The Association's fiscal year ended on September 30, 2007, at which time the independent audit firm of Legacy Professionals LLP examined AALL's financial records. Again this year, Legacy Professionals LLP rendered an unqualified opinion that our financial statements present fairly the financial position of the Association.
Statements of Financial Position
The Statements of Financial Position is a comparison of the assets, liabilities, and net assets of the total of all Association funds as of fiscal years ending September 30, 2007 and 2006. The Association's investment portfolio constitutes the largest segment of AALL's assets. The portfolio is composed of three invested funds�the Permanent Investment, Restricted Endowment, and Cash Management Funds, which account for 77 percent of AALL's assets as of September 30, 2007.
The Permanent Investment Fund is the largest fund within the portfolio; it is invested in a variety of carefully managed equities and fixed income instruments. The Restricted Endowment Fund (consisting of certain endowed funds such as the Scholarship Fund, the AALL and Thomson West-George A. Strait Minority Scholarship Endowment, the LexisNexis/John R. Johnson Memorial Scholarship Endowment, Institute for Courts Management Fund, Alan Holoch Memorial Fund, Ellen Schaffer Annual Meeting Grant Fund, and the AALL/LexisNexis Research Fund) is similarly invested in a variety of equities and fixed income instruments. Finally, the Cash Management Fund continues to serve as a short-term reserve for investing cash available from operations.
During its February meeting, the Finance and Budget Committee also met with the Association's investment manager, Chevy Chase Trust Company, to review the performance of the portfolio and to ensure continued compliance with Association investment policy goals. Overall, through careful guidance from the investment manager and as a result of the robust performance of the financial markets during the fiscal year, the Association's investment portfolio saw an overall increase of 11.4 percent. For the fiscal year, the Permanent Investment Fund produced a very robust 13.5 percent return. Because of the strong growth in this fund, the Executive Board not only was able to withdraw funds, upon the recommendation of the Finance and Budget Committee, to support special projects not part of the budget for the General Fund, but also will be able to continue to support important Association initiatives. The Restricted Endowment Fund also produced a healthy return for the fiscal year, ensuring increases for the individual endowed funds.
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Statements of Activities - All Funds
The Statement of Activities-All Funds compares the various revenue and expense accounts for the 2006 and 2007 fiscal years. For 2007, the Association generated strong revenues similar to the prior year. A significant increase was a result of revenue from publications and royalties. Moreover, revenue from member dues continued to increase. While the 2007 New Orleans Annual Meeting revenue was lower than the amount for the 2006 meeting, the 2007 meeting still generated a net return after direct costs and overhead of $190,000.
Association expenses for fiscal year 2007 also remained comparable with the prior year. The overall expenses for the Annual Meeting were lower than in the previous year; however, the Association saw increased expenses associated with publications and increased support of government affairs and scholarships/grants activities.
In total, the Association reported an increase in net assets from all funds and activities of $403,292 in fiscal year 2007 compared to $341,725 for fiscal year 2006.
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Statements of Activities - General Fund
The Statement of Activities-General Fund reports the fiscal year results of the General Fund only. The increase in net assets for fiscal year 2007 was $135,148. The Association saw significant increases in revenue from membership dues, the Index to Foreign Legal Periodicals, and investment income. Following is an analysis of some specific items from the General Fund.
Dues revenues were reported at $941,042, an increase of $47,500 over the previous year. Compared with the previous fiscal year, the Association saw an increase in the number of dues paying members. Moreover, as with years past, the Association had a healthy member retention rate compared to other similar organizations. Overall, membership dues accounted for 29 percent of total Association revenues�the same as the previous two fiscal years.
The Annual Meeting continues to be the largest revenue generating activity for the Association. The New Orleans Annual Meeting generated lower revenue compared to the St. Louis Annual Meeting; however, overall expenses for the 2007 meeting were lower. In total, 97 exhibitors purchased 193 exhibit spaces. The total number of attendees for the meeting was 1,686, which surpassed the budgeted number of 1,600. While lower than the percentage of previous years, the net percentage return on the Annual Meeting after taking into account direct and indirect costs was almost 14 percent.
As noted above, the Index to Foreign Legal Periodicals generated significant revenues for the Association. The largest component to the increase was from royalty revenue; the revenue for fiscal year 2007 was $439,315 compared to $298,930 for the previous year. Overall, the increase in net assets for the publication was $137,296 compared to $45,113 for the previous year.
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Comparative Fund Balances
The Comparative Fund Balances details the components of the restricted and unrestricted fund balances from the bottom of the Statement of Financial Position.
The various funds and programs itemized on the schedule were established by the Executive Board to ensure that adequate funding is available to support the Association's commitment to leadership, education, and advocacy. Moreover, the funds also ensure that restricted endowment contributions are accounted for and restricted to their intended purposes.
The balance of the Current Reserve Fund at the end of fiscal year 2006 was $440,642. At the end of fiscal year 2007 the balance of the Current Reserve Fund was $458,235. At its February meeting, the Finance and Budget Committee discussed opportunities to fund leadership, education, and advocacy programs during 2008. The committee presented its recommendations to the Executive Board for approval at the board's April meeting. A report during the Business Meeting was made available at the 2008 AALL Annual Meeting in Portland, Oregon.
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For a copy of the AALL Audit Report or Current Budget, please contact:
Director of Finance and Administration
53 W. Jackson Boulevard, Suite 940
Chicago, IL 60604