage repairs and structural upgrade projects to be completed.

Financial Analysis

The assets of the Chennault International Airport Authority exceeded its liabilities at the close ofthe fiscal year ended June 30,2007, by $90,207,716. Table 1 on page 6 compares the calculationof net assets for the last two years.

The net assets of the Chennault International Airport Authority increased by $8,644,849 duringthe fiscal year ended June 30,2007. The changes in net assets are detailed in Table 2 on page 7.

Long-Term Debt

The Authority owes a total of $11,015,000 plus accrued interest. There remains $8,955,000owed of the $10,000,000 that was borrowed under a contract entered into on May 2, 2006 for theissuance of Excess Revenue Certificates of Indebtedness. $2,060,000 is owed under threereimbursement contracts entered into in 1993, 1994, and 1996. The total accrued interest on alldebt as of June 30,2007 is $165,656.

Budgetary Highlights

Property tax collections of $5,680,285 from the 5.45 mill tax levied for 2006 exceeded the$5,250,000 that was budgeted by $430,285. There are nine years remaining on the ten-yearauthorization to levy the property tax. The property tax levy approved for the year endingDecember 31,2007 is 5.45 mills.

Rent income collected amounted to $782,957, which is $311,994 less than was budgeted for theyear ending June 30, 2007. The largest part of not meeting the budget for rent income was theresult of the use of airport premises by the General Services Administration for storm damagerelief ended earlier than was expected, which resulted in $181,692 less rent being collected thanwas budgeted. The second largest reason was that rent income collected from Aeroframe was$150,000 less than was budgeted as the delay in the storm damage repair projects at Hangars D,E, F, and G resulted in a renegotiation of the Aeroframe sublease to factor in the delay, the feetof the significant employment growth at Aeroframe since the storm, the need for additionalfacilities, and a lease payment structure to allow a stepped increase in the rent over the five yearterm of the lease.

The $154,760 total for miscellaneous income exceeded the budget by $2,760. The largestcomponent of miscellaneous income is the $102,134 of fuel flowage fee.

Table 1Chennault International Airport Authority

Net Assets

Assets other than property, plant and equipment;Cash and certificates of depositReceivablesReimbursement reserve accountPrepaid Insurance

Total

Property, plant and equipment-HangarsOffices, warehouses and shopsAirport operations buildingsAirfield pavement improvementsRoads and parking lotsUtility systemsWaste treatment plantFirewater plant and linesFences and gatesOther improvementsEquipment

SubtotalLess accumulated depreciation

Capital Assets, net of depreciationLandConstruction in progress

Total property, plant and equipmentTotal Assets

Liabilities:Other liabilitiesBonds payable

Total liabilities

Net Assets:Invested in capital assetsRestricted for capital projectsRestricted for debt serviceUnrestrictedTotal Net Assets

June 30,2007 June 30,2006

$ 16,258,4821,007,683

50,625370,598

17,687,388

103,915,443

2,692,72711,015,00013,707,727

$ 16,912,98114,678,467

413,607

32,005,055

48,042,18124,163,128

1,268,0913,432,8702,863,8685,682,6241,880,7862,028,7431,840,8205,856,0894,021,084

101,080,284(28,161,158)72,919,1262,584,369

10,724,56086.228,055

25,110,77517,529,0541,803,7553,432,8702,863,8685,682,6241,880,7862,028,7431,840,8205,838,6683,689,108

71,701,071(25,195,178)46,505,893

2,340,99714,335,18263,182,07295,187,127

1,354,26012,270,00013,624,260

75,047,399 50,672,2143,688,312 3,445,056

67,158 445,53111,404,847 27,000,066

S 90,207,716 $ 81,562.867

Note - The net assets listed above do not include either the value of the 1,200 acres of landleased to the Authority for ninety-nine years by the four entities mat created Chennault in

June 1986 or the value of the approximately 14 million square feet of pavement that remainsof the runway, taxrway, and aircraft parking aprons of the former Chennault Air Force Base.

Table 2Cheonautt International Airport Authority

Changes in Net Assets

Revenues:Property laxRent incomeMiscellaneous incomeinterest incomeGrants

SubtotalOther Financing Sources:Impairment gainFEMA proceeds, net of cost of assets

Tola! revenues and other financing sources

Expenses:Operate, maintain and repair airport and facilitiesIntergovernmentalTransfer of land to Sowcla in exchange for long-term lease on propertyInterest paid on debtDepreciation

TolalIncrease in Net AssetsBeginning Net AssetsEnding Net Assets

June 30,2007 June 30,2006

5,680,285782,957154,760696,235552,671

7,866,908

9,756,112-

17,623,020

5,254,0611,069,466

145,561374,10488,971

6,932,163

15,762,570269,718

22,964,451

4,857,578548,72662,500

543,3862,965,9818,978,1718,644,849

81,562,867

4,617,258532,873

-205,108

2,145,0937,500,332

15,464,11966,098,748

$ 90,207,716 $ 81,562,867

CHENNAULT INTERNATIONAL AIRPORT AUTHORITYSTATEMENT OF NET ASSETS AND GOVERNMENTAL FUNDS BALANCE SHEET

June 30,2007

Governmental Fund Types

ASSETSCashCertificates of DepositReceivables:

TaxesInterestFederal/State GrantsRefundable Insurance AssessmentOther

LandOther Capital Assets, net of

accumulated depreciationPrepaid insuranceReimbursement reserve accountDue from other funds

Total assets

LIABILITIESLiabilities:

Accounts payableAccrued expensesContracts payableDue to other fundsCertificates of indebtedness

Due within one yearDue after one year

Reimbursement contracts, Stateof Louisiana

Due within one year

Total liabilitiesFund Balances/ Net AssetsFund Balances

Reserved for construction and repairsDesignated for debt serviceUndesignated

Total liabilities and fund balance

Net AssetsInvested in capital assets, net of related debtRestricted for construction and repairsRestricted for debt serviceUnrestricted

Total net assets

Special Debt CapitalRevenue Service Projects

$

$

$

440,612 *12,445,000

49,9868,130

296,054118,39362,095

370,598

4,288

13,795,156 $

168,357 $747

2,221,205

$ 217.87020,000 3,135,000

58 8,110464,857

50,625

70,683 $ 3,825.837

$ 1t313

135,4493.525 763

2,390t309 3.525

11.404.84711,404,847

$ 13.795.156

67,158

137,525

3.688,312

67,158 3.688.312

70,683 $ 3.825.837

See Accompanying Notes to Financial Statements8

Total GovernmentFunds

$ 658,48215,600,000

49,98616,298

464,857

476,542

370,59850,6254.286

Adjustments

2,584,369

83,643,686

(4.288)

Statement ofNet Assets

; 658,48215,600,000

49,98616,298

464,857

476,5422.584,369

83,643,686370,59850,625

$ 17,691.676 $ 86,223,767 $ 103,915,443

169.670747

2,356,6544,288

165,656

(4,288)

1,100,0007,855,000

$ 169,670166,403

2,356,654

1,100,0007,855,000

2,531,3592,060.000

11.176.3682,060,000

13.707.727

3,688,31267,158

11.404.847

15.160.317

$ 17.691,676

(3,688,312)(67,158)

(11.404.847)(15.160.317)(3,983,949)

75,047,399 75,047,3993,688,312 3,688,312

67,158 67,15811.404,847 11.404.847

$ 90,207,716 $ 90,207,716

See Accompanying Notes to Financial Statements9

CHENNAULT INTERNATIONAL AIRPORT AUTHORITYRECONCILIATION OF GOVERNMENTAL FUND BALANCE TO NET ASSETS

June 30,2007

Total Governmental Fund Balances

Amounts reported for governmental activities in the statement of netassets are different because:

Capital assets used in the governmental activities we not financialresources and therefore are not reported in the funds. These assetsconsist of:

Land

BuildingsAirfield Pavement ImprovementRoads and ParkingUtility and Fire Protection SystemsWaste Treatment PlantFences and GatesOther ImprovementsEquipmentConstruction in progressAccumulated depreciation

Other capital assets, net of accumulated depreciation

Interfund receivables are eliminated Hi reporting total assets

Total asset adjustments

Some tebfllttes are not due and payable in the current period and therefore are notreported in the funds. Those liabilities consist of:

Certificates of indebtednessReimbursement contracts, State of LouisianaAccrued interest

Interfund payables are eliminated in reporting total assets

Total liability adjustments

Net assets of governmental activities

3,955,0002,060,000

165,656

(4,288)

$ 15,160,317

2,504,369

73,473,4003,275,4673,021,2717,711,3671,880,7861.840,8205,856,0394,021,084

10,724,550(28.161,158)83,643,666

(4,288)

$ 86,223,767

$ 11,176.368

$ 90,207.716

See Accompanying Note* to Financial Statements10

CHENNAULT INTERNATIONAL AIRPORT AUTHORITYSTATEMENT OF ACTIVITIES AND GOVERNMENTAL FUND

REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESFiscal Year Ended June 30, 2007

Revenues:TaxesRentsInterestMiscellaneousGrant proceeds

Total revenues

Expenditures:Current operating:

Personal servicesTravelContractual servicesIntergovernmentalSupplies and materialsRepairs and maintenanceHurricane repairsDepreciation

Capital outlaysDebt service:

Interest and fiscal chargesTotal expenditures

Excess (deficiency) of revenuesover expenditures

Other financing sources (uses):Insurance proceedsFEMA proceedsDOTD proceedsSafe of property to SowelaImpairment gainOperating transfers inOperating transfers (out)

Total other financing sources (uses)

Excess (deficiency) of revenuesand other sources overexpenditures and other uses

Fund balance/net assetsBeginning of year

End of year

Governmental FundsSpecial

Revenue

$ 5,680,285782,957539,882154,760

7,157,884

1,359,99728,412

1,344,794548,726209,374

1,260,18024.182.955

110,188

1,464,58830,509,214

(23,351,330)

6.342,7963,181,037

232,279

(2,000.000)7,756,112

(15,595,219)

27,000,066

$ 11,404,847

DebtService

$ - $

29,627

29,627

408,000408,000

(378,373)

-

.

(378,373)

445,531

$ 67,158 $

CapitalProjects

128.726

552,671679,397

2,436,142

2.436,142

(1.756,745)

2,000,000

2,000,000

243,255

3,445,056

3,688,312

See Accompanying Notes to Financial Statements

11

Total Government Statement ofFunds Adjustments Activities

$ 5,680,285782,957696,235154,760552,671

7,866.908

1,359.99728.412

1,344,794548,726209,374

1,260,18024,182,955

-2,546,330

1,872,58833.353.356

(25,486.448)

6,342,7963,181,037232.279

--

2,000,000(2.000,000)9,756,112

$ - $

---

--

_

--

36,510-

(23,564,644)2,965,981(2.546,330)

(1.329.202)(24.437.685)

(24,437.685)

(6,342,796)(3,181,037)(232.279)(62.500)

9,756,112--

(62,500)

5,680.285782,957696,235154,760552,671

7,866,908

1,359,99728.412

1,344.794548,726245.884

1,260,180618,311

2,965,981-

543,3868,915,671

(1,048.763)

--(62.500)

9,756.1122,000,000(2.000,000)9.693,612

(15.730.336) 24,375,185 8.644.849

30.890.653 50.672.214 81.562.867

$ 15.160.317 $ 75.047.399 $ 90.207.716


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CHENNAULT INTERNATIONAL AIRPORT AUTHORITYRECONCILIATION OF CHANGE IN GOVERNMENTAL FUND BALANCE

TO THE STATEMENT OF ACTIVITIESJune 30,2007

Net change in fund balances - total governmental funds

Amounts reported for governmental activities in the statement of activitiesare different because:

Governmental funds report capital outlays and repairs as expenditures. However,in the statement of activities, assets with an Individual cost of more than $10.000are capitalized and the cost is allocated over their estimated useful lives andrepotted as depreciation expense. For the current period, these amounts are:

Hurricane repairs 23,564,644Capital outlay 2,546,330Disposal of equipment acquired costing less than $1 OK (36,510)Transfer of land to Sowela in exchange for long-term lease on property (62,500)Depreciation expense (2.905.981)

Excess of capital outlay over depreciation expense

$ (15,730,336)

23,045,933

Repayment of long-teim debt is reported as an expenditure in governmentalfunds, but the repayment reduces long-term liabilities in the statement of netassets, tn the current year, these amounts consisted of:

Principal retirement - Reimbursement contractsPrincipal retirement - $10M debt. Series 2006Net decrease in accrued interest payable

Net decrease

Insurance and FEMA proceeds are reported as other financing sources ingovernmental funds, but in the statement of net activities offset the cost of theapplicable assets and is reported as an Impairment gain(loss). For thecurrent period, these amounts are:

Insurance proceedsFEMA proceedsDOTD proceedsImpairment gain

210,0001,045,000

74.202

(6,342,796)(3,181,037)

(232,279)9.756.112

1.329.202

Change in net assets of governmental funds $ 8.644.849


13

CHENNAULT INTERNATIONAL AIRPORT AUTHORITYNOTES TO FINANCIAL STATEMENTS

JUNE 30, 2007

Summary of Significant Accounting Policies

The Chennault International Airport Authority (the Authority) is a political subdivision of theState of Louisiana and was created by an Act of the Louisiana Legislature. By virtue of theact and the joint initiative of Calcasieu Parish, City of Lake Charles, Calcasieu Parish SchoolBoard and the State Board of Elementary Education, a special district was created through anintergovernmental contract and local services agreement. The Authority is governed by aboard of seven commissioners appointed as follows: two members appointed by CalcasieuParish, two members appointed by the City of Lake Charles, two members appointed by theCalcasieu Parish School Board. The six members so appointed shall appoint by majority votea seventh member.

The name of the Authority was changed by Act 458 of the Louisiana Legislature, 1997Regular Session, from the Chennault Industrial Airpark Authority to the ChennaultInternational Airport Authority.

The Authority's financial statements are prepared in accordance with generally acceptedaccounting principles (GAAP). The Governmental Accounting Standards Board (GASB) isresponsible for establishing GAAP for state and local governments. In June 1999, theGovernmental Accounting Standards Board unanimously approved Statement No. 34, BasicFinancial Statements - and Management's Discussion and Analysis - for State and LocalGovernments. The Authority implemented the new reporting model standards in fiscal yearended June 30,2004.

Reporting Entity

In evaluating how to define the Authority for financial reporting purposes, management hasconsidered all potential component units. The decision to include a potential component unitin the reporting entity was made by applying the criteria set forth in GAAP. The basic, butnot the only, criteria for including a potential component unit within the reporting entity is thegoverning body's ability to exercise oversight responsibility. The most significantmanifestation of this ability is financial interdependence Other manifestations of the ability toexercise oversight responsibility include, but are not limited to, the selection of governingauthority, the designation of management, the ability to significantly influence operations andaccountability for fiscal matter*. The other criteria used to evaluate potential componentunits for inclusion or exclusion from the reporting entity is the existence of special financingrelationships, regardless of whether the Authority is able to exercise oversight responsibilities.Based upon the application of these criteria, it was determined that no other agency should beincluded in this reporting entity.

14


JUNE 30,2007(continued)

Basic Financial Statements - Fund Financial Statements

The financial transactions of the Authority are reported in individual funds in the fundfinancial statements. Each fund is accounted for by providing a separate set of self-balancingaccounts that comprises its assets, liabilities, fund equity, revenues and expenditures.Government resources are allocated to and accounted for in individual funds based upon thepurposes for which they are to be spent and the means by which spending activities arecontrolled. The various funds are grouped, in the financial statements in this report, intothree generic fund types and two broad funds categories as follows:

GOVERNMENTAL FUNDS

The focus of the governmental funds* measurement (in the fund statements) is upondetermination of financial position and changes in financial position (sources, uses, andbalances of financial resources) rather than upon net income. The following is a descriptionof the governmental funds of the authority.

Special Revenue Funds - Special Revenue Funds are used to account for the proceeds ofspecific revenue sources (other than special assessments, expendable trusts, or major capitalprojects) that are legally restricted to expenditures for specified purposes.

Debt Service Funds - Debt Service Funds are used to account for the accumulation ofresources for, and the payment of, general long-term debt principal, interest, and relatedcosts.

Capital Projects Funds - Capital Projects Funds are used to account for financial resources tobe used for the acquisition, renovation, or construction of major capital facilities.

Basic Financial Statements - Government-Wide Statements

The Authority's basic financial statements include both government-wide (reporting theAuthority as a whole) and fund financial statements (reporting the Authority's funds).In the government-wide Statement of Net Assets, governmental activities are presented on aconsolidated basis and are reported on a full accrual, economic resource basis, whichrecognizes all long-term assets and receivables as well as long-term debt and obligations.The Authority's net assets are reported in three parts - invested in capital assets, net ofrelated debt; restricted net assets; and unrestricted net assets.

15


JUNE 30, 2007(continued)

The government- wide Statement of Activities reports revenues and expenses on a fullaccrual, economic resource basis. The Statement of Activities recognizes depreciationexpense.

This government-wide focus is more on the sustainabilfty of the Authority as an entity and thechange in the Authority's assets resulting from current year's activities.

Basis of Accounting

Basis of accounting refers to when revenues and expenditures or expenses are recognized inthe accounts and reported in the financial statements. Basis of accounting relates to thetiming of the measurements made, regardless of the measurement focus applied.

Accrual

The governmental activities in the government-wide financial statements are presented on theaccrual basis of accounting. Revenues are recognized when earned and expenses arerecognized when incurred.

Modified Accrual

All governmental funds financial statements are presented on the modified accrual basis ofaccounting. Under the modified accrual basis of accounting, revenues are recognized whenavailable and measurable. Revenues that are accrued include rent, property taxes, andinterest. Expenditures, other than interest on long-term debt, are recorded when the liabilityis incurred.

Cash and Certificates of Deposit

Cash and certificates of deposit are stated at cost which approximates market. Interest isaccrued as earned in the period it becomes measurable and available.

Accrued Unpaid Vacation, Sick Leave and Other Employee Benefit Amounts

Vacation, compensation time, and sick leave are recorded as expenditures of the period inwhich they are paid. In the event of separation of employment, the employee will be paid forany unused vacation time accrued. Employees are able to accrue unused sick leave withoutlimitation. However, there will be no payment of unused sick leave upon separation ofemployment. At June 30, 2007 unrecorded Special Revenue Fund liabilities includedapproximately $59,234 vacation pay and $2,440 compensation time.

16



Use of Estimates

The financial statements are prepared in conformity with generally accepted accountingprinciples and, accordingly, include amounts that are based on management's best estimatesand judgements. Actual results could differ from these estimates.

Cash and Certificates of Deposit

The Authority maintains a fiscal agent agreement. All cash and certificates of deposit areentirely insured or collateralized. Louisiana state statute requires that the Authority'sdeposits be secured by the depository banks and savings and loan associations pledginggovernment securities as collateral. The amount of the security shall at all time be equal toone hundred percent of the amount on deposit except that portion of deposits insured by anygovernmental agency insuring bank deposits which is organized under the laws of the UnitedStates.

Cash and investments of the Authority are classified into three categories to give anindication of the level of risk assumed at year-end:

Category 1: includes investments insured or collateralized with securities held by theAuthority or its agent in the name of the Authority.

Category 2: includes uninsured investments which are collateralized with securities held bythe pledging financial institution's trust department or agent in the Authority's name.

Category 3: includes uninsured and unregistered investments with the securities held by thefinancial institution, or by its trust department or agent, but not in the name of the Authority.

Cash and certificates of deposit as of June 30, 2007 were all classified as category I. Thebalance as of June 30, 2007 consisted of the following;

Bank Balance Carrying: ValueCash S 951.738 $ 658.4S2

Certificates of deposit $15.600.000

17



3. Capital Assets

Capital assets purchased or acquired with an original cost of $10,000 or more are reported athistorical cost or estimated historical cost. Additions, improvement and other capital outlaysthat significantly extend the useful life of an asset are capitalized. Other costs incurred forcosts for repairs and maintenance are expensed as incurred. Depreciation on all assets isprovided on the straight-line basis over the following estimated useful lives:

Buildings 15-40 yearsMachinery and equipment 10-30 yearsImprovements 10 - 50 yearsOther infrastructure 10 - 50 years

GASB 34 requires the Authority to report and depreciate new infrastructure assets effectivebeginning the year of implementation (June 30, 2004). The Authority voluntarily elected toretroactively report infrastructure assets and depreciation. Infrastructure assets includedrainage, roads, runways, lighting, utilities, etc.

4. Joint Services Agreement

The Chennault International Airport Authority entered into Joint Services Agreements onApril 4, 1995, with the West-Calcasieu Airport Managing Board and the DeQuincy AirportAuthority. The purpose of the agreements is to cooperate on the construction, acquisition,and improvement of public aviation projects or improvements. The joint use of funds isintended to cany out the public purpose of encouraging and stimulating economicdevelopment throughout Calcasieu Parish.

Under the terms of the amended agreements, effective for years 2006 through 2015, theAuthority agreed to annually grant or transfer $200,000 to the West-Calcasieu AirportAuthority Managing Board and $100>000 to the DeQuincy Airport Authority. The transfersare scheduled to take place annually for the ten-year period.

5. Property Taxes

On January 15, 2005, an election was held and the proposition passed authorizing theAuthority to renew the levy and collect a 5.45 mill property tax for a period of ten yeaisbeginning with the year 2006. For the year ended June 30, 2007, the Authority levied taxes of5.45 mills on property with assessed valuation totaling $1,062,414,142 the taxes werededicated to maintaining, operating, relocating, constructing, or improving Airpark facilitiesof the Authority. Total taxes levied were $5,790,157.

18



Property tax mileage rates are normally adopted in May for the calendar year in which taxesare levied and recorded. All taxes are due and collectible when the assessment rolls are filedon or before November 15th of the current year, and become delinquent after December 31st.Property taxes not paid by February 28th are subject to property lien.

6. Reimbursement Contract

The Authority and the State Bond Commission have entered into three separatereimbursement contracts including a $3,000,000 contract amended August 19, 1993, a$600,000 contract dated November 17, 1994, and a $300,000 contract dated My 18, 1996.The contracts provide for payments to reimburse the state for bonds issued for renovations toChennault facilities as well as providing for the establishment of a reserve account

The reimbursement contracts provide that the Authority shall repay into the State ofLouisiana Bond Security and Redemption Fund designated revenues in an amount sufficientto reimburse the amount of the contract, together with interest at the rate of 6% over aperiod of twenty years.

In July 2005 there was a proposed agreement between the Authority, the State of Louisiana,and the Board of Supervisors of Community and Technical Colleges to transfer land andproperty of the Authority in exchange for forgiving debt of $2,270,000, the balance of theReimbursement Contracts as of June 30, 2005. Prior to finalizing the agreement, a portion ofthe property to be exchanged was destroyed by Hurricane Rita. As a result, there was adelay in the transaction and plans for a new agreement are being developed. During the fiscalyear ended June 30, 2007 the State applied funds from the Reserve Accounts to coverprincipal and interest installments due through November 15, 2006. The balance of thecontracts as of June 30,2007 is as follows;

AccruedPrincipal Interest Reserve

1993 Contract $1,495,000 $ 78,452 $ 45,9431995 Contract 355,000 14,398 2,0481997 Contract 210.000 9.524 2.634

$2,060,000 $102,374 $ 50,625

19



Excess Revenue Certificates of Indebtedness

On March 16,2006 the Louisiana State Bond Commission granted approval to the Authorityfor the issuance, sale and delivery of Excess Revenue Certificates of Indebtedness (FacilitiesEnhancement Project), Series 2006. On May 2, 2006, an issue in the original principalamount of $10,000,000 was sold to Capital One, National Association. The contractprovides for payments to reimburse the state for bonds issued to finance construction,improving and refurbishment of the existing facilities many of which were damaged byHurricane Rita on September 24, 2005, as well as acquisition of other facilities necessary forthe Authority's operations, and paying costs associated with issuance of the Certificates.

The certificates of indebtedness, dated May 2, 2006, provide that the Authority shall repaythe paying agent semi-annual interest payments at a rate ranging from 4.06% to 4.29% andannual principal payments with the final payment due May 1,2014. The annual requirementsto amortize the indebtedness outstanding as of June 30,2007 is as follows:

Year Ending June 30200820092010201120122013 and after

8. Changes in Long-Term Debt

Interest378,029332,819284,771233,862180,142186.335

Principal1,100,0001,155,0001,215,0001,270,0001,340,0002.875.000

$8.955.000

The following is a summary of changes in long-term debt of the Authority for the year endedJune 30, 2007:

ReimbursementContracts

Certificates ofIndebtedness

Total

BalanceJuly 1, 2006

$ 2,270,000 $

KLOOO.OOO£70.000 $

AdditionsBalance

Retirements June 30.2007

$ 210,000 $ 2,060,000

1.045.000 8.955.000$ 1.255.000

There are various limitations and restrictions contained in the various debt agreements. TheAuthority is in compliance with all significant limitations and restrictions.

20



8. Change in Capital Assets

A summary of capital assets for the year ended June 30,2007 is as foDows:

June 30,2006 Additions Retirements June 30,2007Construction inprogress

LandBuildingsImprovementother than buildi

Equipment

Accumulateddepreciation

$ 14,335,1822,340,997

44,443,584

23,568,3793.689.10888,377,250

C25.195.178>1 63.182.072

$26,000,786305,872

29,029,817

17,421368.486

55,722,382

(2.965.981)$ 52.756.401

$29,611,40862,500

36.51029,710,418

—

$29.710.418

$10,724,5602,584,369

73,473,401

23,585,8004.021r084

114,389,214

(28.163. 159}

During the fiscal year ended June 30,2007, the Authority completed construction on severalcapital projects. Listed below is a summary of the completed projects.

ProjectFBO Building ExpansionPortable Building(Ops)Hangar 1Hangar AHangar CHangar EHangar FBuilding 1350Building 3001Building 3002Building 3006Building 3007Building 3009Other ProjectsTotal

Prior PeriodExpenditures

$ 337,414-

249,0025,061,7663,838,1461,852,9881,347,949

-117,766

-155,856

-722,547

.$ 13.683.434

Year EndedJune 30, 2007

$ 1,307,72848,536

1,456,6854,733,8472,945,5502,094,7811,104,159

50,950747,19062,997

255112,881624,68373.562

S 15.363.804

Total ProjectExpenditures

$ 1,645,14248,536

1,705,6879,795,6136,783,6963,947,7692,452,108

50,950864,95662,997

156,111112,881

1,347,23073.562

$ 29.047.238

21



Construction in progress as of June 30, 2007, is composed of the following:

Expended toJune 30.2007

Hangar B $ 7,747,445Hangar D 2,243,490Building 1020 124,426Fuel Farm Expansion 175,531Hangar C Annex 18,951Technology Transfer Building 165,736New Air Traffic Control Tower 243,652Other Projects 5.329Total $10.724.560

9. Lease Revenue

The Authority teases its property to various commercial operations. A significant portion ofthese leases are non-canceiable operating leases.

Minimum rentals as of June 30, 2007 on non-cancelable operating leases for the next fiveyears are as follows:

Year Ending AmountJune 30,2008 $ 901,742June 30, 2009 $1,312,250June 30, 2010 $1,626,762June 30, 2011 $1,521,254June 30, 2012 $1,790,762

10, Defined Benefit Plan

Plan Description:

The Authority contributes to the Louisiana State Employees* Retirement System (System), acost-sharing multiple-employer public employee retirement system (PERSY As a result of

22



state legislation passed Chennault employees with 10 years of service credit on June 30,2004participate in the system.

Employees are eligible for retirement if they have; a) thirty years or more of service, at anyage; b) twenty-five years or more of service, at age fifty-five or thereafter; or c) ten years ormore of service, at the age of sixty or thereafter.

Retirees shall receive a maximum retirement allowance equal to two and one-half percent ofaverage compensation for every year of creditable service plus three hundred dollars. Theretirement benefits provided shall not exceed one hundred percent of retiree's averagecompensation. The System also provides death and disability benefits. Benefits areestablished by Louisiana state statute.

The Authority's payroll for employees covered by the System for the year ended June 30,2007 was $366,255. The Authority's total payroll and taxable benefits was $1,035,782.

Contribution requirements:

Covered employees are required by Louisiana state statute to contribute 7.5 percent of theirsalary to the plan. The Authority is required by the same statute to contribute 19.1 percent ofeligible salaries. The contribution requirement for the year ended June 30, 2007, was$97,424 (26,6% of current year covered payroll), which consisted of $69,955 (19.1% ofcurrent year covered payroll) from the Authority and $27,469 (7.5% of current year coveredpayroll) from employees.

Fund status and progress:

The Tension Benefit Obligation" (PBO) is a standardized disclosure measure of the presentvalue of pension benefits, adjusted for the effects of projected salary increases and step-ratebenefits, estimated to be payable in the future as a result of employee service to date. Hiemeasure is intended to help users access the funding status of the plan on a going-concernbasis, assets progress made in accumulating sufficient assets to pay benefits when due, andmake comparisons among other public employee retirement systems. The measure is calledthe "actuarial present value of credited projected benefits" and is independent of the fundingmethod used to determine contributions to the plan.

The PBO was computed as part of an actuarial valuation performed as of June 30, 2006;however, the System does not make separate measurements of assets and pension benefit

23


IUNE 30, 2007(continued)

obligations of individual employers. The pension benefit obligation at June 30, 2006, for theSystem as a whole was approximately $11.548 billion.

The system's net assets available for benefits on that date (valued at market) woreapproximately $7.430 billion, leaving an unfunded pension benefit obligation ofapproximately $4.117 bilfion.

Ten year historical trend information is presented in a separately issued PERS report whichprovides information about progress made in accumulating sufficient assets to pay benefitswhen due.

11. Contingencies and commitments

Commitments under maintenance and service contracts provide for minimum annualpayments as follows:

Year ending June 30 Fire Protection Runway Equipment2008 $ 456,492 $ 28,5002009 - 28,5002010 - 19.000

5 456.492 $ 76.000

On September 24, 2005, Hurricane Rita made landfall and caused extensive damages to theAuthority's property and equipment. The high winds damaged many of the buildings that areowned by the Authority. Insurance and FEMA recovery net of carrying value of damagedproperty resulted in a net impairment gain of $25,518,682. The replacement cost, includingcode upgrades, of damaged property is estimated to be in excess of $46,000,000. The costsnot covered by insurance will include the two percent of insured value deductible per buildingfor damages caused by high winds, the cost of making code compliance upgrades that are inexcess of the coverage limits, and the cost of repairing or replacing fences, gates, signage,airfield lighting systems, and other ancillary assets not covered by insurance. Managementcontinues to work with insurance adjusters and FEMA representatives and feels that theAuthority will incur costs not to exceed $4,000,000 to replace and upgrade damagedproperty and equipment.

The Authority is subject to pending claims and litigation which arise primarily in the ordinarycourse of business. The Authority does not anticipate any losses with respect to suchpending claims and litigation as of June 30,2007.

24

CHENNAULT INTERNATIONAL AIRPORT AUTHORITYSPECIAL REVENUE FUND

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCEBUDGET AND ACTUAL

Fiscal Year Ended June 30,2007

Revenues:TaxesRentsInterestMiscellaneousGrant proceeds

Total revenues

Expenditures:SalariesEmployee benefits and taxesTravelRentalsInsuranceTelephone and utilitiesMaintenanceControl towerFire protectionAdvertisingArchitectural and engineeringMiscellaneous ContractualIntergovernmentalBusiness developmentMaintenance suppliesOffice ExpenseVehicles-fuel and repairsMajor repairsHurricane repairsCapital outlaysDebt service

Total expenditures

Excess of revenues overexpenditures

Budgeted AmountsOriginal Final

$ 5,250,0001,094,951

175,000152,000

6,671,951

1,162,530327,65940,00018.710

257,431177.420101,83723,300

492,00026,30042.500

144,400537,500

14,00065,60016,950

183,0001,154,185

24,195,372100,000

1,462.61530,543,309

$ 5,250,0001.094.951

175,000152,000

6,671,951

1,162.530327.65940,00018.710

257,431177,420101,83723,300

492,00026,30042,500

144,400537,50014.00065,60016.950

183,0001.154,165

24,195,372100,000

1,462.61530.543.309

Variance withFinal BudgetFavorable

Actual (Unfavorable)

$ 5,680,285 $782.957539,882154,760

7,157,884

1.059,232300.76528,41217,554

281,977195,25593,40016,124

500,45820,73135,895

183,400548,72617.06850,54514,262

127,4991,260,180

24,182,955110,188

1,464,58830,509.214

430,285(311,994)364,882

2.780

485,933

103.29826,89411,5881,156

(24.546)(17,835)

8.4377,176

(8.458)5,5696,605

(39,000)(11.228)(3.06^15,0552.688

55.501(105,995)

12,417(10,188)(1,973)34,095

(23,871,358) (23,871,358)

(continued on next page)

(23,351,330) 520,028

25

CHENNAULT INTERNATIONAL AIRPORT AUTHORITYSPECIAL REVENUE FUND

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCEBUDGET AND ACTUAL

Fiscal Year Ended June 30,2007(continued)

Excess of revenues overexpenditures

Other financing sources (uses):Insurance proceedsFEMA proceedsCertificates of indebtednessOperating transfers inOperating transfers out

Total Other Sources (Uses)

Excess (deficiency) of revenuesover expenditures and other uses

Fund balance at beginning of year

Fund balance at end of year

Original

(23.871,358)

15,608,4616,244,374

99,148(2,000,000)

20,151,983

(3.719,375)

13,329,705

$ 9,610,330

BudgetedFinal

(23.871,358)

15,808.4616,244,374

99.148(2,000,000)

20.151,983

(3,719,379

13,329,705

$ 9.610.330

AmountsActual

(23,351,330)

6,575,075

3,181,037

-

(2,000,000)7,756,112

(15.595,219)

27,000,066

$ 11,404,847

Variance withFinal BudgetFavorable

(Unfavorable)

520,028

(9,233,386)(3,063,338)

(99.148)•

(12,395,872)

(11,875,844)

13.670,361

$ 1,794.517

See Note to Required Supplementary Information28

Chennault Internationa! Airport AuthorityNote to Required Supplementary Information-Budgetary Reporting

For the year ended June 30, 2007

The Budgetary Comparison Schedule-Budget to Actual presents comparisons of the original andfinal legally adopted budget with actual data on a budgetary basis.

A proposed budget is prepared and submitted to the Board of Commissioners prior to the beginningof each year. A budget summary and notice of a public hearing is published with the public hearingbeing conducted prior to the commencement of the budget year.

The annual operating budget, prepared on the modified accrual basis, covers all Authority activities.At the end of the fiscal year, unexpended appropriations automatically lapse. Budget amendmentsare approved by the Board of Commissioners.

Formal budgetary integration is employed as a management control device during the year for theSpecial Revenue Funds. Formal budgetary integration, although employed by the Debt ServiceFunds, is alternatively achieved through certificate of indebtedness and reimbursement contractprovisions. The capital budget ordinances which authorize the Capital Projects Fund presentcumulative as opposed to annual budget amounts.

27

SUPPLEMENTAL INFORMATION


SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

Year ended June 30,2007

FederalFederal Grantor/Pass-through CFDA Federal

Grantor/Program Title Number Expenditures

Federal Emergency Management AgencyPassed through the Louisiana office ofHomeland Security andEmergency PreparednessHurricane Rita recovery program 97.036 $ 3,181,037

U. S. Department of Transportation -Airport improvement Program 20.106 125,769

See accompanying notes to schedule of expenditures of federal awaids28


NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

Year ended June 30,2007

NOTE A - BASIS OF PRESENTATION

The accompanying schedule of expenditures of federal awards includes the federal grantactivity of Chennault International Airport Authority and is presented on the accrual basisof accounting. The information in this schedule is presented in accordance with therequirements of OMB Circular A-133, Audits of State, Local Governments, andNon-Profit Organization. Therefore, some amounts presented in this schedule may differfrom amounts presented in, or used in the preparation of, the basic financial statements.

29


SCHEDULE OF PER DIEM PAID COMMISSIONERSJune 30, 2007

The schedule of per diem paid to commissioners was prepared in compliance with houseConcurrent Resolutions No. 54 of the 1979 Session of the Louisiana Legislature.

As provided by Louisiana Revised Statute 33:4710,6, member of the commission servewithout compensation.

Commissioner Meetings Compensation

George H. Vincent 12Jonald I Walker, HI 12JaneDufrene 14James G, Gobert 14Louis H. Haxthausen 14Glen A. James 14Russell T. Tritico, Sr. 12

30

Stulb & Associates, APACCertified Public Acwunt

James R Stulb, CP.A.Kiistine S. Carter, C.PA

INDEPENDENT AUDITORS' REPORT ON COMPLIANCE AND INTERNALCONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIALSTATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING

STANDARDS


We have audited the accompanying financial statements of the governmental activities, majorfunds, and remaining fund information, which collectively comprise the basic financialstatements, of Chennault International Airport Authority as of and for the year then ended June30,2007, and have issued our report thereon dated January 17, 2008. We conducted our audit inaccordance with auditing standards generally accepted in the United States of America and thestandards applicable to financial audits contained in Government Auditing Standards, issued bythe Comptroller General of the United States.

Internal Control Over Financial ReportingIn planning and performing our audit, we considered the Authority's internal control overfinancial reporting as a basis for designing our auditing procedures for the purpose of expressingour opinion on the financial statements, but not for the purpose of expressing an opinion of theeffectiveness of the Authority's internal control over financial reporting. Accordingly, we do notexpress an opinion on the effectiveness of the Authority's internal control over financialreporting.

A control deficiency exists when the design or operation of a control does not allow managementor employees, in the normal course of performing their assigned functions, to prevent or detectmisstatements on a timely basis. A significant deficiency is a control deficiency, or combinationof control deficiencies, that adversely affect the Authority's ability to initiate, authorize, record,process, or report financial data reliably in accordance with generally accepted accountingprinciples such that there is more than a remote likelihood that a misstatement of the entity'sfinancial statements that is more than inconsequential will not be prevented or detected byAuthority's internal control.

A material weakness is a significant deficiency, or combination of significant deficiencies, thatresults in more than a remote likelihood that a material misstatement of the financial statementswill not be prevented or detected by the entity'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 over financial reporting that might be significant deficiencies or material

Member AICPA • Member LCPAMemba PCPS/The AICPA Alliance for CPA Firms

800 Ryan Street • Suite 200 / P.O. Box 1117 • Lake Charles, Louisiana 70602(337)494-1240 • (337) 494-1040 Fax

weaknesses. We did not identify any deficiencies in internal control over financial reporting thatwe consider to be material weaknesses, as defined above.

ComplianceAs part of obtaining reasonable assurance about whether the Chennault International AirportAuthority's financial statements are free of material misstatement, we performed tests of itscompliance with certain provisions of laws, regulations, contracts, and grant agreements,noncompliance with which could have a direct and material effect on the determination offinancial statement amounts. However, providing an opinion on compliance with thoseprovisions was not an objective of our audit, and accordingly, we do not express such an opinion.The results of our tests disclosed an instance of noncompliance or other matters that is requiredto be reported under Government Auditing Standards and which is described in theaccompanying schedule of findings and questioned costs as item 2007-1.

The Authority's response to the findings identified in our audit is described in the accompanyingschedule of findings and questioned costs. We did not audit the Authority's response and,accordingly, we express no opinion on it.

This report is intended for the information of the Board of Commissioners, management, theFederal Aviation Administration and the Louisiana Legislative Auditor. This restriction is notintended to limit the distribution of this report, which is a matter of public record.

January 17,2008

Stulb & Associates

Stuib & Associates, APACCertified Public Accountant! ^ sssss s

James R Stulb, C.PAKristine S. Carter, CP A

REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJORPROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH

OMB CIRCULAR A-133


Compliance

We have audited the compliance of Chennault International Airport Authority with the types ofcompliance requirements described in the U,S. Office of Management and Budget (OMB)Circular A-J33 Compliance Supplement that are applicable to each of its major federal programsfor the year ended June 30, 2007. The Authority's major federal programs are identified in thesummary of auditors' results section of the accompanying schedule of findings and questionedcosts. Compliance with the requirements of laws, regulations, contracts and grants applicable toeach of its major federal programs is the responsibility of the Authority's management. Ourresponsibility is to express an opinion on the Authority's compliance based on our audit.

We conducted our audit of compliance in accordance with auditing standards generally acceptedin the United States of America; the standards applicable to the financial audits contained inGovernment Auditing Standards, issued by the Comptroller General of the United States, andOMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations.Those standards and OMB Circular A-133 require that we plan and perform the audit to obtainreasonable assurance about whether noncompliance with the types of compliance requirementsreferred to above that could have a direct and material effect on a major federal programoccurred. An audit includes examining, on a test basis, evidence about the Authority'scompliance with those requirements and performing such other procedures as we considerednecessary in the circumstances. We believe that our audit provides a reasonable basis for ouropinion. Our audit does not provide a legal determination of the Authority's compliance withthose requirements.

In our opinion, the Authority complied, in all material respects, with the requirements referred toabove that are applicable to each of its major federal programs for the year ended June 30,2007.

Internal Control over Compliance

The management of the Chennault International Airport Authority is responsible for establishingand maintaining effective internal control over compliance with requirements of laws,regulations, contracts, and grants applicable to federal programs. In planning and performing ouraudit, we considered the Authority's internal control over compliance with requirements that

Member A1CPA » Member LCPAMember PCPS/The AICPA Alliance for CPA Firms

800 Ryan Street • Suite 200 / P.O. Box 1117 * Lake Charles, Louisiana 70602(337)494-1240 • (3 37) 494-1040 Fax

could have a direct material effect on a major federal program in order to determine our auditingprocedures for the purpose of expressing our opinion on compliance, but not for the purpose ofexpressing an opinion on the effectiveness of the internal control over compliance. Accordingly,we do not express an opinion on the effectiveness of the Authority's internal control overcompliance.

A control deficiency in an entity's internal control over compliance exists when the design oroperation of a control does not allow management or employees, in the normal course ofperforming their assigned functions, to prevent or detect noncompliance with a type ofcompliance requirement of a federal program on a timely basis. A significant deficiency is acontrol deficiency, or combination of control deficiencies, that adversely affects the entity'sability to administer a federal program such that there is more than a remote likelihood thatnoncompliance with a type of compliance requirement of a federal program that is more thaninconsequential will not be prevented or detected by the entity's internal control.

A material weakness is a significant deficiency, or combination of significant deficiencies, thatresults in more than a remote likelihood that material noncompliance with a type of compliancerequirement of a federal program will not be prevented or detected by the entity's internalcontrol.

Our consideration of internal control over compliance was for the limited purpose described inthe first paragraph and would not necessarily identify all deficiencies in the Authority's internalcontrol that might be significant deficiencies or material weaknesses. We did not identify anydeficiencies in internal control over compliance that we consider to be material weaknesses asdefined above.

This report is intended for the information of the Board of Commissioners, management, theFederal Aviation Administration and the Louisiana Legislative Auditor. This restriction is notintended to limit the distribution of this report, which is a matter of public record.

January 17,2008

Stulb & Associates

Chennault International Airport Authority

SCHEDULE OF FINDINGS AND QUESTIONED COSTSSection I - Summary of Auditors' Results

June 30, 2007Financial StatementsType of axidtor's report issued;

Internal control over financial reporting:• Material weakness identified?• Significant deficiency identified?• Noncompliance required to be reported in

accordance with Governmental Audit Standards?

Federal AwardsInternal control over major programs:

• Material weakness identified?• Significant deficiency identified?

Type of auditor's report issued on compliance formajor programs:

• Audit findings disclosed that are requiredto be reported in accordance with OMBCircular A-133

Identification of major programs:

Federal Grantor/Pass-throughGrantor/Program Title

Federal Emergency Management AgencyPassed through the Louisiana office ofHomeland Security and Emergency PreparednessHurricane Rita recovery program

Dollar threshold to distinguish betweenType A and Type B programs:

Auditee qualified as low-risk auditee

Unqualified

pes X noyes X no

A_yes

/es X noyes X no

Unqualified

yes

FederalCFDANumber

97,036

$500,000

X ves

no

no

35

Chennauh International Airport Authority

SCHEDULE OF FINDINGS AND QUESTIONED COSTSSection II - Findings - Financial Statement Audit

2007-1Criteria: Under Louisiana Statue, the Authority is required to have an annual audit of itsfinancial statements prepared in accordance with generally accepted accountingprinciples and to complete the audit and file it with the Legislative Auditor of the State ofLouisiana by December 31* of each year.

Condition: The District did not meet the deadline for reporting to the State of Louisiana.

Effect: The District did not comply with state statute.

Recommendation: The necessary procedures should be taken to have all the necessaryinformation available to begin the audit process as soon after year end as possible.

Management Response: Although the audit was submitted subsequent to December 31*,the Authority was granted a one month extension of time to submit the report. In thefuture, the Authority plans to have the necessary accounting complete as soon after yearend as possible.

36

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