Aspira 6 Detail App 6

ANTONIA PANTOJA CHARTER SCHOOL

EUGENIO MARIA DE HOSTOS CHARTER SCHOOL

JOHN B. STETSON CHARTER SCHOOL

OLNEY CHARTER HIGH SCHOOL

ASPIRA BILINGUAL CYBER CHARTER SCHOOL

INTERNAL ACCOUNTING CONTROLS AND ACCOUNTING PROCEDURES MANUAL

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Background Internal control consists of the methods and records used to (a) identify, assemble, analyze, classify, record, and report the school’s transactions, events, and conditions and (b) maintain accountability for the related assets and liabilities. In other words, internal control is the school’s system of internal checks and balances. Controls are established to reduce the potential for misuse of the school’s assets or misstatement of account balances. Most people are aware that internal control helps deter fraud within the school. Because of this, some individuals may resent following control activities or may believe they are not trusted, however controls benefit employees as well as the school because controls protect honest employees from being falsely accused of fraud or misuse of assets. Internal control consists of five components:

Control environment.

Risk assessment.

Information and communication.

Control activities.

Monitoring. Control Environment The control environment sets the tone of the school and influences the control consciousness of its people. The control environment is the foundation for all other components of internal control and provides structure and discipline. The control environment of the school includes the following factors:

Integrity and ethical values.

Commitment to competence.

Attention and direction provided by the board of trustees or audit committee.

Management’s philosophy and operating style.

Organizational structure.

Ways of assigning authority and responsibility.

Personnel policies and procedures.

The control environment reflects how much importance the school places on controls as a part of its daily activities. The school should include a positive attitude about controls in all facets of its activities. Risk Assessment Risk assessment is identifying types of potential misstatements and designing controls to prevent or promptly catch those misstatements. In other words, it is the process of identifying, analyzing, and managing risks that affect the organization’s objectives. This includes identifying changed conditions and taking necessary actions. Risks relevant to the financial reporting process may arise due to the following:

Changes in the organization’s operating environment.

New personnel.







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New or revised information systems.

Rapid growth within the organization.

New accounting pronouncements. Information System The information system related to financial reporting is basically the accounting system. It consists of methods to identify, assemble, analyze, classify, record, and report transactions and conditions, and to maintain accountability for the organization’s assets, liabilities, and net assets. This includes methods and records that:

Identify and record all valid transactions.

Provide, on a timely basis, enough detail about transactions to allow classification for financial reporting.

Allow transactions to be recorded at the correct dollar value in the financial statements.

Indicate when transactions occurred so they can be recorded in the proper accounting period.

Properly present the transactions and related disclosures in the financial statements. Communication Communication relates to providing a clear understanding of internal control, how it works, and the responsibilities of individuals within the school related to internal control. Communication may take the form of policy manuals, memorandums, oral communications, etc. Control Activities Control activities are the policies and procedures set up to help ensure that management directives are carried out. Control activities may occur at all levels, and in all functions, of the school. Control activities cover a range of activities and may include the following:

Performance reviews. Performance reviews involve the comparison of actual results to budgets, forecasts, and results of previous periods.

Information processing controls. These controls help assure the accuracy, completeness, and authorization of individual transactions. Common processing controls include:

Batch controls, or preparing batch control totals of key source document amounts to ensure the amounts are accurately entered into the accounting system.

Source document matching, or comparing information on the various source documents helps ensure they match.

Clerical accuracy of documents, or checking the mathematical accuracy of financial data on key source documents, such as vendor invoices, customer invoices, and time cards.

General ledger account code checking, or checking to ensure that amounts on source documents (such as vendor invoices or journal entries) were coded with the appropriate general ledger account numbers before entering them into the accounting system.

Document controls, or using pre-numbered documents and accounting for the numerical sequence of those documents.







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Reconciliation controls, or reconciling selected general ledger control account to subsidiary ledgers.

Physical controls. Physical controls include physical security of assets, such as adequate controls over access to assets and records, authorization for access to computer programs and data files, and periodic counting and comparison with amounts recorded in the accounting records.

Segregation of duties. Segregation of duties involves allocating tasks among personnel to the extent possible so that one individual does not have the ability to make an accounting error (either intentionally or unintentionally) and also cover it up. The principle of segregation of duties implies that the person with physical access to cash or other moveable assets (investments or inventory) should not also be involved with the related recordkeeping.

Monitoring Because of personnel and other changes within the school, internal control should be monitored over time to ensure that it continues to be relevant and addresses the risks of the school. Monitoring looks at the quality of the school’s internal control over time and involves assessing the design and operation of controls on a timely basis and taking actions as necessary.

THE ACCOUNTING FUNCTION

The overall purpose of the accounting function is to accurately process, record, summarize, and report transactions of the school. The school’s accounting processes generally fall into one of four primary accounting processes, or cycles, which include:

Revenue, accounts receivable, and cash receipts.

Purchases, accounts payable, and cash disbursements.

Payrolls.

General ledger and financial statements.

Revenue, Accounts Receivable, and Cash Receipts This cycle consists of generating revenue from contributions and from services provided, and receiving payment from governmental sources. The principal accounting steps in the cash receipts cycle are:

Requesting funds from funding sources based on contractual provisions.

Making deposits.

Processing cash receipts.

Recording cash receipts in the general ledger and subsidiary records.

Performing month-end reconciliation procedures.







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Purchases, Accounts Payable, and Cash Disbursements

This cycle represents the purchase of goods and services by the school and the subsequent payment for those goods and services. The basic accounting steps in the payment cycle are:

Processing invoices.

Issuing checks.

Recording checks in the general ledger and cash disbursement journal.


Payrolls The payroll process consists of processing payrolls and remitting amounts due to employees, the government, and others (health insurers, retirement plan trustees, etc.). The typical accounting processes relating to payroll consist of the following:

Obtaining and gathering payroll information for processing.

Computing wages and withholdings.

Preparing payroll checks and depositing payroll taxes.


Preparing quarterly payroll tax returns.

Preparing W-2s, the W-3, and other annual payroll tax returns.

General Ledger and Financial Statements (Outside accountant) The general ledger process consists of posting the period’s transactions to the general ledger and preparing financial statements. The accounting processes relating to the general ledger closing cycle include the following:

Preparing monthly journal entries.

Reconciling bank accounts and other general ledger accounts.

Reviewing general ledger activity and posting adjusting journal entries.

Producing the general ledger and financial statements.

REVENUE, ACCOUNTS RECEIVABLE, AND CASH RECEIPTS Opening the Mail: The following steps should be performed:

Thurman opens the mail, which is delivered to the accounting office unopened.

Restrictively endorse checks.

Prepare deposit slip and cash receipts voucher. Restrictively Endorse Checks “Restrictively endorsed” means the back of each check should be stamped with appropriate wording to prevent a lost or stolen deposit from being cashed.







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The stamp indicates that the check is “for deposit only” and includes the organization’s full name and bank account number. Prepare Deposit Slip Staff should prepare an original deposit slip. The deposit slip typically lists the amount and customer or donor names for each check deposited. He should also prepare the cash receipt voucher, which includes the account codings for the general ledger entry. Make Deposits Daily Staff will take the deposit to the bank. Deposits should be made daily whenever possible. Verify the Deposit Amount Staff should have the bank validate the deposit slip. The validated deposit slip should then be returned to accounting for further processing and filed with the deposit backup documentation. Processing Receipts Staff enters the cash receipt transactions after the deposits are made. They are entered as soon as possible because the organization frequently has cash flow problems which require up to date cash accounts. When entering the information into the system, the primary goals should be to see that:

All the transactions are entered.

The information is entered to the correct general ledger account and any donor restrictions are correctly recorded.

Transactions are entered only once.

Cash receipts represent a significant part of the organization’s monthly cash activity. Cash receipt activity is reviewed in conjunction with preparing the monthly bank reconciliation. Monitor the balances in the organization’s cash accounts on almost a daily basis, because the organizations tend to have cash flow problems. Make sure that the types of accounts (i.e., checking, money market, and mutual fund) make sense based on the organization’s cash needs and long-term plans for the funds.

PURCHASES, ACCOUNTS PAYABLE, AND CASH DISBURSEMENTS

PROCESSING INVOICES There are several steps to processing invoices for payment. They are:

Receiving the invoice.

Obtaining payment authorization







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RECEIVING THE INVOICE Thurman opens the mail. Employees who normally make purchases should ask vendors to send bills to the attention of “accounts payable” or “accounting.” Check Requests Not all purchases have invoices. Travel advances, for example, are not initiated with an invoice. For expenditures like this, we use a check request form to initiate the request for disbursement. The employee initiating the disbursement request should prepare the check request form. Once received, process the check request in the same way as an authorized invoice.

OBTAINING PAYMENT AUTHORIZATION The next step is to obtain approval to pay the invoice. The approval process verifies that the organizations actually received the goods or services according to the agreed-upon cost, quantity, and quality to determine the account coding for the purchase. Budget Authorization Each purchase should normally be authorized within the organization’s approved annual budget. The individual approving the expenditure, Staff must ensure that the amount is either authorized in the budget. Check Signer Approval The organization relies on the check signers to approve disbursements. Direct Approval For some purchases, program managers directly approve their purchases for payment, and forward the invoices to accounting. If an invoice comes to the manager directly from the vendor, the manager should approve the invoice before sending it on to accounting. Managers should review the invoice for proper item description, cost, quantity, quality, and payment terms, and initial or sign the invoice to show approval. Highlighting or circling the initials helps the accountant locate the approval. The organization standardizes the approval documentation by including a space for it on the voucher.

RECORDING INVOICES IN THE ACCOUNTING SYSTEM After invoice processing is complete, perform the following steps to record purchases in the accounting records:

Recalculate invoices for accuracy.

Assign account codes.

Document procedures performed on each invoice.

Enter invoices into the system.







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Recalculating Invoices Re-compute the mathematical accuracy of invoices, and check the accuracy of the invoices before recording them in the accounting system. Recalculate the extensions of unit cost × number of units and any other calculations on the invoice, then re-total the invoice. Document your recalculations using a voucher. A voucher is one page in length and contains spaces where you may sign off each processing step as it is completed. It is designed to correspond with the input format of the accounting system. Attach it to the invoice, and any other supporting documentation. Assigning General Ledger Account Codes Assign general ledger account codes to each invoice using the current chart of accounts. Because detecting and correcting a miscoded transaction is often difficult and time consuming, take particular care to ensure that the coding is correct. When assigning account codes, a new general ledger account may need to be created. Instead of trying to use an existing account code that is not meaningful, set up a new account code if it more accurately reflects the essence of the transaction. If a new account code is set up, keep in mind that existing budget categories may also need to change. Account Coding by Function The organizations are required to report expenses by function. Besides coding invoices to reflect normal expense types, you must also code them to designate the expenses as being for programmatic services, management and general, or fund raising. As a result, carefully assigning account codes is essential to ensuring the accuracy of the financial information. If an invoice is entirely for one program or function or can be readily split between functions, code it directly to those functions. Certain types of costs, however, cannot be clearly identified as being only for a specific program or function. Those costs must be allocated between functions. Documenting Procedures Performed By documenting the invoice processing steps as they are completed, you can track what steps are still left to be completed. Document the procedures using the voucher form. Entering Invoices into the System When entering the information into accounts payable, the goals are to ensure that:

All the required information on the invoice is entered.

The information entered is accurate.

Invoices are entered only once.

All the invoices to be processed are entered.

Enter the invoices into accounts payable. Once staff accurately enters the batch, he temporarily files the entered but unpaid invoices by vendor in an “entered and awaiting payment” file.







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Pay from original invoices, not copies or fax copies, unless you have performed thorough research that the invoice has never been entered in the system. The research should include checking for vendor, invoice number, and amount. Perform this research only if the invoice is severely past due—the original invoice could still be in processing or awaiting approval. Once satisfied that it is a valid, unpaid invoice, mark it “Copy of Original,” obtain appropriate approvals, and process as usual. In general, do not pay from statements unless absolutely necessary. Before paying from a statement, match original invoices to the statement. Beware of balance forward statements. It is easy to pay the grand total, resulting in a duplicate payment of the beginning balance. Beware of stale dates—especially late receipts on expense reports. Code all advances, deposits, and prepaid special orders to an asset account. Review this account monthly to be certain items clear timely.

DISBURSING CASH After recording invoices in the accounting system, invoices can be paid. When disbursing cash, perform these two essential activities:

Select invoices to pay.

Issue checks. Selecting Invoices to Pay If cash flow allows, take advantage of vendor credit terms by delaying payment of invoices until near the end of the credit term. In order to do this, assign each invoice a payment date, when entered. The computerized accounting system can automatically assign the date of payment based upon the invoice date entered into the accounting system, and a “time to pay” (such as 25 days) recorded in the vendor’s invoice. Staff should check the current organization cash balances and cash requirements. Partial or Held Payments Sometimes the AP may decide to pay only part of an invoice. Generally, try to associate the partial payment with a specific vendor invoice, and avoid listing the payment as a “payment on account.” This procedure will help reduce confusing differences between the organization’s and the vendor’s records.







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At other times we may decide to put a payment “on hold”; that is, to delay the payment indefinitely, or until a dispute is resolved. To make sure that you do not forget the held payment, perform a regular review of the accounts payable subsidiary ledger to help identify held payments. Issuing Checks When issuing checks perform the following steps:

Prepare the checks.

Get the checks signed.

Distribute the checks.

File the paid invoices and check copies. Preparing Checks Make sure that only authorized and recorded checks are written. Consider check stock like cash on hand. Ruined and Voided Checks Record defaced checks in the cash disbursements journal, write “void” on them, and cut the signature lines out. Place both the original and duplicate checks in the canceled check file. Sometimes checks are written and recorded in the accounting system, only later to require voiding and reissuing. Write “void” on the face of the check, cut the signature line out, and place both the original and duplicate in the canceled check file. Manual Checks Even while using a computerized accounting system, it will sometimes be necessary to prepare checks by hand that cannot wait to be printed in the next check run. These checks are referred to as “manual” checks to distinguish them from computer prepared checks. Because the computerized accounting program did not write the checks, the computer records must be updated to reflect the checks’ issuance. The computerized accounting program contains a means to record the issuance of manual checks. Authorized Check Signers Before an organization opens a checking account with a bank, it usually obtains a board resolution designating certain employees and board members as check signers. The board resolution generally requires dual signatures on the account. Be familiar with the authorized check signers, and with any check signing requirements or restrictions described in the board resolution. The organizations should promptly change the authorized check signers whenever those employees or board members leave the organization. Providing Support for Check Signer Usually, the check signer needs to review support for the payments. Give the check signer the following:

Checks. Arrange the checks numerically. To speed up the process of disbursing of the checks, also attach prepared mailing envelopes, if window envelopes are not used, and any remittance advice to the checks.

Support. Furnish the invoices and attached support for each check, arranged numerically. When several invoices support a check, group them together using a paper







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clip. The voucher lists the invoices that are being paid and this list can be cross-checked to the invoices themselves.

Distributing Checks Distribute (mail) the checks as quickly as possible after they have been signed. When possible, the check signer should give the signed checks to someone without other cash disbursement responsibilities, such as a receptionist, for immediate mailing, although generally, the accounting staff mails the checks after obtaining signatures. The supporting documentation should be returned to Thurman. Only in rare instances should vendor checks be returned to the employee requesting the check. This general rule minimizes risks that a check will be fraudulently converted, lost, or stolen. Filing Paid Invoices and Check Copies The organizations use a three-part check, distributing the top two to the check payee and retaining the third to be attached to the front of the voucher and invoice. The check number is written on the voucher to provide an “audit trail” and to prevent double payment of the invoice. When several invoices are paid by one check, they are grouped together and attached to the check voucher. File invoices and attached support, by payee, so they can be easily located. Maintain individual vendor files in alphabetical order, with support filed by check number or in date order. A separate file folder is set up for each vendor. One-time vendors are usually filed in a miscellaneous folder under each alpha letter; for example, B-Miscellaneous or J-Miscellaneous. Consistency in filing by individual last name and company first name is important. For example, John Smith would be filed under Smith but John Smith & Co., Inc. would be filed under John. Consistently follow the filing system.

OTHER ACTIVITIES Reconciling to Outside Vendor Records Entries to record accounts payable should only be recorded from vendor invoices, not from vendor statements. Do not, however, totally ignore the vendor’s statement. Periodically, compare the organization’s records and the vendor’s statement of unpaid invoices. This reconciliation provides assurance that you have properly recorded all purchases in the organization’s records.







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Independent Contractor Information Under the federal income tax rules, most vendors that nonprofit organizations use are considered to be independent contractors in business for themselves, rather than employees of the organization. However, nonprofit organizations that rely on individuals to routinely provide services (such as seasonal program activities, or consulting) may misclassify as independent contractors persons the IRS views as employees. The IRS is actively auditing the status of workers and is often aggressive in claiming that workers are employees. The penalties for misclassification can be severe (12% to 35% of the tax bill). With knowledge of the classification principles the IRS uses and proper documentation, the organization can do much to defend itself against IRS claims of misclassification. If the organization conducts a significant amount of business with a vendor whose independent contractor status may be uncertain, help defend the organization by obtaining certain documentation supporting the organization’s treatment of the worker. The documentation should be placed in the vendor’s documentation file. Documentation Supporting Independent Contractor Status

Completed IRS Form W-9

Contracts

Bids

Vendor’s advertisements in newspapers, fliers, magazines, and telephone directories

The vendor’s brochure, business card, and stationery

Documents reflecting the vendor’s reimbursement to the organization for any fees, equipment rentals, supplies, insurance, bonding, or other expenses paid on the vendor’s behalf

Vendor payments for damages to equipment or the work site

The vendor’s licenses, sales tax certificate, governmental permits, or incorporation documents

The vendor’s insurance certificates or policies (particularly workers’ compensation, liability, or bonding)

Evidence of the vendor’s separate business location or use of its own tools and equipment

Client referral list

PAYROLL Separate payroll systems are used for the three organizations.

ASPIRA and ASPIRA Schools use the Intuit system from within Quickbooks. The system is designed to provide the basic information necessary to:







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Calculate payrolls, including gross pay, federal, state, and local income tax withholdings, Social Security and Medicare (FICA) taxes, and other payroll deductions.

Compute and make timely payroll tax deposits.

Record payroll liabilities and expenses on the general ledger.

Prepare quarterly and annual payroll tax returns. Employee Information In order to prepare a payroll, accumulate the following information for each employee:

Name and address.

Social Security number (SSN).

Work authorization status.

Job title.

Wage rate.

Withholding status.

Advanced earned income credit (EIC) status.

Other authorized deductions. Summarize this information on the Employee Payroll Information Sheet. Once employee information is entered into the payroll system, either Intuit or ADP, it should be modified only after receipt of authorized notification of changes. To ensure that only authorized changes are made, make changes to employee payroll information only after receiving a properly approved Payroll Change Form. Time Information To accurately calculate the payroll, you must know both:

How much time was used (worked or taken as leave), and

What type of time was used. How Much Time Was Used? The FLSA general rule for nonexempt employees is that each day’s beginning and ending work time and the total time worked during the workweek must be recorded. If nonexempt employees work a fixed schedule, such as office workers, only a statement showing the regular hours the employees are scheduled to work is required. In the weeks an employee adheres to the schedule, the employee should indicate that the scheduled hours were actually worked. In weeks the employee works more or less than the scheduled hours, the employee should show the exact number of hours worked each day and each week. The organizations use time sheets. Time sheets serve to record time worked and leave taken, and to document supervisor approval of the reported time. They should be completed in ink and all corrections initialed. What Type of Time Was Used? Not all time is compensated at the same rate; some time is paid at the regular rate, some leave time is unpaid. To properly prepare a payroll, you should first determine what type of time has been used.







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An employee indicates how time was spent (work, vacation, sick leave, and so forth) on the time sheet. Based on that description, the type of time used can be identified. The primary distinction for wage calculations is whether the time was worked time, paid leave, or unpaid leave. In categorizing time used, be aware that under the FLSA:

Paid or unpaid leave does not count toward overtime.

Only the excess of 40 hours worked during the workweek is considered overtime hours.

Each workweek stands alone.

All time sheets should be signed by the employee and approved by the employee’s supervisor. Send any unsigned or unapproved time sheets back to the supervisor for proper documentation. Do not process paychecks for payment without the proper authorization required.

COMPUTING WAGES After all the necessary payroll information has been gathered and entered into the payroll system, the amounts to be withheld and paid can then be calculated by one of the three systems listed above.

PERFORMING PAY PERIOD ACTIVITIES To process payroll each pay period, perform the following tasks:

Enter time data into the payroll system,

Create the payroll register,

Print paychecks,

Record payroll information, and

Deposit payroll taxes.

Entering Time Data Time sheets may be used to accumulate employee hours worked. Once the time sheets are received, perform the following procedures before entering the payroll information into the payroll system. Review time sheets for proper employee signature and supervisor approval. Then enter the hours worked into the payroll system. The systems produce a payroll time report showing the time entered for each employee and for the organization as a whole. Compare this payroll time report to the time sheets totals to determine that all the time was accurately entered into the system. The payroll system calculates gross pay and all withholdings and prints the paychecks. Payroll records are automatically posted and relevant tax return data are stored.







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Recording Payroll Information The payroll system software posts the information and prints quarterly and annual payroll tax returns and employee W-2 forms. The information for each paycheck must be recorded in the general ledger by cash disbursement entry.

The Intuit system records payroll transactions automatically. Depositing Payroll Taxes The payroll tax deposit function is performed by the organizations’ third party payroll processing service bureaus, either Intuit or ADP.

PERFORMING MONTHLY PAYROLL ACTIVITIES Reconciling the Payroll Bank Account ASPIRA and Pantoja use a separate bank account for payroll, so it should be reconciled monthly. The procedures for reconciling the account are the same as those used for other organization cash accounts. Make sure that applicable state laws dealing with outstanding (uncashed) payroll checks are followed. These laws are called escheat laws, and they can restrict the way the organization can dispose of old and outstanding payroll checks. You can obtain information about them from the secretary of state. Reconciling Employee Payroll Deductions Deductions made from employees should be reconciled to the payments made to insurers, benefit plan providers, and other payees. Sometimes the timetable for making the remittances is set by federal or state law; in other cases, it is part of a contractual agreement between the organization and the employees. The Department of Labor requires employee contributions to pension benefit plans, such as 401(k) plans, to be deposited on the earlier of—

The date the funds can be segregated from the employer’s general assets.

The 15th business day of the month after the contribution was received from the plan participant.

SIMPLE retirement plans have a 30 calendar day deposit deadline and some welfare benefit plans (such as contributory self-insured health insurance plans) have a 90 calendar day deposit deadline. Determine the dates when deduction remittances are due. Record the dates on your calendar so you will not inadvertently miss them. Perform a monthly analysis of each deduction’s general ledger account Compare the total withholdings for payroll deductions from the analysis to the monthly totals in the payroll register or deduction register and resolve any differences.

PERFORMING QUARTERLY PAYROLL ACTIVITIES The organizations’ payroll service bureaus prepare and file all quarterly payroll tax returns.







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Reconciliations After the preparation of Form 941, reconcile all the payroll information on the form with the payroll register, then recalculate the Social Security and Medicare taxes and verify that the employer portion of the FICA taxes equals the employee withholdings. The information within the Form 941 itself should also be reconciled. The compensation subject to federal income tax withholdings (line 2) should be agreed or reconciled to compensation subject to Medicare taxes (line 7a) and Social Security taxes (lines 6a and 6c). The reconciliation is necessary to ensure that the wage information is properly reported. The primary differences arise from the following items:

401(k) pre-tax contributions (limited to $15,500 in 2008, which are excluded from line 2 but included in lines 6 and 7.

SEP and SIMPLE employee contributions, which are excluded from line 2 but included in lines 6 and 7.

PERFORMING ANNUAL PAYROLL ACTIVITIES The organization’s payroll service bureau prepares and files all annual payroll tax returns.

Reconciliations (Outside accountant) After the W-2s and W-3 are prepared, perform two reconciliations:

Agree the payroll information on the W-3 to the combined payroll data (in the payroll register) and nonpayroll data (either in the payroll register or special compensation workpapers).

Agree or reconcile the FIT wages to the Medicare wages and Social Security wages within the Form W-3.

Reconciliation to Form W-3 Once the fourth quarter Form 941 has been prepared, reconcile the year’s four Forms 941 to the Form W-3. This reconciliation is necessary because the IRS and the Social Security Administration will require the organization to explain discrepancies between the following information reported on both sets of forms:

Wages, tips, and other compensation.

Federal income tax withheld.

Social Security wages.

Social Security tips.

Social Security tax withheld.

Medicare wages and tips.

Medicare tax withheld.

Advance earned income credit.







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OVERVIEW OF THE MONTHLY CLOSING PROCESS (Outside accountant) This section briefly describes six steps to completing a monthly general ledger close out:

Step One—Post journals and record standard journal entries.

Step Two—Display the preliminary general ledger.

Step Three—Review general ledger activity, perform reconciliations, and record adjusting journal entries.

Step Four—Display the general ledger and preliminary financial statements.

Step Five—Review the financial statements and make any additional adjustments.

Step Six—Print the final general ledger and financial statements.

PREPARING JOURNAL ENTRIES There are three basic types of journal entries: standard journal entries, reversing journal entries, and adjusting journal entries. Standard journal entries record regular accounting entries to the general ledger. Reversing entries are made to reverse prior month accruals. Adjusting journal entries are made to correct errors noted in the general ledger. Standard and reversing journal entries are usually made earlier in the monthly closing process, while adjusting journal entries are normally made in the later stages. When recording journal entries, it is vital to maintain control over the journal entry process. Using a journal entry checklist and standard journal entry forms help maintain control over exactly which entries have been made at all times. Journal Entry Checklist A monthly journal entry checklist tracks which entries have been made and which have not. The checklist should include information about the journal entries to be made, such as the journal entry numbers, descriptions, and spaces to sign off as the entries are recorded. Also, indicate on the checklist whether the entry should be reversed the following month. Use a checklist and keep it as part of the month-end closing documentation. Common Journal Entries

Record reclassifications.

Record amortization and depreciation.

Record adjustments to correct general ledger postings. Review General Ledger Activity, Perform Reconciliations, and Record Adjusting Journal Entries After displaying the preliminary general ledger, do the following:

Reconcile accounts to supporting records. Agree ending asset and liability accounts to supporting records, such as the bank statement, subsidiary ledgers, and workpapers. If differences exist, determine the reason for the differences.

Review general ledger account activity. Scan account balances and monthly activities to identify any unusual items. Look for account coding errors or other posting errors not already detected.







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Prepare adjusting journal entries. After performing the previous three tasks, prepare and record any necessary adjusting journal entries.

RECONCILING THE BANK ACCOUNTS The bank statement reconciliation process is a very effective after-the-fact internal control procedure. In fact, the process is crucial for many small organizations since their accounting systems are often cash-driven. Bank reconciliations performed by the proper individuals accomplish several things. While not all-inclusive, bank reconciliations:

Verify the accuracy of the general ledger and checkbook balances.

Detect errors made in the general ledger or checkbook.

Identify errors made by the bank.

Identify lost deposits or checks (items that never cleared the bank).

Potentially detect forged checks or unauthorized signatures on checks.

Provide a deterrent to theft. The bank reconciliation process is of utmost importance. Take steps to ensure that bank reconciliations are performed both timely and accurately each month.

RECONCILING OTHER GENERAL LEDGER ACCOUNTS Closing out the general ledger accurately and in a timely manner is extremely difficult without supporting workpapers. These workpapers indicate what comprises the particular account balances and can reduce time spent further analyzing the accounts. At the end of each month, the workpapers are updated and agreed to general ledger balances. If the two amounts agree, you have additional assurance that the general ledger balances are accurate. To the extent possible, supporting workpapers should be prepared for all significant general ledger accounts. The types of supporting workpapers and the methods for generating them vary by account. The supporting workpapers may be generated manually, by computer spreadsheets, or by the accounting system itself, such as the supporting subsidiary ledgers. Use the most efficient type of workpaper for each account. Whenever possible, rely on work papers and records generated automatically by the accounting system instead of those requiring manual input or preparation.

REVIEWING GENERAL LEDGER ACTIVITY AND PRELIMINARY FINANCIAL STATEMENTS After the general ledger and related financial statements are generated, various procedures should be performed to help ensure their accuracy. The general ledger review tends to focus more on balance sheet accounts, whereas the financial statement review focuses more on revenue and expense accounts.







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General Ledger Review The general ledger review process consists of scanning the ending balances and the entries posted to each account to detect any unusual items. Be sure to think carefully and use judgment when performing the review. Ask yourself, “Does this make sense?”, “Does it look right?” Often times, simply using common sense will be most fruitful in detecting general ledger errors. Look for “red flags” that may indicate a problem in a specific account. Some of the more common “red flags” indicating possible errors include:

Debit vs. credit balance. Some accounts naturally carry debit balances (assets and expenses) and others carry credit balances (liabilities, net assets, and revenues). If one of these accounts are unexpectedly in a debit or credit position, there may be a potential problem.

Debit vs. credit postings. Similar to the above, some accounts normally receive debit entries (expense accounts) and others receive credit postings (revenues). If credit entries were posted to an expense account or debit entries were posted to a revenue account, further investigation may be warranted.

Unusually large or small amounts. Most accounts have a normal dollar range of transactions. Unusually large or small amounts may indicate a coding or data entry error.

Unexpected posting source. Some accounts primarily receive postings from specific journals. For example, entries to accounts receivable usually come from the revenue and cash receipts journals. Entries to salaries and labor accounts usually come from the payroll journal. If entries from other journals are found, these entries may have been misposted.

Beginning and end of period balances. Balance sheet account balances are often comparable from one period to the next. If the ending balance for an account differs significantly from the balance at the beginning of the period, a potential problem could exist. Look at the account activity in detail.

Absence of an entry. Most accounts have one or more types of journal entries that are regularly posted to them each month. If one of these entries seems to be missing, follow-up may be needed.

Once the general ledger review is complete, correct any errors by recording adjusting journal entries to the general ledger as necessary.

Financial Statements Review Unlike the detailed, account-by-account approach used when reviewing the general ledger, the financial statement review uses a high-level, analytical approach. This approach takes a big picture look at the organization’s financial statements. In other words, instead of assessing the reasonableness of an amount by looking at it in isolation, the analytical approach assesses the reasonableness of an amount by comparing it to other amounts and relationships within the financial statements. The type of review generally varies depending on whether balance sheet or revenue and expense accounts are being reviewed. Analytical procedures are usually very effective. Most general ledger packages generate statements of activities (income statements) showing current period and year-to-date (YTD) amounts. Frequently, they also show side-by-side comparisons with budget amounts. For







- 19 -

example, you can review each line item of the statement of activities by comparing the following:

Current month expense amounts with current month budgeted amounts.

Current YTD amounts with prior YTD amounts.

Current YTD amounts with current year YTD budgeted amounts.

Investigate any unusual or unexpected items found during the reviews. If any amounts seem out of line, go back and review the general ledger activity for those accounts to determine the reason for the unexpected fluctuation.

CHART OF ACCOUNTS

The chart of accounts is the all-encompassing list of accounts used by the organizations. The chart of accounts serves as the blueprint for building the general ledger, as it defines which types of transactions are recorded and grouped into which accounts. Chart of Account Considerations The account structure of the Hostos and Pantoja charts is prescribed by the Pennsylvania Department of Education. The ASPIRA chart was approved by management and does not use account numbers.

CAPITALIZATION POLICY It is the school’s policy to capitalize all assets purchased or received by donation that cost $1,000 or more individually. All capitalized assets will be depreciated in accordance with the organizations’ depreciation policy. Assets purchased or received by donation that cost less than $1,000 individually will be expensed in the period purchased. It is also the organizations’ policy to capitalize all repairs and improvements to property or leasehold improvements that cost $2,000 or more and with an estimated useful life in excess of one year.


Financial Statements

June 30, 2012 and 2011

With Independent Auditors’ Reports

Aspira Bilingual Cyber Charter School Table of Contents June 30, 2012 and 2011

Independent Auditors' Report ............................................................................................................................. 1-2

Management’s Discussion and Analysis ................................................................................................................. 3-5


Statements of Net Assets ........................................................................................................................................... 6

Statement of Activities (With Comparative Totals at June 30, 2011)......................................................................... 7

Balance Sheet – Governmental Funds (With Comparative Totals at June 30, 2011) ............................................... 8

Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets ................................. 9

Statement of Revenues, Expenditures and Changes in Fund Balances- Governmental Funds (With Comparative Totals at June 30, 2011) ........................................................................................................... 10

Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities ................................................................................................. 11

Notes to Financial Statements ............................................................................................................................ 12-16

Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ......................................................................................................................... 17-18

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Independent Auditors' Report To the Board of Trustees, Aspira Bilingual Cyber Charter School: We have audited the accompanying financial statements of the governmental activities and each major fund of Aspira Bilingual Cyber Charter School (the “School”) as of and for the year ended June 30, 2012, which collectively comprise the School's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the School's management. Our responsibility is to express an opinion on these financial statements based on our audit. The prior year summarized comparative information has been derived from Aspira Bilingual Cyber Charter School’s financial statements and, in our report dated March 13, 2012, we expressed an unqualified opinion on those financial statements. We conducted our audit in accordance with 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the basic financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall basic financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the 2012 financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of Aspira Bilingual Cyber Charter School as of June 30, 2012, and the respective changes in financial position for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated April 18, 2013 on our consideration of the Aspira Bilingual Cyber Charter School's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, 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 the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and is important for assessing the results of our audit.

The management’s discussion and analysis and the schedule of revenues, expenditures and change in fund balance – budget and actual – governmental funds, as listed in the table of contents, are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it.

April 18, 2013

Aspira Bilingual Cyber Charter School

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Management’s Discussion and Analysis June 30, 2012 The Board of Trustees of the Aspira Bilingual Cyber Charter School offers readers of the School's financial statements this narrative overview and analysis of the financial activities of the School for the fiscal year ended June 30, 2012. We encourage readers to consider the information presented here in conjunction with the School's financial statements. Financial Highlights

This fiscal year was the second of the School’s operation.

Current year revenues of $1,098,373 are primarily due to the per student subsidy amounts earned for the approximately 109 regular education and 12 special education students enrolled at the School.

At the close of the current fiscal year, the School reports ending net assets of $45,888. This net assets

balance represents an increase in net assets of $12,764 for the year ended June 30, 2012.

The School's cash balance at June 30, 2012 was $196,066, representing an increase of $177,211 from June 30, 2011.

Overview of the Financial Statements The discussion and analysis is intended to serve as an introduction to the School's basic financial statements. The School's basic financial statements as presented comprise three components: management's discussion and analysis (this section), the basic financial statements, budgetary comparison and report required under Government Auditing Standards. Government-Wide Financial Statements The government-wide financial 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 assets presents information on all of the School's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the School is improving or deteriorating. The statement of activities presents information showing how the School's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. The government-wide financial statements report on the function of the School that is principally supported by subsidies from school districts whose constituents attend the School. Fund Financial Statements A fund is a group of related accounts that are used to maintain control over resources that have been segregated for specific activities or purposes. The School, like governmental type entities, utilizes fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The School has three governmental funds - general, food services and student activities. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements.


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Management’s Discussion and Analysis June 30, 2012 Government-Wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of the School, assets exceeded liabilities by $45,888 as of June 30, 2012.

2012 2011

Total assets 594,644$ 115,613$ Total liabilities 548,756 82,489

Total net assets 45,888$ 33,124$

The School's revenues are predominantly from the School District of Philadelphia, based on student enrollment.

2012 2011Revenues

Local education agencies 1,082,287$ 205,317$ State sources 16,086 -- Federal sources -- 33,058

1,098,373 238,375

ExpendituresInstruction 702,847 101,642 Student support services 55,744 -- Administration support 285,958 91,803 Pupil health 72 -- Business services 14,270 7,252 Student activities 468 1,011 Depreciation 26,250 3,543

1,085,609 205,251

Change in net assets 12,764 33,124

Net assets, beginning 33,124 --

Net assets, ending 45,888$ 33,124$

Governmental Funds The focus of the School's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the School's financing requirements. In particular, fund balance may serve as a useful measure of a government's net resources available for spending for program purposes at the end of the fiscal year. The School's governmental funds, (the General and Student Activities Funds), reported an ending fund balance of $(45,974). For the year ended June 30, 2012, the School's revenues ($1,098,373) exceeded its expenditures ($1,085,609) by $12,764.


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Management’s Discussion and Analysis June 30, 2012 Governmental Fund Budgetary Highlights Some categories of revenues and expenditures varied significantly from those budgeted. Expenses allocated from Aspira for maintenance, security, IT support and other administrative expenses were not included in the budget due to the deadline of the filing of the budget and the fact that the expenses could not be reasonably estimated. Capital Asset and Debt Administration Capital Assets As of June 30, 2012, the School's net investment in capital assets for its governmental activities totals $103,885 (net of depreciation). This investment in capital assets consists of computer equipment. Major capital asset purchases during the year included the following:

Computer equipment amounting to $99,885

Additional information on the School's capital assets can be found in Note 4 of this report. There were capital lease obligations related to the investment in capital assets amounting to $12,023 at June 30, 2012. Economic Factors and Next Year's Budgets and Rates The School's primary source of revenue, the per student subsidy provided by the School District of Philadelphia, will decrease by approximately $70,949 for fiscal year 2012-2013, due to a decreased subsidy per student of $677 for regular education and an increased subsidy of $237 for special education. The current amount of students enrolled at Aspira Bilingual Cyber Charter School is 121, consisting of 109 Regular Education students and 12 Special Education students, which is expected to increase in fiscal 2012-2013. Contacting the School's Financial Management The financial report is designed to provide interested parties a general overview of the School's finances. Questions regarding any of the information provided in this report should be addressed to the Chief Academic Officer, Aspira Bilingual Cyber Charter School, 4322 N. 5th Street, Philadelphia, PA 19140.


The Notes to Financial Statements are an integral part of these statements.

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Statements of Net Assets June 30, 2012 and 2011

Governmental Activities2012 2011

Assets

Curent assetsCash and cash equivalents 196,066$ 18,855$ State subsidies receivable 16,086 -- Other receivables 278,607 66,508

Total current assets 490,759 85,363

Capital assets - net of depreciationComputer equipment 103,885 30,250

103,885 30,250

594,644$ 115,613$

Liabilities and Net Assets

Current liabilitiesAccounts payable and accrued expenses 19,541$ 16,398$ Accrued payroll and payroll taxes 137,109 -- Refundable advances 44,088 -- Due to related parties 335,995 47,158 Current portion of obligations under capital lease 7,431 6,909

Total current liabilities 544,164 70,465

Long-term liabilitiesObligations under capital lease 4,592 12,024

Total liabilities 548,756 82,489

Net assetsInvested in capital assets, net of related debt 91,862 11,317 Unrestricted (45,974) 21,807

Total net assets 45,888 33,124

594,644$ 115,613$



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Statement of Activities Year Ended June 30, 2012 (With Comparative Totals at June 30, 2011)

2012 2011Net (Expense) Net (Expense)Revenue and Revenue andChanges in Changes inNet Assets Net Assets

Operating Total TotalCharges for Grants and Governmental Governmental

Expenses Service Contributions Activities Activities

Governmental activitiesInstruction 702,847$ --$ --$ (702,847)$ (68,584)$ Student support services 55,744 -- -- (55,744) -- Administrative support 285,958 -- -- (285,958) (91,803) Pupil health 72 -- -- (72) -- Business services 14,270 -- -- (14,270) (7,252) Student activities 468 -- -- (468) (1,011) Depreciation 26,250 -- -- (26,250) (3,543)

1,085,609 -- -- (1,085,609) (172,193)

General RevenuesState grants and reimbursements 16,086 -- Local educational agencies 1,082,287 205,317

1,098,373 205,317


Net assets - beginning of year 33,124 --

Net assets - end of year 45,888$ 33,124$

Functions

ProgramRevenues



8

Balance Sheet – Governmental Funds June 30, 2012 (With Comparative Totals at June 30, 2011)

2012 2011Student Total Total

General Activities Governmental GovernmentalFund Fund Activities Activities

Assets

Cash and cash equivalents 196,066$ --$ 196,066$ 18,855$ State subsidies receivable 16,086 -- 16,086 -- Other receivables 278,607 -- 278,607 66,508

490,759$ --$ 490,759$ 85,363$

Liabilities

Accounts payable and accrued expenses 19,541$ --$ 19,541$ 16,398$ Salaries and contracts payable 137,109 -- 137,109 -- Refundable advances 44,088 -- 44,088 -- Due to related parties 335,995 -- 335,995 47,158

Total liabilitlies 536,733 -- 536,733 63,556

Fund Balances

Unrestricted fund balances (45,974) -- (45,974) 21,807

490,759$ --$ 490,759$ 85,363$

Functions



9

Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets June 30, 2012 Total Fund Balances for Governmental Funds (45,974)$

Total net assets reported for governmental activities in the statement of net assets is different because:

Capital assets used in governmental funds are not financial resources and, therefore, are not reported in the funds. Those assets consist of:

Computer equipment 133,678$ Accumulated depreciation (29,793) Obligations under capital leases (12,023)

91,862

Total net assets of governmental activities 45,888$



10

Statement of Revenues, Expenditures and Changes in Fund Balances- Governmental Funds Year Ended June 30, 2012 (With Comparative Totals at June 30, 2011)



RevenuesLocal educational agency assistance 1,082,287$ --$ 1,082,287$ 205,317$ State sources 16,086 -- 16,086 -- Federal sources -- -- -- 33,058

1,098,373 -- 1,098,373 238,375

ExpendituresInstruction 809,642 -- 809,642 116,502 Support services 55,744 -- 55,744 -- Administrative support 285,958 -- 285,958 91,803 Pupil Health 72 -- 72 -- Business services 14,270 -- 14,270 7,252 Student activities -- 468 468 1,011

1,165,686 468 1,166,154 216,568

Excess (deficiency) of revenuesover expenditures (67,313) (468) (67,781) 21,807

Other financing sources (uses)Transfer in -- 2,490 2,490 1,011 Transfer out (2,490) -- (2,490) (1,011)

(2,490) 2,490 -- --

Net change in fund balances (69,803) 2,022 (67,781) 21,807

Fund balances - beginning of year 23,829 (2,022) 21,807 --

Fund balances - end of year (45,974)$ --$ (45,974)$ 21,807$

Functions



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Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities Year Ended June 30, 2012 Net Change in Fund Balances - Total Governmental Funds (67,781)$

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

Capital outlays 99,885 Obligations under capital leases 6,910 Depreciation expense (26,250)

Change in Net Assets of Governmental Activities 12,764$

Governmental funds report capital outlays as expenditures. However, in the statement of activities, assets are capitalized and the cost is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period.


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Notes to Financial Statements June 30, 2012 and 2011

1. Organization and Purpose of Corporation

Aspira Bilingual Cyber Charter School (“the School”) was incorporated as a 501(c)(3) in 2008 under the non-profit law of the Commonwealth of Pennsylvania. The School serves grades eight through twelve and is located in Philadelphia, Pennsylvania. The School was established and operates under the provisions enacted by the General Assembly of the Commonwealth of Pennsylvania in 1997 and is operating under a charter school contract ending on June 30, 2015. The net assets of the School would remain with the School if its charter were not renewed. Aspira Bilingual Cyber Charter School is a charter school which has financial accountability and control over all activities related to the students’ education. The School receives funding from local, state, and federal government sources and must comply with the requirements of these funding source entities. However, the School is not included in any other governmental "reporting entity" as defined by the Governmental Accounting Standards Board (“GASB”) pronouncement. In addition, there are no component units as defined in the standards established for defining and reporting on the financial reporting entity. Aspira Bilingual Cyber Charter School began operations in December 2010. The School provides instruction in the form of interactive distance learning classrooms, one-to-one tutoring, computer-supported collaborative learning, project-based learning, and instruction tailored to each student’s individual education needs. Students access their courses online where worksheets, study material, quizzes and tests are all provided for the student to either read and complete on the computer or print for their own reference or completion by hand.

One of the most unique features of the School is its full two-way immersion bilingual program in order to develop fluency in both English and Spanish. By integrating native Spanish and native English speakers together and teaching classes in both languages, it allows for all students regardless of language preference to receive a truly high quality education while learning a second language.

2. Summary of Significant Accounting Policies Basis of Presentation The financial statements of the School have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as applied to governmental units. The Governmental Accounting Standards Board is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The GASB has issued a codification of governmental accounting and financial reporting standards. This codification and subsequent GASB pronouncements are recognized as U.S. generally accepted accounting principles for state and local governments that have implemented the accounting pronouncement on financial reporting for state and local governments, “Basic Financial Statements and Management’s Discussion and Analysis – for State and Local Governments.” Government-wide and Fund Financial Statements The government-wide financial statements (the statement of net assets and the statement of activities) report on the School as a whole. The statement of activities demonstrates the degree to which the direct expenses of the School's function are offset by program revenues. The fund financial statements (governmental funds balance sheet and statement of governmental funds revenues, expenditures and changes in fund balances) report on the School's general, food services, and student activities funds. Measurement Focus, Basis of Accounting and Financial Statement Presentation Government-wide Financial Statements- The statement of net assets and the statement of

activities are prepared 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 the related cash flows. Grants and similar items are recognized as soon as all eligibility requirements imposed by providers have been met.


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Fund Financial Statements-Governmental funds 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 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. The government reports the following major governmental funds:

General Fund - The General Fund is the operating fund of the School and accounts for all

revenues and expenditures of the School, excluding food services and student activities.

Student Activities Special Revenue Fund - The Student Activities Special Revenue Fund is used to account for student activity revenues and expenditures.

Method of Accounting The School has adopted the provision of the accounting pronouncement on financial reporting for state and local governments. The accounting pronouncement on financial reporting for state and local governments established standards for external financial reporting for all state and local governmental entities, which includes a statement of net assets (deficit), and a statement of activities and changes in net assets (deficit). It requires the classification of net assets (deficit) into three components - invested in capital assets, net of related debt; restricted; and unrestricted. These classifications are defined as follows:

Invested in capital assets, net of related debt - This component of net assets consists of capital assets, including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. If there are significant unspent related debt proceeds at year-end, the portion of the debt attributable to the unspent proceeds are not included in the calculation of invested in capital assets, net of related debt. Rather, that portion of the debt is included in the same net assets component as the unspent proceeds. The School presently has not incurred any related debt.

Restricted - This component of net assets consists of constraints placed on net asset use through

external constraints imposed by creditors such as through debt covenants, grantors, contributors, or laws or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation. The School presently has no temporarily or permanately restricted net assets.

Unrestricted net assets - This component of net assets consists of net assets that do not meet the

definition of "restricted" or "invested” in capital assets, net of related debt. Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Concentration of Credit Risk Financial instruments which potentially subject the School to concentrations of credit risk consist of cash and cash equivalents, contributions and grants receivables and revenue. Cash and cash equivalents are held primarily at one high-credit quality financial institution. At June 30, 2012, the School received eighty-eight percent of their total revenue from one source.


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Capital Assets Capital assets, which includes computer equipment, is reported in the government-wide financial statements. All capital assets are capitalized at cost and updated for additions and retirements during the year. The School does not possess any infrastructure. Improvements are capitalized; the cost of normal maintenance and repairs that do not add to the value of the asset or materially extend an asset's life are not. Capital assets of the School are depreciated using the straight-line method over the useful lives of the assets. The estimated useful lives of furniture and equipment range from five to seven years. Leasehold improvements are amortized over the life of the lease.

Income Tax Status The School is exempt from Federal income taxes under Section 501(c)(3) of the Internal Revenue Code. Accordingly, no provision or liability for income taxes has been recorded in the financial statements. The School adopted the accounting pronouncement dealing with uncertain tax positions as of the date of inception in December 2010. Upon adoption of this accounting pronouncement, the School had no unrecognized tax benefits. Furthermore, the School had no unrecognized tax benefits at June 30, 2012 and 2011. There were no open tax years prior to 2011. In addition, the School had no income tax related penalties or interest for the periods reported in these financial statements.

3. Cash and Cash Equivalents The School considers all highly liquid debt instruments purchased with a maturity of three months or less at the time of acquisition to be cash equivalents. Deposits Custodial credit risk is the risk that in the event of a bank failure, the government's deposits may not be returned to it. The School does have a policy for custodial credit risk. For each of the years ended June 30, 2012 and 2011, none of the School’s bank balances were exposed to custodial credit risk:

2012 2011

Uninsured and uncollateralized --$ --$ Plus: Insured amount 209,124 18,855 Less: Outstanding checks (13,058) -- Plus: Deposits in transit -- -- Carrying amount - bank balances 196,066 18,855 Plus: Petty cash -- --

Total cash per financial statements 196,066$ 18,855

4. Capital Assets

Capital asset activity for the year ended June 30, 2012 and 2011 was as follows:

Balance BalanceJuly 1, 2011 Deletions Additions June 30, 2012

Computer equipment 33,793$ --$ 99,885$ 133,678$ Less: Accumulated depreciation 3,543 -- 26,250 29,793

Capital assets, net 30,250$ --$ 73,635$ 103,885$


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Computer equipment --$ --$ 33,793$ 33,793$ Less: Accumulated depreciation -- -- 3,543 3,543

Capital assets, net --$ --$ 30,250$ 30,250$

Depreciation expense for the years ended June 30, 2012 and 2011 was $26,250 and 3,543, respectively .

5. Capital Leases The School leases computer equipment, under a capital lease, with a total original cost of $21,798 for the year ended June 30, 2012. The lease expires in 2014, with monthly principal and interest payments of $672. The interest rate on this capital lease is 7.30 percent. Computers are included in property and equipment in the statement of net assets at June 30, 2012 as follows:

Machinery and equipment 133,678$ Less: Accumulated depreciation (29,793)

103,885$

The future minimum lease payments under capital lease and the net present value of the future minimum lease payments are as follows:

Year Ending June 30 Amount

2013 8,064$ 2014 4,704

12,768

Less: Amounts representing interest 745

Net minimum lease payment 12,023

Less: Current portion 7,431

Long-term obligations under capital leases 4,592$

6. Local Educational Agency Revenue

Charter schools are funded by the local public school district in which each student resides. The rate per student is determined annually and is based on the budgeted total expenditure per average daily membership of the prior school year for each school district. The majority of the students of the School reside in Philadelphia. For the years ended June 30, 2012 and 2011, the rate for the School District of Philadelphia was $8,773 and $8,608, respectively per year for regular education students plus additional funding for special education students. The annual rate is earned monthly and paid when billed by the School District of Philadelphia and is prorated if a student enters or leaves during the year. Total revenue from local sources was $1,082,287 and $205,317 for the fiscal years ended June 30, 2012 and 2011, respectively.


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7. Government Grants and Reimbursement Programs The School participates in numerous state and federal grant and reimbursement programs, which are governed by various rules and regulations of the grantor agencies. Costs charged to the respective grant programs and reimbursement programs for retirement (pension) expense are subject to audit and adjustment by the grantor agencies; therefore, to the extent that the School has not complied with the rules and regulations governing the grants and reimbursement programs, refunds of any money received may be required and the collectability of any related receivable at June 30, 2012 and 2011 may be impaired. In the opinion of the School, there are no significant contingent liabilities relating to compliance with the rules and regulations governing the respective grants; therefore, no provision has been recorded in the accompanying financial statements for such contingencies.

8. Leasing Arrangements

The School leases a portion of 4322-42 North 5th Street in Philadelphia, Pennsylvania under a 10 year lease operating lease from Aspira, Inc. of Pennsylvania (a related party, see Note 10). The School paid monthly rent of $10,000 for the year ending June 30, 2012.

9. 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 carries commercial insurance for such risks. There have been no settled claims resulting from these risks which have exceeded commercial insurance coverage.

10. Related Party The School is associated with Aspira, Inc. of Pennsylvania (“Aspira”) through board control. The School is associated with Aspira Community Enterprises, Inc. (“ACE”), Antonia Pantoja Charter School (“Pantoja”), John B. Stetson Charter School (“Stetson”), Olney Charter High School (“Olney”), and ACE/Dougherty, Inc. through common board membership and management. The School’s bylaws stipulate that Aspira will appoint 55 percent of the members of the School’s Board of Trustees. As of June 30, 2012 and 2011, the School owed Aspira $280,565 and $47,158, respectively. All receivables and payables with related parties are unsecured, non-interest bearing and have no repayment terms. As described in Note 8, the School leases a portion of Aspira’s building under an operating lease expiring in the year 2022. In connection with the operation of its charter school, the school made lease payments to Aspira in the amount of $120,000 for the year ended June 30, 2012. The School reimbursed Aspira for instruction and administrative expenses paid by Aspira in the amount of $82,187 and $105,060 for the years ended June 30, 2012 and 2011. The School owed Antonia Pantoja Community Charter School $1,066 for the year ended June 30, 2012. The School owed Olney Charter High School $54,364 for the year ended June 30, 2012.

11. Commitments and Contingencies

The School is involved in legal proceedings arising in the ordinary course of business. In the opinion of management, although the outcome of any legal proceedings cannot be predicted, ultimate liability of the School in connection with its legal proceedings will not have a material adverse effect on the financial position or activities of the School.


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12. Retirement Plan The School contributes to the Public School Employees’ Retirement System (the “System”), a governmental cost-sharing multiple-employer defined benefit pension plan. The plan provides retirement and disability benefits, legislatively mandated ad hoc cost-of-living adjustments, and healthcare insurance premium assistance to qualifying annuitants. The Public School Employees’ Retirement Code (Act No. 96 of October 2, 1975, as amended) (24 Pa.C.S. 8101-8535) assigns the authority to establish and amend benefit provisions to the System. The System issues a comprehensive annual financial report that includes financial statements and required supplementary information for the plan. A copy of the report may be obtained by writing to Diane J. Wert, Office of Financial Management, Public School Employees’ Retirement System, P.O. Box 125, Harrisburg, Pennsylvania 17108-0125. This publication is also available on the PSERS website at www.psers.state.pa.us/publications/cafr/index.htm. Member contributions are as follows:

- Active members who joined the System prior to July 22, 1983, contribute at 5.25 percent (Membership

Class T-C) or at 6.5 percent (Membership Class T-D) of the member’s qualifying compensation.

- Members who joined the System on or after July 22, 1983, and who were active or inactive as of July 1, 2001, contribute at 6.25 percent (Membership Class T-C) or at 7.5 percent (Membership Class T-D) of the member’s qualifying compensation.

- Members who joined the System after June 30, 2001, contribute at 7.5 percent (automatic Membership

Class T-D). For all new hires and for members who elected Class T-D membership, the higher contribution rates began with service rendered on or after January 1, 2002.

- Members who joined the System after June 30, 2011, may choose between two classes of membership

in PSERS, and therefore, two base contribution rates. These rates are between 7.5 percent and 9.5 percent (Membership class T-E) and 10.3 percent and 12.3 percent (Membership class T-F).

Employer contributions are based upon an actuarial valuation. For the fiscal year ended June 30, 2012, the rate of employer’s contribution was 8.65 percent of covered payroll.

Payroll expense for employees covered by the System for the year ended June 30, 2012 was approximately $470,000.

In accordance with Act 29 of 1994, the Commonwealth of Pennsylvania will pay school entities for contributions made to the System based on the formula in Act 29 of 1994, but not less than one-half of the school entities’ contributions. The School’s contribution to the Plan for the year ended June 30, 2012 was $36,000.

13. Subsequent Events The School has evaluated subsequent events occurring after the statement of net assets date through the date of April 18, 2013 which is the date the financial statements were available to be issued. Based on this evaluation, the School has determined that no subsequent events have occurred which require disclosure in or adjustment to the financial statements.

Two Logan Square



215 546 2140 . fax 215 546 2148

www.withum.com






17

Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of

Financial Statements Performed in Accordance with Government Auditing Standards

To the Board of Trustees, Aspira Bilingual Cyber Charter School: We have audited the financial statements of the governmental activities and each major fund of Aspira Bilingual Cyber Charter School (the "School”), as of and for the year ended June 30, 2012, which collectively comprises the School’s basic financial statements and have issued our report thereon dated April 18, 2013. We conducted our audit in accordance with 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. Internal Control Over Financial Reporting Management of Aspira Bilingual Cyber Charter School is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered the School’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not to 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 misstatements on a timely basis. A material weakness is a deficiency, or 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. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.

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Compliance and Other Matters As part of obtaining reasonable assurance about whether Aspira Bilingual Cyber Charter School’s financial statements are free of 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. 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.

April 18, 2013



June 30, 2013

(With Summarized Comparative Financial Information For The Year Ended June 30, 2012)


Aspira Bilingual Cyber Charter School Table of Contents June 30, 2013 (With Summarized Comparative Financial Information For The Year Ended June 30, 2012)




Statements of Net Assets (With Comparative Totals at June 30, 2012) ................................................................... 6







Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ............................................................................................................................................................ 18-19

Two Logan Square



215 546 2140 . fax 215 546 2148

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Independent Auditors' Report To the Board of Trustees, Aspira Bilingual Cyber Charter School: We have audited the accompanying financial statements of the governmental activities and each major fund of Aspira Bilingual Cyber Charter School (the “School”) as of June 30, 2013, 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 and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that 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.

Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the governmental activities and each major fund of Aspira Bilingual Cyber Charter School as of June 30, 2013, and the changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Report on Summarized Comparative Information We have previously audited Aspira Bilingual Cyber Charter School’s June 30, 2012 financial statements and we have expressed an unmodified audit opinion on these financial statements in our audit report dated April 18, 2013. In our opinion, the summarized comparative information presented hereon as of and for the year ended June 30, 2012 is consistent in all material respects, with the audited financial statements from which it is have been derived. Other Matters In addition, the management discussion and analysis is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted by the United States of America. We have applied certain limited procedures, which consisted primarily of inquiries of management regarding the measurement and presentation of the required supplementary information. However, we did not audit the information and do not express an opinion on it. Report on Other Legal and Regulatory Requirements In accordance with Government Auditing Standards, we have also issued our report dated January 8, 2014 on our consideration of the Aspira Bilingual Cyber Charter School's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, 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 the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Aspira Bilingual Cyber Charter School’s internal control over financial reporting and compliance.

January 8, 2014


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Management’s Discussion and Analysis June 30, 2013 (With Summarized Comparative Financial Information For The Year Ended June 30, 2012) The Board of Trustees of the Aspira Bilingual Cyber Charter School offers readers of the School's financial statements this narrative overview and analysis of the financial activities of the School for the fiscal year ended June 30, 2013. We encourage readers to consider the information presented here in conjunction with the School's financial statements. Financial Highlights

This fiscal year was the second of the School’s operation.

Current year revenues of $1,574,775 are primarily due to the per student subsidy amounts earned for the approximately 163 regular education and 28 special education students enrolled at the School.


balance represents an increase in net assets of $48,928 for the year ended June 30, 2013.

The School's cash balance at June 30, 2013 was $198,020, representing an increase of $1,954 from June 30, 2012.

Overview of the Financial Statements The discussion and analysis is intended to serve as an introduction to the School's basic financial statements. The School's basic financial statements as presented comprise three components: management's discussion and analysis (this section), the basic financial statements, budgetary comparison and report required under Government Auditing Standards. Government-Wide Financial Statements The government-wide financial 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 assets presents information on all of the School's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the School is improving or deteriorating. The statement of activities presents information showing how the School's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. The government-wide financial statements report on the function of the School that is principally supported by subsidies from school districts whose constituents attend the School. Fund Financial Statements A fund is a group of related accounts that are used to maintain control over resources that have been segregated for specific activities or purposes. The School, like governmental type entities, utilizes fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The School has three governmental funds - general, food services and student activities. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements.


4

Management’s Discussion and Analysis June 30, 2013 (With Summarized Comparative Financial Information For The Year Ended June 30, 2012) Government-Wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of the School, liabilities exceeded assets by $94,816 as of June 30, 2013.

2013 2012

Total assets 887,917$ 594,644$ Total liabilities 793,101 548,756



2013 2012Revenues

Local education agencies 1,328,185$ 1,082,287$ Other local sources 103 -- State sources 84,419 16,086 Federal sources 162,068 --

1,574,775 1,098,373

ExpendituresInstruction 786,548 702,847 Student support services 95,792 55,744 Administration support 548,024 285,958 Pupil health 13,853 72 Business services 37,558 14,270 Student activities 6,155 468 Depreciation 37,917 26,250

1,525,847 1,085,609


Net assets, beginning 45,888 33,124


Governmental Funds The focus of the School's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the School's financing requirements. In particular, fund balance may serve as a useful measure of a government's net resources available for spending for program purposes at the end of the fiscal year. The School's governmental funds, (the General and Student Activities Funds), reported an ending fund balance of $(33,911). For the year ended June 30, 2013, the School's revenue of $1,574,775 exceeded its expenditures of $1,562,712 by $12,063.


5

Management’s Discussion and Analysis June 30, 2013 (With Summarized Comparative Financial Information For The Year Ended June 30, 2012) Governmental Fund Budgetary Highlights Some categories of revenues and expenditures varied significantly from those budgeted. Expenses allocated from Aspira for maintenance, security, IT support and other administrative expenses were not included in the budget due to the deadline of the filing of the budget and the fact that the expenses could not be reasonably estimated. Capital Asset and Debt Administration Capital Assets As of June 30, 2013, the School's net investment in capital assets for its governmental activities totals $133,319 (net of depreciation). This investment in capital assets consists of computer equipment. Major capital asset purchases during the year included the following:


Additional information on the School's capital assets can be found in Note 4 of this report. There were capital lease obligations related to the investment in capital assets amounting to $4,592 at June 30, 2013. Economic Factors and Next Year's Budgets and Rates The School's primary source of revenue, the per student subsidy provided by the School District of Philadelphia, will decrease by approximately $274,253 for fiscal year 2013-2014, due to an increased subsidy per student of $533, but a decreased enrollment of 42. The per student subsidy will increase by approximately $156,474 in special education for fiscal year 2013-14 due to an increased subsidy per student of $2,411 and an increased enrollment of 4. The current amount of students enrolled at Aspira Bilingual Cyber Charter School is 191, consisting of 163 Regular Education students and 28 Special Education students, which is expected to increase in fiscal 2013-2014. Contacting the School's Financial Management The financial report is designed to provide interested parties a general overview of the School's finances. Questions regarding any of the information provided in this report should be addressed to the Chief Academic Officer, Aspira Bilingual Cyber Charter School, 4322 N. 5th Street, Philadelphia, PA 19140.



6

Statements of Net Assets June 30, 2013 (With Summarized Comparative Financial Information For The Year Ended June 30, 2012)


Assets

Curent assetsCash and cash equivalents 198,020$ 196,066$ State subsidies receivable 26,635 16,086 Federal subsidies receivable 132,495 -- Other receivables 397,304 278,607 Due from related parties 144 --

Total current assets 754,598 490,759

Capital assets - net of depreciationComputer equipment 133,319 103,885

133,319 103,885

887,917$ 594,644$


Current liabilitiesAccounts payable and accrued expenses 45,514$ 19,541$ Accrued payroll and payroll taxes 105,061 137,109 Refundable advances 44,088 44,088 Due to related parties 593,846 335,995 Current portion of obligations under capital lease 4,592 7,431


Long-term liabilitiesObligations under capital lease -- 4,592


Net assetsInvested in capital assets, net of related debt 128,727 91,862 Unrestricted (33,911) (45,974)


887,917$ 594,644$


The Notes to Financial Statements are an integral part of this statement.

7

Statement of Activities June 30, 2013 (With Summarized Comparative Financial Information For The Year Ended June 30, 2012)




Governmental activitiesInstruction 786,548$ --$ 162,068$ (624,480)$ (702,847)$ Student support services 95,792 -- -- (95,792) (55,744) Administrative support 548,024 -- -- (548,024) (285,958) Pupil health 13,853 -- -- (13,853) (72) Business services 37,558 -- -- (37,558) (14,270) Student activities 6,155 103 -- (6,052) (468) Depreciation 37,917 -- -- (37,917) (26,250)

1,525,847 103 162,068 (1,363,676) (1,085,609)

General RevenuesState grants and reimbursements 84,419 16,086 Local educational agencies 1,328,185 1,082,287

1,412,604 1,098,373


Net assets - beginning of year 45,888 33,124


Functions

ProgramRevenues



8

Balance Sheet – Governmental Funds June 30, 2013 (With Summarized Comparative Financial Information For The Year Ended June 30, 2012)



Assets

Cash and cash equivalents 198,020$ --$ 198,020$ 196,066$ State subsidies receivable 26,635 -- 26,635 16,086 Federal subsidies receivable 132,495 -- 132,495 -- Other receivables 397,304 -- 397,304 278,607 Due from related parties 144 -- 144 --

754,598$ --$ 754,598$ 490,759$

Liabilities

Accounts payable and accrued expenses 45,514$ --$ 45,514$ 19,541$ Accrued payroll an payroll taxes 105,061 -- 105,061 137,109 Refundable advances 44,088 -- 44,088 44,088 Due to related parties 593,846 -- 593,846 335,995

Total liabilitlies 788,509 -- 788,509 536,733

Fund Balances

Unrestricted fund balances (33,911) -- (33,911) (45,974)

754,598$ --$ 754,598$ 490,759$

Functions



9

Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets June 30, 2013 Total Fund Balances for Governmental Funds (33,911)$



Computer equipment 201,029$ Accumulated depreciation (67,710) Obligations under capital leases (4,592)

128,727




10

Statement of Revenues, Expenditures and Changes in Fund Balances- Governmental Funds Year Ended June 30, 2013 (With Summarized Comparative Financial Information For The Year Ended June 30, 2012)



RevenuesLocal educational agency assistance 1,328,185$ --$ 1,328,185$ 1,082,287$ Other local sources -- 103 103 -- State sources 84,419 -- 84,419 16,086 Federal sources 162,068 -- 162,068 --

1,574,672 103 1,574,775 1,098,373

ExpendituresInstruction 861,330 -- 861,330 809,642 Support services 95,792 -- 95,792 55,744 Administrative support 548,024 -- 548,024 285,958 Pupil health 13,853 -- 13,853 72 Business services 37,558 -- 37,558 14,270 Student activities -- 6,155 6,155 468

1,556,557 6,155 1,562,712 1,166,154

Excess (deficiency) of revenuesover expenditures 18,115 (6,052) 12,063 (67,781)

Other financing sources (uses)Transfer in -- 6,052 6,052 2,490 Transfer out (6,052) -- (6,052) (2,490)

(6,052) 6,052 -- --

Net change in fund balances 12,063 -- 12,063 (67,781)

Fund balances - beginning of year (45,974) -- (45,974) 21,807

Fund balances - end of year (33,911)$ --$ (33,911)$ (45,974)$

Functions



11

Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities Year Ended June 30, 2013 Net Change in Fund Balances - Total Governmental Funds 12,063$


Capital outlays 67,351 Payments under capital leases 7,431 Depreciation expense (37,917)




12



Aspira Bilingual Cyber Charter School (“the School”) was incorporated as a 501(c)(3) in 2008 under the non-profit law of the Commonwealth of Pennsylvania. The School serves grades eight through twelve and is located in Philadelphia, Pennsylvania. The School was established and operates under the provisions enacted by the General Assembly of the Commonwealth of Pennsylvania in 1997 and is operating under a charter school contract ending on June 30, 2015. The net assets of the School would remain with the School if its charter were not renewed. Aspira Bilingual Cyber Charter School is a charter school which has financial accountability and control over all activities related to the students’ education. The School receives funding from local, state, and federal government sources and must comply with the requirements of these funding source entities. However, the School is not included in any other governmental "reporting entity" as defined by the Governmental Accounting Standards Board (“GASB”) pronouncement. In addition, there are no component units as defined in the standards established for defining and reporting on the financial reporting entity. Aspira Bilingual Cyber Charter School began operations in December 2010. The School provides instruction in the form of interactive distance learning classrooms, one-to-one tutoring, computer-supported collaborative learning, project-based learning, and instruction tailored to each student’s individual education needs. Students access their courses online where worksheets, study material, quizzes and tests are all provided for the student to either read and complete on the computer or print for their own reference or completion by hand.

One of the most unique features of the School is its full two-way immersion bilingual program in order to develop fluency in both English and Spanish. By integrating native Spanish and native English speakers together and teaching classes in both languages, it allows for all students regardless of language preference to receive a truly high quality education while learning a second language.

2. Summary of Significant Accounting Policies Basis of Presentation The financial statements of the School have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as applied to governmental units. The Governmental Accounting Standards Board is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The GASB has issued a codification of governmental accounting and financial reporting standards. This codification and subsequent GASB pronouncements are recognized as U.S. generally accepted accounting principles for state and local governments that have implemented the accounting pronouncement on financial reporting for state and local governments, “Basic Financial Statements and Management’s Discussion and Analysis – for State and Local Governments.” Government-wide and Fund Financial Statements The government-wide financial statements (the statement of net assets and the statement of activities) report on the School as a whole. The statement of activities demonstrates the degree to which the direct expenses of the School's function are offset by program revenues. The fund financial statements (governmental funds balance sheet and statement of governmental funds revenues, expenditures and changes in fund balances) report on the School's general, food services, and student activities funds. Measurement Focus, Basis of Accounting and Financial Statement Presentation Government-wide Financial Statements- The statement of net assets and the statement of



13


Fund Financial Statements-Governmental funds 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 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. The government reports the following major governmental funds:







external constraints imposed by creditors such as through debt covenants, grantors, contributors, or laws or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation. The School presently has no temporarily or permanately restricted net assets.


definition of "restricted" or "invested” in capital assets, net of related debt. Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Concentration of Credit Risk Financial instruments which potentially subject the School to concentrations of credit risk consist of cash and cash equivalents, contributions and grants receivables and revenue. Cash and cash equivalents are held primarily at one high-credit quality financial institution. At June 30, 2013 and 2012, the School received eighty-one and eighty-eight percent, respectively of their total revenue from one source.


14


Capital Assets Capital assets, which includes computer equipment, are reported in the government-wide financial statements. All capital assets are capitalized at cost and updated for additions and retirements during the year. The School does not possess any infrastructure. Improvements are capitalized; the cost of normal maintenance and repairs that do not add to the value of the asset or materially extend an asset's life are not. Capital assets of the School are depreciated using the straight-line method over the useful lives of the assets. The estimated useful lives of furniture and equipment range from five to seven years. Leasehold improvements are amortized over the life of the lease.

Income Tax Status The School is exempt from Federal income taxes under Section 501(c)(3) of the Internal Revenue Code. Accordingly, no provision or liability for income taxes has been recorded in the financial statements. The School adopted the accounting pronouncement dealing with uncertain tax positions as of the date of inception in December 2010. Upon adoption of this accounting pronouncement, the School had no unrecognized tax benefits. Furthermore, the School had no unrecognized tax benefits at June 30, 2013 and 2012. There were no open tax years prior to 2011. In addition, the School had no income tax related penalties or interest for the periods reported in these financial statements.

3. Cash and Cash Equivalents The School considers all highly liquid debt instruments purchased with a maturity of three months or less at the time of acquisition to be cash equivalents. Deposits Custodial credit risk is the risk that in the event of a bank failure, the government's deposits may not be returned to it. The School does have a policy for custodial credit risk. For each of the years ended June 30, 2013 and 2012, none of the School’s bank balances were exposed to custodial credit risk:

2013 2012

Uninsured and uncollateralized --$ --$ Plus: Insured amount 210,734 209,124 Less: Outstanding checks (12,714) (13,058) Plus: Deposits in transit -- -- Carrying amount - bank balances 198,020 196,066 Plus: Petty cash -- --

Total cash per financial statements 198,020$ 196,066

4. Capital Assets

Capital asset activity for the years ended June 30, 2013 and 2012 was as follows:





15





Depreciation expense for the years ended June 30, 2013 and 2012 was $37,917 and 26,250, respectively.

5. Capital Leases

The School leases computer equipment, under a capital lease, with a total original cost of $21,798 for each of the years ended June 30, 2013 and 2012. The lease expires in 2014, with monthly principal and interest payments of $672. The interest rate on this capital lease is 7.30 percent. Computers are included in property and equipment in the statement of net assets at June 30, 2013 and 2012 as follows:

2013 2012

Machinery and equipment 21,798$ 21,798$ Less: Accumulated depreciation (18,165) (10,899)

3,633$ 10,899$



2014 4,704$

Less: Amounts representing interest 112



Long-term obligations under capital leases --$


Charter schools are funded by the local public school district in which each student resides. The rate per student is determined annually and is based on the budgeted total expenditure per average daily membership of the prior school year for each school district. The majority of the students of the School reside in Philadelphia. For the years ended June 30, 2013 and 2012, the rate for the School District of Philadelphia was $8,096 and $8,773, respectively per year for regular education students plus additional funding for special education students. The annual rate is earned monthly and paid when billed by the School District of Philadelphia and is prorated if a student enters or leaves during the year. Total revenue from local sources was $1,328,185 and $1,082,287 for the fiscal years ended June 30, 2013 and 2012, respectively.


16


7. Government Grants and Reimbursement Programs

The School participates in numerous state and federal grant and reimbursement programs, which are governed by various rules and regulations of the grantor agencies. Costs charged to the respective grant programs and reimbursement programs for retirement (pension) expense are subject to audit and adjustment by the grantor agencies; therefore, to the extent that the School has not complied with the rules and regulations governing the grants and reimbursement programs, refunds of any money received may be required and the collectability of any related receivable at June 30, 2013 and 2012 may be impaired. In the opinion of the School, there are no significant contingent liabilities relating to compliance with the rules and regulations governing the respective grants; therefore, no provision has been recorded in the accompanying financial statements for such contingencies.

8. Leasing Arrangements

The School leases a portion of 4322-42 North 5th Street in Philadelphia, Pennsylvania under a 10 year operating lease from Aspira, Inc. of Pennsylvania (a related party, see Note 10). The School paid monthly rent of $20,000 and $10,000 for the years ended June 30, 2013 and 2012.


10. Related Party The School is associated with Aspira, Inc. of Pennsylvania (“Aspira”) through board control. The School is associated with Aspira Community Enterprises, Inc. (“ACE”), Eugenio Maria de Hostos Charter School (“Hostos”), Antonia Pantoja Charter School (“Pantoja”), John B. Stetson Charter School (“Stetson”), Olney Charter High School (“Olney”), and ACE/Dougherty, Inc. through common board membership and management. The School’s bylaws stipulate that Aspira will appoint 55 percent of the members of the School’s Board of Trustees. As described in Note 8, the School leases a portion of Aspira’s building under an operating lease expiring in the year 2022. In connection with the operation of its charter school, the School made lease payments to Aspira in the amount of $240,000 and $120,000 for the years ended June 30, 2013 and 2012, respectively. The School reimbursed Aspira for instruction and administrative expenses paid by Aspira in the amount of $137,237 and $283,120 for the years ended June 30, 2013 and 2012, respectively. All receivables and payables with related parties are unsecured, non-interest bearing and have no repayment terms.

2013 2012Receivable Payable Receivable Payable

ASPIRA, Inc. of Pennsylvania --$ 476,414$ --$ 280,565$ Antonia Pantoja Charter School -- 1,044 -- 1,066Eugenio Maria de Hostos Charter School 72 -- -- -- John B. Stetson Charter School 72 -- -- -- Olney Charter High School -- 116,388 -- 54,364

144 593,846 --$ 335,995


17

Notes to Financial Statements June 30, 2013 and 2012 11. Commitments and Contingencies


12. Retirement Plan The School contributes to the Public School Employees’ Retirement System (the “System”), a governmental cost-sharing multiple-employer defined benefit pension plan. The plan provides retirement and disability benefits, legislatively mandated ad hoc cost-of-living adjustments, and healthcare insurance premium assistance to qualifying annuitants. The Public School Employees’ Retirement Code (Act No. 96 of October 2, 1975, as amended) (24 Pa.C.S. 8101-8535) assigns the authority to establish and amend benefit provisions to the System. The System issues a comprehensive annual financial report that includes financial statements and required supplementary information for the plan. A copy of the report may be obtained by writing to Diane J. Wert, Office of Financial Management, Public School Employees’ Retirement System, P.O. Box 125, Harrisburg, Pennsylvania 17108-0125. This publication is also available on the PSERS website at www.psers.state.pa.us/publications/cafr/index.htm. Member contributions are as follows:








Employer contributions are based upon an actuarial valuation. For the fiscal year ended June 30, 2013, the rate of employer’s contribution was 8.65 percent of covered payroll.

Payroll expense for employees covered by the System for the years ended June 30, 2013 and 2012 was approximately $608,000 and $470,000, respectively.

In accordance with Act 29 of 1994, the Commonwealth of Pennsylvania will pay school entities for contributions made to the System based on the formula in Act 29 of 1994, but not less than one-half of the school entities’ contributions. The School’s contribution to the Plan for the years ended June 30, 2013 and 2012 was $90,646 and $41,253, respectively.

13. Subsequent Events The School has evaluated subsequent events occurring after the statement of net assets date through the date of January 8, 2014 which is the date the financial statements were available to be issued. Based on this evaluation, the School has determined that no subsequent events have occurred which require disclosure in or adjustment to the financial statements.

Two Logan Square



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www.withum.com






18

Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial

Statements Performed in Accordance with Government Auditing Standards

Independent Auditors’ Report

To the Board of Trustees, Aspira Bilingual Cyber Charter School: We have audited, in accordance with 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 financial statements of the governmental activities and each major fund of Aspira Bilingual Cyber Charter School (the "School”) and the related notes to the financial statements, as of and for the year ended June 30, 2013, which collectively comprises the School’s basic financial statements and have issued our report thereon dated January 8, 2014. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered Aspira Bilingual Cyber Charter School’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Aspira Bilingual Cyber Charter School’s internal control. Accordingly, we do not express an opinion on the effectiveness of Aspira Bilingual Cyber Charter School’s internal control. 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 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 those 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.

19

Compliance and Other Matters As part of obtaining reasonable assurance about whether Aspira Bilingual Cyber Charter School’s financial statements are free of 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.

January 8, 2014



June 30, 2012 and 2011


Eugenio Maria de Hostos Charter School Table of Contents June 30, 2012 and 2011






Balance Sheet-Governmental Funds (With Comparative Totals at June 30, 2011) .................................................. 8


Statement of Revenues, Expenditures and Changes in Fund Balances-Governmental Funds (With Comparative Totals at June 30, 2011) ........................................................................................................... 10



Supplementary Information

Schedule of Revenues, Expenditures and Changes in Fund Balance - Budet and Actual - Governmental Funds ................................................................................................................................................ 19

Schedule of Expenditures of Federal Awards .......................................................................................................... 20

Notes to Schedule of Expenditures of Federal Awards ........................................................................................... 21


Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 ................. 24-25

Schedule of Findings and Questioned Costs ........................................................................................................... 26

Two Logan Square



215 546 2140 . fax 215 546 2148

www.withum.com






Independent Auditors' Report To the Board of Trustees, Eugenio Maria de Hostos Charter School: We have audited the accompanying financial statements of the governmental activities and each major fund of Eugenio Maria de Hostos Charter School (the “School”) as of and for the year ended June 30, 2012, which collectively comprise the School's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the School's management. Our responsibility is to express an opinion on these financial statements based on our audit. The prior year summarized comparative information has been derived from Eugenio Maria de Hostos Charter School’s financial statements and, in our report dated February 9, 2012 we expressed an unqualified opinion on those financial statements. We conducted our audit in accordance with 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the basic financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall basic financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the 2012 financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of Eugenio Maria de Hostos Charter School as of June 30, 2012, and the respective changes in financial position for the year then ended in conformity with accounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards, we have also issued our report dated April 18, 2013 on our consideration of the Eugenio Maria de Hostos Charter School's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, 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 the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and is important for assessing the results of our audit. The management’s discussion and analysis and the schedule of revenues, expenditures and change in fund balance – budget and actual – governmental funds, as listed in the table of contents, are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying schedule of expenditures of Federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements taken as a whole.

April 18, 2013

Eugenio Maria de Hostos Charter School

3

Management’s Discussion and Analysis June 30, 2012 The Board of Trustees of the Eugenio Maria de Hostos Charter School offers readers of the School's financial statements this narrative overview and analysis of the financial activities of the School for the fiscal year ended June 30, 2012. We encourage readers to consider the information presented here in conjunction with the School's financial statements. Financial Highlights

Total revenues increased $1,198,214 primarily due to the increase in enrollment from 340 students to 440 students, which consisted of 364 Regular Education students and 76 Special Education students. In addition to the increase in enrollment there were also increases in per student subsidy amounts, and increases in renewed grants received in previous years.

At the close of the current fiscal year, the School reports ending net assets of $1,019,250. This net assets

balance represents an increase in net assets of $(52,864) for the year ended June 30, 2012. The School's cash balance at June 30, 2012 was $409,652, representing a decrease of $23,916 from

June 30, 2011. Overview of the Financial Statements The discussion and analysis is intended to serve as an introduction to the School's basic financial statements. The School's basic financial statements as presented comprise four components: management's discussion and analysis (this section), the basic financial statements, budgetary comparison and report required under Government Auditing Standards and OMB Circular A-133. Government-Wide Financial Statements The government-wide financial 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 assets presents information on all of the School's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the School is improving or deteriorating. The statement of activities presents information showing how the School's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. The government-wide financial statements report on the function of the School that is principally supported by subsidies from school districts whose constituents attend the School. Fund Financial Statements A fund is a group of related accounts that are used to maintain control over resources that have been segregated for specific activities or purposes. The School, like governmental type entities, utilizes fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The School has three governmental funds - general, food services and student activities. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements.


4

Management’s Discussion and Analysis June 30, 2012 Government-Wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of the School, assets exceeded liabilities by $1,019,424 as of June 30, 2012.

2012 2011

Total assets 1,961,736$ 1,589,155$ Total liabilities 942,486 517,041

Total net assets 1,019,250$ 1,072,114$


2012 2011Revenues

Local education agencies 4,535,060$ 3,344,058$ Other local sources 148,122 62,751 State sources 234,439 238,797 Federal sources 976,686 1,050,487

5,894,307 4,696,093

ExpendituresInstruction 3,457,779 2,757,238 Student support services 229,907 51,061 Administration support 1,555,822 1,015,019 Pupil health 50,876 69,017 Business services 89,430 119,197 Food services 493,296 381,021 Student activities 56,499 45,338 Depreciation 13,562 10,189

5,947,171 4,448,080

Change in net assets (52,864) 248,013

Net assets, beginning 1,072,114 824,101

Net assets, ending 1,019,250$ 1,072,114$

Governmental Funds The focus of the School's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the School's financing requirements. In particular, fund balance may serve as a useful measure of a government's net resources available for spending for program purposes at the end of the fiscal year. The School's governmental funds, (the General, Food Services and Student Activities Funds), reported an ending fund balance of $1,113,486. For the year ended June 30, 2012, the School's expense ($5,963,502) exceeded its revenues ($5,894,207) by $69,195. For the year ended June 30, 2011, the School revenues ($4,696,093) exceeded its expenditures ($4,359,116) by $336,977.


5

Management’s Discussion and Analysis June 30, 2012 Governmental Fund Budgetary Highlights Some categories of revenues and expenditures varied significantly from those budgeted. Expenses allocated from Aspira for maintenance, security, IT support and other administrative expenses were not included in the budget due to the deadline of the filing of the budget and the fact that the expenses could not be reasonably estimated. There were additional grants received during the year that the School was not aware of at the time of the budget submission. Capital Asset and Debt Administration Capital Assets As of June 30, 2012, the School's investment in capital assets for its governmental activities totals $51,574 (net of accumulated depreciation). This investment in capital assets includes classroom and office furniture and equipment. Major capital asset purchases during the year included the following:

Capital expenditures of $7,844 for computers and 2-way radios

Capital expenditures of $34,200 for various equipment and furniture purchases

Additional information on the School's capital assets can be found in Note 4 of this report. Capital lease obligations during the year included the following:

Lease of $13,956 for office furniture

Additional information on the School’s lease obligations can be found in Note 5 of this report.

Economic Factors and Next Year's Budgets and Rates The School's primary source of revenue, the per student subsidy provided by the School District of Philadelphia, will decrease by approximately $228,400 for fiscal year 2012-2013, due to a decreased subsidy per student of $677 for regular education an increased subsidy of $237 for special education. The current amount of students enrolled at Eugenio Maria De Hostos Charter School is 440, consisting of 364 Regular Education students and 76 Special Education students, which is not expected to increase in fiscal 2012-2013. Contacting the School's Financial Management The financial report is designed to provide interested parties a general overview of the School's finances. Questions regarding any of the information provided in this report should be addressed to the School’s Director/Principal, Eugenio Maria de Hostos Charter School, 4322 N. 5th Street, Philadelphia, PA 19140.



6


2012 2011Assets

Current assetsCash and cash equivalents 409,652$ 433,568$ State subsidies receivable 104,703 97,255Federal subsidies receivable 422,976 374,338Prepaid 425 303 Due from related parties 959,994 653,022 Other assets 12,412 7,577

Total current assets 1,910,162 1,566,063

Capital assets - net of depreciationFurniture and equipment 49,372 21,741

Leasehold improvements 2,202 1,351 Total capital assets - net of depreciation 51,574 23,092

1,961,736$ 1,589,155$


Current liabilitiesAccounts payable 184,256$ 45,736$ Salaries and contracts payable 444,439 422,546

Current portion of obligations under capital lease 4,296 --

Grants payable 22,618 --

Due to related parties 279,022 48,759


Long-term liabilities

Obligations under capital lease 7,855 --


Net assetsInvested in capital assets, net of related debt 39,423 23,092Unrestricted 979,827 1,049,022

Total net assets 1,019,250 1,072,114

1,961,736$ 1,589,155$

Governmental Activities



7




Functions Expenses Service Contributions Activities Activities

Governmental activitiesInstruction 3,457,779$ --$ 459,840$ (2,997,939)$ (2,131,081)$ Student support services 229,907 -- -- (229,907) (51,061) Administrative support 1,555,822 -- -- (1,555,822) (1,015,019) Pupil health 50,876 -- -- (50,876) (69,017) Business services 89,430 -- -- (89,430) (119,197) Food services 493,296 -- 516,846 23,550 43,309 Student activities 56,499 112,722 -- 56,223 17,375

Depreciation 13,562 -- -- (13,562) (10,189) 5,947,171$ 112,722$ 976,686$ (4,857,763) (3,334,880)

General RevenuesState grants and reimbursements 234,439 238,797 Local educational agencies 4,535,060 3,344,058 All other revenue 35,400 38

4,804,899 3,582,893


Net assets - beginning of year 1,072,114 824,101

Net assets - end of year 1,019,250$ 1,072,114$

ProgramRevenues



8


2012 2011Food Student Total Total

General Services Activities Governmental GovernmentalFund Fund Fund Activities Activities

Assets

Cash and cash equivalents 409,652$ --$ --$ 409,652$ 433,568$ State subsidies and receivable 104,703 -- -- 104,703 97,255 Federal subsidies and receivable 422,976 -- -- 422,976 374,338 Due from related parties 959,994 -- -- 959,994 653,022 Prepaids 425 -- -- 425 303 Other assets 8,412 -- 4,000 12,412 7,577

1,906,162$ --$ 4,000$ 1,910,162$ 1,566,063$

Liabilities

Accounts payable 184,256$ --$ --$ 184,256$ 45,736$ Salaries and contracts payable 444,439 -- -- 444,439 422,546 Grants payable 22,618 -- -- 22,618 -- Loan payable 279,022 -- -- 279,022 48,759

Total liabilitlies 930,335 -- -- 930,335 517,041

Fund Balances

Unrestricted fund balances 975,827 -- 4,000 979,827 1,049,022

1,906,162$ --$ 4,000$ 1,910,162$ 1,566,063$

Functions



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Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets June 30, 2012

Total Fund Balances for Governmental Funds 979,827$



Furniture and equipment 300,786$ Leasehold improvements 21,524Accumulated depreciation (270,736) Obligations under capital leases (12,151)

39,423

Total net assets of governmental activities 1,019,250$



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Statement of Revenues, Expenditures and Changes in Fund Balances-Governmental Funds Year Ended June 30, 2012 (With Comparative Totals at June 30, 2011)



RevenuesLocal educational agency assistance 4,535,060$ --$ --$ 4,535,060$ 3,344,058$ Other local sources 35,400 -- 112,722 148,122 62,751 State sources 206,612 27,827 -- 234,439 238,797 Federal sources 487,667 489,019 -- 976,686 1,050,487

5,264,739 516,846 112,722 5,894,307 4,696,093

ExpendituresInstruction 3,487,672 -- -- 3,487,672 2,678,463 Support services 1,926,035 -- -- 1,926,035 1,254,294 Non-instructional services -- 493,296 56,499 549,795 426,359

5,413,707 493,296 56,499 5,963,502 4,359,116

Excess (deficiency) of revenuesover expenditures (148,968) 23,550 56,223 (69,195) 336,977

Other financing sources (uses)Transfer in 138,629 -- (115,079) 23,550 43,309 Transfer out -- (23,550) -- (23,550) (43,309)

138,629 (23,550) (115,079) -- --

Net change in fund balances (10,339) -- (58,856) (69,195) 336,977

Fund balances - beginning of year 986,166 -- 62,856 1,049,022 712,045

Fund balances - end of year 975,827$ --$ 4,000$ 979,827$ 1,049,022$

Functions



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

Capital outlays 42,044 Obligations under capital leases (12,151) Depreciation expense (13,562)

Change in Net Assets of Governmental Activities (52,864)$

Governmental funds report capital outlays as expenditures. However, in the statement of activities, assets are capitalized and the cost is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period:


12



The Eugenio Maria de Hostos Charter School was incorporated as a 501(c)(3) in 2002 under the non-profit law of the Commonwealth of Pennsylvania. The School serves grades kindergarten through eight and is located in Philadelphia, Pennsylvania. The School was established and operates under the provisions enacted by the General Assembly of the Commonwealth of Pennsylvania in 1997 and is operating under a charter school contract ending on June 30, 2013. The net assets of the School would remain with the School if its charter were not renewed. Eugenio Maria de Hostos is a charter school which has financial accountability and control over all activities related to the students' education. The School receives funding from local, state, and federal government sources and must comply with the requirements of these funding source entities. However, the School is not included in any other governmental "reporting entity" as defined by the Governmental Accounting Standards Board (“GASB”) pronouncement. In addition, there are no component units as defined in the standards established for defining and reporting on the financial reporting entity.

2. Summary of Significant Accounting Policies Basis of Presentation The financial statements of the School have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as applied to governmental units. The Governmental Accounting Standards Board is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The GASB has issued a codification of governmental accounting and financial reporting standards. This codification and subsequent GASB pronouncements are recognized as U.S. generally accepted accounting principles for state and local governments that have implemented the accounting pronouncement on financial reporting for state and local governments, “Basic Financial Statements and Management’s Discussion and Analysis – for State and Local Governments.” Comparative Financial Information The financial statements include certain prior year summarized comparative information in total. Such information does not include sufficient detail to constitute a presentation in conformity with generally accepted accounting principles. Accordingly, such information should be read in conjunction with the School's financial statements for the year ended June 30, 2012 from which the summarized information was derived. Government-wide and Fund Financial Statements The government-wide financial statements (the statement of net assets and the statement of activities) report on the School as a whole. The statement of activities demonstrates the degree to which the direct expenses of the School's function are offset by program revenues. The fund financial statements (governmental funds balance sheet and statement of governmental funds revenues, expenditures and changes in fund balances) report on the School's general, food services, and student activities funds. Measurement Focus, Basis of Accounting and Financial Statement Presentation Government-wide Financial Statements-The statement of net assets and the statement of


Fund Financial Statements-Governmental funds 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 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


13


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. The School reports the following major governmental funds:



Food Services Fund - The Food Services Fund is used to account for food service revenues and expenditures.

Student Activities Fund - The Student Activities Special Revenue Fund is used to account for student activity revenues and expenditures.

Method of Accounting The School has adopted the provision of the accounting pronouncement on financial reporting for state and local governments. The accounting pronouncement on financial reporting for state and local governments established standards for external financial reporting for all state and local governmental entities, which includes a statement of net assets (deficit), and a statement of activities and changes in net assets (deficit). It requires the classification of net assets (deficit) into three components – invested in capital assets, net of related debt, restricted and unrestricted. These classifications are defined as follows:

Invested in capital assets, net of related debt - This component of net assets consists of capital assets, including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. If there are significant unspent related debt proceeds at year-end, the portion of the debt attributable to the unspent proceeds are not included in the calculation of invested in capital assets, net of related debt. Rather, that portion of the debt is included in the same net assets component as the unspent proceeds.


external constraints imposed by creditors such as through debt covenants, grantors, contributors, or laws or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation. The School presently has no restricted net assets.


definition of "restricted" or "invested” in capital assets, net of related debt. Budgets and Budgetary Accounting Budgets are adopted on a basis consistent with generally accepted accounting principles. An annual budget is adopted for the governmental funds. The Budgetary Comparison Schedule should present both the original and the final appropriated budgets for the reporting period. The School only has a governmental funds budget. The original budget was filed and accepted by the Labor, Education and Community Services Comptroller's Office in July 2011 and is the final budget as well. The budget is required supplementary information. Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.


14


Concentration of Credit Risk Financial instruments which potentially subject the School to concentrations of credit risk consist of cash in interest bearing accounts and cash equivalents, investments, grants receivables and revenue. Cash in interest bearing accounts and cash equivalents and investments, which consist of certificates of deposit and treasury bills, are held primarily at one high-credit quality financial institution. At various times funds held at this financial institution may exceed the FDIC insurance limit. As of June 30, 2012, sixty-five percent of grant receivables were due from the School District of Philadelphia and the Pennsylvania Department of Education. For the year ended June 30, 2012, the School received ninety-one percent of its total revenue from one source.

Fair Value of Financial Instruments The carrying amounts of financial instruments including state and federal subsidies receivable, accounts payable and salary and contracts payable approximate their fair values because of the relatively short maturity of these investments. Capital Assets Capital assets, which include furniture and equipment, are reported in the government-wide financial statements. All capital assets are capitalized at cost and updated for additions and retirements during the year. The School does not possess any infrastructure. Improvements are capitalized; the cost of normal maintenance and repairs that do not add to the value of the asset or materially extend an asset's life are not. Capital assets of the School are depreciated using the straight-line method over the useful lives of the assets. The estimated useful lives of furniture and equipment range from five to seven years. Leasehold improvements are amortized over the life of the lease. Income Tax Status The School is exempt from Federal income taxes under Section 501(c)(3) of the Internal Revenue Code. Accordingly, no provision or liability for income taxes has been recorded in the financial statements. The School adopted the accounting pronouncement dealing with uncertain tax positions as of July 1, 2010. Upon adoption of this accounting pronouncement, the School had no unrecognized tax benefits. Furthermore, the School had no unrecognized tax benefits at June 30, 2012 and 2011. There were no open tax years prior to 2009. In addition, the School has no income tax related penalties or interest for the periods reported in these financial statements.

3. Cash and Cash Equivalents The School considers all highly liquid debt instruments purchased with a maturity of three months or less at the time of acquisition to be cash equivalents. Deposits Custodial credit risk is the risk that in the event of a bank failure, the government's deposits may not be returned to it. The School does have a policy for custodial credit risk. For each of the years ended June 30, 2012 and 2011, $227,452 and $236,926 of the School's bank balance was exposed to custodial credit risk as follows:

2012 2011

Uninsured and uncollateralized 227,452$ 236,926$ Plus: Insured amount 250,000 250,000Less: Outstanding checks (67,800) (53,358) Plus: Deposits in transit -- -- Carrying amount - bank balances 409,652 433,568 Plus: Petty cash -- --

Total cash per financial statements 409,652$ 433,568$

Eugenio Maria De Hostos Charter School

15

Notes to Financial Statements June 30, 2012 and 2011 4. Capital Assets

Capital asset activity for the years ended June 30, was as follows:


Furniture and equipment 276,865$ --$ 23,920$ 300,785$ Leasehold improvements 3,400 -- 18,124 21,524

280,265 -- 42,044 322,309

Less: Accumulated depreciation 257,173 -- 13,562 270,735


Depreciation expense for the years ended June 30, 2012 and 2011 was $13,562 and $10,189, respectively. 5. Capital Leases

The School leases furniture, under capital leases, with a total original cost of $13,596 for the year ended June 30, 2012. The lease will be paid off in 2015, with monthly principal and interest payments of $417. The interest rate on these capital leases is 6.94 percent. Furniture and equipment is included in property and equipment in the statements of net assets at June 30, 2012 as follows:

Furniture and equipment 13,596$ Less: Accumulated depreciation (1,511)

12,085$

The future minimum lease payments under the capital leases and the net present value of the future minimum lease payments are as follows:


2013 5,004$ 2014 5,004 2015 3,337

13,345

Less: Amount representing interest 1,194





Charter schools are funded by the local public school district in which each student resides. The rate per student is determined annually and is based on the budgeted total expenditure per average daily membership of the prior school year for each school district. The majority of the students for the School reside in Philadelphia. For the years ended June 30, 2012 and 2011, the rate for the School District of Philadelphia was $8,773 and $8,608, respectively per year for regular education students plus additional funding for special education students.


16


The annual rate is earned monthly and paid when billed by the School District of Philadelphia and is prorated if a student enters or leaves during the year. Total revenue from local sources was $4,535,060 and $3,344,058 for the fiscal years ended June 30, 2012 and 2011, respectively.

7. Government Grants and Reimbursement Programs The School participates in numerous state and federal grant and reimbursement programs, which are governed by various rules and regulations of the grantor agencies. Costs charged to the respective grant programs and reimbursement programs for social security taxes, retirement expense, facility lease costs and health services are subject to audit and adjustment by the grantor agencies; therefore, to the extent that the School has not complied with the rules and regulations governing the grants and reimbursement programs, refunds of any money received may be required and the collectability of any related receivable at June 30, 2012 and 2011 may be impaired. In the opinion of the School, there are no significant contingent liabilities relating to compliance with the rules and regulations governing the respective grants; therefore, no provision has been recorded in the accompanying financial statements for such contingencies.

8. Leasing Arrangements The School leases a portion of 4322-42 North 5th Street in Philadelphia, Pennsylvania under a month to month operating lease from Aspira, Inc. of Pennsylvania (a related party, see Note 11). The School paid monthly rent of $35,000 for the year ending June 2012. Beginning in September 2011, the School leased a new space at 6301 North 2nd Street in Philadelphia, Pennsylvania under an annual operating lease from ACE/Dougherty, Inc. (a related party, see Note 11) Rent expense was $420,000 for each of the years ended June 30, 2012 and 2011. The School leases office equipment under operating leases that expire in December 2012. Monthly lease payments are $939. Lease expense for office equipment was $11,266 for each of the years ended June 30, 2012 and 2011. Minimum annual rental for equipment for each year subsequent to June 30, 2012 is as follows:


2013 3,198$

9. Retirement Plan

The School contributes to the Public School Employees’ Retirement System (the “System”), a governmental cost-sharing multiple-employer defined benefit pension plan. The plan provides retirement and disability benefits, legislatively mandated ad hoc cost-of-living adjustments, and healthcare insurance premium assistance to qualifying annuitants. The Public School Employees’ Retirement Code (Act No. 96 of October 2, 1975, as amended) (24 Pa.C.S. 8101-8535) assigns the authority to establish and amend benefit provisions to the System. The System issues a comprehensive annual financial report that includes financial statements and required supplementary information for the plan. A copy of the report may be obtained by writing to Diane J. Wert, Office of Financial Management, Public School Employees’ Retirement System, P.O. Box 125, Harrisburg, Pennsylvania 17108-0125. This publication is also available on the PSERS website at www.psers.state.pa.us/publications/cafr/index.htm.


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Member contributions are as follows:

- Active members who joined the System prior to July 22, 1983, contribute at 5.25 percent (Membership Class T-C) or at 6.5 percent (Membership Class T-D) of the member’s qualifying compensation.






- Employer contributions are based upon an actuarial valuation. For the fiscal years ended June 30, 2012 and 2011, the rate of employer’s contribution was 8.65 percent and 5.64 percent, respectively, of covered payroll.

Payroll expense for employees covered by the System for the years ended June 30, 2012 and 2011 was approximately $3.3 million and $2.4 million, respectively.

In accordance with Act 29 of 1994, the Commonwealth of Pennsylvania will pay school entities for contributions made to the System based on the formula in Act 29 of 1994, but not less than one-half of the school entities’ contributions. The School’s contributions to the Plan for the years ended June 30, 2012, 2011, and 2010 totaled $188,257, $103,286, and $61,890, respectively.

10. 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 carries commercial insurance for such risks. There has been no significant reduction in insurance coverage from the previous year in any of the School's policies. Settled claims resulting from these risks have not exceeded commercial insurance coverage in the past three years.

11. Related Party The School is associated with Aspira, Inc. of Pennsylvania (“Aspira”) through board control. The School is associated with Aspira Community Enterprises, Inc. (“ACE”), Antonia Pantoja Charter School (“Pantoja”), Aspira Bilingual Cyber Charter School (“Cyber”), John B. Stetson Charter School (“Stetson”), Olney High School (“Olney”) and ACE/Dougherty, Inc. through common board membership and management. The School's bylaws stipulate that Aspira will appoint a majority of up to five members of the School's Board of Trustees. Directors cannot be members of both boards. All receivables and payables with related parties are unsecured, non-interest bearing and have no repayment terms. As described in Note 8, the School leases a portion of Aspira's building under an operating lease expiring in the year 2011. In connection with the operation of its charter school, the School made lease payments to Aspira in the amount of $52,500 and $525,000 for the years ended June 30, 2012 and 2011, respectively.


18


As described in Note 8, the School leases a building from ACE/Dougherty, Inc. under and operating lease expiring in the year 2012. In connection with the operation of its charter school the School made lease payments to ACE/Dougherty in the amount of $367,500 for the year ended June 30, 2012. The School reimbursed Aspira for maintenance, security, IT support and other administrative expenses paid by Aspira in the amount of $1,048,949 and $528,165 for the years ended June 30, 2012 and 2011, respectively. As of June 30, 2012 and 2011, Aspira owed the School $381,447 and $269,520, respectively. John B. Stetson Charter School, An Aspira, Inc. of Pennsylvania School owed the School $578,547 and $507,961 for the years ended June 30, 2012 and 2011, respectively. The School owed Antonia Pantoja Community Charter School $57,434 and $48,759 for the years ended June 30, 2012 and 2011, respectively. The School owed ACE/Dougherty Inc. $176,000 for the year ended June 30, 2012. The School owed Olney High School $45,588 for the year ended June 30, 2012.


The School is a guarantor of a $1,950,000 term loan issued to Aspira, Inc. for the acquisition and construction loan associated with the building the School leases. The term loan was to mature May 2015, but was subsequently refinanced with a new maturity date of October 1, 2016. This debt is collateralized by a first and second priority interest in the real estate and all fixtures and leases associated with the real estate. The School would be required to make principal and interest payments in the event of default by Aspira, Inc. The outstanding balance on the term loan is $526,708 and $666,143 as of June 30, 2012 and 2011, respectively. The School is involved in legal proceedings arising in the ordinary course of business. In the opinion of management, although the outcome of any legal proceedings cannot be predicted, ultimate liability of the School in connection with its legal proceedings will not have a material adverse effect on the financial position or activities of the School.


SUPPLEMENTARY INFORMATION

See Independent Auditors’ Report. 19

Eugenio Maria de Hostos Charter School Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual - Governmental Funds Year Ended June 30, 2012

Over(Under)

Actual FinalOriginal Final Amounts Budget

RevenuesLocal educational agency assistance 4,445,239$ 4,445,239$ 4,535,060$ (89,821)$ Other local sources 50,000 50,000 148,122 (98,122) State sources 291,400 291,400 234,439 56,961 Federal sources 515,000 515,000 976,686 (461,686)

5,301,639 5,301,639 5,894,307 (592,668)

ExpendituresInstruction 4,014,078 4,014,078 3,487,672 526,406 Support services 951,222 951,222 1,926,035 (974,813) Non-instructional services 176,000 176,000 549,795 (373,795)

5,141,300 5,141,300 5,963,502 (822,202)

Net change in fund balances 160,339 160,339 (69,195) 229,534

Fund balances - beginning of year 930,739 930,739 1,049,022 (118,283)

Fund balances - end of year 1,091,078$ 1,091,078$ 979,827$ 111,251$

Budget

See Independent Auditors’ Report. See accompanying Notes to Schedule of Expenditures of Federal Awards.

20

Eugenio Maria de Hostos Charter School Schedule of Expenditures of Federal Awards Year Ended June 30, 2012

Pass- Grant Total Accrued orFederal Grantor/ Federal Through Period Program Received (Deferred) Accrued or

Pass-Through Grantor Source CFDA Grantor's Beginning/ or for Revenue Revenue Federal (Deferred)Program Title Code Number Number Ending Date Award the Year at 7/1/11 Recognized Expenditures at 6/30/12

U.S. Department of EducationPass-Through Pennsylvania

Department of Education

Title I - Improving Basic Programs I 84.010 013-110837 07/01/11 - 09/30/12 240,557$ 227,084$ --$ 240,557$ 240,557$ 13,473$

Title I - Improving Basic Programs I 84.010 013-100837 07/01/10 - 09/30/11 228,699 83,454 62,644 -- -- (20,810)

Academic Achievement Award I 84.010 077-110837 07/01/11 - 09/30/12 1,800 -- -- 1,800 1,800 1,800

Academic Achievement Award I 84.010 077-090837 07/01/10 - 09/30/11 1,800 -- 1,800 -- -- 1,800

Title II - Improving Teacher Quality I 84.367 020-110837 07/01/11 - 09/30/12 17,334 3,830 -- 17,334 17,334 13,504

Title II - Improving Teacher Quality I 84.367 020-100837 07/01/10 - 09/30/11 19,868 -- (1,808) -- -- (1,808)

Title III - Language Instruction LEP I 84.365 010-110837 07/01/11 - 09/30/12 28,800 22,436 -- 28,800 28,800 6,364

Title III - Language Instruction LEP I 84.365 010-090837 07/01/10 - 09/30/11 15,606 1,548 12,510 -- -- 10,962

Pass-Through School District of PhiladelphiaIDEA I 84.027 N/A 07/01/11 - 06/30/12 58,832 -- -- 58,832 58,832 58,832 IDEA I 84.027 N/A 07/01/10 - 06/30/11 50,202 50,202 50,202 -- -- -- TAP I 84.374A 614/F10 10/01/10 - 09/30/11 -- 75,327 75,327 -- -- --

Total U.S. Department of Education 663,498 463,881 200,675 347,323 347,323 84,117

U.S. Department of AgriculturePass-Through Pennsylvania

Department of EducationNational School Lunch Program I 10.555 362 07/01/11 - 06/30/12 -- 237,963 -- 322,244 322,244 84,281 National School Lunch Program I 10.555 362 07/01/11 - 06/30/12 -- 34,896 -- 34,896 34,896 -- National School Lunch Program I 10.555 362 07/01/10 - 06/30/11 -- 50,174 50,174 -- -- -- School Breakfast Program I 10.553 367 07/01/11 - 06/30/12 -- 122,698 -- 166,775 166,775 44,077 School Breakfast Program I 10.553 367 07/01/10 - 06/30/11 117,681 7,189 7,189 -- -- --

Total U.S. Department of Agriculture 117,681 452,920 57,363 523,915 523,915 128,358

Totals 916,801$ 258,038$ 871,238$ 871,238$ 212,475$

D - Direct FundingI - Indirect Funding


Eugenio Maria de Hostos Charter School Notes to Schedule of Expenditures of Federal Awards June 30, 2012 1. General Information

The accompanying schedule of expenditures of federal awards presents the activities in all of the federal financial assistance programs of Eugenio Maria de Hostos Charter School. Financial awards received directly from federal agencies, as well as financial assistance passed through other governmental agencies or non-profit organizations, are included in the schedule.

2. Basis of Accounting

The accompanying schedule of expenditures of federal awards includes the federal grant activity of the School and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the general purpose financial statements.

3. Relationship to Basic Financial Statements

The schedule of expenditures of federal awards presents only a selected portion of the activities of the School. It is not intended to and does not present either the balance sheet, revenue, expenditures, or changes in fund balances of governmental funds. The financial activity for the aforementioned awards is reported in the School’s statement of revenues, expenditures, and changes in fund balances of governmental funds.

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22



To the Board of Trustees, Eugenio Maria de Hostos Charter School: We have audited the financial statements of the governmental activities and each major fund of Eugenio Maria de Hostos Charter School (the “School”), as of and for the year ended June 30, 2012, which collectively comprises the School’s basic financial statements and have issued our report thereon dated April 18, 2013. We conducted our audit in accordance with 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. Internal Control Over Financial Reporting The management of Eugenio Maria de Hostos Charter School is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered the School’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not to 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 misstatements on a timely basis. A material weakness is a deficiency, or 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 by the entity’s internal control on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.

23

Compliance and Other Matters As part of obtaining reasonable assurance about whether Eugenio Maria de Hostos Charter School’s financial statements are free of 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. 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.

April 18, 2013

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24

Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control

Over Compliance in Accordance with OMB Circular A-133

The Board of Trustees, Eugenio Maria de Hostos Charter School: Compliance We have audited the compliance of Eugenio Maria de Hostos Charter School with the types of compliance requirements described in the U.S. Office of Management and Budget (“OMB”) Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2011. Eugenio Maria de Hostos Charter School’s major Federal programs are identified in the summary of auditors’ results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major Federal programs is the responsibility of Eugenio Maria de Hostos Charter School’s management. Our responsibility is to express an opinion on Eugenio Maria de Hostos Charter School’s compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States and OMB Circular A-133. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about Eugenio Maria de Hostos Charter School’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of Eugenio Maria de Hostos Charter School’s compliance with those requirements. In our opinion Eugenio Maria de Hostos Charter School complied, in all material respects, with the requirements referred to above that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2012.

25

Internal Control Over Compliance The management of Eugenio Maria de Hostos Charter School is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to Federal major programs. In planning and performing our audit, we considered Eugenio Maria de Hostos Charter School’s internal control over compliance with requirements that could have a direct and material effect on a major Federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Eugenio Maria de Hostos Charter School’s internal control over compliance. A deficiency in internal control over compliance 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 noncompliance with a type of compliance requirement of a Federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with type of compliance requirement of a Federal program will not be prevented, or detected and corrected, on a timely basis. Our consideration of the internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we considered to be a material weakness, as defined above. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control and compliance and the results of that testing based upon the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.

April 18 2013

26

Eugenio Maria de Hostos Charter School Schedule of Findings and Questioned Costs Year Ended June 30, 2012 Section 1 – Summary of Auditors' Results Financial Statements Type of auditors' report issued: Unqualified Internal control over financial reporting: Material weaknesses identified? No Control deficiencies identified that are not considered to be material weaknesses? None reported Noncompliance material to financial statements noted? No Federal Awards Internal control over major programs: Material weaknesses identified? No Control deficiencies identified that are not considered to be material weaknesses? None reported

Type of auditors' report issued on compliance for major programs: Unqualified Any audit findings disclosed that are required to be reported in accordance with section 510(a) of Circular A-133? No The following Federal programs were designated as major programs:

CFDA Number(s) Name of Federal Program or Cluster

10.555 National School Lunch Program 10.553 School Breakfast Program

Dollar threshold used to distinguish between Type A and Type B programs: $300,000 Auditee qualified as low-risk auditee? Yes Section 2 – Financial Statement Findings None reported. Section 3 – Federal Award Findings and Questioned Costs None reported. Section 4 – Follow Up Prior Year Audit Findings There were no prior year audit findings.


Financial Statements and Supplementary Information

June 30, 2013

(With Summarized Comparative Financial Information

For the Year ended June 30, 2012)

Eugenio Maria de Hostos Charter School Table of Contents June 30, 2013 (With Summarized Comparative Financial Information for the Year June 30, 2012)








Statement of Revenues, Expenditures and Changes in Fund Balances-Governmental Funds (With Comparative Totals at June 30, 2012) ........................................................................................................... 10




Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - Governmental Funds ................................................................................................................................................ 19




Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance Required by OMB Circular A-133 ................................................................................................... 24-25


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Independent Auditors' Report To the Board of Trustees, Eugenio Maria de Hostos Charter School: We have audited the accompanying financial statements of the governmental activities and each major fund of Eugenio Maria de Hostos Charter School (the “School”) as of June 30, 2013, which collectively comprise the School's basic financial statements as listed in the table of contents. The prior year summarized comparative information has been derived from Eugenio Maria de Hostos Charter School’s financial statements and, in our report dated April 18, 2013 we expressed an unqualified opinion on those financial statements. 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 and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that 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.

Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Eugenio Maria de Hostos Charter School as of June 30, 2013, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Report on Summarized Comparative Information We have previously audited Eugenio Maria de Hostos Charter School’s June 30, 2012 financial statements and we have expressed an unmodified audit opinion on these financial statements in our audit report dated April 18, 2013. In our opinion, the summarized comparative information presented hereon as of and for the year ended June 30, 2012 is consistent in all material respects, with the audited financial statements from which it is has been derived. Other Matters Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the financial statements. In addition, the schedule of revenues, expenditures and changes in fund balance - budget and actual – governmental funds, as listed in the table of contents is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records use to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditure of federal awards is fairly stated in all material respects in relation to the financial statements as a whole. In addition, the management’s discussion and analysis is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted by the United States of America. We have applied certain limited procedures, which consisted primarily of inquiries of management regarding the measurement and presentation of the required supplementary information. However, we did not audit the information and do not express an opinion on it. Report on Other Legal and Regulatory Requirements In accordance with Government Auditing Standards, we have also issued our report dated January 20, 2014 on our consideration of the Eugenio Maria de Hostos Charter School's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, 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 the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Eugenio Maria de Hostos Charter School’s internal control over financial reporting and compliance.

January 20, 2014


3

Management’s Discussion and Analysis June 30, 2013 (With Summarized Comparative Financial Information for the Year June 30, 2012) The Board of Trustees of the Eugenio Maria de Hostos Charter School offers readers of the School's financial statements this narrative overview and analysis of the financial activities of the School for the fiscal year ended June 30, 2013. We encourage readers to consider the information presented here in conjunction with the School's financial statements. Financial Highlights

Total revenues decreased $22,908 to $5,871,399 primarily due to a decrease in federal funding the School received at June 30, 2013.


balance represents a decrease in net assets of $(621,211) for the year ended June 30, 2013 The School's cash balance at June 30, 2013 was $480,762, representing a decrease of $71,110 from

June 30, 2012. Overview of the Financial Statements The discussion and analysis is intended to serve as an introduction to the School's basic financial statements. The School's basic financial statements as presented comprise four components: management's discussion and analysis (this section), the basic financial statements, budgetary comparison and report required under Government Auditing Standards and OMB Circular A-133. Government-Wide Financial Statements The government-wide financial 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 assets presents information on all of the School's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the School is improving or deteriorating. The statement of activities presents information showing how the School's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. The government-wide financial statements report on the function of the School that is principally supported by subsidies from school districts whose constituents attend the School. Fund Financial Statements A fund is a group of related accounts that are used to maintain control over resources that have been segregated for specific activities or purposes. The School, like governmental type entities, utilizes fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The School has three governmental funds - general, food services and student activities. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements.


4

Management’s Discussion and Analysis June 30, 2013 (With Summarized Comparative Financial Information for the Year June 30, 2012) Government-Wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of the School, assets exceeded liabilities by $398,039 as of June 30, 2013.

2013 2012

Total assets 1,642,972$ 1,961,736$ Total liabilities 1,244,933 942,486

Total net assets 398,039$ 1,019,250$


2013 2012Revenues

Local education agencies 4,576,632$ 4,535,060$ Other local sources 80,738 148,122 State sources 308,110 234,439 Federal sources 905,919 976,686

5,871,399 5,894,307

ExpendituresInstruction 3,719,277 3,457,779 Student support services 201,959 229,907 Administration support 803,175 1,555,822 Pupil health 117,660 50,876 Business services 699,935 89,430 Food services 771,026 493,296 Student activities 111,547 56,499 Other 38,298 -- Depreciation 29,733 13,562

6,492,610 5,947,171

Change in net assets (621,211) (52,864)

Net assets, beginning 1,019,250 1,072,114

Net assets, ending 398,039$ 1,019,250$

Governmental Funds The focus of the School's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the School's financing requirements. In particular, fund balance may serve as a useful measure of a government's net resources available for spending for program purposes at the end of the fiscal year. The School's governmental funds, (the General, Food Services and Student Activities Funds), reported an ending fund balance of $270,798. For the year ended June 30, 2013, the School's expense ($6,580,428) exceeded its revenues ($5,871,399) by $709,029. For the year ended June 30, 2012, the School expense ($5,963,502) exceeded its revenues ($5,894,307) by $69,195.


5

Management’s Discussion and Analysis June 30, 2013 (With Summarized Comparative Financial Information for the Year June 30, 2012) Governmental Fund Budgetary Highlights Some categories of revenues and expenditures varied significantly from those budgeted. Expenses allocated from ASPIRA for maintenance, security, IT support and other administrative expenses were not included in the budget due to the deadline of the filing of the budget and the fact that the expenses could not be reasonably estimated. There were additional grants received during the year that the School was not aware of at the time of the budget submission. Capital Asset and Debt Administration Capital Assets As of June 30, 2013, the School's investment in capital assets for its governmental activities totals $135,096 (net of accumulated depreciation). This investment in capital assets includes classroom and office furniture and equipment. Major capital asset purchases during the year included the following:

Capital expenditures of $70,985 for various leasehold improvements

Capital expenditures of $42,270 for various equipment and furniture purchases

Additional information on the School's capital assets can be found in Note 4 of this report. Capital lease obligations during the year included the following:

Lease of $13,956 for office furniture

Additional information on the School’s lease obligations can be found in Note 5 of this report.

Economic Factors and Next Year's Budgets and Rates The School's primary source of revenue, the per student subsidy provided by the School District of Philadelphia, will increase by approximately $309,500 for fiscal year 2013-2014, due to an increased subsidy per student of $501 for regular education and an increased subsidy of $2,582 for special education. The current amount of students enrolled at Eugenio Maria De Hostos Charter School is 440, consisting of 352 Regular Education students and 88 Special Education students, which is not expected to increase in fiscal 2013-2014. Contacting the School's Financial Management The financial report is designed to provide interested parties a general overview of the School's finances. Questions regarding any of the information provided in this report should be addressed to the School’s Director/Principal, Eugenio Maria de Hostos Charter School, 6301 North 2nd Street, Philadelphia, PA 19120.



6

Statements of Net Assets June 30, 2013 (With Summarized Comparative Financial Information for the Year June 30, 2012)

2013 2012Assets

Current assetsCash and cash equivalents 480,762$ 409,652$ State subsidies receivable 126,144 104,703Federal subsidies receivable 307,887 422,976Prepaid 3,859 425 Due from related parties 579,691 959,994Other assets 9,533 12,412



Leasehold improvements -- 2,202 Total capital assets - net of depreciation 135,096 51,574

1,642,972$ 1,961,736$


Current liabilitiesAccounts payable 105,525$ 184,256$ Salaries and contracts payable 496,664 444,439

Current portion of obligations under capital lease 4,603 4,296

Grants payable -- 22,618


Total current liabilities 1,241,681 934,631

Long-term liabilities

Obligations under capital lease 3,252 7,855

Total liabilities 1,244,933 942,486

Net assetsInvested in capital assets, net of related debt 127,241 39,423Unrestricted 270,798 979,827

Total net assets 398,039 1,019,250

1,642,972$ 1,961,736$

Governmental Activities



7

Statement of Activities Year Ended June 30, 2013 (With Summarized Comparative Financial Information for the Year June 30, 2012)



Functions Expenses Service Contributions Activities Activities

Governmental activitiesInstruction 3,719,277$ --$ 401,695$ (3,317,582)$ (2,997,939)$ Student support services 201,959 -- -- (201,959) (229,907) Administrative support 803,175 -- -- (803,175) (1,555,822) Pupil health 117,660 -- -- (117,660) (50,876) Business services 699,935 -- -- (699,935) (89,430) Food services 771,026 -- 504,224 (266,802) 23,550 Student activities 111,547 79,559 -- (31,988) 56,223

Depreciation 29,733 -- -- (29,733) (13,562)

Other 38,298 -- -- (38,298) -- 6,492,610$ 79,559$ 905,919$ (5,507,132)$ (4,857,763)$

General RevenuesState grants and reimbursements 308,110 234,439 Local educational agencies 4,576,632 4,535,060 All other revenue 1,179 35,400

4,885,921 4,804,899


Net assets - beginning of year 1,019,250 1,072,114

Net assets - end of year 398,039$ 1,019,250$

ProgramRevenues



8

Balance Sheet – Governmental Funds June 30, 2013 (With Summarized Comparative Financial Information for the Year June 30, 2012)



Assets

Cash and cash equivalents 480,762$ --$ --$ 480,762$ 409,652$ State subsidies and receivable 126,144 -- -- 126,144 104,703 Federal subsidies and receivable 307,887 -- -- 307,887 422,976 Due from related parties 579,691 -- -- 579,691 959,994 Prepaids 3,859 -- -- 3,859 425 Other assets 5,533 -- 4,000 9,533 12,412

1,503,876$ --$ 4,000$ 1,507,876$ 1,910,162$

Liabilities

Accounts payable 105,525$ --$ --$ 105,525$ 184,256$ Salaries and contracts payable 496,664 -- -- 496,664 444,439 Grants payable -- -- -- -- 22,618 Loan payable 634,889 -- -- 634,889 279,022

Total liabilitlies 1,237,078 -- -- 1,237,078 930,335

Fund Balances

Unrestricted fund balances 266,798 -- 4,000 270,798 979,827 266,798 -- 4,000 270,798 979,827

1,503,876$ --$ 4,000$ 1,507,876$ 1,910,162$

Functions



9

Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets June 30, 2013

Total Fund Balances for Governmental Funds 270,798$




127,241




10

Statement of Revenues, Expenditures and Changes in Fund Balances-Governmental Funds Year Ended June 30, 2013 (With Summarized Comparative Financial Information for the Year June 30, 2012)



RevenuesLocal educational agency assistance 4,576,632$ --$ --$ 4,576,632$ 4,535,060$ Other local sources 1,179 -- 79,559 80,738 148,122 State sources 280,228 27,882 -- 308,110 234,439 Federal sources 429,577 476,342 -- 905,919 976,686

5,287,616 504,224 79,559 5,871,399 5,894,307

ExpendituresInstruction 3,836,828 -- -- 3,836,828 3,487,672 Support services 1,861,027 -- -- 1,861,027 1,926,035 Non-instructional services -- 771,026 111,547 882,573 549,795

5,697,855 771,026 111,547 6,580,428 5,963,502

Excess (deficiency) of revenuesover expenditures (410,239) (266,802) (31,988) (709,029) (69,195)

Other financing sources (uses)Transfer in (298,790) -- 31,988 (266,802) 23,550 Transfer out -- 266,802 -- 266,802 (23,550)

(298,790) 266,802 31,988 -- --

Net change in fund balances (709,029) -- -- (709,029) (69,195)

Fund balances - beginning of year 975,827 -- 4,000 979,827 1,049,022

Fund balances - end of year 266,798$ --$ 4,000$ 270,798$ 979,827$

Functions



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Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities June 30, 2013

Net Change in Fund Balances - Total Governmental Funds (709,029)$

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



Governmental funds report capital outlays as expenditures. However, in the statement of activities, assets are capitalized and the cost is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period:


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Eugenio Maria de Hostos Charter School was incorporated as a 501(c)(3) in 2002 under the non-profit law of the Commonwealth of Pennsylvania. The School serves grades kindergarten through eight and is located in Philadelphia, Pennsylvania. The School was established and operates under the provisions enacted by the General Assembly of the Commonwealth of Pennsylvania in 1997 and is operating under a charter school contract ending on June 30, 2018. The net assets of the School would remain with the School if its charter were not renewed. Eugenio Maria de Hostos is a charter school which has financial accountability and control over all activities related to the students' education. The School receives funding from local, state, and federal government sources and must comply with the requirements of these funding source entities. However, the School is not included in any other governmental "reporting entity" as defined by the Governmental Accounting Standards Board (“GASB”) pronouncement. In addition, there are no component units as defined in the standards established for defining and reporting on the financial reporting entity.

2. Summary of Significant Accounting Policies Basis of Presentation The financial statements of the School have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as applied to governmental units. The Governmental Accounting Standards Board is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The GASB has issued a codification of governmental accounting and financial reporting standards. This codification and subsequent GASB pronouncements are recognized as U.S. generally accepted accounting principles for state and local governments that have implemented the accounting pronouncement on financial reporting for state and local governments, “Basic Financial Statements and Management’s Discussion and Analysis – for State and Local Governments.” Comparative Financial Information The financial statements include certain prior year summarized comparative information in total. Such information does not include sufficient detail to constitute a presentation in conformity with generally accepted accounting principles. Accordingly, such information should be read in conjunction with the School's financial statements for the year ended June 30, 2012 from which the summarized information was derived. Government-wide and Fund Financial Statements The government-wide financial statements (the statement of net assets and the statement of activities) report on the School as a whole. The statement of activities demonstrates the degree to which the direct expenses of the School's function are offset by program revenues. The fund financial statements (governmental funds balance sheet and statement of governmental funds revenues, expenditures and changes in fund balances) report on the School's general, food services, and student activities funds. Measurement Focus, Basis of Accounting and Financial Statement Presentation Government-wide Financial Statements-The statement of net assets and the statement of


Fund Financial Statements-Governmental funds 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 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


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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. The School reports the following major governmental funds:




Student Activities Fund - The Student Activities Special Revenue Fund is used to account for student activity revenues and expenditures.

Method of Accounting The School has adopted the provision of the accounting pronouncement on financial reporting for state and local governments. The accounting pronouncement on financial reporting for state and local governments established standards for external financial reporting for all state and local governmental entities, which includes a statement of net assets (deficit), and a statement of activities and changes in net assets (deficit). It requires the classification of net assets (deficit) into three components – invested in capital assets, net of related debt, restricted and unrestricted. These classifications are defined as follows:

Invested in capital assets, net of related debt - This component of net assets consists of capital assets, including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. If there are significant unspent related debt proceeds at year-end, the portion of the debt attributable to the unspent proceeds are not included in the calculation of invested in capital assets, net of related debt. Rather, that portion of the debt is included in the same net assets component as the unspent proceeds.






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Concentration of Credit Risk Financial instruments which potentially subject the School to concentrations of credit risk consist of cash in interest bearing accounts and cash equivalents, investments, grants receivables and revenue. Cash in interest bearing accounts and cash equivalents and investments, which consist of certificates of deposit and treasury bills, are held primarily at one high-credit quality financial institution. At various times funds held at this financial institution may exceed the FDIC insurance limit. As of June 30, 2013, eighty-nine percent of grant receivables were due from the School District of Philadelphia and the Pennsylvania Department of Education. For the year ended June 30, 2013, the School received ninety-one percent of its total revenue from one source.

Fair Value of Financial Instruments The carrying amounts of financial instruments including state and federal subsidies receivable, accounts payable and salary and contracts payable approximate their fair values because of the relatively short maturity of these investments. Capital Assets Capital assets, which include furniture and equipment, are reported in the government-wide financial statements. All capital assets are capitalized at cost and updated for additions and retirements during the year. The School does not possess any infrastructure. Improvements are capitalized; the cost of normal maintenance and repairs that do not add to the value of the asset or materially extend an asset's life are not. Capital assets of the School are depreciated using the straight-line method over the useful lives of the assets. The estimated useful lives of furniture and equipment range from five to seven years. Leasehold improvements are amortized over the life of the lease. Income Tax Status The School is exempt from Federal income taxes under Section 501(c)(3) of the Internal Revenue Code. Accordingly, no provision or liability for income taxes has been recorded in the financial statements. The School adopted the accounting pronouncement dealing with uncertain tax positions as of July 1, 2010. Upon adoption of this accounting pronouncement, the School had no unrecognized tax benefits. Furthermore, the School had no unrecognized tax benefits at June 30, 2013 and 2012. There were no open tax years prior to 2010. In addition, the School has no income tax related penalties or interest for the periods reported in these financial statements.

3. Cash and Cash Equivalents The School considers all highly liquid debt instruments purchased with a maturity of three months or less at the time of acquisition to be cash equivalents. Deposits Custodial credit risk is the risk that in the event of a bank failure, the government's deposits may not be returned to it. The School does have a policy for custodial credit risk. For each of the years ended June 30, 2013 and 2012, $320,016 and $227,452 of the School's bank balance was exposed to custodial credit risk as follows:

2013 2012

Uninsured and uncollateralized 320,616$ 227,452$ Plus: Insured amount 250,000 250,000Less: Outstanding checks (89,854) (67,800) Plus: Deposits in transit -- -- Carrying amount - bank balances 480,762 409,652 Plus: Petty cash -- --



15


Capital asset activity for the years ended June 30, was as follows:



322,310 -- 113,255 435,565

Less: Accumulated depreciation 270,736 -- 29,733 300,469


Depreciation expense for the years ended June 30, 2013 and 2012 was $29,733 and $13,562, respectively. 5. Capital Leases

The School leases furniture, under capital leases, with a total original cost of $13,596 for the year ended June 30, 2013. The lease will be paid off in 2015, with monthly principal and interest payments of $417. The interest rate on these capital leases is 6.94 percent. Furniture and equipment is included in property and equipment in the statements of net assets at June 30, 2013 as follows:

Furniture and equipment 13,596$ Less: Accumulated depreciation (6,043)

7,553$



2014 5,004$ 2015 3,337

8,341

Less: Amount representing interest 486





Charter schools are funded by the local public school district in which each student resides. The rate per student is determined annually and is based on the budgeted total expenditure per average daily membership of the prior school year for each school district. The majority of the students for the School reside in Philadelphia. For the years ended June 30, 2013 and 2012, the rate for the School District of Philadelphia was $8,096 and $8,773, respectively per year for regular education students plus additional funding for special education students.


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The annual rate is earned monthly and paid when billed by the School District of Philadelphia and is prorated if a student enters or leaves during the year. Total revenue from local sources was $4,576,632 and $4,535,060 for the fiscal years ended June 30, 2013 and 2012, respectively.

7. Government Grants and Reimbursement Programs The School participates in numerous state and federal grant and reimbursement programs, which are governed by various rules and regulations of the grantor agencies. Costs charged to the respective grant programs and reimbursement programs for social security taxes, retirement expense, facility lease costs and health services are subject to audit and adjustment by the grantor agencies; therefore, to the extent that the School has not complied with the rules and regulations governing the grants and reimbursement programs, refunds of any money received may be required and the collectability of any related receivable at June 30, 2013 and 2012 may be impaired. In the opinion of the School, there are no significant contingent liabilities relating to compliance with the rules and regulations governing the respective grants; therefore, no provision has been recorded in the accompanying financial statements for such contingencies.

8. Leasing Arrangements The School leases a portion of 6301 North 2nd Street in Philadelphia, Pennsylvania under an operating lease from ACE/Dougherty, LLC, Inc. of Pennsylvania (a related party, see Note 11). The School paid monthly rent of $35,000 for the year ending June 2013. Rent expense was $420,000 for each of the years ended June 30, 2013 and 2012. The School leases office equipment under operating leases that expire in December 2012. Monthly lease payments are $939. Lease expense for office equipment was $11,266 for each of the years ended June 30, 2013 and 2012. Minimum annual rental for equipment for each year subsequent to June 30, 2013 is as follows:


2014 423,198$ 2015 420,000 2016 420,000 2017 420,000 2018 420,000

2019 and thereafter 3,198 2,106,396$

9. Retirement Plan



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- Active members who joined the System prior to July 22, 1983, contribute at 5.25 percent (Membership Class T-C) or at 6.5 percent (Membership Class T-D) of the member’s qualifying compensation.




Employer contributions are based upon an actuarial valuation. For the fiscal years ended June 30, 2013 and 2012, the rate of employer’s contribution was 12.36 percent and 8.65 percent, respectively, of covered payroll.

Payroll expense for employees covered by the System for the years ended June 30, 2013 and 2012 was approximately $2.5 million and $2.4 million, respectively.

In accordance with Act 29 of 1994, the Commonwealth of Pennsylvania will pay school entities for contributions made to the System based on the formula in Act 29 of 1994, but not less than one-half of the school entities’ contributions. The School’s contributions to the Plan for the years ended June 30, 2013, 2012, and 2011 totaled $303,331, $188,257, and $103,286, respectively.

10. 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 carries commercial insurance for such risks. There has been no significant reduction in insurance coverage from the previous year in any of the School's policies. Settled claims resulting from these risks have not exceeded commercial insurance coverage in the past three years.

11. Related Party The School is associated with ASPIRA, Inc. of Pennsylvania (“ASPIRA”) through board control. The School is associated with ASPIRA Community Enterprises, Inc. (“ACE”), Antonia Pantoja Charter School (“Pantoja”), ASPIRA Bilingual Cyber Charter School (“Cyber”), John B. Stetson Charter School (“Stetson”), Olney High School (“Olney”) and ACE/Dougherty, Inc. through common board membership and management. The School's bylaws stipulate that ASPIRA will appoint a majority of up to five members of the School's Board of Trustees. Directors cannot be members of both boards. As described in Note 8, the School leases a building from ACE/Dougherty, Inc. under and operating lease expiring in the year 2021. In connection with the operation of its charter school the School made lease payments to ACE/Dougherty in the amount of $420,000 for each of the years ended June 30, 2013 and 2012. The School reimbursed ASPIRA for maintenance, security, IT support and other administrative expenses paid by ASPIRA in the amount of $1,336,538 and $1,011,703 for the years ended June 30, 2013 and 2012, respectively.


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All receivables and payables with related parties are unsecured, non-interest bearing and have no repayment terms.


ASPIRA, Inc. of Pennsylvania --$ 180,434$ 379,552$ -$ Antonia Pantoja Charter School -- 58,919 -- 57,434ACE/Dougherty, LLC -- 251,000 -- 176,000John B. Stetson Charter School 579,691 -- 580,442 -- Aspira Bilingual Cyber Charter School -- 72 -- -- Olney Charter High School -- 144,464 -- 45,588

579,691$ 634,889$ 959,994$ 279,022$


The School is a guarantor of a $1,950,000 term loan issued to ASPIRA, Inc. for the acquisition and construction loan associated with the building of the School. The term loan was to mature May 2015, but was subsequently refinanced with a new maturity date of October 1, 2016. This debt is collateralized by a first and second priority interest in the real estate and all fixtures and leases associated with the real estate. The School would be required to make principal and interest payments in the event of default by ASPIRA, Inc. The outstanding balance on the term loan is $367,608 and $526,708 as of June 30, 2013 and 2012, respectively. The School is involved in legal proceedings arising in the ordinary course of business. In the opinion of management, although the outcome of any legal proceedings cannot be predicted, ultimate liability of the School in connection with its legal proceedings will not have a material adverse effect on the financial position or activities of the School.



Eugenio Maria de Hostos Charter School Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual - Governmental Funds Year Ended June 30, 2013

Over(Under)


RevenuesLocal educational agency assistance 3,035,900$ 2,912,424$ 4,576,632$ (1,664,208)$ Other local sources 100,000 100,000 80,738 19,262 State sources 1,487,300 1,850,192 308,110 1,542,082 Federal sources 779,100 1,007,185 905,919 101,266

5,402,300 5,869,801 5,871,399 (1,598)

ExpendituresInstruction 3,500,128 3,705,861 3,836,828 (130,967) Support services 1,609,084 1,471,541 1,861,027 (389,486) Non-instructional services 490,588 746,873 882,573 (135,700)

5,599,800 5,924,275 6,580,428 (656,153)

Net change in fund balances (197,500) (54,474) (709,029) 654,555

Fund balances - beginning of year 1,072,114 979,827 979,827 --

Fund balances - end of year 874,614$ 925,353$ 270,798$ 654,555$

Budget


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Eugenio Maria de Hostos Charter School Schedule of Expenditures of Federal Awards Year Ended June 30, 2013

Pass- Grant Total Accrued orFederal Grantor/ Federal Through Period Program Received (Deferred) Accrued or

Pass-Through Grantor Source CFDA Grantor's Beginning/ or for Revenue Revenue Federal (Deferred)Program Title Code Number Number Ending Date Award the Year at 7/1/12 Recognized Expenditures at 6/30/13

U.S. Department of EducationPass-Through Pennsylvania



Title I - Improving Basic Programs I 84.010 013-120837 07/01/11 - 09/30/12 240,557 18,924 13,473 -- -- (5,451)




Title II - Improving Teacher Quality I 84.367 020-120837 07/01/11 - 09/30/12 19,868 12,768 13,504 -- -- 736

Title II - Improving Teacher Quality I 84.367 020-110837 07/01/10 - 09/30/11 19,868 (1,808) (1,808) -- -- --

Title III - Language Instruction LEP I 84.365 010-130837 07/01/12 - 09/30/13 15,480 15,480 -- 15,480 15,480 --

Title III - Language Instruction LEP I 84.365 010-110837 07/01/11 - 09/30/12 28,800 -- 6,364 -- -- 6,364

Title III - Language Instruction LEP I 84.365 010-090837 07/01/10 - 09/30/11 15,606 10,962 10,962 -- -- --

Pass-Through School District of PhiladelphiaIDEA I 84.027 N/A 07/01/12 - 06/30/13 58,832 -- -- 93,948 93,948 93,948 IDEA I 84.027 N/A 07/01/11 - 06/30/12 50,202 58,832 58,832 -- -- --

Total U.S. Department of Education 773,136 367,394 104,927 429,577 429,577 167,110

U.S. Department of AgriculturePass-Through Pennsylvania

Department of EducationNational School Lunch Program I 10.555 362 07/01/12 - 06/30/13 -- 257,498 -- 316,202 316,202 58,704 National School Lunch Program I 10.555 362 07/01/11 - 06/30/12 -- 84,281 84,281 -- -- -- School Breakfast Program I 10.553 367 07/01/12 - 06/30/13 -- 129,335 -- 159,485 159,485 30,150 School Breakfast Program I 10.553 367 07/01/11 - 06/30/12 -- 44,077 44,077 -- -- --

Total U.S. Department of Agriculture -- 515,191 128,358 475,687 475,687 88,854

Totals 882,585$ 233,285$ 905,264$ 905,264$ 255,964$

D - Direct FundingI - Indirect Funding


Eugenio Maria de Hostos Charter School Notes to Schedule of Expenditures of Federal Awards Year Ended June 30, 2013 1. General Information

The accompanying schedule of expenditures of federal awards presents the activities in all of the federal financial assistance programs of Eugenio Maria de Hostos Charter School. Financial awards received directly from federal agencies, as well as financial assistance passed through other governmental agencies or non-profit organizations, are included in the schedule.

2. Basis of Accounting

The accompanying schedule of expenditures of federal awards includes the federal grant activity of the School and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the general purpose financial statements.

3. Relationship to Basic Financial Statements

The schedule of expenditures of federal awards presents only a selected portion of the activities of the School. It is not intended to and does not present either the balance sheet, revenue, expenditures, or changes in fund balances of governmental funds. The financial activity for the aforementioned awards is reported in the School’s statement of revenues, expenditures, and changes in fund balances of governmental funds.

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Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on

an Audit of Financial Statements Performed in Accordance with Government Auditing Standards


To the Board of Trustees, Eugenio Maria de Hostos Charter School: We have audited, in accordance with 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 financial statements of the governmental activities and each major fund of Eugenio Maria de Hostos Charter School (the "School”) and the related notes to the financial statements, as of and for the year ended June 30, 2013, which collectively comprises the School’s basic financial statements and have issued our report thereon dated January 20, 2014. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered Eugenio Maria de Hostos Charter School’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Eugenio Maria de Hostos Charter School’s internal control. Accordingly, we do not express an opinion on the effectiveness of Eugenio Maria de Hostos Charter School’s internal control. 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 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 those 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 Eugenio Maria de Hostos Charter School’s financial statements are free of 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.

January 20, 2014

Two Logan Square



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24

Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance Required by

OMB Circular A-133

Independent Auditor’s Report

The Board of Trustees, Eugenio Maria de Hostos Charter School: Report on Compliance for Each Major Federal Program We have audited Eugenio Maria de Hostos Charter School’s compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of Eugenio Maria de Hostos Charter School’s major Federal programs for the year ended June 30, 2013. Eugenio Maria de Hostos Charter School’s major Federal programs are identified in the summary of auditors’ results section of the accompanying schedule of findings and questioned costs. Management’s Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its Federal programs. Auditors’ Responsibility Our responsibility is to express an opinion on compliance for each of Eugenio Maria de Hostos Charter School’s major Federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB 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 obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about Eugenio Maria de Hostos Charter School’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Eugenio Maria de Hostos Charter School’s compliance with those requirements.

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Opinion on Each Major Federal Program In our opinion, Eugenio Maria de Hostos Charter School complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2013. Report on Internal Control Over Compliance Management of Eugenio Maria de Hostos Charter School is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Eugenio Maria de Hostos Charter School’s internal control over compliance with the types of requirements that could have a direct and material effect on each major Federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Eugenio Maria de Hostos Charter School’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.

January 20, 2014

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Eugenio Maria de Hostos Charter School Schedule of Findings and Questioned Costs Year Ended June 30, 2013 Section 1 – Summary of Auditors' Results Financial Statements Type of auditors' report issued: Unqualified Internal control over financial reporting: Material weaknesses identified? No Control deficiencies identified that are not considered to be material weaknesses? None reported Noncompliance material to financial statements noted? No Federal Awards Internal control over major programs: Material weaknesses identified? No Control deficiencies identified that are not considered to be material weaknesses? None reported



84.010 Title I – Improving Basic Programs 10.555 10.553

National School Lunch Program School Breakfast Program

Dollar threshold used to distinguish between Type A and Type B programs: $300,000 Auditee qualified as low-risk auditee? Yes Section 2 – Financial Statement Findings None reported. Section 3 – Federal Award Findings and Questioned Costs None reported. Section 4 – Follow Up Prior Year Audit Findings There were no prior year audit findings.

OLNEY CHARTER HIGH SCHOOL AN ASPIRA, INC. OF PENNSYLVANIA SCHOOL


June 30, 2012


OLNEY CHARTER HIGH SCHOOL An Aspira, Inc. of Pennsylvania School Table of Contents June 30, 2012




Statement of Net Assets ............................................................................................................................................ 6

Statement of Activities ................................................................................................................................................ 7

Balance Sheet – Governmental Funds ...................................................................................................................... 8


Statement of Revenues, Expenditures and Changes in Fund Balances- Governmental Funds ............................. 10





Schedule of Expenditure of Federal Awards............................................................................................................ 19





Two Logan Square



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Independent Auditors' Report To the Board of Trustees, Olney Charter High School An Aspira, Inc. of Pennsylvania School: We have audited the accompanying financial statements of the governmental activities and each major fund of Olney Charter High School, An Aspira, Inc. of Pennsylvania School (the “School”) as of and for the year ended June 30, 2012, which collectively comprise the School's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the School's management. 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 and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the basic financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall basic financial statement 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, the respective financial position of the governmental activities and each major fund of Olney Charter High School, An Aspira, Inc. of Pennsylvania School as of June 30, 2012, and the respective changes in financial position for the year then ended in conformity with accounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards, we have also issued our report dated March xx, 2013 on our consideration of the Olney Charter High School, An Aspira, Inc. of Pennsylvania School's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, 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 the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and is important for assessing the results of our audit. The management’s discussion and analysis and the schedule of revenues, expenditures and change in fund balance – budget and actual – governmental funds, as listed in the table of contents, are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying schedule of expenditures of Federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements taken as a whole.

April 18, 2013

Olney Charter High School An Aspira, Inc. of Pennsylvania School

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Management’s Discussion and Analysis June 30, 2012 The Board of Trustees of Olney Charter High School, An Aspira, Inc. of Pennsylvania School offers readers of the School's financial statements this narrative overview and analysis of the financial activities of the School for the fiscal year ended June 30, 2012. We encourage readers to consider the information presented here in conjunction with the School's financial statements. Financial Highlights

This fiscal year was the first full year of the School’s operation.

For fiscal year ending June 30, 2012, the enrollment of the School consists of approximately 1,172 Regular Education students and 329 Special Education students.

At the close of the current fiscal year, the School reports total revenue of $22,544,260, and total expenses of $21,720,727 resulting in ending net assets of $823,533.

The School's cash balance at June 30, 2012 was $1,068,008.

Overview of the Financial Statements The discussion and analysis is intended to serve as an introduction to the School's basic financial statements. The School's basic financial statements as presented comprise three components: management's discussion and analysis (this section), the basic financial statements, budgetary comparison and report required under Government Auditing Standards and OMB Circular A-133. Government-Wide Financial Statements The government-wide financial 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 assets presents information on all of the School's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the School is improving or deteriorating. The statement of activities presents information showing how the School's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. The government-wide financial statements report on the function of the School that is principally supported by subsidies from school districts whose constituents attend the School. Fund Financial Statements A fund is a group of related accounts that are used to maintain control over resources that have been segregated for specific activities or purposes. The School, like governmental type entities, utilizes fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The School has three governmental funds - general, food services and student activities. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements.


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2012

Total assets 6,493,221$ Total liabilities 5,690,847

Total net assets 802,374$


2012Revenues

Local education agencies 17,936,131$ Other sources 1,153,591 State sources 784,851 Federal sources 2,669,687

22,544,260

ExpendituresInstruction 14,312,789 Student support services 1,094,467 Administration support 4,903,716 Pupil health 156,512 Business services 393,401 Food services 493,845 Student activities 188,508 Depreciation 177,489

21,720,727

Change in net assets 823,533

Net assets, beginning (21,159)

Net assets, ending 802,374$

Governmental Funds The focus of the School's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the School's financing requirements. In particular, fund balance may serve as a useful measure of a government's net resources available for spending for program purposes at the end of the fiscal year. The School's governmental funds, (the General and Student Activities Funds), reported an ending fund balance of $249,587. For the year ended June 30, 2012, the School's revenues ($23,588,872) were greater than its expenditures ($23,318,126) by $270,746.


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Management’s Discussion and Analysis June 30, 2012 Capital Asset and Debt Administration Capital Assets As of June 30, 2012, the School's investment in capital assets for its governmental activities totals $1,774,888. This investment in capital assets includes classroom, office furniture and equipment and leasehold improvements. Major capital asset purchases during the year included the following:


Furniture and equipment amounting to $930,068

Security system amounting to $394,782

Leasehold improvements amounting to $325,445

Additional information on the School's capital assets can be found in Note 4 of this report. There were capital lease obligations related to the investment in capital assets amounting to $1,044,612 at June 30, 2012. Economic Factors and Next Year's Budgets and Rates The School's primary source of revenue, the per student subsidy provided by the School District of Philadelphia, will decrease by approximately $715,849 for fiscal year 2012-2013, due to a decreased subsidy per student of $677 for regular education and an increased subsidy per student of $237 for special education. Contacting the School's Financial Management The financial report is designed to provide interested parties a general overview of the School's finances. Questions regarding any of the information provided in this report should be addressed to the Chief Academic Officer, Olney Charter High School, An Aspira, Inc. of Pennsylvania School, 100 W Duncannon Avenue, Philadelphia, PA 19120.



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Statement of Net Assets June 30, 2012 Assets

Current assetsCash and cash equivalents 1,068,008$ State subsidies receivable 393,848 Federal subsidies receivable 1,544,067 Other receivables 239,379 Prepaids 20,588Due from related parties 1,629,932

Total current assets 4,895,822

Capital assets - net of depreciationFurniture and equipment 949,195

Leasehold improvements 648,2041,597,399

6,493,221$


Current liabilitiesAccounts payable 1,193,170$ Accrued payroll and payroll taxes 3,111,341

Refundable advances 251,255

Due to related parties 90,469

Current portion of obligations under capital lease 229,098

Total current liabilities 4,875,333

Long-term liabilitiesObligations under capital lease 815,514

Total liabilities 5,690,847

Net assets

Invested in capital assets, net of related debt 552,787 Unrestricted 249,587

Total net assets 802,374

6,493,221$



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Statement of Activities Year Ended June 30, 2012

Net (Expense)Revenue andChanges inNet Assets

Operating TotalCharges for Grants and Governmental

Expenses Service Contributions Activities

Governmental activitiesInstruction 14,312,789$ --$ 2,200,000$ (12,112,789)$ Student support services 1,094,467 -- -- (1,094,467) Administrative support 4,903,716 -- -- (4,903,716) Pupil health 156,512 -- -- (156,512) Business services 393,401 -- -- (393,401) Food services 493,845 -- 469,687 (24,158) Student activities 188,508 97,709 -- (90,799) Depreciation 177,489 -- -- (177,489)

21,720,727 97,709 2,669,687 (18,953,331)

General RevenuesState grants and reimbursements 784,851 Local educational agencies 17,936,131

All other revenue 1,055,882

19,776,864

Change in net assets 823,533

Net assets - beginning of year (21,159)

Net assets - end of year 802,374$

Functions

ProgramRevenues



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Balance Sheet – Governmental Funds June 30, 2012

Student TotalGeneral Activities Governmental

Fund Fund Activities

Assets

Cash and cash equivalents 1,066,604$ 1,404$ 1,068,008$ State subsidies receivable 393,848 -- 393,848 Federal subsidies receivable 1,544,067 -- 1,544,067 Other receivables 239,379 -- 239,379 Prepaids 20,588 -- 20,588 Due from related parties 1,629,932 -- 1,629,932

4,894,418$ 1,404$ 4,895,822$

Liabilities

Accounts payable 1,193,170$ --$ 1,193,170$ Salaries and contracts payable 3,111,341 -- 3,111,341 Refundable advances 251,255 -- 251,255 Due to related parties 90,469 -- 90,469

Total liabilitlies 4,646,235 -- 4,646,235

Fund Balances

Unrestricted fund balances 248,183 1,404 249,587

4,894,418$ 1,404$ 4,895,822$

Functions



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Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets June 30, 2012 Total Fund Balances for Governmental Funds 249,587$



Furniture and equipment 1,054,661$ Leasehold improvements 720,227 Accumulated depreciation (177,489) Obligations under capital leases (1,044,612)

552,787




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Statement of Revenues, Expenditures and Changes in Fund Balances- Governmental Funds Year Ended June 30, 2012

Food Student TotalGeneral Services Activities Governmental

Fund Fund Fund Activities

RevenuesLocal educational agency assistance 17,936,131$ --$ --$ 17,936,131$ Other sources 2,138,786 -- 97,709 2,236,495 State sources 746,559 38,292 -- 784,851 Federal sources 2,200,000 431,395 -- 2,631,395

23,021,476 469,687 97,709 23,588,872

ExpendituresInstruction 16,087,677 -- -- 16,087,677 Support services 1,094,467 -- -- 1,094,467 Administrative support 4,903,716 -- -- 4,903,716 Pupil Health 156,512 -- -- 156,512 Business services 393,401 -- -- 393,401 Food services -- 493,845 -- 493,845 Student activities -- -- 188,508 188,508

22,635,773 493,845 188,508 23,318,126

Excess (deficiency) of revenuesover expenditures 385,703 (24,158) (90,799) 270,746

Other financing sources (uses)Transfer in -- 24,158 92,103 116,261 Transfer out (116,261) -- -- (116,261)

(116,261) 24,158 92,103 --

Net change in fund balances 269,442 -- 1,304 270,746

Fund balances - beginning of year (21,259) -- 100 (21,159)

Fund balances - end of year 248,183$ --$ 1,404$ 249,587$

Functions



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Capital outlays 1,774,888 Obligations under capital leases (1,044,612) Depreciation expense (177,489)




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Notes to Financial Statements June 30, 2012


Olney Charter High School, An Aspira, Inc. of Pennsylvania School (the “School”) was incorporated in June 2011 under the non-profit corporation law of the Commonwealth of Pennsylvania and began operations in September 2011. The School serves grades nine through twelve and is located in Philadelphia, Pennsylvania. The School obtained its charter as a result of the School District of Philadelphia Renaissance Schools Initiative. The School operates under the provisions enacted by the General Assembly of the Commonwealth of Pennsylvania in 1997 and is operating under a charter school contract ending on June 30, 2015. The net assets of the School would remain with the School if its charter were not renewed. The School has financial accountability and control over all activities related to the students' education. The School receives funding from local, state, and federal government sources and must comply with the requirements of these funding source entities. However, the School is not included in any other governmental "reporting entity" as defined by the Governmental Accounting Standards Board (“GASB”) pronouncement. In addition, there are no component units as defined in the standards established for defining and reporting on the financial reporting entity.

2. Summary of Significant Accounting Policies Basis of Presentation The financial statements of the School have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as applied to governmental units. The Governmental Accounting Standards Board is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The GASB has issued a codification of governmental accounting and financial reporting standards. This codification and subsequent GASB pronouncements are recognized as U.S. generally accepted accounting principles for state and local governments that have implemented the accounting pronouncement on financial reporting for state and local governments, “Basic Financial Statements and Management's Discussion and Analysis - for State and Local Governments”.

Government-wide and Fund Financial Statements The government-wide financial statements (the statement of net assets and the statement of activities) report on the School as a whole. The statement of activities demonstrates the degree to which the direct expenses of the School's function are offset by program revenues. The fund financial statements (governmental funds balance sheet and statement of governmental funds revenues, expenditures and changes in fund balances) report on the School's general, food services, and student activities funds. Measurement Focus, Basis of Accounting and Financial Statement Presentation Government-wide Financial Statements - the statement of net assets and the statement of


Fund Financial Statements - governmental funds 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 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. The government reports the following major governmental funds:


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definition of "restricted" or "invested” in capital assets, net of related debt. Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Concentration of Credit Risk Financial instruments which potentially subject the School to concentrations of credit risk consist of cash and cash equivalents, contributions and grants receivables. Cash and cash equivalents are held primarily at one high-credit quality financial institution. At various times during the year ended June 30, 2012 funds held at this financial institution may have exceeded the FDIC insurance limit. At June 30, 2012, the School received seventy-seven percent of their total revenue from one source. Capital Assets Capital assets, which include furniture and equipment, are reported in the government-wide financial statements. All capital assets are capitalized at cost and updated for additions and retirements during the year. The School does not possess any infrastructure as they lease the building from the School District of Philadelphia. Improvements are capitalized; the cost of normal maintenance and repairs that do not add to the value of the asset or materially extend an asset's life are not. Capital assets of the School are


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depreciated using the straight-line method over the useful lives of the assets. The estimated useful lives of furniture and equipment range from five to seven years. Leasehold improvements are amortized over the life of the lease. Income Tax Status The School is exempt from Federal income taxes under Section 501(c)(3) of the Internal Revenue Code. Accordingly, no provision or liability for income taxes has been recorded in the financial statements.

The School adopted the accounting pronouncement dealing with uncertain tax positions as of July 1, 2011. Upon adoption of this accounting pronouncement, the School had no unrecognized tax benefits. Furthermore, the School had no unrecognized tax benefits at June 30, 2012. There were no open tax years prior to 2011. In addition, the School had no income tax related penalties or interest for the period reported in these financial statements.

3. Cash and Cash Equivalents The School considers all highly liquid debt instruments purchased with a maturity of three months or less at the time of acquisition to be cash equivalents. Deposits Custodial credit risk is the risk that in the event of a bank failure, the government's deposits may not be returned to it. The School does not have a policy for custodial credit risk. As of June 30, 2012, $1,139,629 of the School's bank balance was exposed to custodial credit risk as follows:

Uninsured and uncollateralized 1,139,629$ Plus: Insured amount 250,000 Less: Outstanding checks (321,621) Plus: Deposits in transit -- Carrying amount - bank balances 1,068,008 Plus: Petty cash --

Total cash per financial statements 1,068,008$

4. Capital Assets

Capital asset activity for the year ended June 30, 2012 was as follows:


Furniture and equipment --$ --$ 1,054,661$ 1,054,661$ Leasehold improvements -- -- 720,227 720,227

-- -- 1,774,888 1,774,888 Less: Accumulated depreciation -- -- 177,489 177,489

Capital assets, net --$ --$ 1,597,399$ 1,597,399$

Depreciation expense for the year ended June 30, 2012 was $177,489.


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5. Capital Leases

The School leases furniture, under capital leases, with a total original cost of $1,234,851 for the year ended June 30, 2012. The leases will be paid off between 2016 and 2017, with monthly principal and interest payments of $24,654. The interest rate on these capital leases range from 6.9 percent to 7.1 percent. Furniture and equipment is included in property and equipment in the statements of net assets at June 30, 2012 as follows:

Furniture and equipment 1,234,851$ Less: Accumulated depreciation (123,485)

1,111,366$



2013 295,848$ 2014 295,848 2015 295,848 2016 284,284 2017 34,699

1,206,527

Less: Amounts representing interest 161,915

Net minimum lease payment 1,044,612




Charter schools are funded by the local public school district in which each student resides. The rate per student is determined annually and is based on the budgeted total expenditure per average daily membership of the prior school year for each school district. The majority of the students of the School reside in Philadelphia. For the year ended June 30, 2012, the rate for the School District of Philadelphia was $8,771 per year for regular education students plus additional funding for special education students. The annual rate is earned monthly and paid when billed by the School District of Philadelphia and is prorated if a student enters or leaves during the year. Total revenue from local sources was $17,936,131 for the fiscal year ended June 30, 2012.

7. Government Grants and Reimbursement Programs The School participates in numerous state and federal grant and reimbursement programs, which are governed by various rules and regulations of the grantor agencies. Costs charged to the respective grant programs and reimbursement programs retirement (pension) expense, facility lease costs and health services are subject to audit and adjustment by the grantor agencies; therefore, to the extent that the School has not complied with the rules and regulations governing the grants and reimbursement programs, refunds of any money received may be required and the collectability of any related receivable at June 30, 2012 may be impaired. In the opinion of the School, there are no significant contingent liabilities relating to compliance with the rules and regulations governing the respective grants; therefore, no provision has been recorded in the accompanying financial statements for such contingencies.


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8. Leasing Arrangements The School incurs a facilities charge, levied by the School District of Philadelphia, under a license agreement by which the School occupies the building located at 100 West Duncannon Avenue, Philadelphia, PA. Total facilities charges for the year ended June 30, 2012 amounted to $424,380. Under the agreement, the School District provided snow and waste removal, and landscaping and grounds keeping for grounds and athletic facilities, utilities, and occupancy for the School. The agreement is for a term of five years and is set to expire on June 30, 2016. In addition the School leases additional space from a related party (see note 11) for the Success Academy Program. Total rental charges for the space for the year ended June 30, 2012 was $60,000.

9. Retirement Plan










Employer contributions are based upon an actuarial valuation. For the fiscal year ended June 30, 2012, the rate of employer’s contribution was 8.65 percent of covered payroll. The 8.65 percent rate is composed of a pension contribution rate of 8.00 percent for pension benefits and 0.65 percent for healthcare insurance premium assistance.

Payroll expense for employees covered by the System for the year ended June 30, 2012 was approximately $10.3 million. In accordance with Act 29 of 1994, the Commonwealth of Pennsylvania will pay school entities for contributions made to the System based on the formula in Act 29 of 1994, but not less than one-half of the school entities' contributions. The School’s contributions due to the Plan for the year ending June 30, 2012 totaled $757,500.


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10. Related Party The School is associated with Aspira, Inc. of Pennsylvania (“Aspira”) through board control. The School is associated with Aspira Community Enterprises, Inc. (“ACE”), Antonia Pantoja Charter School (“Pantoja”), Aspira Bilingual Cyber Charter School (“Cyber”), John B. Stetson Charter School (“Stetson”), Eugenio Maria De Hostos Charter School (“Hostos”) and ACE/Dougherty, Inc. through common board membership and management The School's bylaws stipulate that a majority of its members at all times shall be appointees of Aspira, Inc. of Pennsylvania. Aspira owed the School $1,496,529 for the year ended June 30, 2012. Hostos owed the School $45,587 for the year ended June 30, 2012. Stetson owed the School $33,452 for the year ended June 30, 2012 Cyber owed the School $54,364 for the year ended June 30, 2012 All payables with related parties are unsecured, non-interest bearing and have no repayment terms. The School made payments to Aspira in reimbursement for maintenance, security, IT support and other administrative expenses paid by Aspira in the amount of $2,429,245 for the year ended June 30, 2012.

The School owed Pantoja $30,469 for the year ended June 30, 2012. The School owed ACE/Dougherty $60,000 for the year ended June 30, 2012

11. Commitments and Contingencies The School is involved in legal proceedings arising in the ordinary course of business. In the opinion of management, although the outcome of any legal proceedings cannot be predicted, ultimate liability of the School in connection with its legal proceedings will not have a material adverse effect on the financial position or activities of the School.


See Independent Auditors’ Report.

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Olney Charter High School An Aspira, Inc. of Pennsylvania School Schedule of Revenue, Expenditures and Changes in Fund Balance Budget and Actual – Governmental Funds Year ended June 30, 2012

Over

(Under)Budget Actual Final

Original Final Amounts Budget

RevenuesLocal educational agency assistance 17,688,900$ 17,688,900$ 17,936,131$ (247,231)$ Other local sources 335,700 335,700 2,236,495 (1,900,795) State sources 992,700 992,700 784,851 207,849 Federal sources 3,290,000 3,290,000 2,631,395 658,605

22,307,300 22,307,300 23,588,872 (1,281,572)

ExpendituresInstruction 13,423,527 13,423,527 16,087,677 (2,664,150) Support services 7,458,073 7,458,073 1,094,467 6,363,606 Administrative support 622,000 622,000 4,903,716 (4,281,716) Pupil Health 156,512 (156,512) Business Services 393,401 (393,401) Food Services -- -- 493,845 (493,845) Student Activities -- -- 188,508 (188,508)

21,503,600 21,503,600 23,318,126 (1,814,526)

Net change in fund balances 803,700 803,700 270,746 532,954

Fund balances - beginning of year -- -- (21,159) --

Fund balances - end of year 803,700$ 803,700$ 249,587$ 532,954$


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Olney Charter High School An Aspira, Inc. of Pennsylvania School Schedule of Expenditures of Federal Awards Year ended June 30, 2012

Pass- Grant Total Accrued or

Federal Grantor/ Federal Through Period Program Received (Deferred) Accrued or

Pass-Through Grantor Source CFDA Grantor's Beginning/ or for Revenue Revenue (Deferred)

Program Title Code Number Number Ending Date Award the Year at 7/1/11 Recognized Expenditures at 6/30/12

U.S. Department of Education

Pass-Through Pennsylvania


Charter School Program Implementation Grant I 84.282B U282B110018 10/01/11 - 09/30/14 200,000$ 200,000$ --$ 200,000$ 200,000$ --$

ARRA - SIG I 84.388 139-11-1110 12/20/11 - 09/30/12 2,000,000 600,000 -- 2,000,000 2,000,000 1,400,000

Total U.S. Department of Education 2,200,000 800,000 -- 2,200,000 2,200,000 1,400,000

U.S. Department of Agriculture



National School Lunch Program I 10.555 362 07/01/11 - 06/30/12 -- 210,252 -- 320,276 320,276 110,024

School Breakfast Program I 10.553 367 07/01/11 - 06/30/12 -- 60,966 -- 95,009 95,009 34,043

Commodoties I 10.555 07/01/11 - 06/30/12 -- 16,110 -- 16,110 16,110 --

Total U.S. Department of Agriculture -- 287,328 -- 431,395 431,395 144,067

Total Federal awards 1,087,328$ --$ 2,631,395$ 2,631,395$ 1,544,067$

D - Direct Funding

I - Indirect Funding


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Olney Charter High School An Aspira, Inc. of Pennsylvania School Notes to Schedule of Expenditures of Federal Awards June 30, 2012 1. General Information The accompanying schedule of expenditures of Federal awards presents the activities in all of the Federal

financial assistance programs of Olney Charter High School, An Aspira, Inc. of Pennsylvania School. Financial awards received directly from federal agencies, as well as financial assistance passed through other governmental agencies or non-profit organizations, are included in the schedule.

2. Basis of Accounting The accompanying schedule of expenditures of federal awards includes the federal grant activity of the

School and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the general purpose financial statements.

3. Relationship to Basic Financial Statements The schedule of expenditures of federal awards presents only a selected portion of the activities of the

School. It is not intended to and does not present either the balance sheet, revenue, expenditures, or changes in fund balances of governmental funds. The financial activity for the aforementioned awards is reported in the School’s statement of revenues, expenditures, and changes in fund balances of governmental funds.

Two Logan Square



215 546 2140 . fax 215 546 2148

www.withum.com






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To the Board of Trustees, Olney Charter High School, An Aspira, Inc. of Pennsylvania School: We have audited the financial statements of the governmental activities and each major fund of Olney Charter High School, An Aspira, Inc. of Pennsylvania School (the "School”), as of and for the year ended June 30, 2012, which collectively comprises the School’s basic financial statements and have issued our report thereon dated April 18, 2013. We conducted our audit in accordance with 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. Internal Control Over Financial Reporting Management of Olney Charter High School, An Aspira, Inc. of Pennsylvania School is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered the School’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not to 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 misstatements on a timely basis. A material weakness is a deficiency, or 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. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.

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Compliance and Other Matters As part of obtaining reasonable assurance about whether Olney Charter High School, An Aspira, Inc. of Pennsylvania School’s financial statements are free of 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. 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.

April 18, 2013

Two Logan Square



215 546 2140 . fax 215 546 2148

www.withum.com






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The Board of Trustees, Olney Charter High School, An Aspira, Inc. of Pennsylvania School: Compliance We have audited the compliance of Olney Charter High School, An Aspira, Inc. of Pennsylvania School with the types of compliance requirements described in the U.S. Office of Management and Budget (“OMB”) Circular A-133 Compliance Supplement that are applicable to each of its major Federal programs for the year ended June 30, 2012. Olney Charter High School, An Aspira, Inc. of Pennsylvania School’s major Federal programs are identified in the summary of auditors’ results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major Federal programs is the responsibility of Olney Charter High School, An Aspira, Inc. of Pennsylvania School’s management. Our responsibility is to express an opinion on Olney Charter High School, An Aspira, Inc. of Pennsylvania School’s compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States and OMB Circular A-133. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about Olney Charter High School, An Aspira, Inc. of Pennsylvania School’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of Olney Charter High School, An Aspira, Inc. of Pennsylvania School’s compliance with those requirements. In our opinion Olney Charter High School, An Aspira, Inc. of Pennsylvania School complied, in all material respects, with the requirements referred to above that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2012.

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Internal Control Over Compliance The management of Olney Charter High School, An Aspira, Inc. of Pennsylvania School is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to major Federal programs. In planning and performing our audit, we considered Olney Charter High School, An Aspira, Inc. of Pennsylvania School’s internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Olney Charter High School, An Aspira, Inc. of Pennsylvania School’s internal control over compliance. A deficiency in internal control over compliance 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 noncompliance with a type of compliance requirement of a Federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a Federal program will not be prevented, or detected and corrected, on a timely basis. Our consideration of the internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we considered to be a material weakness, as defined above. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control and compliance and the results of that testing based upon the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.

April 18, 2013

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Olney Charter High School An Aspira, Inc. of Pennsylvania School Schedule of Findings and Questioned Costs Year Ended June 30, 2012 Section 1 – Summary of Auditors' Results Financial Statements Type of auditors' report issued: Unqualified Internal control over financial reporting: Material weaknesses identified? No Control deficiencies identified that are not considered to be material weaknesses? None reported Noncompliance material to financial statements noted? No Federal Awards Internal control over major programs: Material weaknesses identified? No Control deficiencies identified that are not considered to be material weaknesses? None reported



84.388 10.555/10.553

ARRA - SIG National School Lunch and Breakfast Programs

Dollar threshold used to distinguish between Type A and Type B programs: $300,000 Auditee qualified as low-risk auditee? No (A) Section 2 – Financial Statement Findings None reported. Section 3 – Federal Award Findings and Questioned Costs None reported. Section 4 – Follow Up Prior Year Audit Findings There were no prior year audit findings. (A) This is the first year Olney Charter High School, An Aspira, Inc. of Pennsylvania School has been subject to

an A-133 audit, therefore they do not qualify as a low risk auditee.

OLNEY CHARTER HIGH SCHOOL AN ASPIRA, INC. OF PENNSYLVANIA SCHOOL

Financial Statements and


June 30, 2013

(With Summarized Comparative Financial Information For the Year Ended June 30, 2012)

Olney Charter High School An Aspira, Inc. of Pennsylvania School Table of Contents June 30, 2013 (With Summarized Comparative Financial Information for the Year June 30, 2012)












Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - Governmental Funds (With Comparative Totals at June 30, 2012)......................................................................... 19

Schedule of Expenditure of Federal Awards............................................................................................................ 20



Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance Required by OMB A-133 ................................................................................................................. 24-25


Two Logan Square



215 546 2140 . fax 215 546 2148

www.withum.com






Independent Auditors' Report To the Board of Trustees, Olney Charter High School An Aspira, Inc. of Pennsylvania School: We have audited the accompanying financial statements of the governmental activities and each major fund of Olney Charter High School (the “School”) as of June 30, 2013, 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 and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that 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.

Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Olney Charter High School as of June 30, 2013, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Report on Summarized Comparative Information We have previously audited Olney Charter High School’s June 30, 2012 financial statements and we have expressed an unmodified audit opinion on these financial statements in our audit report dated April 18, 2013. In our opinion, the summarized comparative information presented hereon as of and for the year ended June 30, 2012 is consistent in all material respects, with the audited financial statements from which it is has been derived. Other Matters Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the financial statements. In addition, the schedule of revenues, expenditures and changes in fund balance - budget and actual – governmental funds, as listed in the table of contents is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records use to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditure of federal awards is fairly stated in all material respects in relation to the financial statements as a whole. In addition, the management’s discussion and analysis is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted by the United States of America. We have applied certain limited procedures, which consisted primarily of inquiries of management regarding the measurement and presentation of the required supplementary information. However, we did not audit the information and do not express an opinion on it. Report on Other Legal and Regulatory Requirements In accordance with Government Auditing Standards, we have also issued our report dated January 20, 2014 on our consideration of the Olney Charter High School's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, 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 the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Olney Charter High School’s internal control over financial reporting and compliance.

January 20, 2014


3

Management’s Discussion and Analysis June 30, 2013 (With Summarized Comparative Financial Information for the Year June 30, 2012) The Board of Trustees of Olney Charter High School, An Aspira, Inc. of Pennsylvania School offers readers of the School's financial statements this narrative overview and analysis of the financial activities of the School for the fiscal year ended June 30, 2013. We encourage readers to consider the information presented here in conjunction with the School's financial statements. Financial Highlights

This fiscal year was the second full year of the School’s operation.

For fiscal year ending June 30, 2013, the enrollment of the School consists of approximately 1,239 Regular Education students and 340 Special Education students.

At the close of the current fiscal year, the School reports total revenue of $25,446,835, and total expenses of $23,498,521 resulting in ending net assets of $2,750,688.

The School's cash balance at June 30, 2013 was $506,787 representing a decrease of $561,221 from

June 30, 2012. Overview of the Financial Statements The discussion and analysis is intended to serve as an introduction to the School's basic financial statements. The School's basic financial statements as presented comprise three components: management's discussion and analysis (this section), the basic financial statements, budgetary comparison and report required under Government Auditing Standards and OMB Circular A-133. Government-Wide Financial Statements The government-wide financial 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 assets presents information on all of the School's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the School is improving or deteriorating. The statement of activities presents information showing how the School's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. The government-wide financial statements report on the function of the School that is principally supported by subsidies from school districts whose constituents attend the School. Fund Financial Statements A fund is a group of related accounts that are used to maintain control over resources that have been segregated for specific activities or purposes. The School, like governmental type entities, utilizes fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The School has three governmental funds - general, food services and student activities. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements.


4

Management’s Discussion and Analysis June 30, 2013 (With Summarized Comparative Financial Information for the Year June 30, 2012) Government-Wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of the School, assets exceeded liabilities by $2,750,688 as of June 30, 2013.

2013 2012

Total assets 7,181,912$ 6,493,221$ Total liabilities 4,431,224 5,690,847

Total net assets 2,750,688$ 802,374$


2013 2012Revenues

Local education agencies 17,926,441$ 17,936,131$ Other sources 3,974,304 1,153,591 State sources 1,164,954 784,851 Federal sources 2,381,136 2,669,687

25,446,835 22,544,260

ExpendituresInstruction 15,199,321 14,312,789 Student support services 1,322,938 1,094,467 Administration support 3,214,901 4,903,716 Pupil health 212,709 156,512 Business services 2,023,639 393,401 Food services 530,878 493,845 Student activities 594,039 188,508 Depreciation 400,096 177,489

23,498,521 21,720,727

Change in net assets 1,948,314 823,533

Net assets, beginning 802,374 (21,159)

Net assets, ending 2,750,688$ 802,374$

Governmental Funds The focus of the School's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the School's financing requirements. In particular, fund balance may serve as a useful measure of a government's net resources available for spending for program purposes at the end of the fiscal year. The School's governmental funds, (the General and Student Activities Funds), reported an ending fund balance of $2,021,228. For the year ended June 30, 2013 the School’s revenues ($25,545,172) exceeded expenditures (23,373,531) by 1,771,641. For the year ended June 30, 2012, the School's revenues ($23,588,872) were greater than its expenditures ($23,318,126) by $270,746.


5

Management’s Discussion and Analysis June 30, 2013 (With Summarized Comparative Financial Information for the Year June 30, 2012) Capital Asset and Debt Administration Capital Assets As of June 30, 2013, the School's investment in capital assets for its governmental activities totals $2,449,994. This investment in capital assets includes classroom, office furniture and equipment and leasehold improvements. Major capital asset purchases during the year included the following:



Telephone system amounting to $46,254


Additional information on the School's capital assets can be found in Note 4 of this report. There were capital lease obligations related to the investment in capital assets amounting to $1,142,949 at June 30, 2013. Economic Factors and Next Year's Budgets and Rates The School's primary source of revenue, the per student subsidy provided by the School District of Philadelphia, will increase by approximately $1,592,715 for fiscal year 2013-2014, due to an increased subsidy per student of $529 for regular education and an increased subsidy per student of $2,401 for special education. Contacting the School's Financial Management The financial report is designed to provide interested parties a general overview of the School's finances. Questions regarding any of the information provided in this report should be addressed to the Chief Academic Officer, Olney Charter High School, An Aspira, Inc. of Pennsylvania School, 100 W Duncannon Avenue, Philadelphia, PA 19120.



6

Statement of Net Assets June 30, 2013 (With Summarized Comparative Financial Information for the Year June 30, 2012)


Assets

Current assetsCash and cash equivalents 506,787$ 1,068,008$ State subsidies receivable 494,803 393,848 Federal subsidies receivable 2,908,372 1,544,067 Other receivables -- 239,379 Prepaids 20,588 20,588 Due from related parties 1,378,953 1,629,932



Leasehold improvements 880,812 648,2041,872,409 1,597,399

7,181,912$ 6,493,221


Current liabilitiesAccounts payable 905,092$ 1,193,170$ Accrued payroll and payroll taxes 2,267,073 3,111,341

Refundable advances -- 251,255



Total current liabilities 3,608,142 4,875,333


Total liabilities 4,431,224 5,690,847

Net assets

Invested in capital assets, net of related debt 729,460 552,787 Unrestricted 2,021,228 249,587

Total net assets 2,750,688 802,374

7,181,912$ 6,493,221



7





Governmental activitiesInstruction 15,199,321$ --$ 1,817,704$ (13,381,617)$ (12,112,789)$ Student support services 1,322,938 -- -- (1,322,938) (1,094,467) Administrative support 3,214,901 -- -- (3,214,901) (4,903,716) Pupil health 212,709 -- -- (212,709) (156,512) Business services 2,023,639 -- -- (2,023,639) (393,401) Food services 530,878 -- 563,432 32,554 (24,158) Student activities 594,039 54,572 -- (539,467) (90,799) Depreciation 400,096 -- -- (400,096) (177,489)

23,498,521 54,572 2,381,136 (21,062,813) (18,953,331)

General RevenuesState grants and reimbursements 1,164,954 784,851 Local educational agencies 17,926,441 17,936,131

All other revenue 3,919,732 1,055,882

23,011,127 19,776,864

Change in net assets 1,948,314 823,533

Net assets - beginning of year 802,374 (21,159)

Net assets - end of year 2,750,688$ 802,374

Functions

ProgramRevenues



8




Assets

Cash and cash equivalents 505,279$ 1,508$ 506,787$ 1,068,008$ State subsidies receivable 494,803 -- 494,803 393,848 Federal subsidies receivable 2,908,372 -- 2,908,372 1,544,067 Other receivables -- -- -- 239,379 Prepaids 20,588 -- 20,588 20,588 Due from related parties 1,378,953 -- 1,378,953 1,629,932

5,307,995$ 1,508$ 5,309,503$ 4,895,822$

Liabilities

Accounts payable 905,092$ --$ 905,092$ 1,193,170$ Salaries and contracts payable 2,267,073 -- 2,267,073 3,111,341 Refundable advances -- -- -- 251,255 Due to related parties 116,110 -- 116,110 90,469

Total liabilitlies 3,288,275 -- 3,288,275 4,646,235

Fund Balances

Unrestricted fund balances 2,019,720 1,508 2,021,228 249,587

5,307,995$ 1,508$ 5,309,503$ 4,895,822$

Functions



9

Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets June 30, 2013 Total Fund Balances for Governmental Funds 2,021,228$



Furniture and equipment 1,497,159$ Leasehold improvements 952,835 Accumulated depreciation (577,585) Obligations under capital leases (1,142,949)

729,460




10

Statement of Revenues, Expenditures and Changes in Fund Balances- Governmental Funds Year Ended June 30, 2013 (With Summarized Comparative Financial Information for the Year June 30, 2012)



RevenuesLocal educational agency assistance 17,926,441$ --$ --$ 17,926,441$ 17,936,131$ Other sources 402,089 -- 54,572 456,661 2,236,495 State sources 1,133,085 31,869 -- 1,164,954 784,851 Federal sources 5,465,553 531,563 -- 5,997,116 2,631,395

24,927,168 563,432 54,572 25,545,172 23,588,872

ExpendituresInstruction 15,874,427 -- -- 15,874,427 16,087,677 Support services 1,322,938 -- -- 1,322,938 1,094,467 Administrative support 3,214,901 -- -- 3,214,901 4,903,716 Pupil Health 212,709 -- -- 212,709 156,512 Business services 2,023,639 -- -- 2,023,639 393,401 Food services -- 530,878 -- 530,878 493,845 Student activities -- -- 594,039 594,039 188,508

22,648,614 530,878 594,039 23,773,531 23,318,126

Excess (deficiency) of revenuesover expenditures 2,278,554 32,554 (539,467) 1,771,641 270,746

Other financing sources (uses)Transfer in -- (32,554) 539,571 507,017 116,261 Transfer out (507,017) -- -- (507,017) (116,261)

(507,017) (32,554) 539,571 -- --

Net change in fund balances 1,771,537 -- 104 1,771,641 270,746

Fund balances - beginning of year 248,183 -- 1,404 249,587 (21,159)

Fund balances - end of year 2,019,720$ --$ 1,508$ 2,021,228$ 249,587$

Functions



11

Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities Year Ended June 30, 2013 Net Change in Fund Balances - Total Governmental Funds 1,771,641$


Capital outlays 675,106 Payments under capital leases (98,337) Depreciation expense (400,096)

Change in Net Assets of Governmental Activities 1,948,314$



12



Olney Charter High School, An Aspira, Inc. of Pennsylvania School (the “School”) was incorporated in June 2011 under the non-profit corporation law of the Commonwealth of Pennsylvania and began operations in September 2011. The School serves grades nine through twelve and is located in Philadelphia, Pennsylvania. The School obtained its charter as a result of the School District of Philadelphia Renaissance Schools Initiative. The School operates under the provisions enacted by the General Assembly of the Commonwealth of Pennsylvania in 1997 and is operating under a charter school contract ending on June 30, 2015. The net assets of the School would remain with the School if its charter were not renewed. The School has financial accountability and control over all activities related to the students' education. The School receives funding from local, state, and federal government sources and must comply with the requirements of these funding source entities. However, the School is not included in any other governmental "reporting entity" as defined by the Governmental Accounting Standards Board (“GASB”) pronouncement. In addition, there are no component units as defined in the standards established for defining and reporting on the financial reporting entity.




Fund Financial Statements - governmental funds 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 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. The government reports the following major governmental funds:


13











definition of "restricted" or "invested” in capital assets, net of related debt. Budgets and Budgetary Accounting Budgets are adopted on a basis consistent with generally accepted accounting principles. An annual budget is adopted for the governmental funds. The Budgetary Comparison Schedule should present both the original and the final appropriated budgets for the reporting period. The School only has a governmental funds budget. The original budget was filed and accepted by the Labor, Education and Community Services Comptroller's Office in July 2011 and is the final budget as well. The budget is required supplementary information. Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Concentration of Credit Risk Financial instruments which potentially subject the School to concentrations of credit risk consist of cash and cash equivalents, contributions and grants receivables. Cash and cash equivalents are held primarily at one high-credit quality financial institution. At various times during the years ended June 30, 2013 and 2012


14


funds held at this financial institution may have exceeded the FDIC insurance limit. At June 30, 2013 and 2012, the School received seventy percent and seventy-seven percent, repsectively of their total revenue from one source. Fair Value of Financial Instruments The carrying amounts of financial instruments including state and federal subsidies receivable, accounts payable and salary and contracts payable approximate their fair values because of the relatively short maturity of these investments. Capital Assets Capital assets, which include furniture and equipment, are reported in the government-wide financial statements. All capital assets are capitalized at cost and updated for additions and retirements during the year. The School does not possess any infrastructure as they lease the building from the School District of Philadelphia. Improvements are capitalized; the cost of normal maintenance and repairs that do not add to the value of the asset or materially extend an asset's life are not. Capital assets of the School are depreciated using the straight-line method over the useful lives of the assets. The estimated useful lives of furniture and equipment range from five to seven years. Leasehold improvements are amortized over the life of the lease. Income Tax Status The School is exempt from Federal income taxes under Section 501(c)(3) of the Internal Revenue Code. Accordingly, no provision or liability for income taxes has been recorded in the financial statements.

The School adopted the accounting pronouncement dealing with uncertain tax positions as of July 1, 2011. Upon adoption of this accounting pronouncement, the School had no unrecognized tax benefits. Furthermore, the School had no unrecognized tax benefits at June 30, 2013 and 2012. There were no open tax years prior to 2011. In addition, the School had no income tax related penalties or interest for the period reported in these financial statements.

3. Cash and Cash Equivalents The School considers all highly liquid debt instruments purchased with a maturity of three months or less at the time of acquisition to be cash equivalents. Deposits Custodial credit risk is the risk that in the event of a bank failure, the government's deposits may not be returned to it. The School does not have a policy for custodial credit risk. For the years ended June 30, 2013 and 2012, $810,311 and $1,139,629 of the School's bank balance was exposed to custodial credit risk as follows:

2013 2012

Uninsured and uncollateralized 810,311$ 1,139,629$ Plus: Insured amount 250,000 250,000 Less: Outstanding checks (553,524) (321,621) Plus: Deposits in transit -- -- Carrying amount - bank balances 506,787 1,068,008 Plus: Petty cash -- --

Total cash per financial statements 506,787$ 1,068,008$


15




Furniture and equipment 1,054,661$ --$ 442,498$ 1,497,159$ Leasehold improvements 720,227 -- 232,608 952,835

1,774,888 -- 675,106 2,449,994 Less: Accumulated depreciation 177,489 -- 400,096 577,585

Capital assets, net 1,597,399$ --$ 275,010$ 1,872,409$

Depreciation expense for the years ended June 30, 2013 and 2012 was $400,096 and $177,489, respectively.

5. Capital Leases The School leases furniture, under capital leases, with a total original cost of $1,585,331 and $1,234,851 for the years ended June 30, 2013 and 2012. The leases will be paid off between 2016 and 2018, with monthly principal and interest payments of $31,866. The interest rate on these capital leases range from 6.9 percent to 7.1 percent. Furniture and equipment is included in property and equipment in the statements of net assets at June 30, 2013 and 2012 as follows:

2013 2012

Furniture and equipment 1,585,331$ 1,234,851$ Less: Accumulated depreciation (383,124) (123,485)

1,202,207$ 1,111,366$



2014 382,387$ 2015 382,387 2016 370,823 2017 121,238 2018 12,160

1,268,995


Net minimum lease payment 1,142,949




16



Charter schools are funded by the local public school district in which each student resides. The rate per student is determined annually and is based on the budgeted total expenditure per average daily membership of the prior school year for each school district. The majority of the students of the School reside in Philadelphia. For the year ended June 30, 2013, the rate for the School District of Philadelphia was $8,068 per year for regular education students plus additional funding for special education students. The annual rate is earned monthly and paid when billed by the School District of Philadelphia and is prorated if a student enters or leaves during the year. Total revenue from local sources was $17,926,441 and $17,936,131 for the fiscal years ended June 30, 2013 and 2012, respectively.

7. Government Grants and Reimbursement Programs The School participates in numerous state and federal grant and reimbursement programs, which are governed by various rules and regulations of the grantor agencies. Costs charged to the respective grant programs and reimbursement programs retirement (pension) expense, facility lease costs and health services are subject to audit and adjustment by the grantor agencies; therefore, to the extent that the School has not complied with the rules and regulations governing the grants and reimbursement programs, refunds of any money received may be required and the collectability of any related receivable at June 30, 2013 and 2012 may be impaired. In the opinion of the School, there are no significant contingent liabilities relating to compliance with the rules and regulations governing the respective grants; therefore, no provision has been recorded in the accompanying financial statements for such contingencies.

8. Leasing Arrangements The School incurs a facilities charge, levied by the School District of Philadelphia, under a license agreement by which the School occupies the building located at 100 West Duncannon Avenue, Philadelphia, PA. Total facilities charges for the years ended June 30, 2013 and 2012 amounted to $581,703- and $424,380, respectively. Under the agreement, the School District provided snow and waste removal, and landscaping and grounds keeping for grounds and athletic facilities, utilities, and occupancy for the School. The agreement is for a term of five years and is set to expire on June 30, 2016. In addition the School leases additional space from a related party (see Note 10) for the Success Academy Program. Total rental charges for the space for the years ended June 30, 2013 and 2012 was $100,000 and $60,000, respectively.

9. Retirement Plan



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Payroll expense for employees covered by the System for the years ended June 30, 2013 and 2012 was approximately $11 million and $10.3 million. In accordance with Act 29 of 1994, the Commonwealth of Pennsylvania will pay school entities for contributions made to the System based on the formula in Act 29 of 1994, but not less than one-half of the school entities' contributions. The School’s contributions due to the Plan for the year ending June 30, 2013 and 2012 totaled $1,306,243 and $757,500.

10. Related Party The School is associated with Aspira, Inc. of Pennsylvania (“Aspira”) through board control. The School is associated with Aspira Community Enterprises, Inc. (“ACE”), Antonia Pantoja Charter School (“Pantoja”), Aspira Bilingual Cyber Charter School (“Cyber”), John B. Stetson Charter School (“Stetson”), Eugenio Maria De Hostos Charter School (“Hostos”) and ACE/Dougherty, Inc. through common board membership and management The School's bylaws stipulate that a majority of its members at all times shall be appointees of Aspira, Inc. of Pennsylvania. Aspira owed the School $994,705 and $1,496,529 for the years ended June 30, 2013 and 2012, respectively. Hostos owed the School $144,464 and $45,587 for the years ended June 30, 2013 and 2012, respectively. Stetson owed the School $123,396 and $33,452 for the years ended June 30, 2013 and 2012, respectively. Cyber owed the School $116,388 and $54,364 for the year ended June 30, 2013 and 2012, respectively. All payables with related parties are unsecured, non-interest bearing and have no repayment terms.


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The School made payments to Aspira in reimbursement for maintenance, security, IT support and other administrative expenses paid by Aspira in the amount of $3,297,591 and $2,429,245 for the years ended June 30, 2013 and 2012, respectively.

The School owed Pantoja $16,110 and $30,469 for the years ended June 30, 2013 and 2012, respectively. The School owed ACE/Dougherty $100,000 and $60,000 for the years ended June 30, 2013 and 2012, respectively.

11. Commitments and Contingencies The School is involved in legal proceedings arising in the ordinary course of business. In the opinion of management, the outcome of any proceedings cannot be predicted. Ultimate liability of the School in connection with its legal proceedings will not have a material adverse effect on the financial position or activities of the School.



19

Olney Charter High School An Aspira, Inc. of Pennsylvania School Schedule of Revenue, Expenditures and Changes in Fund Balance Budget and Actual – Governmental Funds Year Ended June 30, 2013

Over

(Under)Budget Actual Final

Original Final Amounts Budget

RevenuesLocal educational agency assistance 11,050,500$ 10,435,344$ 17,926,441$ (7,491,097)$ Other local sources 425,200 85,000 456,661 (371,661) State sources 8,836,600 8,503,631 1,164,954 7,338,677 Federal sources 4,312,200 5,844,664 5,997,116 (152,452)

24,624,500 24,868,639 25,545,172 (676,533)

ExpendituresInstruction 14,598,050 14,493,575 15,874,427 (1,380,852) Support services 2,937,424 3,298,189 1,322,938 1,975,251 Administrative support 3,130,812 3,892,968 3,214,901 678,067 Pupil Health 146,256 207,378 212,709 (5,331) Business Services 58,000 63,000 2,023,639 (1,960,639) Food Services 834,446 777,286 530,878 246,408 Student Activities 212,912 222,991 594,039 --

21,917,900 22,955,387 23,773,531 (447,096)

Net change in fund balances 2,706,600 1,913,252 1,771,641 (229,437)

Fund balances - beginning of year -- 224,586 249,587 --

Fund balances - end of year 2,706,600$ 2,137,838$ 2,021,228$ (229,437)$


20

Olney Charter High School An Aspira, Inc. of Pennsylvania School Schedule of Expenditures of Federal Awards Year Ended June 30, 2013








Charter School Program Implementation Grant I 84.282B U282B110018 10/01/11 - 09/30/14 600,000$ 58,000$ --$ 200,000$ 200,000$ 142,000$

Title I - Improving Basic Programs I 84.010 013-13-1110 10/01/12 - 09/30/13 1,166,044 1,166,044 -- 1,166,044 1,166,044 --

Title I - Improving Basic Programs I 84.010 013-12-1110 10/01/11 - 09/30/12 1,012,364 -- -- 990,584 990,584 990,584

Title II - Improving Teacher Quality I 84.367 020-13-1110 10/01/12 - 09/30/13 101,423 33,136 -- 101,423 101,423 68,287

Title II - Improving Teacher Quality I 84.367 020-12-1110 10/01/11 - 09/30/12 -- -- 86,397 86,397 86,397

Title III - Language Instruction LEP I 84.365 010-13-1110 10/01/12 - 09/30/13 71,970 23,990 -- 71,970 71,970 47,980

21st Century I 84.287 06/01/12 - 09/30/15 1,497,174 124,764 -- 499,058 499,058 374,294

ARRA - SIG I 84.388 139-12-1110 07/01/12 - 06/30/13 1,250,000 -- 1,817,704 1,817,704 567,704

ARRA - SIG I 84.388 139-11-1110 07/01/11 - 06/30/12 2,000,000 1,400,000 1,400,000 -- -- --

IDEA I 84.027 07/01/12 - 06/30/13 532,373 -- -- 532,373 532,373 532,373

Total U.S. Department of Education 6,981,348 4,055,934 1,400,000 5,465,553 5,465,553 2,809,619




National School Lunch Program I 10.555 362 07/01/12 - 06/30/13 -- 344,614 -- 424,024 424,024 79,410

National School Lunch Program I 10.555 362 07/01/11 - 06/30/12 -- 110,024 110,024 -- -- --

School Breakfast Program I 10.553 365 07/01/12 - 06/30/13 -- 88,196 -- 107,539 107,539 19,343

School Breakfast Program I 10.553 365 07/01/11 - 06/30/12 -- 34,466 34,466 -- -- --

Total U.S. Department of Agriculture -- 577,300 144,490 531,563 531,563 98,753

Total Federal awards 4,633,234$ 1,544,490$ 5,997,116$ 5,997,116$ 2,908,372$

D - Direct Funding



21

Olney Charter High School An Aspira, Inc. of Pennsylvania School Notes to Schedule of Expenditures of Federal Awards June 30, 2013 1. General Information The accompanying schedule of expenditures of Federal awards presents the activities in all of the Federal

financial assistance programs of Olney Charter High School, An Aspira, Inc. of Pennsylvania School. Financial awards received directly from federal agencies, as well as financial assistance passed through other governmental agencies or non-profit organizations, are included in the schedule.





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22

Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial



To the Board of Trustees, Olney Charter High School, An Aspira, Inc. of Pennsylvania School: We have audited, in accordance with 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 financial statements of the governmental activities and each major fund of Olney Charter High School (the "School”) and the related notes to the financial statements, as of and for the year ended June 30, 2013, which collectively comprises the School’s basic financial statements and have issued our report thereon dated January 20, 2014. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered Olney Charter High School’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Olney Charter High School’s internal control. Accordingly, we do not express an opinion on the effectiveness of Olney Charter High School’s internal control. 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 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 those 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.

23

Compliance and Other Matters As part of obtaining reasonable assurance about whether Olney Charter High School’s financial statements are free of 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.

January 20, 2014

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24

Report on Compliance for Each Major Federal Program; Report on Internal Control Over

Compliance Required by OMB Circular A-133


The Board of Trustees, Olney Charter High School, An Aspira, Inc. of Pennsylvania School: Report on Compliance for Each Major Federal Program We have audited Olney Charter High School’s compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of Olney Charter High School’s major Federal programs for the year ended June 30, 2013. Olney Charter High School’s major Federal programs are identified in the summary of auditors’ results section of the accompanying schedule of findings and questioned costs. Management’s Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its Federal programs. Auditors’ Responsibility Our responsibility is to express an opinion on compliance for each of Olney Charter High School’s major Federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB 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 obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about Olney Charter High School’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Olney Charter High School’s compliance with those requirements.

25

Opinion on Each Major Federal Program In our opinion, Olney Charter High School complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2013. Report on Internal Control Over Compliance Management of Olney Charter High School is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Olney Charter High School’s internal control over compliance with the types of requirements that could have a direct and material effect on each major Federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A- 133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Olney Charter High School’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.

January 20, 2014

26

Olney Charter High School An Aspira, Inc. of Pennsylvania School Schedule of Findings and Questioned Costs Year Ended June 30, 2013 Section 1 – Summary of Auditors' Results Financial Statements Type of auditors' report issued: Unqualified Internal control over financial reporting: Material weaknesses identified? No Control deficiencies identified that are not considered to be material weaknesses? None reported Noncompliance material to financial statements noted? No Federal Awards Internal control over major programs: Material weaknesses identified? No Control deficiencies identified that are not considered to be material weaknesses? None reported



84.010 84.027 84.287

Title I Improving Basic Programs IDEA 21st Century

Dollar threshold used to distinguish between Type A and Type B programs: $300,000 Auditee qualified as low-risk auditee? No (A) Section 2 – Financial Statement Findings None reported. Section 3 – Federal Award Findings and Questioned Costs None reported. Section 4 – Follow Up Prior Year Audit Findings There were no prior year audit findings. (A) This is the second year Olney Charter High School, An Aspira, Inc. of Pennsylvania School has been subject

to an A-133 audit, therefore they do not qualify as a low risk auditee.

ANTONIA PANTOJA COMMUNITY CHARTER SCHOOL


June 30, 2012 and 2011


Antonia Pantoja Community Charter School Table of Contents June 30, 2012 and 2011


















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Independent Auditors' Report

To the Board of Trustees, Antonia Pantoja Community Charter School: We have audited the accompanying financial statements of the governmental activities and each major fund of Antonia Pantoja Community Charter School (the “School”) as of and for the year ended June 30, 2012, which collectively comprise the School's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the School's management. Our responsibility is to express an opinion on these financial statements based on our audit. The prior year summarized comparative information has been derived from Antonia Pantoja Community Charter School’s 2011 financial statements and, in our report dated March 13, 2012 we expressed an unqualified opinion on those financial statements. We conducted our audit in accordance with 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the basic financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall basic financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the basic financial statements referred to above present fairly, in all material respects, the financial position of the governmental activities and each major fund of Antonia Pantoja Community Charter School as of June 30, 2012, and the respective changes in financial position for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated April 18, 2013 on our consideration of the Antonia Pantoja Charter School's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, 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 the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and is important for assessing the results of our audit.

The management’s discussion and analysis and the schedule of revenues, expenditures and changes in fund balance – budget and actual – governmental funds, as listed in the table of contents, are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying schedule of expenditures of Federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements taken as a whole.

April 18, 2013

Antonia Pantoja Community Charter School

3

Management’s Discussion and Analysis June 30, 2012 The Board of Trustees of the Antonia Pantoja Community Charter School offers readers of the School's financial statements this narrative overview and analysis of the financial activities of the School for the fiscal year ended June 30, 2012. We encourage readers to consider the information presented here in conjunction with the School's financial statements. Financial Highlights

Total revenues decreased $188,007 primarily due to the decreases in Federal and State grant allocations.

For fiscal year ending June 30, 2012, the enrollment of the School consists of approximately 567 Regular

Education students and 133 Special Education students.

At the close of the current fiscal year, the School reports ending net assets of $813,318. This net assets balance represents a decrease in net assets of $236,363 for the year ended June 30, 2012. The decrease in net assets is a result of decreases in revenue from both Federal and State sources.

The School's cash balance at June 30, 2012 was $188,563, representing an increase of $100,808 from

June 30, 2011. The increase in cash is directly related to receiving less cash advances from government funding sources and the payment of cash advances received from related affiliates.

Overview of the Financial Statements The discussion and analysis is intended to serve as an introduction to the School's basic financial statements. The School's basic financial statements as presented comprise four components: management's discussion and analysis (this section), the basic financial statements, budgetary comparison and reports required under Government Auditing Standards and OMB Circular A-133. Government-Wide Financial Statements The government-wide financial 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 assets presents information on all of the School's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the School is improving or deteriorating. The statement of activities presents information showing how the School's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. The government-wide financial statements report on the function of the School that is principally supported by subsidies from school districts whose constituents attend the School. Fund Financial Statements A fund is a group of related accounts that are used to maintain control over resources that have been segregated for specific activities or purposes. The School, like governmental type entities, utilizes fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The School has three governmental funds - general, food services and student activities. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements.


4


2012 2011


Total net assets 814,266$ 1,049,681$


2012 2011Revenues

Local education agencies 7,440,246$ 7,221,884$ Other local sources 185,952 154,857 State sources 514,890 575,165 Federal sources 1,247,524 2,062,702

9,388,612 10,014,608


9,624,027 9,931,366



Net assets, ending 814,266$ 1,049,681$

Governmental Funds The focus of the School's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the School's financing requirements. In particular, fund balance may serve as a useful measure of a government's net resources available for spending for program purposes at the end of the fiscal year. The School's governmental funds, (the General, Food Services and Student Activities Funds), reported an ending fund balance of $437,583. For the year ended June 30, 2012, the School's revenues ($9,388,612) were less than its expenditures ($9,940,222) by $113,621. For the year ended June 30, 2011, the School's revenues ($10,014,608) were less than its expenditures ($10,040,062) by $25,454.


5

Management’s Discussion and Analysis June 30, 2012 Governmental Fund Budgetary Highlights Some categories of revenues and expenditures varied significantly from those budgeted. Expenses allocated from Aspira for maintenance, security, IT support and other administrative expenses were not included in the budget due to the deadline of the filing of the budget and the fact that the expenses could not be reasonably estimated. There were additional grants received during the year that the School was not aware of at the time of the budget submission. Capital Asset and Debt Administration Capital Assets As of June 30, 2012, the School's investment in capital assets for its governmental activities totals $547,956. This investment in capital assets includes classroom and office furniture and equipment. Major capital asset purchases during the year included the following:


Additional information on the School's capital assets can be found in Note 4 of this report. There were capital lease obligations related to the investment in capital assets amounting to $172,220 at June 30, 2012. Economic Factors and Next Year's Budgets and Rates The School's primary source of revenue, the per student subsidy provided by the School District of Philadelphia, will decrease by approximately $352,338 for fiscal year 2012-2013, due to a decreased subsidy per student of $677 for regular education and an increased subsidy per student of $237 for special education Contacting the School's Financial Management The financial report is designed to provide interested parties a general overview of the School's finances. Questions regarding any of the information provided in this report should be addressed to the Chief Academic Officer, Antonia Pantoja Charter School, 4101 N. American Street, Philadelphia, PA 19140.



6



Assets

Current assetsCash and cash equivalents 188,563$ 87,755$ State subsidies receivable 169,474 142,478Federal subsidies receivable 639,511 521,373Other receivables 41,833 46,494 Due from related parties 1,028,420 887,161Prepaids -- 817Other assets 20,897 20,897



Leasehold improvements 222,212 215,784Total capital assets - net of depreciation 547,955 869,935

2,636,653$ 2,576,910$


Current liabilitiesAccounts payable 176,405$ 139,680$ Accrued payroll and payroll taxes 798,007 936,338

Refundable advances -- --






Net assets

Invested in capital assets, net of related debt 375,735 523,931Unrestricted 438,531 525,750

Total net assets 814,266 1,049,681

2,636,653$ 2,576,910$



7





Governmental activitiesInstruction 5,827,108$ --$ 819,750$ (5,007,358)$ (4,258,203)$ Student support services 201,367 -- -- (201,367) (254,491) Administrative support 2,362,789 -- -- (2,362,789) (2,142,860) Pupil health 207,768 -- -- (207,768) (218,751) Business services 210,583 -- -- (210,583) (600,434) Food services 280,699 -- 427,774 147,075 81,360 Student activities 207,733 185,952 -- (21,781) (1,763) Depreciation 325,980 -- -- (325,980) (318,665)

9,624,027$ 185,952$ 1,247,524$ (8,190,551) (7,713,807)

General RevenuesState grants and reimbursements 514,890 575,165Local educational agencies 7,440,246 7,221,884

7,955,136 7,797,049



Net assets - end of year 814,266$ 1,049,681$

Functions

ProgramRevenues



8




Assets

Cash and cash equivalents 183,391$ --$ 5,172$ 188,563$ 87,755$ State subsidies receivable 169,474 -- -- 169,474 142,478 Federal subsidies receivable 639,511 -- -- 639,511 521,373 Other receivables 41,833 -- -- 41,833 46,494 Due from related parties 1,028,420 -- -- 1,028,420 887,161 Prepaids -- -- -- -- 817 Other assets 20,897 -- -- 20,897 20,897

2,083,526$ --$ 5,172$ 2,088,698$ 1,706,975$

Liabilities

Accounts payable 176,405$ --$ --$ 176,405$ 139,680$ Salaries and contracts payable 798,007 -- -- 798,007 936,338 Due to related parties 675,755 -- -- 675,755 105,207

Total liabilitlies 1,650,167 -- -- 1,650,167 1,181,225

Fund Balances

Unrestricted fund balances 433,359 -- 5,172 438,531 525,750

2,083,526$ --$ 5,172$ 2,088,698$ 1,706,975$

Functions



9




Furniture and equipment 1,432,810$ Leasehold improvements 255,209Accumulated depreciation (1,140,064) Obligations under capital leases (172,220)

375,735




10




RevenuesLocal educational agency assistance 7,440,246$ --$ --$ 7,440,246$ 7,221,884$ Other local sources -- -- 185,952 185,952 154,857 State sources 488,303 26,587 -- 514,890 575,165 Federal sources 846,337 401,187 -- 1,247,524 2,062,702

8,774,886 427,774 185,952 9,388,612 10,014,608

ExpendituresInstruction 6,030,346 -- -- 6,030,346 6,362,083 Support services 201,367 -- -- 201,367 254,491 Administrative support 2,337,335 -- -- 2,337,335 2,142,860 Pupil Health 207,768 -- -- 207,768 218,751 Business services 210,583 -- -- 210,583 600,434 Food services -- 280,699 -- 280,699 304,823 Student activities -- -- 207,733 207,733 156,620

8,987,399 280,699 207,733 9,475,831 10,040,062

Excess (deficiency) of revenuesover expenditures (212,513) 147,075 (21,781) (87,219) (25,454)

Other financing sources (uses)Transfer in 194,697 -- (47,622) 147,075 81,360Transfer out -- (147,075) -- (147,075) (81,360)

194,697 (147,075) (47,622) -- --

Net change in fund balances (17,816) -- (69,403) (87,219) (25,454)

Fund balances - beginning of year 451,175 -- 74,575 525,750 551,204


Functions



11







12



Antonia Pantoja Community Charter School (the “School”) was incorporated in 2007 under the non-profit law of the Commonwealth of Pennsylvania. The School serves grades kindergarten through eight and it is located in Philadelphia, Pennsylvania. The School was established and operates under the provisions enacted by the General Assembly of the Commonwealth of Pennsylvania in 1997 and is operating under a charter school contract ending on June 30, 2013. The net assets of the School would remain with the School if its charter were not renewed. Antonia Pantoja is a charter school which has financial accountability and control over all activities related to the students' education. The School receives funding from local, state, and federal government sources and must comply with the requirements of these funding source entities. However, the School is not included in any other governmental "reporting entity" as defined by the Governmental Accounting Standards Board (“GASB”) pronouncement. In addition, there are no component units as defined in the standards established for defining and reporting on the financial reporting entity.


Government-wide and Fund Financial Statements The government-wide financial statements (the statement of net assets and the statement of activities) report on the School as a whole. The statement of activities demonstrates the degree to which the direct expenses of the School's function are offset by program revenues. The fund financial statements (governmental funds balance sheet and statement of governmental funds revenues, expenditures and changes in fund balances) report on the School's general, food services, and student activities funds. Measurement Focus, Basis of Accounting and Financial Statement Presentation Government-wide Financial Statements-The statement of net assets and the statement of


Fund Financial Statements-Governmental funds 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 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. The School reports the following major governmental funds:


13




Food Services Special Revenue Fund - The Food Services Fund is used to account for food service revenues and expenditures.







definition of "restricted" or "invested” in capital assets, net of related debt. Budgets and Budgetary Accounting Budgets are adopted on a basis consistent with generally accepted accounting principles. An annual budget is adopted for the governmental funds. The Budgetary Comparison Schedule should present both the original and the final appropriated budgets for the reporting period. The School only has a governmental funds budget. The original and final budgets are required supplementary information. Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.


14


Concentration of Credit Risk Financial instruments which potentially subject the School to concentrations of credit risk consist of cash and cash equivalents, grants receivables and revenue. Cash and cash equivalents are held primarily at one high-credit quality financial institution. At various times, funds held at this financial institution may exceed the FDIC insurance limit. As of June 30, 2012 and 2011, sixty-four percent and seventy five percent, respectively of grant receivables were due from the School District of Philadelphia and the Pennsylvania Department of Education. For the years ended June 30, 2012 and 2011, the School received seventy-five percent and seventy three percent of their total revenue, respectively, from one source. Capital Assets Capital assets, which include furniture and equipment, are reported in the government-wide financial statements. All capital assets are capitalized at cost and updated for additions and retirements during the year. The School does not possess any infrastructure as they lease the building from a related party (see Notes 9 and 12). Improvements are capitalized; the cost of normal maintenance and repairs that do not add to the value of the asset or materially extend an asset's life are not. Capital assets of the School are depreciated using the straight-line method over the useful lives of the assets. The estimated useful lives of furniture and equipment range from five to seven years. Leasehold improvements are amortized over the life of the lease.

Income Tax Status The School is exempt from Federal income taxes under Section 501(c)(3) of the Internal Revenue Code. Accordingly, no provision or liability for income taxes has been recorded in the financial statements. Management has determined that there are no uncertain tax positions at the School as of the date of the adoption or at June 30, 2012 and 2011. There are no open tax years prior to June 2009. The School did not have any income tax related penalties or interest for the periods reported on these financial statements.

3. Cash and Cash Equivalents The School considers all highly liquid debt instruments purchased with a maturity of three months or less at the time of acquisition to be cash equivalents. Deposits Custodial credit risk is the risk that in the event of a bank failure, the government's deposits may not be returned to it. The School does not have a policy for custodial credit risk. As of June 30, 2012 and 2011, $58,769 and $5,467, respectively, of the School's bank balance was exposed to custodial credit risk as follows:

2012 2011

Uninsured and uncollateralized 58,769$ 5,467$ Plus: Insured amount 250,000 250,000 Less: Outstanding checks (120,206) (167,712) Plus: Deposits in transit -- -- Carrying amount - bank balances 188,563 87,755 Plus: Petty cash -- --



15


4. Capital Assets


July 1, 2011 Deletions Additions June 30, 2012

Furniture and equipment 1,428,810$ --$ 4,000$ 1,432,810$ Leasehold improvements 255,209 -- -- 255,209

1,684,019 -- 4,000 1,688,019 Less: Accumulated depreciation 814,084 -- 325,980 1,140,064

Capital assets, net 869,935$ --$ (321,980)$ 547,955$


5. Capital Leases The School leases furniture and equipment, under capital leases, with a total original cost of $1,168,175 for each of the years ending June 30, 2012 and 2011. The leases will expire and be paid off at various times during the years from 2012 to 2015, with monthly principal and interest payments of $11,900. The interest rate on these capital leases varies from 7.35 percent to 12.93 percent and are based on the lessor’s implicit rate of return. Furniture is included in property and equipment in the statements of net assets at June 30, as follows:

2012 2011

Furniture and equipment 1,168,175$ 1,168,175$ Less: Accumulated depreciation (843,506) (609,762)

324,669$ 558,413$



2013 143,207$ 2014 31,252 2015 8,252

182,711






16


6. Line of Credit

The School maintains a $100,000 line of credit with Sovereign Bank which is guaranteed by Aspira, Inc. and Aspira Community Enterprises, Inc (see Note 12). The interest rate on the line is the lower of the bank’s prime rate less .5 percent or the sum of the thirty day reserve adjusted London Inter-Bank Offered Rate (“LIBOR”) plus 225 basis points, applied to the unpaid principal balance. The line matures July 2012 and is collateralized by certain assets of both Aspira Inc. (second priority lien) and Aspira Community Enterprise, Inc. (fourth priority line). At each of the years ended June 30, 2012 and 2011, the interest rate was 2.75 percent and there was no balance due.

7. Local Educational Agency Revenue Charter schools are funded by the local public school district in which each student resides. The rate per student is determined annually and is based on the budgeted total expenditure per average daily membership of the prior school year for each school district. The majority of the students of the School reside in Philadelphia. For the years ended June 30, 2012 and 2011, the rate for the School District of Philadelphia was $8,773 and $8,608, respectively, per year for regular education students plus additional funding for special education students. The annual rate is earned monthly and paid when billed by the School District of Philadelphia and is prorated if a student enters or leaves during the year. Total revenue from local sources was $7,440,246 and $7,221,884 for the fiscal years ended June 30, 2012 and 2011, respectively.

8. Government Grants and Reimbursement Programs The School participates in numerous state and federal grant and reimbursement programs, which are governed by various rules and regulations of the grantor agencies. Costs charged to the respective grant programs and reimbursement programs for retirement (pension) expense, facility lease costs and health services are subject to audit and adjustment by the grantor agencies; therefore, to the extent that the School has not complied with the rules and regulations governing the grants and reimbursement programs, refunds of any money received may be required and the collectability of any related receivable at June 30, 2012 and 2011 may be impaired. In the opinion of the School, there are no significant contingent liabilities relating to compliance with the rules and regulations governing the respective grants; therefore, no provision has been recorded in the accompanying financial statements for such contingencies.

9. Leasing Arrangements The School leases the building located at 4101 North American Street in Philadelphia, Pennsylvania under an operating lease expiring August 2017 from Aspira Community Enterprises, Inc. (“ACE”) (a related party, see Note 12). The School pays monthly rent of $80,000. Rent expense was $960,000 for each of the years ended June 30, 2012 and 2011. Minimum annual rentals for each year subsequent to June 30, 2012 are as follows:


2013 960,000$ 2014 960,000 2015 960,000 2016 960,000 2017 960,000 Thereafter 160,000

4,960,000$


17


10. Retirement Plan



-Active members who joined the System prior to July 22, 1983, contribute at 5.25 percent (Membership Class T-C) or at 6.5 percent (Membership Class T-D) of the member’s qualifying compensation.

-Members who joined the System on or after July 22, 1983, and who were active or inactive as of July 1, 2001, contribute at 6.25 percent (Membership Class T-C) or at 7.5 percent (Membership Class T-D) of the member’s qualifying compensation.

-Members who joined the System after June 30, 2001, contribute at 7.5 percent (automatic Membership Class T-D). For all new hires and for members who elected Class T-D membership, the higher contribution rates began with service rendered on or after January 1, 2002.

Employer contributions are based upon an actuarial valuation. For each of the fiscal years ended June 30, 2012 and 2011, the rate of employer’s contribution was 8.65 percent of covered payroll. The 8.65 percent rate is composed of a pension contribution rate of 8.00 percent for pension benefits and 0.65 percent for healthcare insurance premium assistance.

Payroll expense for employees covered by the System for the years ended June 30, 2012 and 2011 was approximately $4.4 million and $4.3 million, respectively. In accordance with Act 29 of 1994, the Commonwealth of Pennsylvania will pay school entities for contributions made to the System based on the formula in Act 29 of 1994, but not less than one-half of the school entities' contributions. The School’s contributions due to the Plan for the years ending June 30, 2012 and 2011 totaled $382,351 and $227,295, respectively.

11. 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 carries commercial insurance for such risks. There has been no significant reduction in insurance coverage from the previous year in any of the School's policies. Settled claims resulting from these risks have not exceeded commercial insurance coverage in the past three years.

12. Related Party The School is associated with Aspira, Inc. of Pennsylvania (“Aspira”) through board control. The School is associated with Aspira Community Enteriprise, Inc. (“ACE”), Eugenio Maria De Hostos Charter School (“Hostos”), Aspira Bilingual Cyber Charter School (“Cyber”), John B. Stetson Charter School (“Stetson”), Olney High School (“Olney) and ACE/Dougherty, Inc. through common board membership and management.


18


The School's bylaws stipulate that the incorporator will appoint the members of the School's Board of Trustees prior to the first annual meeting and Aspira’s Board of Directors will appoint 55 percent of the members thereafter. All receivables and payables with related parties are unsecured, non-interest bearing and have no repayment terms. The School made payments to Aspira for reimbursement of maintenance, security, IT support and other administrative expenses paid by Aspira in the amount of $969,802 and $1,387,426 for the years ended June 30, 2012 and 2011, respectively. As of June 30, 2012 and 2011, Aspira owed the School $623,396 and $553,501, respectively. As described in Note 9, the School leases the building located at 4101 North American Street Philadelphia, Pennsylvania from ACE. In connection with the operation of its Charter School, the School made lease payments to ACE in the amount of $960,000 for each of the years ended June 30, 2012 and 2011. As of June 30, 2012 and 2011, the School owed ACE $677,505 and $105,207, respectively. The School owed ACE/Dougherty $1,750 as of June 30, 2012 Hostos owed the School $57,437 and $48,759 as of June 30, 2012 and 2011, respectively. Stetson owed the School $316,053 and $284,835 as of June 30, 2012 and 2011, respectively. Olney owed the School $30,469 as of June 30, 2012 . Cyber owed the School $1,066 as of June 30, 2012.

13. Commitments and Contingencies The School is a guarantor of a $5,400,000 mortgage loan issued to Aspira Community Enterprises, Inc. for the acquisition and construction loan associated with the building the School leases. The mortgage loan was to mature July 2033, but was subsequently refinanced with a new maturity date of October 1, 2016. The debt is collateralized by property known as 4101 North American Street, Philadelphia, Pennsylvania, owned by Aspira, Community Enterprise, Inc., including all fixtures and leases associated with the properties. The balance of the loan at June 30, 2012 and 2011 was $4,912,070 and $5,047,111, respectively. The School is involved in legal proceedings arising in the ordinary course of business. In the opinion of management, although the outcome of any proceedings cannot be predicted, ultimate liability of the School in connection with its legal proceedings will not have a material adverse effect on the financial position or activities of the School.



Antonia Pantoja Community Charter School Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual - Governmental Funds Year Ended June 30, 2012

Over(Under)


RevenuesLocal educational agency assistance 5,044,200$ 5,044,200$ 7,440,246$ (2,396,046)$ Other local sources -- -- 185,952 (185,952) State sources 2,640,700 2,640,700 514,890 2,125,810 Federal sources 2,102,600 2,102,600 1,247,524 855,076

9,787,500 9,787,500 9,388,612 398,888

ExpendituresInstruction 5,397,165 5,397,165 6,030,346 (633,181) Support services 237,729 237,729 201,367 36,362 Administrative support 1,809,383 1,809,383 2,362,789 (553,406) Pupil health 115,570 115,570 207,768 (92,198) Business services 36,171 36,171 210,583 (174,412) Food services 620,538 620,538 280,699 339,839 Student activities 145,235 145,235 207,733 (62,498)

8,361,791 8,361,791 9,501,285 (1,139,494)

Net change in fund balances 1,425,709 1,425,709 (112,673) 1,538,382

Fund balances - beginning of year 1,123,458 1,123,458 525,750 597,708

Fund balances - end of year 2,549,167$ 2,549,167$ 413,077$ 2,136,090$

Budget


20

Antonia Pantoja Community Charter School Schedule of Expenditures of Federal Awards Year Ended June 30, 2012



Pass-Through Grantor Source CFDA Grantor's Beginning/ or for Revenue Revenue Federal (Deferred)






Title II - Improving Teacher Quality I 84.367 020-121037 07/01/11 - 09/30/12 53,566 53,964 -- 53,566 53,566 (398)

Title III - Language Inst LEP/ Immigrant Students I 84.365 010-111073 11/18/10 - 09/30/11 57,277 44,620 -- 57,277 57,277 12,657

Pass-Through School District of Philadelphia

IDEA I 84.027 N/A 07/01/11 - 06/30/12 169,937 -- -- 170,756 170,756 170,756

IDEA I 84.027 N/A 07/01/10 - 06/30/11 176,469 176,469 176,469 -- -- --

TAP I 84.374A 438/F10 10/01/10 - 09/30/11 366,125 119,986 119,986 -- -- --

Total U.S. Department of Education 1,362,469 859,324 296,455 820,694 820,694 257,825




National School Lunch Program I 10.555 362 07/01/11 - 06/30/12 292,586 219,900 -- 292,586 292,586 72,686

National School Lunch Program I 10.555 362 07/01/11 - 06/30/12 28,372 28,372 -- 28,372 28,372 --

National School Lunch Program I 10.555 362 07/01/10 - 06/30/11 264,241 42,542 42,542 -- -- --

School Breakfast Program I 10.553 367 07/01/11 - 06/30/12 108,601 80,482 108,601 108,601 28,119

School Breakfast Program I 10.553 367 07/01/10 - 06/30/11 97,498 16,345 16,345 -- -- --

Total U.S. Department of Agriculture 387,641 58,887 429,559 429,559 100,805

Total Federal awards 1,246,965$ 355,342$ 1,250,253$ 1,250,253$ 358,630$

D - Direct Funding


See Independent Auditors' Report.

21

Antonia Pantoja Community Charter School Notes to Schedule of Expenditures of Federal Awards June 30, 2012 1. General Information The accompanying schedule of expenditures of federal awards presents the activities in all of the federal

financial assistance programs of Antonia Pantoja Community Charter School. Financial awards received directly from federal agencies, as well as financial assistance passed through other governmental agencies or non-profit organizations, are included in the schedule.





Two Logan Square



215 546 2140 . fax 215 546 2148

www.withum.com






22



To the Board of Trustees, Antonia Pantoja Community Charter School: We have audited the financial statements of the governmental activities and each major fund of Antonia Pantoja Community Charter School (the "School”), as of and for the year ended June 30, 2012, which collectively comprises the School’s basic financial statements and have issued our report thereon dated April 18, 2013. We conducted our audit in accordance with 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. Internal Control Over Financial Reporting Management of Antonia Pantoja Community Charter School is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered the School’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not to 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 misstatements on a timely basis. A material weakness is a deficiency, or 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. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.

23

Compliance and Other Matters As part of obtaining reasonable assurance about whether Antonia Pantoja Community Charter School’s financial statements are free of 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. 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.

April 18, 2013

Two Logan Square



215 546 2140 . fax 215 546 2148

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24



The Board of Trustees, Antonia Pantoja Community Charter School: Compliance We have audited the compliance of Antonia Pantoja Community Charter School with the types of compliance requirements described in the U.S. Office of Management and Budget (“OMB”) Circular A-133 Compliance Supplement that are applicable to each of its major Federal programs for the year ended June 30, 2012. Antonia Pantoja Community Charter School’s major Federal programs are identified in the summary of auditors’ results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major Federal programs is the responsibility of Antonia Pantoja Community Charter School’s management. Our responsibility is to express an opinion on Antonia Pantoja Community Charter School’s compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States and OMB Circular A-133. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about Antonia Pantoja Community Charter School’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of Antonia Pantoja Community Charter School’s compliance with those requirements. In our opinion Antonia Pantoja Community Charter School complied, in all material respects, with the requirements referred to above that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2012.

25

Internal Control Over Compliance The management of Antonia Pantoja Community Charter School is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to Federal major programs. In planning and performing our audit, we considered Antonia Pantoja Community Charter School’s internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Antonia Pantoja Community Charter School’s internal control over compliance. A deficiency in internal control over compliance 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 noncompliance with a type of compliance requirement of a Federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a Federal program will not be prevented, or detected and corrected, on a timely basis. Our consideration of the internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we considered to be a material weakness, as defined above. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control and compliance and the results of that testing based upon the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.

April 18, 2013

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Antonia Pantoja Community Charter School Schedule of Findings and Questioned Costs Year Ended June 30, 2012 Section 1 – Summary of Auditors' Results Financial Statements Type of auditors' report issued: Unqualified Internal control over financial reporting: Material weaknesses identified? No Control deficiencies identified that are not considered to be material weaknesses? None reported Noncompliance material to financial statements noted? No Federal Awards Internal control over major programs: Material weaknesses identified? No Control deficiencies identified that are not considered to be material weaknesses? None reported

Type of auditors' report issued on compliance for major programs: Unqualified Any audit findings disclosed that are required to be reported in accordance with section 510(a) of Circular A-133? No The following Federal program was designated as a major program:

CFDA Number Name of Federal Program or Cluster

84.010 Title I - Improving Basic Programs Dollar threshold used to distinguish between Type A and Type B programs: $300,000 Auditee qualified as low-risk auditee? Yes Section 2 – Financial Statement Findings None reported. Section 3 – Federal Award Findings and Questioned Costs None reported. Section 4 – Follow Up Prior Year Audit Findings There were no prior year audit findings.

ANTONIA PANTOJA COMMUNITY CHARTER SCHOOL

Financial Statements and Supplementary Information

June 30, 2013

(With Summarized Comparative Financial Information

For the Year ended June 30, 2012)

Antonia Pantoja Community Charter School Table of Contents June 30, 2013 (With Summarized Comparative Financial Information for the Year June 30, 2012)
















Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance Required by OMB Circular A-133 ................................................................................................... 24-25


Two Logan Square



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Independent Auditors' Report To the Board of Trustees, Antonia Pantoja Community Charter School: We have audited the accompanying financial statements of the governmental activities and each major fund of Antonia Pantoja Community Charter School (the “School”) as of June 30, 2013, 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 and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that 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.

Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Antonia Pantoja Community Charter School as of June 30, 2013, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Report on Summarized Comparative Information We have previously audited Antonia Pantoja Community Charter School’s June 30, 2012 financial statements and we have expressed an unmodified audit opinion on these financial statements in our audit report dated April 18, 2013. In our opinion, the summarized comparative information presented hereon as of and for the year ended June 30, 2012 is consistent in all material respects, with the audited financial statements from which it is has been derived. Other Matters Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the financial statements. In addition, the schedule of revenues, expenditures and changes in fund balance - budget and actual – governmental funds, as listed in the table of contents is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records use to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditure of federal awards is fairly stated in all material respects in relation to the financial statements as a whole. In addition, the management’s discussion and analysis is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted by the United States of America. We have applied certain limited procedures, which consisted primarily of inquiries of management regarding the measurement and presentation of the required supplementary information. However, we did not audit the information and do not express an opinion on it. Report on Other Legal and Regulatory Requirements In accordance with Government Auditing Standards, we have also issued our report dated January 20, 2014 on our consideration of the Antonia Pantoja Community Charter School's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, 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 the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Antonia Pantoja Community Charter School’s internal control over financial reporting and compliance.

January 20, 2014


3

Management’s Discussion and Analysis June 30, 2013 (With Summarized Comparative Financial Information for the Year June 30, 2012) The Board of Trustees of the Antonia Pantoja Community Charter School offers readers of the School's financial statements this narrative overview and analysis of the financial activities of the School for the fiscal year ended June 30, 2013. We encourage readers to consider the information presented here in conjunction with the School's financial statements. Financial Highlights

Total revenues increased $159,409 to $9,548,021 primarily due to an increase in state funding the School received at June 30, 2013.


balance represents a decrease in net assets of $98,730 for the year ended June 30, 2013. The decrease in net assets is a result of decreases in revenue from both Federal and Local sources.

The School's cash balance at June 30, 2013 was $549,249, representing an increase of $360,686 from

June 30, 2012. The increase in cash is directly related to receiving less cash advances from government funding sources and the payment of cash advances received from related affiliates.

Overview of the Financial Statements The discussion and analysis is intended to serve as an introduction to the School's basic financial statements. The School's basic financial statements as presented comprise four components: management's discussion and analysis (this section), the basic financial statements, budgetary comparison and reports required under Government Auditing Standards and OMB Circular A-133. Government-Wide Financial Statements The government-wide financial 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 assets presents information on all of the School's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the School is improving or deteriorating. The statement of activities presents information showing how the School's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. The government-wide financial statements report on the function of the School that is principally supported by subsidies from school districts whose constituents attend the School. Fund Financial Statements A fund is a group of related accounts that are used to maintain control over resources that have been segregated for specific activities or purposes. The School, like governmental type entities, utilizes fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The School has three governmental funds - general, food services and student activities. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements.


4

Management’s Discussion and Analysis June 30, 2013 (With Summarized Comparative Financial Information for the Year June 30, 2012) Government-Wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of the School, assets exceeded liabilities by $715,537 as of June 30, 2013.

2013 2012




2013 2012Revenues

Local education agencies 7,326,631$ 7,440,246$ Other local sources 524,104 185,952 State sources 669,103 541,477 Federal sources 1,028,183 1,220,937

9,548,021 9,388,612


9,646,751 9,624,026


Net assets, beginning 814,267 1,049,681


Governmental Funds The focus of the School's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the School's financing requirements. In particular, fund balance may serve as a useful measure of a government's net resources available for spending for program purposes at the end of the fiscal year. The School's governmental funds, (the General, Food Services and Student Activities Funds), reported an ending fund balance of $409,052. For the year ended June 30, 2013, the School's revenues ($9,548,021) were less than its expenditures ($9,577,500) by $29,479. For the year ended June 30, 2012, the School's revenues ($9,388,612) were less than its expenditures ($9,475,830) by $87,218.


5

Management’s Discussion and Analysis June 30, 2013 (With Summarized Comparative Financial Information for the Year June 30, 2012) Governmental Fund Budgetary Highlights Some categories of revenues and expenditures varied significantly from those budgeted. Expenses allocated from Aspira for maintenance, security, IT support and other administrative expenses were not included in the budget due to the deadline of the filing of the budget and the fact that the expenses could not be reasonably estimated. There were additional grants received during the year that the School was not aware of at the time of the budget submission. Capital Asset and Debt Administration Capital Assets As of June 30, 2013, the School's investment in capital assets for its governmental activities totals $344,723. This investment in capital assets includes classroom and office furniture and equipment. Major capital asset purchases during the year included the following:


Leasehold Improvements amounting to $55,473

Additional information on the School's capital assets can be found in Note 4 of this report. There were capital lease obligations related to the investment in capital assets amounting to $38,239 at June 30, 2013. Economic Factors and Next Year's Budgets and Rates The School's primary source of revenue, the per student subsidy provided by the School District of Philadelphia, will increase by approximately $673,300 for fiscal year 2013-2014, due to a increased subsidy per student of $501 for regular education and an increased subsidy per student of $2,582 for special education. Contacting the School's Financial Management The financial report is designed to provide interested parties a general overview of the School's finances. Questions regarding any of the information provided in this report should be addressed to the Chief Academic Officer, Antonia Pantoja Charter School, 4101 N. American Street, Philadelphia, PA 19140.



6

Statements of Net Assets June 30, 2013 (With Summarized Comparative Financial Information for the Year June 30, 2012)


Assets

Current assetsCash and cash equivalents 549,249$ 188,563$ State subsidies receivable 200,471 169,474Federal subsidies receivable 490,764 639,511Other receivables 334,019 41,833 Due from related parties 1,013,915 1,030,171Prepaids 20,036 -- Other assets 20,897 20,897



Leasehold improvements 277,685 215,784Total capital assets - net of depreciation 344,723 547,955

2,974,074$ 2,638,404$


Current liabilitiesAccounts payable 523,282$ 176,405$ Accrued payroll and payroll taxes 784,511 798,007






Net assets

Invested in capital assets, net of related debt 306,484 375,735Unrestricted 409,053 438,532


2,974,074$ 2,638,404$



7





Governmental activitiesInstruction 5,505,284$ --$ 617,503$ (4,887,781)$ (5,007,359)$ Student support services 502,262 -- -- (502,262) (201,367) Administrative support 2,435,098 -- -- (2,435,098) (2,362,787) Pupil health 207,404 -- -- (207,404) (207,768) Business services 224,286 -- -- (224,286) (210,583) Food services 254,664 -- 410,680 156,016 147,075 Student activities 210,765 199,104 -- (11,661) (21,781) Depreciation 306,988 -- -- (306,988) (325,980)

9,646,751$ 199,104$ 1,028,183$ (8,419,464) (8,190,550)

General RevenuesState grants and reimbursements 669,103 514,890Local educational agencies 7,326,631 7,440,246

All other revenue 325,000 --

8,320,734 7,955,136


Net assets - beginning of year 814,267 1,049,681


Functions

ProgramRevenues



8




Assets

Cash and cash equivalents 534,074$ --$ 15,175$ 549,249$ 188,563$ State subsidies receivable 200,471 -- -- 200,471 169,474 Federal subsidies receivable 490,764 -- -- 490,764 639,511 Other receivables 334,019 -- -- 334,019 41,833 Due from related parties 1,013,915 -- -- 1,013,915 1,030,171 Prepaids 20,036 -- -- 20,036 -- Other assets 20,897 -- -- 20,897 20,897

2,614,176$ --$ 15,175$ 2,629,351$ 2,090,449$

Liabilities

Accounts payable 523,282$ --$ --$ 523,282$ 176,405$ Salaries and contracts payable 784,511 -- -- 784,511 798,007 Due to related parties 912,505 -- -- 912,505 677,505

Total liabilitlies 2,220,298 -- -- 2,220,298 1,651,917

Fund Balances

Unrestricted fund balances 393,878 -- 15,175 409,053 438,532

2,614,176$ --$ 15,175$ 2,629,351$ 2,090,449$

Functions



9




Furniture and equipment 1,481,093$ Leasehold improvements 310,682Accumulated depreciation (1,447,052) Obligations under capital leases (38,239)

306,484




10




RevenuesLocal educational agency assistance 7,326,631$ --$ --$ 7,326,631$ 7,440,246$ Other local sources 325,000 -- 199,104 524,104 185,952 State sources 647,935 21,168 -- 669,103 541,477 Federal sources 638,671 389,512 -- 1,028,183 1,220,937

8,938,237 410,680 199,104 9,548,021 9,388,612


9,112,071 254,664 210,765 9,577,500 9,475,830

Excess (deficiency) of revenuesover expenditures (173,834) 156,016 (11,661) (29,479) (87,218)

Other financing sources (uses)Transfer in 134,352 -- 21,664 156,016 147,075Transfer out -- (156,016) -- (156,016) (147,075)

134,352 (156,016) 21,664 -- --

Net change in fund balances (39,482) -- 10,003 (29,479) (87,218)



Functions



11

Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities June 30, 2013 Net Change in Fund Balances - Total Governmental Funds (29,479)$






12



Antonia Pantoja Community Charter School (the “School”) was incorporated in 2007 under the non-profit law of the Commonwealth of Pennsylvania. The School serves grades kindergarten through eight and it is located in Philadelphia, Pennsylvania. The School was established and operates under the provisions enacted by the General Assembly of the Commonwealth of Pennsylvania in 1997 and is operating under a charter school contract ending on June 30, 2018. The net assets of the School would remain with the School if its charter were not renewed. Antonia Pantoja is a charter school which has financial accountability and control over all activities related to the students' education. The School receives funding from local, state, and federal government sources and must comply with the requirements of these funding source entities. However, the School is not included in any other governmental "reporting entity" as defined by the Governmental Accounting Standards Board (“GASB”) pronouncement. In addition, there are no component units as defined in the standards established for defining and reporting on the financial reporting entity.


Government-wide and Fund Financial Statements The government-wide financial statements (the statement of net assets and the statement of activities) report on the School as a whole. The statement of activities demonstrates the degree to which the direct expenses of the School's function are offset by program revenues. The fund financial statements (governmental funds balance sheet and statement of governmental funds revenues, expenditures and changes in fund balances) report on the School's general, food services, and student activities funds. Measurement Focus, Basis of Accounting and Financial Statement Presentation Government-wide Financial Statements-The statement of net assets and the statement of


Fund Financial Statements-Governmental funds 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 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. The School reports the following major governmental funds:


13




Food Services Special Revenue Fund - The Food Services Fund is used to account for food service revenues and expenditures.







definition of "restricted" or "invested” in capital assets, net of related debt. Budgets and Budgetary Accounting Budgets are adopted on a basis consistent with generally accepted accounting principles. An annual budget is adopted for the governmental funds. The Budgetary Comparison Schedule should present both the original and the final appropriated budgets for the reporting period. The School only has a governmental funds budget. The original and final budgets are required supplementary information. Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.


14


Concentration of Credit Risk Financial instruments which potentially subject the School to concentrations of credit risk consist of cash and cash equivalents, grants receivables and revenue. Cash and cash equivalents are held primarily at one high-credit quality financial institution. At various times, funds held at this financial institution may exceed the FDIC insurance limit. As of June 30, 2013 and 2012, sixty-four percent and seventy five percent, respectively of grant receivables were due from the School District of Philadelphia and the Pennsylvania Department of Education. For the years ended June 30, 2013 and 2012, the School received seventy-five percent and seventy three percent of their total revenue, respectively, from one source. Capital Assets Capital assets, which include furniture and equipment, are reported in the government-wide financial statements. All capital assets are capitalized at cost and updated for additions and retirements during the year. The School does not possess any infrastructure as they lease the building from a related party (see Notes 8 and 11). Improvements are capitalized; the cost of normal maintenance and repairs that do not add to the value of the asset or materially extend an asset's life are not. Capital assets of the School are depreciated using the straight-line method over the useful lives of the assets. The estimated useful lives of furniture and equipment range from five to seven years. Leasehold improvements are amortized over the life of the lease.

Income Tax Status The School is exempt from Federal income taxes under Section 501(c) (3) of the Internal Revenue Code. Accordingly, no provision or liability for income taxes has been recorded in the financial statements. The School adopted the accounting pronouncement dealing with uncertain tax positions as of July 1, 2010. Upon adoption of this pronouncement, the School had no unrecognized tax benefits. Furthermore, the School had no unrecognized tax benefits at June 30, 2013 and 2012. There were no open tax years prior to 2010. In addition, the School has no income tax related penalties or interest for the periods reported in these financial statements.

3. Cash and Cash Equivalents The School considers all highly liquid debt instruments purchased with a maturity of three months or less at the time of acquisition to be cash equivalents. Deposits Custodial credit risk is the risk that in the event of a bank failure, the government's deposits may not be returned to it. The School does not have a policy for custodial credit risk. As of June 30, 2013 and 2012, $371,093 and $58,769, respectively, of the School's bank balance was exposed to custodial credit risk as follows:

2013 2012

Uninsured and uncollateralized 371,093$ 58,769$ Plus: Insured amount 250,000 250,000 Less: Outstanding checks (71,844) (120,206) Plus: Deposits in transit -- -- Carrying amount - bank balances 549,249 188,563 Plus: Petty cash -- --



15


4. Capital Assets


July 1, 2012 Deletions Additions June 30, 2013

Furniture and equipment 1,432,810$ --$ 48,283$ 1,481,093$ Leasehold improvements 255,209 -- 55,473 310,682

1,688,019 -- 103,756 1,791,775 Less: Accumulated depreciation 1,140,064 -- 306,988 1,447,052



5. Capital Leases The School leases furniture and equipment, under capital leases, with a total original cost of $1,168,175 for each of the years ending June 30, 2013 and 2012. The leases will expire and be paid off at various times during the years from 2012 to 2015, with monthly principal and interest payments of $13,430. The interest rate on these capital leases varies from 7.35 percent to 12.93 percent and are based on the lessor’s implicit rate of return. Furniture is included in property and equipment in the statements of net assets at June 30, as follows:

2013 2012

Furniture and equipment 1,168,175$ 1,168,175$ Less: Accumulated depreciation (1,077,141) (843,506)

91,034$ 324,669$



2014 31,821$ 2015 8,786

40,607






16

Notes to Financial Statements June 30, 2013 and 2012 6. Local Educational Agency Revenue

Charter schools are funded by the local public school district in which each student resides. The rate per student is determined annually and is based on the budgeted total expenditure per average daily membership of the prior school year for each school district. The majority of the students of the School reside in Philadelphia. For the years ended June 30, 2013 and 2012, the rate for the School District of Philadelphia was $8,773 and $8,608, respectively, per year for regular education students plus additional funding for special education students. The annual rate is earned monthly and paid when billed by the School District of Philadelphia and is prorated if a student enters or leaves during the year. Total revenue from local sources was $7,326,631 and $7,440,246 for the fiscal years ended June 30, 2013 and 2012, respectively.


8. Leasing Arrangements The School leases the building located at 4101 North American Street in Philadelphia, Pennsylvania under an operating lease expiring August 2017 from Aspira Community Enterprises, Inc. (“ACE”) (a related party, see Note 11). The School pays monthly rent of $80,000. Rent expense was $960,000 for each of the years ended June 30, 2013 and 2012. Minimum annual rentals for each year subsequent to June 30, 2013 are as follows:


2014 960,000$ 2015 960,000 2016 960,000 2017 960,000 2018 160,000

4,000,000$


17


9. Retirement Plan



-Active members who joined the System prior to July 22, 1983, contribute at 5.25 percent (Membership Class T-C) or at 6.5 percent (Membership Class T-D) of the member’s qualifying compensation.

-Members who joined the System on or after July 22, 1983, and who were active or inactive as of July 1, 2001, contribute at 6.25 percent (Membership Class T-C) or at 7.5 percent (Membership Class T-D) of the member’s qualifying compensation.

-Members who joined the System after June 30, 2001, contribute at 7.5 percent (automatic Membership Class T-D). For all new hires and for members who elected Class T-D membership, the higher contribution rates began with service rendered on or after January 1, 2002.

Employer contributions are based upon an actuarial valuation. For each of the fiscal years ended June 30, 2013 and 2012, the rate of employer’s contribution was 12.36 percent and 8.65 percent, respectively.

Payroll expense for employees covered by the System for the years ended June 30, 2013 and 2012 was approximately $4.7 million and $4.4 million, respectively. In accordance with Act 29 of 1994, the Commonwealth of Pennsylvania will pay school entities for contributions made to the System based on the formula in Act 29 of 1994, but not less than one-half of the school entities' contributions. The School’s contributions due to the Plan for the years ending June 30, 2013 and 2012 totaled $575,601 and $382,351, respectively.

10. 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 carries commercial insurance for such risks. There has been no significant reduction in insurance coverage from the previous year in any of the School's policies. Settled claims resulting from these risks have not exceeded commercial insurance coverage in the past three years.

11. Related Party The School is associated with Aspira, Inc. of Pennsylvania (“Aspira”) through board control. The School is associated with Aspira Community Enteriprise, Inc. (“ACE”), Antonia Pantoja CommunityCharter School (“Hostos”), Aspira Bilingual Cyber Charter School (“Cyber”), John B. Stetson Charter School (“Stetson”), Olney High School (“Olney) and ACE/Dougherty, Inc. through common board membership and management.


18


The School's bylaws stipulate that the incorporator will appoint the members of the School's Board of Trustees prior to the first annual meeting and Aspira’s Board of Directors will appoint 55 percent of the members thereafter.

The School made payments to Aspira for reimbursement of maintenance, security, IT support and other administrative expenses paid by Aspira in the amount of $549,993 and $1,063,037 for the years ended June 30, 2013 and 2012, respectively. As described in Note 9, the School leases the building located at 4101 North American Street Philadelphia, Pennsylvania from ACE. In connection with the operation of its Charter School, the School made lease payments to ACE in the amount of $960,000 for each of the years ended June 30, 2013 and 2012. All receivables and payables with related parties are unsecured, non-interest bearing and have no repayment terms.


ASPIRA, Inc. of Pennsylvania 616,055$ --$ 623,396$ --$ ASPIRA Community Enterprise, Inc. -- 912,505 -- 677,505ACE/Dougherty, LLC -- -- 1,750 -- Eugenio Maria de Hostos Charter School 58,919 -- 57,437 -- John B. Stetson Charter School 320,037 -- 316,053 -- Aspira Bilingual Cyber Charter School 1,044 -- 1,066 -- Olney Charter High School 16,110 -- 30,469 --

1,013,915$ 912,505$ 1,030,171$ 677,505$


The School is a guarantor of a $5,400,000 mortgage loan issued to Aspira Community Enterprises, Inc. for the acquisition and construction loan associated with the building of the School. The mortgage loan was to mature July 2033, but was subsequently refinanced with a new maturity date of October 1, 2016. The debt is collateralized by property known as 4101 North American Street, Philadelphia, Pennsylvania, owned by Aspira, Community Enterprise, Inc., including all fixtures and leases associated with the properties. The balance of the loan at June 30, 2013 and 2012 was $4,771,380 and $4,912,070, respectively. The School is involved in legal proceedings arising in the ordinary course of business. In the opinion of management, the outcome of any proceedings cannot be predicted. Ultimate liability of the School in connection with its legal proceedings will not have a material adverse effect on the financial position or activities of the School.



Antonia Pantoja Community Charter School Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual - Governmental Funds Year Ended June 30, 2013

Over(Under)


RevenuesLocal educational agency assistance 4,695,500$ 4,562,482$ 7,326,631$ (2,764,149)$ Other local sources 864,600 180,000 524,104 (344,104) State sources 2,847,000 3,303,945 669,103 2,634,842 Federal sources 1,186,900 1,360,999 1,028,183 332,816

9,594,000 9,407,426 9,548,021 (140,595)

ExpendituresInstruction 5,751,943 5,904,685 5,743,021 161,664 Support services 1,455,721 711,106 502,262 208,844 Administrative support 1,812,625 2,110,908 2,435,098 (324,190) Pupil health 111,225 113,215 207,404 (94,189) Business services 110,521 44,000 224,286 (180,286) Food services 572,365 551,214 254,664 296,550 Student activities 180,000 180,000 210,765 (30,765)

9,994,400 9,615,128 9,577,500 37,628

Net change in fund balances (400,400) (207,702) (29,479) (178,223)

Fund balances - beginning of year 874,153 438,532 438,532 --

Fund balances - end of year 473,753$ 230,830$ 409,053$ (178,223)$

Budget


20

Antonia Pantoja Community Charter School Schedule of Expenditures of Federal Awards June 30, 2013



Pass-Through Grantor Source CFDA Grantor's Beginning/ or for Revenue Revenue Federal (Deferred)






Title I - Improving Basic Programs I 84.010 013-121073 10/011/11 - 09/30/12 539,095 74,810 74,810 -- -- --


Title II - Improving Teacher Quality I 84.367 020-121037 07/01/11 - 09/30/12 53,566 (398) -- -- (398)

Title III - Language Inst LEP/ Immigrant Students I 84.365 010-131073 10/011/12 - 09/30/13 57,277 50,786 -- 50,786 50,786 --

Title III - Language Inst LEP/ Immigrant Students I 84.365 010-121073 10/1/11-09/30/12 57,277 12,657 12,657 -- -- --


IDEA I 84.027 N/A 07/01/12 - 06/30/13 185,049 -- -- 185,049 185,049 185,049

IDEA I 84.027 N/A 07/01/10 - 06/30/11 170,756 170,756 170,756 -- -- --

Total U.S. Department of Education 1,648,935 781,625 257,825 810,587 810,587 286,787






School Breakfast Program I 10.553 367 07/01/12 - 06/30/13 112,829 93,362 -- 112,829 112,829 19,467

School Breakfast Program I 10.553 367 07/01/11 - 06/30/12 108,601 28,119 28,119 -- -- --



D - Direct Funding


See Independent Auditors' Report.

21

Antonia Pantoja Community Charter School Notes to Schedule of Expenditures of Federal Awards June 30, 2013 1. General Information The accompanying schedule of expenditures of federal awards presents the activities in all of the federal

financial assistance programs of Antonia Pantoja Community Charter School. Financial awards received directly from federal agencies, as well as financial assistance passed through other governmental agencies or non-profit organizations, are included in the schedule.





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22

Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on Audit of Financial



To the Board of Trustees, Antonia Pantoja Community Charter School: We have audited, in accordance with 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 financial statements of the governmental activities and each major fund of Antonia Pantoja Community Charter School (the “School”) and the related notes to the financial statements, as of and for the year ended June 30, 2013, which collectively comprises the School’s basic financial statements and have issued our report thereon dated January 20, 2014. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered Antonia Pantoja Community Charter School’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Antonia Pantoja Community Charter School’s internal control. Accordingly, we do not express an opinion on the effectiveness of Antonia Pantoja Community Charter School’s internal control. 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 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 those 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.

23

Compliance and Other Matters As part of obtaining reasonable assurance about whether Antonia Pantoja Community Charter School’s financial statements are free of 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. 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.

January 20, 2014

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24




The Board of Trustees, Antonia Pantoja Community Charter School: Report on Compliance for Each Major Federal Program We have audited Antonia Pantoja Community Charter School’s compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of Antonia Pantoja Community Charter School’s major Federal programs for the year ended June 30, 2013. Antonia Pantoja Community Charter School’s major Federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. Management’s Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its Federal programs. Auditors’ Responsibility Our responsibility is to express an opinion on compliance for each of Antonia Pantoja Community Charter School’s major Federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standard applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB 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 obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about Antonia Pantoja Community Charter School’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Antonia Pantoja Community Charter School’s compliance with those requirements.

25

Opinion on Each Major Federal Program In our opinion, Antonia Pantoja Community Charter School complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2013. Report on Internal Control Over Compliance Management of Antonia Pantoja Community Charter School’s responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Antonia Pantoja Community Charter School’s internal control over compliance with the types of requirements that could have a direct and material effect on each major Federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Antonia Pantoja Community Charter School’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.

January 20, 2014

26

Antonia Pantoja Community Charter School Schedule of Findings and Questioned Costs Year Ended June 30, 2013 Section 1 – Summary of Auditors' Results Financial Statements Type of auditors' report issued: Unqualified Internal control over financial reporting: Material weaknesses identified? No Control deficiencies identified that are not considered to be material weaknesses? None reported Noncompliance material to financial statements noted? No Federal Awards Internal control over major programs: Material weaknesses identified? No Control deficiencies identified that are not considered to be material weaknesses? None reported

Type of auditors' report issued on compliance for major programs: Unqualified Any audit findings disclosed that are required to be reported in accordance with section 510(a) of Circular A-133? No The following Federal program was designated as a major program:

CFDA Number Name of Federal Program or Cluster

84.010 10.553 10.555

Title I - Improving Basic Programs School Breakfast Program National School Lunch Program

Dollar threshold used to distinguish between Type A and Type B programs: $300,000 Auditee qualified as low-risk auditee? No Section 2 – Financial Statement Findings None reported. Section 3 – Federal Award Findings and Questioned Costs None reported. Section 4 – Follow Up Prior Year Audit Findings There were no prior year audit findings.

JOHN B. STETSON CHARTER SCHOOL AN ASPIRA, INC. OF PENNSYLVANIA SCHOOL


June 30, 2012 and 2011


John B. Stetson Charter School An Aspira, Inc. of Pennsylvania School Table of Contents June 30, 2012 and 2011















Report of Compliance with Requirements That Could Have a Direct Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 ........................... 23-24


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Independent Auditors' Report To the Board of Trustees, John B. Stetson Charter School An Aspira, Inc. of Pennsylvania School: We have audited the accompanying financial statements of the governmental activities and each major fund of John B. Stetson Charter School, An Aspira, Inc. of Pennsylvania School (the “School”) as of and for the year ended June 30, 2012, which collectively comprise the School's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the School's management. Our responsibility is to express an opinion on these financial statements based on our audit. The prior year summarized comparative information has been derived from John B. Stetson Charter School, An Aspira, Inc. of Pennsylvania School’s 2011 financial statements and, in our report dated February 15, 2012, we expressed an unqualified opinion on those financial statements. We conducted our audit in accordance with 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the basic financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall basic financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the 2012 financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of John B. Stetson Charter School, An Aspira, Inc. of Pennsylvania School as of June 30, 2012, and the respective changes in financial position for the year then ended in conformity with accounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards, we have also issued our report dated April 18, 2013 on our consideration of the John B. Stetson Charter School, An Aspira, Inc. of Pennsylvania School's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, 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 the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and is important for assessing the results of our audit. The management’s discussion and analysis as listed in the table of contents, is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying schedule of expenditures of Federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements taken as a whole.

April 18, 2013

John B. Stetson Charter School An Aspira, Inc. of Pennsylvania School

3

Management’s Discussion and Analysis June 30, 2012 and 2011 The Board of Trustees of John B. Stetson Charter School, An Aspira, Inc. of Pennsylvania School offers readers of the School's financial statements this narrative overview and analysis of the financial activities of the School for the fiscal year ended June 30, 2012. We encourage readers to consider the information presented here in conjunction with the School's financial statements. Financial Highlights

Total revenues increased $1,306,948 primarily due to the increase from 530 students to 711, which consisted of 572 Regular Education students and 139 Special Education students. In addition, there was an increase in per student subsidy allocation and federal grants.

At the close of the current fiscal year, the School reported ending net assets of $1,006,467. This net assets balance represents an increase in net assets of $834,579 for the year ended June 30, 2012

The School's cash balance at June 30, 2012 was $1,084,295, representing an increase of $940,084 from

June 30, 2011. Overview of the Financial Statements The discussion and analysis is intended to serve as an introduction to the School's basic financial statements. The School's basic financial statements as presented comprise three components: management's discussion and analysis (this section), the basic financial statements, budgetary comparison and report required under Government Auditing Standards and OMB Circular A-133. Government-Wide Financial Statements The government-wide financial 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 assets presents information on all of the School's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the School is improving or deteriorating. The statement of activities presents information showing how the School's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. The government-wide financial statements report on the function of the School that is principally supported by subsidies from school districts whose constituents attend the School. Fund Financial Statements A fund is a group of related accounts that are used to maintain control over resources that have been segregated for specific activities or purposes. The School, like governmental type entities, utilizes fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The School has three governmental funds - general, food services and student activities. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements.


4

Management’s Discussion and Analysis June 30, 2012 and 2011 Government-Wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of the School, assets exceeded liabilities by $1,006,467 as of June 30, 2012.

2012 2011


Total net assets 1,050,331$ 171,888$


2012 2011Revenues

Local education agencies 7,722,297$ 6,895,129$ Other local sources 119,450 72,872 Other sources 1,002 200,112 State sources 340,650 378,006 Federal sources 2,157,289 1,443,757

10,340,688 8,989,876

ExpendituresInstruction 6,004,606 6,252,011 Student support services 598,984 518,731 Administration support 2,486,730 1,643,119 Pupil health 78,252 162,290 Business services 83,858 117,774 Food services 9,309 -- Student activities 50,537 73,546 Depreciation 149,969 50,517

9,462,245 8,817,988


Net assets, beginning 171,888 --

Net assets, ending 1,050,331$ 171,888$

Governmental Funds The focus of the School's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the School's financing requirements. In particular, fund balance may serve as a useful measure of a government's net resources available for spending for program purposes at the end of the fiscal year. The School's governmental funds, (the General and Student Activities Funds), reported an ending fund balance of $1,257,894. For the year ended June 30, 2012, the School's revenues ($10,296,824) were greater than its expenditures ($9,462,245) by $834,579.


5

Management’s Discussion and Analysis June 30, 2012 and 2011 Governmental Fund Budgetary Highlights Some categories of revenues and expenditures varied significantly from those budgeted. Expenses allocated from Aspira for maintenance, security, IT support and other administrative expenses were not included in the budget due to the deadline of the filing of the budget and the fact that the expenses could not be reasonably estimated. There were additional grants received during the year that the School was not aware of at the time of the budget submission. Capital Asset and Debt Administration Capital Assets As of June 30, 2012, the School's investment in capital assets for its governmental activities totals $600,537. This investment in capital assets includes classroom, office furniture and equipment and leasehold improvements. Major capital asset purchases during the year included the following:



Security system amounting to $54,805

Additional information on the School's capital assets can be found in Note 4 of this report. There were capital lease obligations related to the investment in capital assets amounting to $371,943 at June 30, 2012. Economic Factors and Next Year's Budgets and Rates The School's primary source of revenue, the per student subsidy provided by the School District of Philadelphia, will decrease by approximately $354,301 for fiscal year 2012-2013, due to a decreased subsidy per student of $667 for regular education and and increased subsidy per student of $237 for special education. Contacting the School's Financial Management The financial report is designed to provide interested parties a general overview of the School's finances. Questions regarding any of the information provided in this report should be addressed to the Chief Academic Officer, John B. Stetson Charter School, An Aspira, Inc. of Pennsylvania School, 3200 B Street, Philadelphia, PA 19134.



6

Statement of Net Assets June 30, 2012 and 2011


Assets

Current assetsCash and cash equivalents 1,084,295$ 144,211$ State subsidies receivable 154,219 378,006 Federal subsidies receivable 957,247 1,302,203 Other receivables 10,852 112,812 Due from related parties 793,096 495,832




3,600,246$ 3,070,840$


Current liabilitiesAccounts payable 455,741$ 424,098$ Accrued payroll and payroll taxes 775,975 1,143,910

Refundable advances 15,846 58,430






Net assets

Invested in capital assets, net of related debt 228,594 158,058 Unrestricted 821,737 13,830

Total net assets 1,050,331 171,888

3,600,246$ 3,070,840$



7





Governmental activitiesInstruction 6,004,606$ --$ 1,863,131 (4,141,475)$ (4,808,254)$ Student support services 598,984 -- -- (598,984) (518,731) Administrative support 2,486,730 -- -- (2,486,730) (1,643,119) Pupil health 78,252 -- -- (78,252) (162,290) Business services 83,858 -- -- (83,858) (117,774) Food services 9,309 -- 294,158 284,849 -- Student activities 50,537 119,452 -- 68,915 (674) Depreciation 149,969 -- -- (149,969) (50,517)

9,462,245 119,452 2,157,289 (7,185,504) (7,301,359)


All other revenue 1,000 200,112

8,063,947 7,473,247


Net assets - beginning of year 171,888 --

Net assets - end of year 1,050,331$ 171,888$

Functions

ProgramRevenues



8




Assets

Cash and cash equivalents 1,018,341$ 65,954$ 1,084,295$ 144,211$ State subsidies receivable 154,219 -- 154,219 378,006 Federal subsidies receivable 957,247 -- 957,247 1,302,203 Other receivables 10,852 -- 10,852 112,812 Due from related parties 793,096 -- 793,096 495,832

2,933,755$ 65,954$ 2,999,709$ 2,433,064$

Liabilities

Accounts payable 455,741$ --$ 455,741$ 424,098$ Salaries and contracts payable 775,975 -- 775,975 1,143,910 Refundable advances 15,846 -- 15,846 58,430 Due to related parties 930,410 -- 930,410 792,796


Fund Balances

Unrestricted fund balances 755,783 65,954 821,737 13,830

2,933,755$ 65,954$ 2,999,709$ 2,433,064$

Functions



9





228,594




10



General Services Activities Governmental GovernmentaFund Fund Fund Activities Activities

RevenuesLocal educational agency assistance 7,722,297$ --$ --$ 7,722,297$ 6,895,129$ Other local sources -- -- 119,450 119,450 72,872 Other sources 1,002 -- 1,002 200,112 State sources 319,355 21,295 -- 340,650 378,006 Federal sources 1,884,426 272,863 -- 2,157,289 1,443,757

9,927,080 294,158 119,450 10,340,688 8,989,876

ExpendituresInstruction 6,225,111 -- -- 6,225,111 6,460,586 Support services 598,984 -- -- 598,984 518,731 Administrative support 2,486,730 -- -- 2,486,730 1,643,119 Pupil Health 78,252 -- -- 78,252 162,290 Business services 83,858 -- -- 83,858 117,774 Food services -- 9,309 -- 9,309 -- Student activities -- -- 50,537 50,537 73,546

9,472,935 9,309 50,537 9,532,781 8,976,046

Excess of revenuesover expenditures 454,145 284,849 68,913 807,907 13,830

Other financing sources (uses)Transfer in -- (284,849) (11,368) (296,217) -- Transfer out 296,217 -- -- 296,217 --

296,217 (284,849) (11,368) -- --

Net change in fund balances 750,362 -- 57,545 807,907 13,830

Fund balances - beginning of year 5,421 -- 8,409 13,830 --


Functions



11







12



John B. Stetson Charter School, An Aspira, Inc. of Pennsylvania School (the “School”) was incorporated in June 2010 under the non-profit corporation law of the Commonwealth of Pennsylvania and began operations in September 2010. The School serves grades five through eight and is located in Philadelphia, Pennsylvania. The School obtained its charter as a result of the School District of Philadelphia Renaissance Schools Initiative. The School operates under the provisions enacted by the General Assembly of the Commonwealth of Pennsylvania in 1997 and is operating under a charter school contract ending on June 30, 2015. The net assets of the School would remain with the School if their charter was not renewed. The School has financial accountability and control over all activities related to the students' education. The School receives funding from local, state, and federal government sources and must comply with the requirements of these funding source entities. However, the School is not included in any other governmental "reporting entity" as defined by the Governmental Accounting Standards Board (“GASB”) pronouncement. In addition, there are no component units as defined in the standards established for defining and reporting on the financial reporting entity.

2. Summary of Significant Accounting Policies Basis of Presentation The financial statements of the School have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as applied to governmental units. The Governmental Accounting Standards Board is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The GASB has issued a codification of governmental accounting and financial reporting standards. This codification and subsequent GASB pronouncements are recognized as U.S. generally accepted accounting principles for state and local governments that have implemented the accounting pronouncement on financial reporting for state and local governments, “Basic Financial Statements and Management's Discussion and Analysis - for State and Local Governments”. Comparative Financial Information The financial statements include certain prior year summarized comparative information in total. Such information does not include sufficient detail to constitute a presentation in conformity with generally accepted accounting principles. Accordingly, such information should be read in conjunction with the School's financial statements for the year ended June 30, 2011 from which the summarized information was derived.




13


Fund Financial Statements - governmental funds 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 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. The government reports the following major governmental funds: General Fund - The General Fund is the operating fund of the School and accounts for all








definition of "restricted" or "invested” in capital assets, net of related debt. Budgets and Budgetary Accounting Budgets are adopted on a basis consistent with generally accepted accounting principles. An annual budget is adopted for the governmental funds. The Budgetary Comparison Schedule should present both the original and the final appropriated budgets for the reporting period. The School only has a governmental funds budget. The original budget was filed and accepted by the Labor, Education and Community Services Comptroller's Office in July 2011 and is the final budget as well. The budget is required supplementary information.


14


Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Concentration of Credit Risk Financial instruments which potentially subject the School to concentrations of credit risk consist of cash in interest bearing accounts and cash equivalents, contributions and grants receivables. Cash and cash equivalents are held primarily at one high-credit quality financial institution. At various times during the year ended June 30, 2012 funds held at this financial institution may have exceeded the FDIC insurance limit. At June 30, 2012, the School received seventy-five percent of their total revenue from one source. Fair Value of Financial Instruments The carrying amounts of financial instruments including state and federal subsidies receivable, accounts payable and salary and contracts payable approximate their fair values because of the relatively short maturity of these investments. Capital Assets Capital assets, which include furniture and equipment, are reported in the government-wide financial statements. All capital assets are capitalized at cost and updated for additions and retirements during the year. The School does not possess any infrastructure as they lease the building from the School District of Philadelphia. Improvements are capitalized; the cost of normal maintenance and repairs that do not add to the value of the asset or materially extend an asset's life are not. Capital assets of the School are depreciated using the straight-line method over the useful lives of the assets. The estimated useful lives of furniture and equipment range from five to seven years. Leasehold improvements are amortized over the life of the lease. Income Tax Status The School is exempt from Federal income taxes under Section 501(c)(3) of the Internal Revenue Code. Accordingly, no provision or liability for income taxes has been recorded in the financial statements.

The School adopted the accounting pronouncement dealing with uncertain tax positions as of July 1, 2010. Upon adoption of this accounting pronouncement, the School had no unrecognized tax benefits. Furthermore, the School had no unrecognized tax benefits at June 30, 2012 and 2011. There were no open tax years prior to 2009. In addition, the School had no income tax related penalties or interest for the period reported in these financial statements.

3. Cash and Cash Equivalents The School considers all highly liquid debt instruments purchased with a maturity of three months or less at the time of acquisition to be cash equivalents. Deposits Custodial credit risk is the risk that in the event of a bank failure, the government's deposits may not be returned to it. The School does not have a policy for custodial credit risk. As of June 30, 2012, $-0- of the School's bank balance was exposed to custodial credit risk as follows:

2012 2011

Uninsured and uncollateralized 795,505$ --$ Plus: Insured amount 463,864 235,827 Less: Outstanding checks (175,074) (91,616) Plus: Deposits in transit -- -- Carrying amount - bank balances 1,084,295 144,211 Plus: Petty cash -- --

Total cash per financial statements 1,084,295$ 144,211$


15


4. Capital Assets




688,293 -- 112,730 801,023 Less: Accumulated depreciation 50,517 -- 149,969 200,486


Depreciation expense for the year ended June 30, 2012 and 2011 was $149,969 and $50,517, respectively.

5. Capital Leases

The School leases furniture, under capital leases, with a total original cost of $558,479 for the year ended June 30, 2012. The leases will be paid off between 2015 and 2016, with monthly principal and interest payments of $11,649. The interest rate on these capital leases is 7.4 percent. Furniture and equipment is included in property and equipment in the statements of net assets at June 30, as follows:

2012 2011

Furniture and equipment 558,479$ 558,479$ Less: Accumulated depreciation (148,928) (37,232)

409,551$ 521,247$



2013 139,784$ 2014 139,784 2015 119,707 2016 16,940 2017 --

416,215






16


6. Local Educational Agency Revenue Charter schools are funded by the local public school district in which each student resides. The rate per student is determined annually and is based on the budgeted total expenditure per average daily membership of the prior school year for each school district. The majority of the students of the School reside in Philadelphia. For the years ended June 30, 2012 and 2011, the rate for the School District of Philadelphia was $8,773 and $8,608, respectively per year for regular education students plus additional funding for special education students. The annual rate is earned monthly and paid when billed by the School District of Philadelphia and is prorated if a student enters or leaves during the year. Total revenue from local sources was $7,722,297 and $ 6,895,129 for the fiscal year ended June 30, 2012 and 2011, respectively.


8. Leasing Arrangements The School incurs a facilities charge, levied by the School District of Philadelphia, under a license agreement by which the School occupies the building located at 3200 B Street, Philadelphia, PA. Total facilities charge for the years ended June 30, 2012 and 2011 amounted to $332,147 and $793,128, respectively. Under the agreement, the School District provided snow and waste removal, utilities, and occupancy for the School.

9. Retirement Plan

The School contributes to the Public School Employees’ Retirement System (the “System”), a governmental cost-sharing multiple-employer defined benefit pension plan. The plan provides retirement and disability benefits, legislatively mandated ad hoc cost-of-living adjustments, and healthcare insurance premium assistance to qualifying annuitants. The Public School Employees’ Retirement Code (Act No. 96 of October 2, 1975, as amended) (24 Pa.C.S. 8101-8535) assigns the authority to establish and amend benefit provisions to the System. The System issues a comprehensive annual financial report that includes financial statements and required supplementary information for the plan. A copy of the report may be obtained by writing to Diane J. Wert, Office of Financial Management, Public School Employees’ Retirement System, P.O. Box 125, Harrisburg, Pennsylvania 17108-0125. This publication is also available on the PSERS website at www.psers.state.pa.us/publications/cafr/index.htm. Member contributions are as follows:





17


- Members who joined the System after June 30, 2001, contribute at 7.5 percent (automatic Membership Class T-D). For all new hires and for members who elected Class T-D membership, the higher contribution rates began with service rendered on or after January 1, 2002.




Payroll expense for employees covered by the System for the year ended June 30, 2012 was approximately $4.2 million. In accordance with Act 29 of 1994, the Commonwealth of Pennsylvania will pay school entities for contributions made to the System based on the formula in Act 29 of 1994, but not less than one-half of the school entities' contributions. The School’s contributions due to the Plan for the years ending June 30, 2012 and 2011 totaled $354,850 and $241,043, respectively.


11. Related Party The School is associated with Aspira, Inc. of Pennsylvania (“Aspira”) through board control. The School is associated with Aspira Community Enterprises, Inc. (“ACE”), Antonia Pantoja Charter School (“Pantoja”), Aspira Bilingual Cyber Charter School (“Cyber”), Olney High School (“Olney”) and ACE/Dougherty, Inc. through common board membership and management. The School's bylaws stipulate that a majority of its members at all times shall be appointees of Aspira. Aspira owed the School $790,736 and $495,740 for the years ended June 30, 2012 and 2011, respectively. Olney owed the School $92 for the year ended June 30, 2011. All payables with related parties are unsecured, non-interest bearing and have no repayment terms. The School made payments to Aspira in reimbursement for maintenance, security, IT support and other administrative expenses paid by Aspira in the amount of $666,158 and $1,246,869 for the years ended June 30, 2012 and 2011, respectively. The School owed Hostos $578,547 and $507,961 for the years ended June 30, 2012 and 2011, respectively.

The School owed Pantoja $316,053 and $284,835 for the years ended June 30, 2012 and 2011, respectively. The School owed Olney $11,945 for the year ended June 30, 2012.


18






19

John B. Stetson Charter School An Aspira, Inc. of Pennsylvania School Schedule of Expenditures of Federal Awards Year Ended June 30, 2012









Title I - Improving Basic Programs I 84.010 013-111989 07/01/10 - 09/30/11 478,408 136,687 478,408 -- -- 341,721

Title II - Improving Teacher Quality I 84.367 020-121089 07/01/11 - 09/30/12 46,946 46,946 -- 46,946 46,946 --

Title II - Improving Teacher Quality I 84.367 020-111089 07/01/10 - 09/30/11 56,649 56,649 56,649 -- -- --

Title III - Language Instruction LEP I 84.365 010-121089 07/01/11 - 09/30/12 43,864 -- -- 43,864 43,864 43,864

Charter School Program Implementation Grant I 84.282B U282B100035 10/01/11 - 09/30/12 199,984 198,091 -- 182,245 182,245 (15,846)

Charter School Program Implementation Grant I 84.282B U282B100035 10/01/10 - 09/30/11 199,984 -- (58,430) 58,430 58,430 --

ARRA - SIG I 84.388 139-111089 01/26/12 - 09/30/12 872,600 610,820 -- 855,991 855,991 245,171

ARRA - SIG I 84.388 139-101089 01/26/11 - 09/30/11 767,146 767,146 767,146 -- -- --


IDEA I 84.027 N/A 07/01/11 - 06/30/12 182,235 -- -- 182,235 182,235 182,235

Total U.S. Department of Education 3,319,511 2,209,418 1,243,773 1,841,406 1,841,406 875,761





National School Lunch Program I 10.555 362 07/01/11 - 06/30/12 9,858 9,858 -- 9,858 9,858 -- School Breakfast Program I 10.553 367 07/01/11 - 06/30/12 50,843 39,954 -- 50,843 50,843 10,889

Total U.S. Department of Agriculture 217,081 -- 282,721 282,721 65,640

Total Federal awards 2,426,499$ 1,243,773$ 2,124,127$ 2,124,127$ 941,401$

D - Direct Funding


20

John B. Stetson Charter School An Aspira, Inc. of Pennsylvania School Notes to Schedule of Expenditures of Federal Awards June 30, 2012 1. General Information The accompanying schedule of expenditures of Federal awards presents the activities in all of the Federal

financial assistance programs of John B. Stetson Charter School, An Aspira, Inc. of Pennsylvania School. Financial awards received directly from federal agencies, as well as financial assistance passed through other governmental agencies or non-profit organizations, are included in the schedule.





Two Logan Square



215 546 2140 . fax 215 546 2148

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21



To the Board of Trustees, John B. Stetson Charter School, An Aspira, Inc. of Pennsylvania School: We have audited the financial statements of the governmental activities and each major fund of John B. Stetson Charter School, An Aspira, Inc. of Pennsylvania School (the "School”), as of and for the year ended June 30, 2012, which collectively comprises the School’s basic financial statements and have issued our report thereon dated April 18, 2013. We conducted our audit in accordance with 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. Internal Control Over Financial Reporting Management of John B. Stetson Charter School, An Aspira, Inc. of Pennsylvania School is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered the School’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not to 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 misstatements on a timely basis. A material weakness is a deficiency, or 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. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.

22

Compliance and Other Matters As part of obtaining reasonable assurance about whether John B. Stetson Charter School, An Aspira, Inc. of Pennsylvania School’s financial statements are free of 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. 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.

April 18, 2013

Two Logan Square



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23



The Board of Trustees, John B. Stetson Charter School, An Aspira, Inc. of Pennsylvania School: Compliance We have audited the compliance of John B. Stetson Charter School, An Aspira, Inc. of Pennsylvania School with the types of compliance requirements described in the U.S. Office of Management and Budget (“OMB”) Circular A-133 Compliance Supplement that are applicable to each of its major Federal programs for the year ended June 30, 2012. John B. Stetson Charter School, An Aspira, Inc. of Pennsylvania School’s major Federal programs are identified in the summary of auditors’ results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major Federal programs is the responsibility of John B. Stetson Charter School, An Aspira, Inc. of Pennsylvania School’s management. Our responsibility is to express an opinion on John B. Stetson Charter School, An Aspira, Inc. of Pennsylvania School’s compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States and OMB Circular A-133. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about John B. Stetson Charter School, An Aspira, Inc. of Pennsylvania School’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of John B. Stetson Charter School, An Aspira, Inc. of Pennsylvania School’s compliance with those requirements. In our opinion John B. Stetson Charter School, An Aspira, Inc. of Pennsylvania School complied, in all material respects, with the requirements referred to above that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2012.

24

Internal Control Over Compliance The management of John B. Stetson Charter School, An Aspira, Inc. of Pennsylvania School is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to major Federal programs. In planning and performing our audit, we considered John B. Stetson Charter School, An Aspira, Inc. of Pennsylvania School’s internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of John B. Stetson Charter School, An Aspira, Inc. of Pennsylvania School’s internal control over compliance. A deficiency in internal control over compliance 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 noncompliance with a type of compliance requirement of a Federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a Federal program will not be prevented, or detected and corrected, on a timely basis. Our consideration of the internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we considered to be a material weakness, as defined above. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control and compliance and the results of that testing based upon the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.

April 18, 2013

25

John B. Stetson Charter School An Aspira, Inc. of Pennsylvania School Schedule of Findings and Questioned Costs Year Ended June 30, 2012 Section 1 – Summary of Auditors' Results Financial Statements Type of auditors' report issued: Unqualified Internal control over financial reporting: Material weaknesses identified? No Control deficiencies identified that are not considered to be material weaknesses? None reported Noncompliance material to financial statements noted? No Federal Awards Internal control over major programs: Material weaknesses identified? No Control deficiencies identified that are not considered to be material weaknesses? None reported



84.010 84.388

Title I, Improving Basic Programs ARRA - SIG

Dollar threshold used to distinguish between Type A and Type B programs: $300,000 Auditee qualified as low-risk auditee? No (A) Section 2 – Financial Statement Findings None reported. Section 3 – Federal Award Findings and Questioned Costs None reported. Section 4 – Follow Up Prior Year Audit Findings There were no prior year audit findings.

(A) This is the second year John B. Stetson Charter School, An Aspira, Inc. of Pennsylvania School has been subject to an A-133 audit, therefore they do not qualify as a low risk auditee.

JOHN B. STETSON CHARTER SCHOOL AN ASPIRA, INC. OF PENNSYLVANIA SCHOOL

Financial Statements and


June 30, 2013

(With Summarized Comparative Financial Information For the Year Ended June 30, 2012)

John B. Stetson Charter School An Aspira, Inc. of Pennsylvania School Table of Contents June 30, 2013 (With Summarized Comparative Financial Information for the Year June 30, 2012)












Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual- Governmental Fund ................................................................................................................................................. 19




Report on Compliance For Each Major Program; Report on Internal Control Over Compliance Required by OMB Circular A-133 ....................................................................................................................... 24-25


Two Logan Square



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Independent Auditors' Report To the Board of Trustees, John B. Stetson Charter School An Aspira, Inc. of Pennsylvania School: We have audited the accompanying financial statements of the governmental activities and each major fund of John B. Stetson Charter School (the “School”) as of June 30, 2013, 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 and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that 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.

Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the governmental activities and each major fund of John B. Stetson Charter School as of June 30, 2013, and the changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Report on Summarized Comparative Information We have previously audited John B. Stetson Charter School’s June 30, 2012 financial statements and we have expressed an unmodified audit opinion on these financial statements in our audit report dated April 18, 2013. In our opinion, the summarized comparative information presented hereon as of and for the year ended June 30, 2012 is consistent in all material respects, with the audited financial statements from which it is has been derived. Other Matters Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the financial statements. In addition, the schedule of revenues, expenditures and changes in fund balance - budget and actual – Governmental fund, as listed in the table of contents is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records use to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditure of federal awards is fairly stated in all material respects in relation to the financial statements as a whole. In addition, the management’s discussion and analysis is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted by the United States of America. We have applied certain limited procedures, which consisted primarily of inquiries of management regarding the measurement and presentation of the required supplementary information. However, we did not audit the information and do not express an opinion on it. Report on Other Legal and Regulatory Requirements In accordance with Government Auditing Standards, we have also issued our report dated January 17, 2014 on our consideration of the John B. Stetson Charter School's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, 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 the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering John B. Stetson Charter School’s internal control over financial reporting and compliance.

January 17, 2014


3

Management’s Discussion and Analysis June 30, 2013 (With Summarized Comparative Financial Information for the Year June 30, 2012) The Board of Trustees of John B. Stetson Charter School, An Aspira, Inc. of Pennsylvania School offers readers of the School's financial statements this narrative overview and analysis of the financial activities of the School for the fiscal year ended June 30, 2013. We encourage readers to consider the information presented here in conjunction with the School's financial statements. Financial Highlights

Total revenues decreased $697,776 primarily due to a decrease in per student subsidy allocation and federal grants.

At the close of the current fiscal year, the School reported ending net assets of $1,484,329. This net assets balance represents an increase in net assets of $433,998 for the year ended June 30, 2013

The School's cash balance at June 30, 2013 was $677,386, representing a decrease of $406,909 from

June 30, 2012. Overview of the Financial Statements The discussion and analysis is intended to serve as an introduction to the School’s financial statements. The School’s financial statements as presented comprise four components: Management’s Discussion and Analysis (this section), the financial statements, supplementary information and single audit reporting. Government-Wide Financial Statements The government-wide financial 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 assets presents information on all of the School's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the School is improving or deteriorating. The statement of activities presents information showing how the School's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. The government-wide financial statements report on the function of the School that is principally supported by subsidies from school districts whose constituents attend the School. Fund Financial Statements A fund is a group of related accounts that are used to maintain control over resources that have been segregated for specific activities or purposes. The School, like governmental type entities, utilizes fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The School has three governmental funds - general, food services and student activities. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements.


4

Management’s Discussion and Analysis June 30, 2013 (With Summarized Comparative Financial Information for the Year June 30, 2012) Government-Wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of the School, assets exceeded liabilities by $1,484,329 as of June 30, 2013.

2013 2012


Total net assets 1,484,329$ 1,050,330$


2013 2012Revenues

Local education agencies 7,300,808$ 7,722,297$ Other local sources 85,980 119,450 Other sources 1,583 1,002 State sources 528,125 340,650 Federal sources 1,910,357 2,157,289

9,826,853 10,340,688


9,392,854 9,462,246



Net assets, ending 1,484,329$ 1,050,330$

Governmental Funds The focus of the School's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the School's financing requirements. In particular, fund balance may serve as a useful measure of a government's net resources available for spending for program purposes at the end of the fiscal year. The School's governmental funds, (the General and Student Activities Funds), reported an ending fund balance of $1,265,615. For the year ended June 30, 2013, the School's revenues ($9,826,853) were greater than its expenditures ($9,392,854) by $433,999. For the year ended June 30, 2012, the School’s revenues ($10,340,688) were greater than its expenditures ($9, 462,245) by $878,442.


5

Management’s Discussion and Analysis June 30, 2013 (With Summarized Comparative Financial Information for the Year June 30, 2012) Governmental Fund Budgetary Highlights Some categories of revenues and expenditures varied significantly from those budgeted. Expenses allocated from Aspira for maintenance, security, IT support and other administrative expenses were not included in the budget due to the deadline of the filing of the budget and the fact that the expenses could not be reasonably estimated. There were additional grants received during the year that the School was not aware of at the time of the budget submission. Capital Asset and Debt Administration Capital Assets As of June 30, 2013, the School's investment in capital assets for its governmental activities totals $474,603. This investment in capital assets includes classroom, office furniture and equipment and leasehold improvements. Major capital asset purchases during the year included the following:



Additional information on the School's capital assets can be found in Note 4 of this report. There were capital lease obligations related to the investment in capital assets amounting to $255,889 at June 30, 2013. Economic Factors and Next Year's Budgets and Rates The School's primary source of revenue, the per student subsidy provided by the School District of Philadelphia, will increase by approximately $671,000 for fiscal year 2013-2014, due to an increased subsidy per student of $501 for regular education and an increased subsidy per student of $2,582 for special education. Contacting the School's Financial Management The financial report is designed to provide interested parties a general overview of the School's finances. Questions regarding any of the information provided in this report should be addressed to the Chief Academic Officer, John B. Stetson Charter School, An Aspira, Inc. of Pennsylvania School, 3200 B Street, Philadelphia, PA 19134.



6

Statement of Net Assets June 30, 2013 (With Summarized Comparative Financial Information for the Year June 30, 2012)


Assets

Current assetsCash and cash equivalents 677,386$ 1,084,295$ State subsidies receivable 236,318 154,219 Federal subsidies receivable 714,398 957,247 Other receivables -- 10,852 Due from related parties 1,877,802 790,736 Prepaids 2,533 --




3,983,040$ 3,597,886$


Current liabilitiesAccounts payable and accrued expenses 279,681$ 455,741$ Accrued payroll and payroll taxes 922,207 775,975

Refundable advances 17,739 15,846

Due to related parties 1,023,195 928,051





Net assets

Invested in capital assets, net of related debt 218,714 228,594 Unrestricted 1,265,615 821,736

Total net assets 1,484,329 1,050,330

3,983,040$ 3,597,886$



7





Governmental activitiesInstruction 6,018,058$ --$ 1,638,034 (4,380,024)$ (4,141,475)$ Student support services 566,563 -- -- (566,563) (598,984) Administrative support 1,616,068 -- -- (1,616,068) (2,486,731) Pupil health 194,188 -- -- (194,188) (78,252) Business services 547,264 -- -- (547,264) (83,858) Food services 201,078 -- 288,624 87,546 284,849 Student activities 85,529 85,980 -- 451 68,915 Depreciation 164,106 -- -- (164,106) (149,969)

9,392,854 85,980 1,926,658 (7,380,216) (7,185,505)


All other revenue 1,583 1,000

7,814,215 8,063,947



Net assets - end of year 1,484,329$ 1,050,330$

Functions

ProgramRevenues



8




Assets

Cash and cash equivalents 610,110$ 67,276$ 677,386$ 1,084,295$ State subsidies receivable 236,318 -- 236,318 154,219 Federal subsidies receivable 714,398 -- 714,398 957,247 Other receivables -- -- -- 10,852 Due from related parties 1,877,802 -- 1,877,802 790,736 Prepaids 2,533 -- 2,533 --

3,441,161$ 67,276$ 3,508,437$ 2,997,349$

Liabilities

Accounts payable 279,681$ --$ 279,681$ 455,741$ Salaries and contracts payable 922,207 -- 922,207 775,975 Refundable advances 17,739 -- 17,739 15,846 Due to related parties 1,023,195 -- 1,023,195 928,051


Fund Balances

Unrestricted fund balances 1,198,339 67,276 1,265,615 821,736

3,441,161$ 67,276$ 3,508,437$ 2,997,349$

Functions



9

Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets June 30, 2013 Total Fund Balances for Governmental Funds 1,265,615$




218,714




10



General Services Activities Governmental GovernmentaFund Fund Fund Activities Activities

RevenuesLocal educational agency assistance 7,300,808$ --$ --$ 7,300,808$ 7,722,297$ Other local sources -- -- 85,980 85,980 119,450 Other sources 1,583 -- 1,583 1,002 State sources 511,824 16,301 -- 528,125 340,650 Federal sources 1,638,034 272,323 -- 1,910,357 2,157,289

9,452,249 288,624 85,980 9,826,853 10,340,688


9,096,367 201,078 85,529 9,382,974 9,532,782

Excess of revenuesover expenditures 355,882 87,546 451 443,879 807,906

Other financing sources (uses)Transfer in -- (87,546) 871 (86,675) (296,217) Transfer out 86,675 -- -- 86,675 296,217

86,675 (87,546) 871 -- --

Net change in fund balances 442,557 -- 1,322 443,879 807,906


Fund balances - end of year 1,198,339$ --$ 67,276$ 1,265,615$ 821,736$

Functions



11



Capital outlays 38,172 Payments under capital leases 116,054 Depreciation expense (164,106)




12



John B. Stetson Charter School, An Aspira, Inc. of Pennsylvania School (the “School”) was incorporated in June 2010 under the non-profit corporation law of the Commonwealth of Pennsylvania and began operations in September 2010. The School serves grades five through eight and is located in Philadelphia, Pennsylvania. The School obtained its charter as a result of the School District of Philadelphia Renaissance Schools Initiative. The School operates under the provisions enacted by the General Assembly of the Commonwealth of Pennsylvania in 1997 and is operating under a charter school contract ending on June 30, 2015. The net assets of the School would remain with the School if their charter was not renewed. The School has financial accountability and control over all activities related to the students' education. The School receives funding from local, state, and federal government sources and must comply with the requirements of these funding source entities. However, the School is not included in any other governmental "reporting entity" as defined by the Governmental Accounting Standards Board (“GASB”) pronouncement. In addition, there are no component units as defined in the standards established for defining and reporting on the financial reporting entity.

2. Summary of Significant Accounting Policies Basis of Presentation The financial statements of the School have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as applied to governmental units. The Governmental Accounting Standards Board is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The GASB has issued a codification of governmental accounting and financial reporting standards. This codification and subsequent GASB pronouncements are recognized as U.S. generally accepted accounting principles for state and local governments that have implemented the accounting pronouncement on financial reporting for state and local governments, “Basic Financial Statements and Management's Discussion and Analysis - for State and Local Governments”. Comparative Financial Information The financial statements include certain prior year summarized comparative information in total. Such information does not include sufficient detail to constitute a presentation in conformity with generally accepted accounting principles. Accordingly, such information should be read in conjunction with the School's financial statements for the year ended June 30, 2012 from which the summarized information was derived.



Fund Financial Statements - governmental funds financial statements are reported using the

current financial resources measurement focus and the modified accrual basis of accounting.


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Revenues are recognized as soon as they are 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. The government reports the following major governmental funds: General Fund - The General Fund is the operating fund of the School and accounts for all





Restricted - This component of net assets consists of constraints placed on net asset use through external constraints imposed by creditors such as through debt covenants, grantors, contributors, or laws or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation. The School presently has no restricted net assets.




14


Concentration of Credit Risk Financial instruments which potentially subject the School to concentrations of credit risk consist of cash in interest bearing accounts and cash equivalents, contributions and grants receivables. Cash and cash equivalents are held primarily at one high-credit quality financial institution. At various times during the years ended June 30, 2013 and 2012 funds held at this financial institution may have exceeded the FDIC insurance limit. At June 30, 2013 and 2012, the School received seventy-eight percent and seventy-five percent, respectively of their total revenue from one source.

Fair Value of Financial Instruments The carrying amounts of financial instruments including state and federal subsidies receivable, accounts payable and salary and contracts payable approximate their fair values because of the relatively short maturity of these investments.

Capital Assets Capital assets, which include furniture and equipment, are reported in the government-wide financial statements. All capital assets are capitalized at cost and updated for additions and retirements during the year. The School does not possess any infrastructure as they lease the building from the School District of Philadelphia. Improvements are capitalized; the cost of normal maintenance and repairs that do not add to the value of the asset or materially extend an asset's life are not. Capital assets of the School are depreciated using the straight-line method over the useful lives of the assets. The estimated useful lives of furniture and equipment range from five to seven years. Leasehold improvements are amortized over the life of the lease.

Income Tax Status The School is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Service Code. Accordingly, no provision or liability for income taxes has been recorded in the financial statements. The School adopted the accounting pronouncement related to uncertain tax positions effective July 1, 2010. Upon adoption of this accounting pronouncement, the School had no unrecognized tax benefits. Furthermore, the School had no unrecognized tax benefits at June 30, 2013 and 2012. There were no open tax years prior to June 2010. In addition, the School has no income tax related penalties or interest for the periods reported in these financial statements.

3. Cash and Cash Equivalents The School considers all highly liquid debt instruments purchased with a maturity of three months or less at the time of acquisition to be cash equivalents.

Deposits Custodial credit risk is the risk that in the event of a bank failure, the government's deposits may not be returned to it. The School does not have a policy for custodial credit risk. As of June 30, 2013 and 2012, $211,546 and $795,505, respectively of the School's bank balance was exposed to custodial credit risk as follows:

2013 2012

Uninsured and uncollateralized 211,546$ 795,505$ Plus: Insured amount 540,069 463,864 Less: Outstanding checks (74,229) (175,074) Plus: Deposits in transit -- -- Carrying amount - bank balances 677,386 1,084,295 Plus: Petty cash -- --

Total cash per financial statements 677,386$ 1,084,295$


15


4. Capital Assets




801,023 -- 38,172 839,195 Less: Accumulated depreciation 200,486 -- 164,106 364,592


Depreciation expense for the year ended June 30, 2013 and 2012 was $164,106 and $149,969, respectively.

5. Capital Leases

The School leases furniture, under capital leases, with a total original cost of $558,479 for each of the years ended June June 30, 2013 and 2012. The leases will be paid off between 2015 and 2016, with monthly principal and interest payments of $11,649. The interest rate on these capital leases is 7.4 percent. Furniture and equipment is included in property and equipment in the statements of net assets at June 30, as follows:

2013 2012

Furniture and equipment 558,479$ 558,479$ Less: Accumulated depreciation (260,624) (148,928)

297,855$ 409,551$



2014 139,784$ 2015 119,707 2016 16,940 2017 -- 2018 --

276,431






16



Charter schools are funded by the local public school district in which each student resides. The rate per student is determined annually and is based on the budgeted total expenditure per average daily membership of the prior school year for each school district. The majority of the students of the School reside in Philadelphia. For the years ended June 30, 2013 and 2012, the rate for the School District of Philadelphia was $8,068 and $8,773, respectively per year for regular education students plus additional funding for special education students. The annual rate is earned monthly and paid when billed by the School District of Philadelphia and is prorated if a student enters or leaves during the year. Total revenue from local sources was $7,300,808 and $7,722,297 for the fiscal year ended June 30, 2013 and 2012, respectively.


8. Leasing Arrangements The School incurs a facilities charge, levied by the School District of Philadelphia, under a license agreement by which the School occupies the building located at 3200 B Street, Philadelphia, PA. Total facilities charge for the years ended June 30, 2013 and 2012 amounted to $337,908 and $332,147, respectively. Under the agreement, the School District provided snow and waste removal, utilities, and occupancy for the School.

9. Retirement Plan

The School contributes to the Public School Employees’ Retirement System (the “System”), a governmental cost-sharing multiple-employer defined benefit pension plan. The plan provides retirement and disability benefits, legislatively mandated ad hoc cost-of-living adjustments, and healthcare insurance premium assistance to qualifying annuitants. The Public School Employees’ Retirement Code (Act No. 96 of October 2, 1975, as amended) (24 Pa.C.S. 8101-8535) assigns the authority to establish and amend benefit provisions to the System. The System issues a comprehensive annual financial report that includes financial statements and required supplementary information for the plan. A copy of the report may be obtained by writing to Diane J. Wert, Office of Financial Management, Public School Employees’ Retirement System, P.O. Box 125, Harrisburg, Pennsylvania 17108-0125. This publication is also available on the PSERS website at www.psers.state.pa.us/publications/cafr/index.htm. Member contributions are as follows:





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- Members who joined the System after June 30, 2011, may choose between two classes of membership in PSERS, and therefore, two base contribution rates. These rates are between 7.5 percent and 9.5 percent (Membership class T-E) and 10.3 percent and 12.3 percent (Membership class T-F).


Payroll expense for employees covered by the System for the year ended June 30, 2013 and 2012 were approximately $4.5 and $4.2 million, respectively. In accordance with Act 29 of 1994, the Commonwealth of Pennsylvania will pay school entities for contributions made to the System based on the formula in Act 29 of 1994, but not less than one-half of the school entities' contributions. The School’s contributions due to the Plan for the years ending June 30, 2013 and 2012 totaled $562,846 and $354,850, respectively.


11. Related Party The School is associated with Aspira, Inc. of Pennsylvania (“Aspira”) through board control. The School is associated with Aspira Community Enterprises, Inc. (“ACE”), Antonia Pantoja Charter School (“Pantoja”), Aspira Bilingual Cyber Charter School (“Cyber”), Olney High School (“Olney”) and ACE/Dougherty, Inc. through common board membership and management. The School's bylaws stipulate that a majority of its members at all times shall be appointees of Aspira. The School made payments to Aspira in reimbursement for maintenance, security, IT support and other administrative expenses paid by Aspira in the amount of $1,320,837 and $1,206,705 for the years ended June 30, 2013 and 2012, respectively. All receivable and payables with related parties are unsecured, non-interest bearing and have no repayment terms.


ASPIRA, Inc. of Pennsylvania 1,877,802$ --$ 790,736$ --$ Antonia Pantoja Charter School -- 320,037 -- 316,053Eugenio Maria de Hostos Charter School -- 579,691 -- 578,547Aspira Bilingual Cyber Charter School -- 72 -- 0Olney Charter High School -- 123,395 -- 33,451

1,877,802 1,023,195 790,736 928,051


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19

John B. Stetson Charter School An Aspira, Inc. of Pennsylvania School Schedule of Revenues, Expenditures and Change in Fund Balance Budget and Actual Governmental Fund Year Ended June 30, 2013

Over(Under)

Budget Actual FinalOriginal Final Amounts Budget

RevenuesLocal educational agency assistance 4,815,400$ 4,815,400$ 7,300,808$ (2,485,408)$ Other local sources -- -- 87,563 (87,563) State sources 3,862,200 3,862,200 528,125 3,334,075 Federal sources 1,043,000 1,043,000 1,910,357 (867,357)

9,720,600 9,720,600 9,826,853 (106,253)

ExpendituresInstruction 6,709,157 6,709,157 6,172,284 536,873 Support services 542,985 542,985 566,563 (23,578) Administrative support 1,901,728 1,901,728 1,616,068 285,660 Pupil Health 54,280 54,280 194,188 (139,908) Business Services 69,912 69,912 547,264 (477,352) Food Services -- -- 201,078 (201,078) Student Activities -- -- 85,529 (85,529)

9,278,062 9,278,062 9,382,974 (104,912)

Net change in fund balances 442,538 442,538 443,879 (1,341)

Fund balances - beginning of year -- -- 821,736 --

Fund balances - end of year 442,538$ 442,538$ 1,265,615$ (1,341)$


20

John B. Stetson Charter School An Aspira, Inc. of Pennsylvania School Schedule of Expenditures of Federal Awards Year Ended June 30, 2013












Title III - Language Instruction LEP I 84.365 010-131089 07/01/12-09/30/13 56,218 56,218 -- 56,218 56,218 --

Title III - Language Instruction LEP I 84.365 010-121089 07/01/11 - 09/30/12 43,864 43,864 43,864 -- -- --

Charter School Program Implementation Grant I 84.282B U282B100035 10/01/11 - 09/30/12 199,984 -- (15,846) -- -- (15,846)

ARRA - SIG I 84.388 139-121089 01/26/13 - 09/30/13 876,400 602,525 -- 876,400 893,009 273,875

ARRA - SIG I 84.388 139-111089 01/26/12 - 09/30/12 872,600 261,780 245,171 16,609 -- --


IDEA I 84.027 N/A 07/01/12 - 06/30/13 193,590 -- -- 193,590 193,590 193,590

IDEA I 84.027 N/A 07/01/11 - 06/30/12 182,235 182,235 182,235 -- -- --

Total U.S. Department of Education 3,906,965 1,898,675 875,761 1,638,034 1,638,034 615,120






School Breakfast Program I 10.553 367 07/01/12 - 06/30/13 50,843 27,768 -- 40,568 40,568 12,800 School Breakfast Program I 10.553 367 07/01/11 - 06/30/12 50,843 10,889 10,889 -- -- --



D - Direct Funding



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John B. Stetson Charter School An Aspira, Inc. of Pennsylvania School Notes to Schedule of Expenditures of Federal Awards June 30, 2013 1. General Information The accompanying schedule of expenditures of Federal awards presents the activities in all of the Federal

financial assistance programs of John B. Stetson Charter School, An Aspira, Inc. of Pennsylvania School. Financial awards received directly from federal agencies, as well as financial assistance passed through other governmental agencies or non-profit organizations, are included in the schedule.





Two Logan Square



215 546 2140 . fax 215 546 2148

www.withum.com






22

Report on Internal Control Over Financial Reporting and on

Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing

Standards

Independent Auditors’ Report To the Board of Trustees, John B. Stetson Charter School, An Aspira, Inc. of Pennsylvania School: We have audited, in accordance with 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 financial statements of the governmental activities and each major fund of John B. Stetson Charter School (the "School”) and the related notes to the financial statements, as of and for the year ended June 30, 2013, which collectively comprises the School’s basic financial statements and have issued our report thereon dated January 17, 2014. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered John B. Stetson Charter School’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of John B. Stetson Charter School’s internal control. Accordingly, we do not express an opinion on the effectiveness of John B. Stetson Charter School’s internal control. 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 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 those 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 basic financial statements are free of 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 report on the School’s internal control over financial reporting and on compliance and other matters based on an audit of the financial statements performed in accordance with Government Auditing Standards. This 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 on compliance and other matters based on an audit of the financial statements performed in accordance with Government Auditing Standards. Accordingly, this report is not suitable for any other purpose.

January 17, 2014

Two Logan Square



215 546 2140 . fax 215 546 2148

www.withum.com






24




The Board of Trustees, John B. Stetson Charter School, An Aspira, Inc. of Pennsylvania School: Report on Compliance for Each Major Federal Program We have audited John B. Stetson Charter School’s compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of John B. Stetson Charter School’s major Federal programs for the year ended June 30, 2013. John B. Stetson Charter School’s major Federal programs are identified in the summary of auditors’ results section of the accompanying schedule of findings and questioned costs. Management’s Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its Federal programs. Auditors’ Responsibility Our responsibility is to express an opinion on compliance for each of John B. Stetson Charter School’s major Federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB 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 obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about John B. Stetson Charter School’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on John B. Stetson Charter School’s compliance with those requirements.

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Opinion on Each Major Federal Program In our opinion, John B. Stetson Charter School complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2013. Report on Internal Control Over Compliance Management of John B. Stetson Charter School is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered John B. Stetson Charter School’s internal control over compliance with the types of requirements that could have a direct and material effect on each major Federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of John B. Stetson Charter School’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.

January 17, 2014

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John B. Stetson Charter School An Aspira, Inc. of Pennsylvania School Schedule of Findings and Questioned Costs Year Ended June 30, 2013 Section 1 – Summary of Auditors' Results Financial Statements Type of auditors' report issued: Unqualified Internal control over financial reporting: Material weaknesses identified? No Control deficiencies identified that are not considered to be material weaknesses? None reported Noncompliance material to financial statements noted? No Federal Awards Internal control over major programs: Material weaknesses identified? No Control deficiencies identified that are not considered to be material weaknesses? None reported



84.010 84.388

Title I, Improving Basic Programs ARRA - SIG

Dollar threshold used to distinguish between Type A and Type B programs: $300,000 Auditee qualified as low-risk auditee? No Section 2 – Financial Statement Findings None reported. Section 3 – Federal Award Findings and Questioned Costs None reported. Section 4 – Follow Up Prior Year Audit Findings There were no prior year audit findings.

Aspira 6 Detail App 6

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Transcript of Aspira 6 Detail App 6