academie da vinci charter school, inc. rpts... · major fund of the academie da vinci charter...

Academie Da Vinci Charter School, Inc.

A Component Unit of the Pinellas County

School District

FINANCIAL STATEMENTS

June 30, 2015

Academie Da Vinci Charter School, Inc. Table of Contents

June 30, 2015

TAB: REPORT Independent Auditors’ Report 1 MANAGEMENT’S DISCUSSION AND ANALYSIS Management’s Discussion and Analysis 3 TAB: FINANCIAL STATEMENTS Government-Wide Financial Statements

Statement of Net Position 6 Statement of Activities 7

Fund Financial Statements

Balance Sheet – Governmental Fund 8 Reconciliation of the Governmental Fund Balance to the 9

Statement of Net Position Statement of Revenues, Expenditures and Changes in Fund 10

Balance – Governmental Fund Reconciliation of the Governmental Funds Statement of Revenues, 11 Expenditures, and Changes in Fund Balance to the Statement of Activities Notes to Financial Statements 12 Budgetary Comparison Schedule – General Fund – (Unaudited) 19 Report of Independent Certified Public Accountants on Internal Control over Financial 20 Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Management Letter Required by Chapter 10.850, Rules of the Auditor General 22 TAB: REQUIRED COMMUNICATIONS Required Communications 24 Accounting Policies, Judgments, & Sensitive Estimates & CRI Comments on Quality 30 Summary of Audit Adjustments 31 Management Representation Letter 32

REPORT

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INDEPENDENT AUDITORS’ REPORT To The Board of Directors Academie Da Vinci Charter School, Inc. Dunedin, Florida Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities and the major fund of the Academie Da Vinci Charter School, Inc. (the “School”), a component unit of the Pinellas County School District, as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the School’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility 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 of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the School as of June 30, 2015 and the changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and budgetary comparison information on pages 3 through 5 and 19 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated August 24, 2015, on our consideration of the School’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the School’s internal control over financial reporting and compliance.

CARR, RIGGS & INGRAM, LLC Clearwater, Florida August 24, 2015

MANAGEMENT DISCUSSION ANDANALYSIS

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Academie Da Vinci Charter School, Inc. Management’s Discussion Analysis

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Our discussion and analysis of Academie Da Vinci Charter School, Inc.’s (the “School”) financial performance provides an overview of the School’s activities for the fiscal year ended June 30, 2015. Please read it in conjunction with the accompanying financial statements. Overview of Financial Activity The organization-wide and fund financial statements are combined for this annual report, as all activities of the School are governmental activities. The report consists of the organization-wide fund statements and notes to the financial statements. The statements are designed to provide readers with a broad overview of the School’s finances, in a manner similar to a private-sector business. The Statement of Net Position presents information on all of the School’s assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the School is improving or deteriorating. The Statement of Activities and Governmental Funds Revenues, Expenditures and Changes in Fund Balances presents information showing how the School’s net position changed during the most recent fiscal year. The School uses the economic resources measurement focus and the accrual basis of accounting. All changes in net position are reported as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., appropriations receivable). Governmental activities are primarily supported by state sources and charges for services. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The School uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. A reconciliation of the organization-wide and fund financial statements are provided as part of the basic financial statements. Financial Analysis Over time, net position may serve as a useful indicator of the School’s financial position. At the close of the fiscal year, assets exceeded liabilities by $717,043. Fifty-seven percent of the balance is unassigned and is available to meet the School’s obligations and operating costs. The School’s 2014-15 operating budget was based on 250 students and estimated revenue of $6,259 per student for a total of $1,564,739 and capital outlay revenue of $85,000. Final amendment to the budget was approved by the Board at fiscal year-end. Actual FEFP revenues and capital outlay funds were $1,632,792 and $80,954, respectively. Other revenues include income from a before/after school program, $62,051 and rental income, $60,000.


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Financial Analysis (Continued) The School does not budget for capital purchases; however, there were purchases of $32,643 and disposals of $24,251 for the year ended June 30, 2015. The following is a summary of changes in the statements of net position:

FYE 2015 FYE 2014

Current assets 470,217$ 379,514$ Capital assets 299,191 344,966

Total assets 769,408 724,480

Total current liabilities 34,804 31,621 Long-term liabilities 17,561 44,199

Total liabilities 52,365 75,820

Net position:Unassigned 435,413 347,893 Net investment in capital assets 281,630 300,767

Total net position & liabilities 769,408$ 724,480$

Total assets increased $44,928 due to an $88,846 increase in cash, a $4,467 increase in prepaid insurance, a $45,773 decrease in net capital assets, and a $2,608 decrease in accounts receivable. Total liabilities decreased $23,455. The following is a summary of changes in the statements of activities:

FYE 2015 FYE 2014

Total expenses 1,820,489$ 1,662,034$ Less: program revenues (143,005) (192,566)

Net program expense 1,677,484 1,469,468 General revenues 1,745,867 1,743,934

Change in net position 68,383$ 274,466$


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Financial Analysis (Continued) Total expenses increased by $180,279 over the prior fiscal year. This increase was due in part from an increase in the operation of the plant of $59,651, school administration of $93,091, and instructional expenses of $28,898 primarily representing an increase in building lease expense, hiring of full time gifted educational staff and administrative staff and an increase in district administrative fee. The General Fund is the only operating fund of the School. At the end of the current fiscal year, the unassigned fund balance of the General Fund was $435,413, compared to $347,893 at the end of the previous year. As a measure of the General Fund liquidity, it may be useful to compare total fund balance to total fund expenditures. Total fund balance represents 24% of total General Fund expenditures as compared to 21% for the previous fiscal year ended. Expenses were $87,520 less than revenues in the General Fund in the current year as compared to the prior year in which expenses were $237,741 less than revenues. Economic Factors and Next Year’s Budget The overall financial position and results of operations for the School increased from the prior year. The School met its operating budget goals and all significant educational legal compliance requirements. The School has renewed the Charter with the Pinellas County School Board through June 30, 2025. Requests for Information This financial report is designed to provide a general overview of the School’s finances for all those with an interest in the School’s finances. Questions concerning any of the information provided in this report, or requests for additional financial information, should be addressed to the School Administrator, 1060 Keene Road, Dunedin, Florida 34698.

FINANCIAL STATEMENTS

Academie Da Vinci Charter School, Inc. Statement of Net Position

June 30, 2015

The accompanying notes are an integral part of these financial statements. - 6 -

Current assets:Cash 418,285$ Prepaid expenses 51,932

Total current assets 470,217

Capital assets:Leasehold improvements 689,476 Furniture, fixtures, and equipment 199,272 Less accumulated depreciation (589,557)

Total capital assets, net 299,191

Total Assets 769,408$

Accounts payable 7,413$ Accrued payroll 27,391 Notes payable 17,561

Total Liabilities 52,365

Net investment in capital assets 281,630 Unrestricted 435,413

Total net position 717,043

Total Liabilities and Net Position 769,408$

Assets

Liabilities

Net Position

Academie Da Vinci Charter School, Inc. Statement of Activities

Year Ended June 30, 2015


Net (Expenses)

Revenue and Changes in Net

PositionCharges Capital

Expensesfor

ServicesGrants and

ContributionGovernmental

ActivitiesGovernmental activities:

Instructional 1,002,007$ -$ -$ (1,002,007)$ School administration 389,650 - - (389,650) Operation and maintenance of plant 350,485 - 80,954 (269,531) Community services 32,892 62,051 - 29,159 School activities/field trips 43,831 - - (43,831) Debt service interest 1,624 - - (1,624)

Total governmental activities 1,820,489$ 62,051$ 80,954$ (1,677,484)$

General revenues:State and local sources 1,632,792$ Other 134,903 Loss on disposal of capital assets (21,828)

1,745,867

Change in net position 68,383 Net position, July 1, 2014 648,660 Net position, June 30, 2015 717,043$

Program Revenues

Academie Da Vinci Charter School, Inc. Balance Sheet – Governmental Funds

June 30, 2015

The accompanying footnotes are an integral part of these financial statements. - 8 -

General

Fund

Assets

Cash 418,285$ Prepaid expenses 51,932

Total assets 470,217$

Liabilities and Fund Balance

LiabilitiesAccounts payable 7,413$ Accrued payroll 27,391Total liabilities 34,804

Fund balanceUnassigned 435,413

Total fund balance 435,413 Total liabilities and fund balance 470,217$

Academie Da Vinci Charter School, Inc. Reconciliation of the Governmental Funds Balance Sheet

to the Statement of Net Position June 30, 2015

The accompanying footnotes are an integral part of these financial statements. - 9 -

Total fund balances - governmental funds 435,413$

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

Capital assets, net of accumulated depreciation, used in governmental activies are not financial resournces and,therefore, are not reported as assets in governmental funds. 299,191

Notes payable is not a liability in the governmental funds. (17,561)

Net position of governmental activities 717,043$

Academie Da Vinci Charter School, Inc. Statement of Revenues, Expenditures, and Changes

in Fund Balance – Governmental Funds Year Ended June 30, 2015


General

FundRevenues

State passed through local school district 1,713,746$ Charges for services:

Other programs and services 62,051Other revenue 134,903

Total revenues 1,910,700

ExpendituresInstructional 956,735School administration 378,332Operation and maintenance of plant 350,485 Community services 32,892School activities/field trips 43,831Capital outlay 32,643 Debt service

Principal 26,638Interest 1,624

Total expenditures 1,823,180

Excess of revenues over expenditures 87,520

Net change in fund balance 87,520

Fund Balance, July 1, 2014 347,893 Fund Balance, June 30, 2015 435,413$

Academie Da Vinci Charter School, Inc. Reconciliation of the Governmental Funds Statement of Revenues,

Expenditures, and Changes in Fund Balance to the Statement of Activities

Year Ended June 30, 2015


Net change in fund balance - governmental funds 87,520$

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

Capital outlays are reported in governmental funds as expenditures.However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense.This is the amount of depreciation expense ($56,590) in excess of capital outlays ($32,643) in the current period. (23,947)

Principal payments on notes payable are expenditures in the governmental funds ($26,638) and the repayments reduceliabilities in the statement of position. 26,638

In the statement of activities, only the loss on disposal of capital assets is reported. (21,828)

Change in net position of governmental activities 68,383$

Academie Da Vinci Charter School, Inc. Notes to Financial Statements

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NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Reporting Entity Academie Da Vinci Charter School, Inc. (the “School”) is part of the Florida system of public education under the general direction of the State Department of Education. The School was created pursuant to Chapter 228, Florida Statues, following approval of its charter by the School Board of Pinellas County, Florida (the “School Board”). The School Board approved the charter effective May 30, 2010 through June 30, 2025. The School is a Florida not-for-profit organization that is exempt from state and federal income taxes under Internal Revenue Service Code Section 501(c)(3). The Florida Department of Education (the “Department”) has concluded that Florida charter schools are component units of the sponsoring school board. To facilitate accounting and reporting to school boards, charter schools are encouraged to use the governmental reporting model and follow the fund and account structure provided in the Financial and Program Cost Accounting and Reporting for Florida Schools manual issued by the Department. The School is required by contract with the School Board to use the governmental reporting model and the Department’s accounting and reporting manual. These financial statements present the financial position and results of operations of the applicable funds controlled or dependent upon the School. In evaluating the School as a reporting entity, management has addressed all potential component units for which the School may or may not be financially accountable and, as such, are included in the School’s financial statements. No component units exist that would require inclusion in the School’s financial statements. Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the activities of the School. The effect of interfund activities has been removed from these statements. The School only has governmental activities and does not engage in any business-type activities. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include charges for services for other programs and services. General revenues include amounts received from state and local sources. The School reports the following major governmental fund: General Fund – The general operating fund of the School. It is used to account for all financial resources not required to be accounted for in another fund. When both restricted and unrestricted resources are available for use, it is the School’s policy to use restricted resources first, then unrestricted resources as they are needed.


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NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the School considers revenues to be available if they are collected within 60 days of the end of the current period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, expenditures related to compensated absences and long-term debt agreements are recorded only when payment is due. Budgets and Budgetary Accounting Budgets are prepared and original budgets are adopted annually for the General Fund in accordance with procedures and time intervals prescribed by the Board of Directors (the “Board”) of the School. During the fiscal year ended June 30, 2015, the Board adopted an annual budget for the General Fund. The budget is prepared using the economic resources measurement focus and the budgetary basis of accounting. The School is not required to submit its budget to any regulatory agencies. Appropriations are controlled at the object level (e.g., salaries, purchased services, and capital outlay) within each activity (e.g., instructional, school administration, and debt service) and may be amended at any Board meeting prior to the due date of the annual financial report. Cash Cash is made up of cash on hand and in interest-earning checking accounts. The School places its cash balances with federally insured financial institutions. At times, the balances at these financial institutions may exceed the FDIC insured limit of $250,000.


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NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Capital Assets Capital assets consist of buildings and improvements and furniture, fixtures and equipment. Capital assets are defined by the School as assets with an initial individual cost of at least $500 and an estimated useful life of at least one year. Such assets are recorded at cost. Donated capital assets are recorded at their estimated fair market values at the date of donation. Depreciation has been provided on capital assets using the straight-line method over the estimated useful lives of the various classes of depreciable assets, which range from three to ten years. State Sources The state provides financial assistance to administer certain categorical educational programs. Department rules require that revenue earmarked for these programs be expended only for the program for which the money is provided and require that the money not expended, as of the close of the fiscal year, be carried forward into the following year to be expended for the same categorical education programs. The Department generally requires that categorical educational program revenues be accounted for in the General Fund. A portion of the fund balance of the General Fund is reserved for the unencumbered balance of categorical educational program resources. The state allocates gross receipt taxes, generally known as Public Education Capital Outlay money, to local School Boards on an annual basis. The Boards are authorized to expend these funds only upon applying for and receiving an encumbrance authorization from the Department. The School recognizes any revenues from these sources when appropriated. Subsequent Events Subsequent events have been evaluated through August 24, 2015, which is the date the financial statements were available to be issued.


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NOTE 2: CAPITAL ASSETS The following is a summary of changes in capital assets during the fiscal year:

Balance Balance

July 1, 2014 Increase Decrease June 30, 2015

Capital assets being depreciated:

Buildings and improvements 713,727$ -$ (24,251)$ 689,476$ Furnitures, fixtures, and equipment 166,629 32,643 - 199,272

Total capital assets being depreciated 880,356 32,643 (24,251) 888,748

Less: accumulated depreciation for:Buildings and improvements (436,332) (21,358) 2,423 (455,267) Furnitures, fixtures, and equipment (99,058) (35,232) - (134,290)

Total accumulated depreciation (535,390) (56,590) 2,423 (589,557)

Total capital assets, net 344,966$ (23,947)$ (21,828)$ 299,191$

Depreciation was charged to functions, as follows:

For the year-ended June 30, 2015

Instructional 45,272$ School administration 11,318

Total depreciation expense 56,590$

NOTE 3: RISK MANAGEMENT The School is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The School purchases commercial insurance for all types of claims with nominal deductible amounts. There have been no significant reductions in insurance coverage during fiscal year 2015. Settled claims have not exceeded the commercial excess coverage in any of the past three years.


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NOTE 4: SALARY SAVINGS PLAN The School has adopted a salary savings plan in accordance with Section 401(k) of the Internal Revenue Code, which covers substantially all full-time employees who have achieved the age of 18. Eligible employees may elect to contribute a portion of their earnings to the Plan. The School’s Board of Directors authorized a 3% matching contribution for the year for all eligible employees that contributed a minimum of $25 per month to the Plan. NOTE 5: LEASE COMMITMENTS The School leases certain property under non-cancelable operating leases. These leases expire on varying dates through September 2022 and contain varying renewal options. Current year expense charged to operations under these leases approximated $279,000. The following is a schedule of future minimum lease payments: For the year-ended June 30,

2016 239,736$ 2017 214,804 2018 228,956 2019 233,673 2020 223,705 Thereafter 546,316

Total minimum lease payments 1,687,190$

After the relocation to the current school building during August 2012, the School was liable for the land lease on the former school site until March 31, 2016. In addition, the school was continuing to resolve ownership issues related to two modular classroom buildings located on the former school site. In November 2014, the School resolved the issues with a buyout of the lease for the two modular classrooms for $32,824, which was recorded as additional rental expense. The School entered into a sublease agreement for the former school site executed on July 1, 2013. Based on the sub-lease agreement the school received a security deposit in the amount of $10,000 and receives monthly payments of $5,000 that began on July 1, 2013 and continues through March 26, 2016.


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NOTE 5: LEASE COMMITMENTS (Continued) The following is a schedule of future minimum lease payments to be received:

For the year-ended June 30,

2016 45,000$

Total minimum lease payments 45,000$

NOTE 6: NOTES PAYABLE In January 2013, the School entered into a loan agreement with a bank for an amount of $85,000 and a maturity date of January 16, 2016. The loan is secured by substantially all of the assets of the school. The loan accrues interest at a rate of 5.5% per annum. As of June 30, 2015, the School had an outstanding balance on the loan of $17,561. Notes payable activity for the fiscal year ended June 30, 2015 as follows:

Balance 7/1/2014 Additions Reductions

Balance 6/30/2015

Due within One Year

Governmental Activities:Note Payable 44,199$ -$ (26,638)$ 17,561$ 17,561$

The following table indicates future debt service requirements for Governmental Activities:

Principal Interest Total

Note Payable2016 17,561$ 322$ 17,883$

17,561$ 322$ 17,883$


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NOTE 7: CONCENTRATIONS The School receives revenues for current operations primarily from the State of Florida through the School Board of Pinellas County. The following is a schedule of revenue sources: Sources Amount

School Board of Pinellas CountyFlorida education finance program 1,632,792$ Capital outlay 80,954

Total 1,713,746$

Academie Da Vinci Charter School, Inc. Required Supplementary Information

Budgetary Comparison Schedule – General Fund – (Unaudited) Year Ended June 30, 2015

See Independent Auditor’s Report. - 19 -

Actual Amounts Variance with

(Budgetary Final Budget -Original Final Basis) Over (Under)

RevenuesState and local sources 1,649,739$ 1,713,746$ 1,713,746$ -$ Other program and services 68,400 62,051 62,051 - Other income 71,000 134,902 134,903 1

Total revenues 1,789,139 1,910,699 1,910,700 1

ExpensesInstructional 996,695 956,734 956,735 (1) School administration 311,301 378,330 378,332 (2) Operation and maintenance of plant 358,702 428,903 428,903 - Community services 36,006 32,891 32,892 (1) School activities/field trips - 43,831 43,831 - Debt service

Principal 29,130 - - - Interest 1,704 1,624 1,624 -

Total expenses 1,733,538 1,842,313 1,842,317 (4)

Net change in fund balance 55,601 68,386 68,383 3

Fund balance at beginning of year 648,660 648,660 648,660 -

Fund balance at end of year 704,261$ 717,046$ 717,043$ 3$

Reconciliation to GAAP BasisAmounts reported in the General Fund on the Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds are reported on the modified accrual basis of accounting. The budget was prepared using the accrual basis of accounting. The differences for the fiscal year ended June 30, 2014 are:

Capital outlays are reported in modified accrual basis of accounting as expenditures. However, in the accrual basis, the cost of those assets is allocated over their estimated useful lives as depreciation expense.This is the amount of depreciation expense ($56,590) in excess of capital outlays ($32,643) 23,947$

Loss on disposal of capital assets is a reduction in the accrual basis 21,828

Principal payments on notes payable are expenditures in the modified accrual basis of accounting ($26,638) and the repayments reduce notes payable in the accrual basis. (26,638)

Net change in fund balance - general fund 87,520$

General Fund

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INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To The Board of Directors Academie Da Vinci Charter School, Inc. Dunedin, Florida We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the basic financial statements of Academie Da Vinci Charter School, Inc. (the School), a component unit of the Pinellas County School District, Florida, as of and for the year ended June 30, 2015, and have issued our report thereon dated August 24, 2015. Internal Control over Financial Reporting In planning and performing our audit, we considered the School’s internal control over financial reporting to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the School’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the School’s internal control over financial reporting.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

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Compliance and Other Matters As part of obtaining reasonable assurance about whether the School’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.


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MANAGEMENT LETTER REQUIRED BY CHAPTER 10.850, RULES OF THE AUDITOR GENERAL To the Board of Directors Academie Da Vinci Charter School, Inc. Dunedin, Florida Report on the Financial Statements We have audited the financial statements of Academie Da Vinci Charter School, Inc., a component unit of the Pinellas County School District, Florida, as of and for the fiscal year ended June 30, 2015, and have issued our report thereon dated August 24, 2015. Auditor’s Responsibility We conducted our audit in accordance with auditing standards generally accepted in the United States of America and Government Auditing Standards issued by the Comptroller General of the United States. Other Reporting Required by Government Auditing Standards We have issued our Independent Auditors’ Report on Internal Control over Financial Reporting and Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards. Disclosures in those reports which are dated August 24, 2015, should be considered in conjunction with this management letter. Prior Audit Findings Section 10.854(1)(e)1, Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. Corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. Financial Condition Section 10.854(1)(e)2 and 10.855(11), Rules of the Auditor General, requires that we apply appropriate procedures to determine whether or not Academie Da Vinci Charter School, Inc. has met one or more of the conditions of financial emergency risks described in Section 218.503(1), Florida Statutes, and identification of the specific condition(s) met. In connection with our audit, we determined that Academie Da Vinci Charter School, Inc. did not meet any of the conditions described in Section 218.503(1), Florida Statutes.

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Section 10.854(1)(e)6a and 10.855(12), Rules of the Auditor General, require that we apply financial condition assessment procedures for Academie Da Vinci Charter School, Inc. It is management’s responsibility to monitor Academie Da Vinci Charter School, Inc.’s financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same. Transparency Section 10.854(1)(e)7 and 10.855(13), Rules of the Auditor General, requires that we apply appropriate procedures to determine whether or not Academie Da Vinci Charter School, Inc. maintains on its Web site the information specified in Section 1002.33(9)(p), Florida Statutes. In connection with our audit, we determined that Academie Da Vinci Charter School, Inc. maintained on its Web site the information specified in Section 1002.33(9)(p), Florida Statutes. Other Matters Section 10.854(1)(e)3, Rules of the Auditor General, requires that we address in the management letter any recommendations to improve financial management. In connection with our audit, we recommend (1) management implement using software to record and track student activity services and receipts and (2) we recommend budgeting on the governmental funds basis to include capital outlays and principal payments on debt. Section 10.854(1)(e)4, Rules of the Auditor General, requires that we address noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings. Section 10.854(1)(e)5, Rules of the Auditor General, requires the name or official title of the entity. The official title of the entity is Academie Da Vinci Charter School, Inc. Purpose of this Letter Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, Federal and other granting agencies, Board of Directors, and applicable management, and is not intended to be and should not be used by anyone other than these specified parties.


REQUIRED COMMUNICATIONS

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August 24, 2015 The Board of Directors Academie Da Vinci Charter School, Inc. We are pleased to present the results of our audit of the 2015 financial statements of Academie Da Vinci Charter School, Inc. (the “School”). This report to the Board of Directors summarizes our audit, the report issued and various analyses and observations related to the School’s accounting and reporting. The document also contains the communications required by our professional standards. Our audit was designed, primarily to express an opinion on the School’s 2015 financial statements. We considered the School’s current and emerging business needs, along with an assessment of risks that could materially affect the financial statements, and aligned our audit procedures accordingly. We conducted the audit with the objectivity and independence that you expect. We received the full support and assistance of Academie Da Vinci Charter School, Inc. (the "School") personnel. At Carr, Riggs & Ingram, LLC (CRI), we are continually evaluating the quality of our professionals’ work in order to deliver audit services of the highest quality that will meet or exceed your expectations. We encourage you to provide any feedback you believe is appropriate to ensure that we do not overlook a single detail as it relates to the quality of our services. This report is intended solely for the information and use of the Board of Directors and others within the School and should not be used by anyone other than these specified parties. We appreciate this opportunity to work with you. If you have any questions or comments, please contact me at 727-446-0504 or [email protected]. Very truly yours,

Charles Whetstone, CPA Partner

mailto:[email protected]

Required Communications

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As discussed with the Board of Directors during our planning process, our audit plan represented an approach responsive to the assessment of risk for the School. Specifically, we planned and performed our audit to:

• Perform audit services, as requested by the Board of Directors, in accordance with auditing standards generally accepted in the United States of America, in order to express an opinion on the School’s financial statements for the year ended June 30, 2015;

• Communicate directly with the Board of Directors regarding the results of our procedures;

• Address with the Board of Directors any accounting and financial reporting issues;

• Anticipate and respond to concerns of the Board of Directors; and

• Other audit-related projects as they arise and upon request.


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We have audited the financial statements of Academie Da Vinci Charter School, Inc. for the year ended June 30, 2015, and have issued our report thereon dated August 24, 2015. Professional standards require that we provide you with the following information related to our audit:

MATTER TO BE COMMUNICATED AUDITORS’ RESPONSE Auditors’ responsibility under Generally Accepted Auditing Standards

As stated in our engagement letter dated May 28, 2015 our responsibility, as described by professional standards, is to express an opinion about whether the financial statements prepared by management with your oversight are fairly presented, in all material respects, in conformity with accounting principles generally accepted in the United States of America (GAAP). Our audit of the financial statements does not relieve you or management of your responsibilities.

As part of our audit, we considered the internal control of the School. Such considerations were solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control.

Client’s responsibility Management, with oversight from those charged with governance, is responsible for establishing and maintaining internal controls, including monitoring ongoing activities; for the selection and application of accounting principles; and for the fair presentation in the statements of revenue and expenses, and the statements of assets, liabilities, and net assets in conformity with the applicable framework. Management is responsible for the design and implementation of programs and controls to prevent and detect fraud.

Planned scope and timing of the audit Our initial audit plan was not significantly altered during our fieldwork.

Management judgments and accounting estimates The process used by management in forming particularly sensitive accounting estimates and the basis for the auditors’ conclusion regarding the reasonableness of those estimates.

Please see the following section titled “Accounting Policies, Judgments and Sensitive Estimates and CRI Comments on Quality.”

Potential effect on the financial statements of any significant risks and exposures Major risks and exposures facing the School and how they are disclosed.

No such risks or exposures were noted.


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MATTER TO BE COMMUNICATED AUDITORS’ RESPONSE Significant accounting policies, including critical accounting policies and alternative treatments within generally accepted accounting principles and the auditors’ judgment about the quality of accounting principles • The initial selection of and changes in

significant accounting policies or their application; methods used to account for significant unusual transactions; and effect of significant policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus.

• The auditor should also discuss the auditors’ judgment about the quality, not just the acceptability, of the School’s accounting policies as applied in its financial reporting. The discussion should include such matters as consistency of accounting policies and their application, and clarity and completeness of the financial statements, including disclosures. Critical accounting policies and practices applied by the School in its financial statements and our assessment of management’s disclosures regarding such policies and practices (including any significant modifications to such disclosures proposed by us but rejected by management), the reasons why certain policies and practices are or are not considered critical, and how current and anticipated future events impact those determinations.

None.

Significant difficulties encountered in the audit Any significant difficulties, for example, unreasonable logistical constraints or lack of cooperation by management.

None.

Disagreements with management Disagreements, whether or not subsequently resolved, about matters significant to the financial statements or auditors’ report. This does not include those that came about based on incomplete facts or preliminary information.

None.


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MATTER TO BE COMMUNICATED AUDITORS’ RESPONSE Other findings or issues Matters significant to oversight of the financial reporting practices by those charged with governance. For example, an entity's failure to obtain the necessary type of audit, such as one under Government Auditing Standards, in addition to GAAS.

CRI recommends that management implement using software to record and track student activity services and receipts. CRI recommends budgeting on the governmental funds basis to include capital outlays and principal payments on debt.

Matters arising from the audit that were discussed with, or the subject of correspondence with, management

Business conditions that might affect risk or discussions regarding accounting practices or application of auditing standards.

None

Corrected and uncorrected misstatements All significant audit adjustments arising from the audit, whether or not recorded by the School, that could individually or in the aggregate have a significant effect on the financial statements. We should also inform the Board about uncorrected misstatements aggregated by us during the current engagement and pertaining to the latest period presented, that were determined by management to be immaterial, both individually and in the aggregate, to the financial statements taken as a whole. Any internal control deficiencies that could have prevented the misstatements.

None.

Major issues discussed with management prior to retention Any major accounting, auditing or reporting issues discussed with management in connection with our initial or recurring retention.

None.

Consultations with other accountants When management has consulted with other accountants about significant accounting or auditing matters.

None of which we are aware.

Written representations A description of the written representations the auditor requested (or a copy of the representation letter).

See “Management Representation Letter” section.


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MATTER TO BE COMMUNICATED AUDITORS’ RESPONSE Internal control deficiencies Any significant deficiencies or material weaknesses in the design or operation of internal control that came to the auditors’ attention during the audit.

See “Independent Certified Public Accountants Report on Internal Control over Financial Reporting” in the Financial Statement section.

Fraud and illegal acts Fraud involving the School Board of Directors or those responsible for internal controls, or causing a material misstatement of the financial statements, where the auditor determines there is evidence that such fraud may exist. Any illegal acts coming to the auditors’ attention involving senior management and any other illegal acts, unless clearly inconsequential.

We are unaware of any fraud or illegal acts involving management or causing material misstatement of the financial statements.

Other information in documents containing audited financial statements The external auditors’ responsibility for information in a document containing audited financial statements, as well as any procedures performed and the results.

Our responsibility related to documents (including annual reports, websites, etc.) containing the financial statements is to read the other information to consider whether: • Such information is materially inconsistent with

the financial statements; and • We believe such information represents a

material misstatement of fact. We have not been provided any such items to date and are unaware of any other documents that contain the audited financial statements.

Accounting Policies, Judgments, & Sensitive Estimates & CRI Comments on Quality

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We are required to communicate our judgments about the quality, not just the acceptability, of the School's accounting principles as applied in its financial reporting. We are also required to communicate critical accounting policies and sensitive accounting estimates. The Board may wish to monitor throughout the year the process used to compute and record these accounting estimates. The table below summarizes our communications regarding these matters.

AREA ACCOUNTING POLICY CRITICAL POLICY?

JUDGMENTS & SENSITIVE ESTIMATE

COMMENTS ON QUALITY OF

ACCOUNTING POLICY &

APPLICATION Fixed Assets

Useful lives of depreciable assets range from 3-10 years and depreciated on a straight-line basis. Leasehold improvements are amortized over the lives of the respective leases or the service lives of the improvements, whichever is shorter

X A sensitive estimate for the School is the useful lives of fixed assets.

The School’s policies are in accordance with accounting principles generally accepted in the United States of America (GAAP).

Summary of Audit Adjustments

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During the course of our audit, we accumulate differences between amounts recorded by the School and amounts that we believe to be recorded based on auditing standards. Those adjustments are either recorded (corrected) by the School or passed (uncorrected). There were no adjustments, either corrected or uncorrected, as a result of our audit procedures. QUALITATIVE MATERIALITY CONSIDERATIONS

In evaluating the materiality of audit differences when they do arise, we consider both quantitative and qualitative factors, for example:

• Whether the difference arises from an item capable of precise measurement or whether it

arises from an estimate, and, if so, the degree of imprecision inherent in the estimate. • Whether the difference masks a change in earnings or other trends. • Whether the difference changes a net decrease in assets to addition, or vice versa. • Whether the difference concerns an area of the School’s operating environment that has

been identified as playing a significant role in the School’s operations or viability. • Whether the difference affects compliance with regulatory requirements. • Whether the difference has the effect of increasing management’s compensation – for

example, by satisfying requirements for the award of bonuses or other forms of incentive compensation.

• Whether the difference involves concealment of an unlawful transaction.

Management Representation Letter

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