D'Arbonne Woods Charter School Inc · 2020. 9. 10. · D'Arbonne Woods Charter School, Inc....

D'Arbonne Woods Charter School, Inc. FarmervJUe, Louisiana

Financial Report For the Years Ended June 30, 2012 and 2011

D'ARBONNE WOODS CHARTER SCHOOL, INC. Farmerville, Louisiana

Table of Contents

Page

Independent Auditors'Report 1

Financial Statements

Statements of Financial Position 2

Statements of Activities 4

Statements of Cash Flows 6

Notes to the Financial Statements 7

Supplementary Information

Independent Auditors' Report on Intemal Control Over Financial Reporting and Compliance And Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards 14

Schedule of Findings 16

Status of Prior Year Findings 23

Agreed-Upon Procedures

Independent Accountants' Report on Applying Agreed-Upon Procedures 27

Schedules Required by State Lscw 30

Schedule 1 ~ General Fund Instructional and Support Expenditures

and Certain Local Revenue Sources- 32

Schedule 2 - Education Levels of Public School Staff 33

Schedule 3 ~ Number and Type of Public Schools 34

D'ARBONNE WOODS CHARTER SCHOOL, INC. Farmerviile, Louisiana

Table of Contents

Page

Schedule 4 - Experience of Public Principals and Full-Time Classroom Teachers 35

Schedule 5 ~ Public School Staff Data 36

Schedule 6 - Class Size Characteristics 37

Schedule 7 - Louisiana Educational Assessment Program (LEAP)

for the 21' ' Century 38

Schedule 8 -• The Graduation Exit Exam (GEE) for the 21^^ Century 40

Schedule 9 - The iLEAP Tests 41

Agreed-Upon Procedures

Independent Accountants' Report on Applying Agreed-Upon Procedures 45

Financial Management 46

Credit Cards 47

Travel and Expense Reimbursement 53

Contracts 57

Payroll and Personnel 61

I uFFEY, HUFFMAN, RACSDALE & SOIGNIER

John L. Luffey, MBA, CPA (1963-2002) Francis I. Huffman, CPA Philip A. Ragsdale, CPA David Ray Soignier, CPA, MBA

(A PROFESSIONAL ACCOUNTING CORPORATION)

CERTIFIED PUBUC ACCOUNTANTS

John Herman, CPA Lynn Andries, CPA EstlierAtteberry, CPA Lori Vl'oodard, MBA, CPA

INDEPENDENT AUDITORS' REPORT

Board of Directors D'Arbonne Woods Charter School, Inc. Farmerviile, Louisiana

We have audited the accompanying statements of fmancial position ofthe D'Arbonne Woods Charter School, Inc. (a not-for-profit organization - the School) as of June 30,2012 and 2011, aud the related statements of financial position, statements of activities, and cash flows for the years then ended. These financial statements are the responsibility ofthe School's management. Our responsibility is to express an opinion on these fmancial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the fmancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fmancial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the fmancial statements referred to above present fairly, in all material respects, the financial position ofthe School as of and for the years ended June 30,2012 and 2011, aj id the changes in net assets and its cash flows for the years then ended in confonnity with accounting principles generally accepted in the United States of America.

In accordance with Goveniment Auditing Standards, we have also issued our report dated November 9,2012, on our consideration ofthe School's intemal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of intemal control over fmancial reporting and compliance and the results of that testing, and do not provide an opinion on intemal control over financial reporting or compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction vvdth this report in considering the results of our audits.

(A Professional Accounting Corporation)

November 9, 2012

1100 North 18th Street Monroe, Louisiana 71201 Tel: (318)387-2672 • Fax: (318)322-8866 • Website: www.afuiiservicecpafirm.com

MEMBERS OF THE AMERICAN INSTITUTE OF CERTiFiED PUBLIC ACCOUNTANTS

http://www.afuiiservicecpafirm.com

D'ARBONNE WOODS CHARTER SCHOOL,

Farmerviile, Louisiana

Statements of Financial Position

Assets Cash Accounts receivable Grants receivable Unamortized bond issuance cost Land Construction in progress Equipment Land held for sale Accumulated depreciation

Total assets

Unrestricted

4,987,543 10,950

124,592 128,801 473,787

29,000 386,702

55,310 (168,997)

6,027,688

June 30, 2012

Temporarily

Restricted

$ 6,564 $ -

-

-

--

-

-

-

$ 6,564 $

Total

4,994,107 10,950

124,592 128,801 473,787

29,000 386,702

55,310 (168,997)

6,034,252

Liabilities and net assets

Liabilities Accoimts payable School activity funds Payroll liabilities Compensated absences Bond payable

Total liabilities

Net assets Unrestricted net assets Temporarily restricted net assets

Total net assets

Total liabilities and net assets

$ 156,374 $ 3,448

271,853 74,783

5,100,000 5,606,458

421,230 -

421,230

$ 6,027,688 $

$

-„

-

-

-

"

6,564 6,564

6,564 $

156,374 3,448

271,853 74,783

5,100,000 5,606,458

421,230 6,564

427,794

6,034,252

The accompanying notes are an integral part of these statements

June 30,2011

Temporarily Unrestricted Restricted Total

$ 5,524,535 $ 109,247 $ 5,633,782 12,802 - 12,802

274,739 - 274,739 136,378 - 136,378

301,316 - 301,316

(88,496) - (88,496)

$ 6,161,274 $ 109,247 $ 6,270,521

52,875 $ - $ 52,875

521,646 - 521,646 56,569 - 56,569

5,100,000 - 5,100,000 5,731,090 - 5,731,090

430,184 - 430,184

109,247 109,247

430,184 109,247 539,431

$ 6,161,274 $ 109,247 $ 6,270,521

D'ARBONNE W O O D S C H A R T E R SCHOOL, EVC.


Statements of Activities

For the Year Ended

Unrestricted

3,137,622 $ 424,109 14,387

. ---

49,333 43,716 42,041

3,711,208

132,053

June 30,2012 Temporarily Restricted

S --

4,482 39,456 (22,868) 8,300 ---

29,370

(132,053)

Total

3,137,622 424,109 14,387

4,482 39,456 (22,868) 8,300

49,333 43,716 42,041

3,740,578

-

Support and revenue State public sciiool funding Federal sources State sources School activity funds

Donations Fundraisers Cost of direct benefit to donors O&et income

Meal income Other income Interest income

Total

Net assets released from restrictions

Total support and revmue 3,843,261 (102,683) 3,740,578

Expenses Program expenses

Regular pro-ams School administration Food service Operation and maintenance of plant Special education programs Pupil transportation Special programs Pupil support Other instructional programs Instructional staff services Community services Depreciation School activity funds

iVIanagement and general Facilities acquisition Business services General administration Central services Debt services - interest

Total expenses

Increase (decrease) in net assets

Net assets at beginning of year

Net assets at end of year


1,472,444 283,118 316,671 363,745 173,726 131,724 145,488 154,846 57,879

263,255 3,000

80,493 21,982

77,870 150,572 94,372 9,410

51,620 3,852,215

(8=954)

430,184

421,230 $

--•-----------

------

(102,683)

109,247

6,564 $

1,472,444 283,118 316,671 363,745 173,726 131,724 145,488 154,846 57,879

263,255 3,000

80,493 21,982

77,870 150,572 94,372 9,410

51,620 3,852,215

(111,637)

539,431

427,794

Unrestricted

2,644,420 $ 462,661

June 30,2011 Temporarily

Restricted

- $

Total

2,644,420 462,661

1,500 - 1,500

85,565 - 85,565 21,999 - 21,999

18,553 - 18,553 3,234,698 - 3,234,698

120,753 (120,753)

3.355,451 (120,753) 3,234,698

1,819,490 - 1,819,490 257,812 - 257,812 155,942 - 155,942 327,653 - 327,653 166,191 - 166,191 120,535 - 120,535

18,406 • 18,406 4,056 - 4,056 3,107 - 3,107

58,220 - 58,220

$

157,676 157,302 38,583

25,500 3,310,473

44,978

385,206

430,184 $

-

.

-

(120,753)

230,000

109,247 $

157,676 157,302 38,583

25,500 3,310,473

(75,775)

615,206

539,431

I'ARBONNE WOODS CHARTER SCHOOL, INC. Farmerviile, Louisiana

Statements of Cash Flows

For the Year Ended June 30,

2012 2011 Cash flows from operating activities

Increase (decrease) in net assets !

Adjustment to reconcile operating loss to net cash provided by operating activities

Depreciation and amortization

Changes in assets and liabilities Accounts receivable Grants receivable Bond amortization Accounts payable PayroU liabilities

Net cash provided (used) by operating activities

Cash flows from capital and related financing activities

Purchase of land, construction in progress and equipment Issuance of bonded debt Costs of bond issuance Payments of short-term debt

Net cash provided (used) by capital and related fmancing activities

Net increase (decrease) in cash

Cash at begiiming of year

Cash at end of year

(111,637) $

80,501

(75,775)

65,797

1,852

150,147

7,577

106,947

(231,579)

3,808

(643,483)

(643,483)

(639,675)

5,633,782

4,994,107 S

(8,466)

12,080

38,046

398,113

429,795

(160,037)

5,100,000

(143,955)

(70,000)

4,726,008

5,155,803

477,979

5,633,782

Supplemental disclosure of cash flow information Interest paid 51,620 S 26,070


6

D'ARBONNE WOODS CHARTER SCHOOL, INC.


Notes to the Financial Statements

For the Years Ended June 30, 2012 and 2011

1. Summary of Significant Accounting Policies

The D*Arbomie Woods Charter School, Inc. (the School) was granted a Type 2 charter by the Louisiana Board of Elementary or Secondary Education (BESE) to provide educational services in Union Parish to students beginning vsdth the 2009-2010 school year. The curriculum is designed to meet the unique needs of rural, at-risk students. The School served eligible students in kindergarten through eighth grade in the 2011-2012 school year. At its March 9, 2012 meeting the Louisiana State Board of Elementary and Secondary Education approved a material amendment to the School's charter allowing an increase in total enrollment from 323 to 560 students and to add grades nine through twelve beginning with grade nine in the fall of 2012 subject to certain conditions set by the State Superintendent of Education. The School is govemed by a seven member board of directors.

A. Financial Reporting

The School follows the guidance of the Not-for-Profit Entities Topic of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 958. The School is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted, temporarily restricted and permanently restricted. In addition, the School is required to present a statement of cash flows. Restricted contributions, for which the restriction is met in the same year, are classified as unrestricted,

B. Basis of Accounting

Basis of accoimting refers to when revenues and expenses are recognized in the accounts and reported on the financial statements. The financial statements of the School are prepared on the accrual basis of accoimting whereby revenues are recognized when eamed and expenses are recognized when incurred.

C. Revenues

The SchooFs primary source of fimding is through the Minirainn Foundation Program (MFP) fimded through the State Public School Fund. The School receives fimding per eligible student in attendance on October 1 , payable in monthly installments. Adjustments are normally made in the following year. State and Federal grants are generally on a cost reimbursement basis whereby revenues are recognized when related eligible expenses are incurred.

I'ARBONNE WOODS CHARTER SCHOOL, INC.




D. Property, Plant, and Equipment

The School has adopted the practice of capitalizing all expenditures for depreciable assets where the unit cost exceeds $500 and the usefiil life exceeds one year. Effective July 1, 2011, the School changed the capitalization policy to $2,000 for all new assets. Fixed assets are recorded at historical cost or estimated historical cost if historical cost is not available. Betterments that naturally add to the value of related assets or materially extend the useful lives of assets are capitalized. Normal building maintenance and minor equipment purchases are included as expenses ofthe School.

Depreciation of capital assets is calculated using the straight-line method over the estimated useful lives ofthe assets. The following are the estimated useful lives of the capital assets ofthe School:

Asset Buildings Portable School Building Fumiture and Equipment Computer Equipment Buses Software

Useful Life fin years) 30 5

5-7 3

5-10 5

E. Compensated Absences

The School grants all employees of the School a total of ten days of paid sick leave per year. Sick leave may be accumulated from year to year, not to exceed 90 days. Upon retirement or death prior to retirement, the School will pay to the employee or his/her estate for any unused sick leave not to exceed 25 days. In addition, all full-time personnel employed on a twelve month fiscal year basis are entitled to annual leave of ten to fifteen days per year, based upon years of consecutive service. Leave may be acciomulated at a rate of five days per year with a maximum of twenty days.

F. Income Taxes

The School is recognized by the Intemal Revenue Service as a Secfion 501(c)(3) tax-exempt organization. However, income from certain activities not directly related to the School's tax-exempt purpose is subject to taxation as unrelated business income.

J'ARBONNE WOODS CHARTER SCHOOL, INC.




G. StatementofCashFlows

For purposes of the Statement of Cash Flows, the School considers all investments purchased with an original maturity of three months or less to be cash equivalents.

H. Use of Estimates

The preparation of financial statements in conformity vdth accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

I. Concentrations

The School received 85% and 82% of its revenues in the years ended June 30, 2012 and 2011 respectively, fiom the State of Louisiana's Minimum Foundation Program, in accordance with its charter school contract with the State.

J. Comparability

The comparability of the financial statements between the prior year and the current year is limited for several reasons. The School added another grade and increased classroom size thus greatly increasing revenues and expenditures. The chart of accounts was redesigned with some items being classified differently than in the prior year. While it was not practical to reclassify all the prior year balances, some items have been reclassified. For the year ended June 30, 2012, the Administrative Expenses were allocated at a ratio of 25% to General Administration and 75%o to School Administration.

2. Cash

The School's cash (bank balance) at June 30, 2012, was $5,163,825 of which $250,000 was covered by Federal Deposit Insurance Corporation and approximately $4,593,500 unsecured. The remaining $320,325 represents the amount transferred to the paying agent to be held in tmst for the repayment of the School's Qualified School Constmcfion Bond and consists of securities issued or guaranteed by the U. S. govemment. A complete breakdown of cash is as follows:





Bank Bank Bank Balance Balance Balance Book (secured) (unsecured) (total) Balance

Cash $ 250,000 $ 302,490 $ 552,490 $ 382,772

Cash held for school facility constmction - 4,291,010 4,291,010 4,291,010

Cash held by fiscal agent 320,325 ;:____ 320,325 320,325

^ 570,325 $ ...4,593,500 $ 5,163,825 $ 4,994,107

3. Grants and Other Receivables

Grants receivables are as follows:

Grant Receivable

Title I $92,646 IDEA Parte 18,645 Title II 3,434 State Grants 9,867

Total $124,592

The other receivables are comprised primarily of various refunds, commissions and student lunch balances. The School expects to collect substantially all outstanding balances and, therefore, does not include an estimate for allowance for doubtful accounts.

4. School Activity Funds

School Activity Funds are monies collected through dues, fimdraisers, admissions or other money generating activity by an organizational unit within the School. It also includes donations from outside sources when such donation is made for a specific or restricted purpose. These monies are kept separate from govemmental monies provided for regular instructional programs or facilities.

Any School Activity Funds collected for a specific purpose are considered temporarily restricted until such fimds are spent unless eamed and spent during the same period. Refer to Note 10.

10





5. Land and Construction in Progress

In August 2011, the School purchased 21.65 acres of land at a cost of $55,310 for the purpose of constmcting its school facility. Subsequent to the purchase it was detennined that this tract of land was not suitable for constmction ofthe school. The School has approved advertising the land for sale and it is classified as Land Held for Sale on the financial statements.

In March 2012, the School purchased 41.55 acres of land at a total cost of $473,387 for the purpose of constmcting its school facility. Work on the constmction of the school facility is classified as Constmction in Progress.

6. Equipment

Depreciation expense totaled $80,483 and $58,220 for the years ended June 30, 2012 and 2011 respectively. All assets acquired with Louisiana Department of Education fiinds are owned by the School while used for the purpose for which they were purchased. The Louisiana Department of Education, however, has a reversionary interest in these assets. Should the charter not be renewed, title in any assets purchased with those fmids will transfer to the appropriate agency,

7. Retirement Plan

Certain employees of the School participate in the Teachers' Retirement System of Louisiana (TRSL). The TRSL is a cost-sharing, multiple-employer defined benefit pension plan administered by a separate board of trustees. Pertinent information relative to the plan follows:

Plan Description: The TRSL provides retirement benefits as well as disability and survivor benefits. Ten years of service credit are required to become vested for retirement benefits, and five years to become vested for disability and survivor benefits. Benefits are established and amended by state statute. The TRSL issues a publicly available financial report that includes financial statements and required supplementary information for the TRSL. That report may be obtained by writing to the Teachers' Retirement System of Louisiana, P.O. Box 94123, Baton Rouge, LA 70804-9123.

Funding Policy: Plan members are required to contribute 8% of their annual covered salary. The School is required to contribute at an actuarially determined rate. The current rate is 15,5% of annual eligible covered payroll. Member contributions and employer contributions for the TRSL are established by state law, and rates are

11

t'ARBONNE WOODS CHARTER SCHOOL, INC.




established by the Public Retirement System's Actuarial Committee. The School's contributions to the plan were $381,323 and $230,193 for the years ended Jime 30, 2012 and 2011 respectively, which is equal to the required contribution.

8. Line of Credit

The School had a line of credit with a local bank in the amount of $150,000, of which $70,000 was outstanding at June 30, 2010. The line of credit matured and was paid off in 2011.

9. Bond Payable

The School issued a $5.1 million Qualified School Constmction Bond dated December 21, 2010 bearing interest at 1.0%) for the purpose of constmcting a school facility. Interest is payable quarterly with the full principal amount due at maturity on December 15,2029.

10. Temporarily Restricted Net Assets

In a prior year, the School received the Walton grant of which $109,247 remained unspent and restricted at June 30, 2011. During the 2012 fiscal year, the stipulations of the grant were met thus releasing the restriction. Another $21,982 of net assets released from restrictions were School Activity Funds eamed and expended during the audit year. The remaining $824 released from restrictions were donations in the General Fund received and expended during the period. The addition of $6,564 to Temporarily Restricted Net Assets during the year was School Activity Funds that were eamed but not yet spent.

June 30,2011 Received Released June 30,2012

Walton Grant $ 109,247 $ - $ (109,247) $

School Activity Funds - 28,546 (21,982) 6,564

Donations -__ 824_ (824) -__

Total Temporarily Restricted $ 109,247 $ 29,370 $ (132,053) $ 6,564

12





11. Uncertain Income Taxes

The School has adopted the provisions of FASB ASC 740 Accounting for Uncertainty in Income Taxes. The implementation of this topic had no impact on the statement of financial position or statement of activities.

12. Subsequent Events

Management has evaluated subsequent events through the date that the financial statements were available to be issued, November 9, 2012, and determined that only one event occurred that requires disclosure.

In 2012-13, the School is receiving less Minimum Foundation Program fimding per student than in 2011-12 due to decreases in Federal fimding and local taxes. The impact to the School is expected to be approximately $225,000 for 2012-13.

13

I UFFEY, HuFFMAH, R A G S D M E & SoiC^NlER

John L. Luffey, MBA, CPA (1963-2002) Francis 1. Huffman, CPA PhllipA. Ragsdale, CPA David Ray Soignier, CPA, MBA

(A pROFBSSioNAi ACCOUNTING CORPORATION)

CERTIFIED PUBLIC ACCOUNTANTS

John Herman, CPA Lynn Andries, CPA Esther Atteberry, CPA Lori Woodard, MBA, CPA

;' REPORT ON INTERNAL CONTROL OVER AND COMPLIANCE AND OTHER MATTERS BASED

ON AN AUDIT OF FINANCIAL STATEMENTS PEREORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

Board of Directors D'Arbonne Woods Charter School, Inc. Farmerviile, Louisiana

We have audited the financial statements of D'Arbonne Woods Charter School, Inc. (the School) as of and for the year ended June 30, 2012, and have issued our report thereon dated November 9, 2012. We conducted our audit in accordance with auditing staadards 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 ofthe United States.

Internal Control over Financial Reporting

In planning and performing our audit, we considered the School's intemal 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 for the purpose of expressing an opinion on the effectiveness ofthe School's intemal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness ofthe School's intemal control over financial reporting.

Our consideration of intemal control over financial reporting was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in intemal control over financial reporting that might be significant deficiencies or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weakiaesses have been idenfified. However, as described in the accompany Schedule of Findings, we identified certain deficiencies in intemal control over financial reporting that we consider to be material weaknesses.

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 intemal control such that there is a reasonable possibility that a material misstatement ofthe School's financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiencies described in the accompanying Schedule of Findings listed as 12-01 through 12-05 to be material weaknesses.

1100 North 18th Street Monroe, Louisiana 71201 Tel: (318)387-2672 • Fax: (318)322-8866 • Website: www.afullservicecpafirm.com p o g g 14

MEMBERS OF THE AMERICAN INSTiTUTE OF CERTIFIED PUBLIC ACCOUNTANTS ^

http://www.afullservicecpafirm.com

D'Arbonne Woods Charter School, Inc. Farmerviile, Louisiana

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the 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 fmancial 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 instances of noncompliance or other matters that are required to be reported under Government Auditing Standards and which are described in the accompanying Schedule of Findings as items 12-02 and 12-03.

The School's responses to the findings identified in our audit are described in the accompanying Schedule of Findings. We did not audit the School's responses and, accordingly, we express no opmion on them.

This report is intended solely for the information and use of management ofthe School, others within the entity, federal awarding agencies and pass-througli entities, and other entities granting funds to the School and the Legislative Auditor for the State of Louisiana and is not intended to be and should not be used by anyone other than these specified parties. However, under Louisiana Revised Statute 24:513, this report is distributed by the Legislative Auditor as a public document.

imM^^^^^^^^m^mi^^f S^:&3s&^


November 9, 2012

15

D'ARBONNE WOODS CHARTER SCHOOL, INC. Farmerviile, LA

Schedule of Findings For the Year Ended June 30, 2012

12-01 Internal Controls

Finding Intemal control is a process designed to provide reasonable assurance about the achievement of the entity's objectives with regard to the reliability of financial reporting, effectiveness and efficiency of operations, and compliance with applicable laws and regulations. Our audit discovered significant deficiencies in the design and implementation of intemal control. For the year ended June 30, 2012, the School did not have sufficient controls to ensure that School functions were handled appropriately.

In a review of 60 cash receipts, only 28 (47%) were without exception. Four deposits ($2,911) could not be located in the bank statements, four more did not easily reconcile with the bank records, seventeen deposits were recorded in an incorrect account, eight deposits were not made in a timely manner and 16 transactions had insufficient supporting documentation. There was no process during the audit year to reconcile cash receipt books to deposits to ensure that all School revenue was properly accounted for.

Additionally, the Louisiana Legislative Auditor has required an additional Agreed-Upon Procedures engagement to be conducted. During the course of this additional engagement we noted the following weaknesses in intemal control:

• Management was not presented with timely and accurate monthly financial statements, including budget-to-actual comparisons on funds of the School, during tlie year under examination.

• Management did not have a formal/written plan to eliminate the deficit spending exercised during the period.

9 The procedures required a review ofthe largest service contract The School's largest service contract for the audit year was for food service and totaled approximately $285,000. In a review of this contract per procedures we encountered the following issues:

• While docimientation was provided that showed a request for bids and a bid selection sheet notating which bid was accepted, the losing bid was not provided for our review.

• There is no evidence to indicate that the School's legal advisor reviewed or advised on the contract.

16


Schedule of Findings For the Year Ended June 30. 2012

• There is no documentation that the Board approved the contract.

• Weaknesses in intemal controls were noted in the following areas and are notated in separate findings:

o Payroll / Personnel issues (Refer to Finding 12-02) o Credit / Debit cards (refer to Finding 12-04) o Policies and procedures in place for the audit year (refer to Finding 12-05)

Recommendation Intemal controls should be designed to provide reasonable assurance about the achievement of the entity's objectives with regard to the reliability of financial reporting, effectiveness and efficiency of operations, and compliance with applicable laws and regulations.

Managements Response The Board has established procedures for receiving and accounting for receipts. The Business Office is monitoring receipts to ensure the policies are being followed and that all receipts are accounted for and properly documented. The Business Office is also providing training to other employees ofthe procedures that should be followed.

The Board is currently being presented budget-to-actual financial statements. The excess of expenditures over revenue for 2011-12 has been addressed by the Board. The Board is projecting a surplus for the 2012-13 fiscal year. We are in the process of developing a policy related to contracts entered into by the school system.

12-02 Personnel and PayroU

Finding The School initially calculated compensated absences to be approximately $16,500. Subsequently, the balances on the schedule were determined to be inaccurate and there was no documentation to support the time transferred in fi'om other school districts. Therefore, each employee's work history with the School was reviewed, the School obtained documentation for balances transferred in fiom other school districts and the compensated absence balance for each employee was recalculated. The actual balance outstanding was approximately $73,000, as given in the financial statements.

Three teachers were over paid because of a prior year error in determining salary amounts but their pay was not decreased per Louisiana Revised Statute 17:422.5. However, charter schools are exempted from this law and payments should have been adjusted at least at the commencement ofthe first contract after the period in which the error occurred.

17



Additionally, the Louisiana Legislative Auditor has required an additional Agreed-Upon Procedures engagement to be conducted. During the course of this engagement the following issues with personnel and payroll were noted:

• The policies and procedures do not address the processing of payroll, including reviewing and approving time and attendance records, including leave and overtime worked.

• There were payments paid to a reviewed employee for merit pay but there is no mention of merit pay in the contract. Policies and procedures state that the School shall execute a contract prior to beginning work for all full-time employees but the contract for the employee reviewed was not signed until more than a month after employment commenced. The salary payments did indicate that the employee was paid for the entire contract period.

Not all employees are documenting their daily attendance.

Recommendation Compensated absence balances should be updated and reviewed periodically for accuracy, employees should not be paid for leave not earned and teachers should be paid per the Board approved salary schedule. Policies and procedures pertaining to personnel should be updated and implemented to address all payroll-related issues. AH employees should be paid as given in their contracts. Attendance should be fully documented and all leave should be reviewed with relation to available balances and approved by management. Termination payments should be made in accordance with policies and procedures and be properly approved.

Management's Response We are in the process of reviewing payroll leave balances in the payroll accounting system to ensure that they are correct. We have updated our personnel records to ensure that proper documentation has been received for employee's sick leave transferred in firom other school systems. Severance pay will be verified by the Business Office to ensure that the leave balance is correct and properly documented prior to making any pa>rments. We have changed our informal procedures for documenting leave to ensure that all leave taken is properly accounted for. We plan to have Board adopted leave procedures by the end of January 2013.

The Board is aware ofthe three teachers' pay exceeding the salary schedule and have addressed it in their 2012-13 contract.

18



12-03 Contributions and Fundraisers

Finding The School foUows the guidance ofthe Not-for-Profit Entities Topic ofthe Financial Accoimting Standards Board (FASB) Accounting Standards Codification (ASC) 958 which differentiates revenues eamed fi:om contributions separate from those eamed as part of operations. During the audit year, the School did not differentiate monies contributed as compared to those firom operating sources. In addition, there was no accounting of the revenues eamed fiom several fundraisers or the associated cost of benefits to donors. All contributions were recorded in miscellaneous revenue, often without appropriate designation as contributions.

As an example, the School conducted two book fairs during the audit year v^erein the School sold books to students and received books in retum based on the amount sold. Initial recording of the revenue from all events totaled around $4,500 when actual revenue eamed was nearly $39,500 and cost of benefit to donors was over $22,800 (none of which had been properly recorded). A second fundraiser was the sale of pizza cards. The monies that could be traced to this event ($1,970) were initially recorded in miscellaneous income and $250 has no record of having been deposited.

Additionally, management exercised very little control over fiindraising functions including the accounting for the fundraisers. As an example, one ofthe teachers created a D'Arbonne Woods Charter School cookbook without prior management approval. She then sold the cookbooks at the School using her classroom receipt book but had all checks made out to her. A few checks were mistakenly made out to the School and those, in tum, were deposited into School accounts and the School paid her those amounts. The School has also not kept a separate accounting of yearbook sales to ensure that the cost to the School of the yearbooks did not exceed the amount of monies received.

Recommendation Management should thoroughly review and approve all fundraisers prior to the commencement of the event. The School should also modify their accounting of such events to clearly differentiate contributions, fundraisers, associated fim,draising costs and the cost of benefit to donors from operating fimctions.

Management's Response The Board has adopted procedui'es for accounting and documenting fund raisers. The Business Office is training employees on the procedures for conducting and documenting fundraisers. Fundraiser receipts and disbursements are being accounted for separately in the accounting records.

19

i'ARBONNE WOODS CHARTER SCHOOL, INC. Farmerviile, LA


12-04 Debit/Credit Cards

Finding The Louisiana Legislative Auditor has required an additional Agreed-Upon Procedures engagement to be conducted. During the course of this engagement, the following issues with debit / credit cards (to include gas cards) were noted;

Debit Card

Number of Number of Transactions Noncompliant

Reviewed Transactions

Gas Card

Number of Number of Transactions Noncompliant

Reviewed Transactions

Supported by an original itemized receipt 43 13 16 10

Documented business/public purpose 43 21 16 13

Additionally, there were no written policies and procedures related to debit / credit cards in place for the period.

There is no evidence that any of the bank statements were reviewed for approval of the debit card purchases, including supporting documentation.

Recommendation The policies and procedures related to credit and debit cards should be reviewed and revised to ensure all purchases and reimbursements are fully documented as to their appropriateness to the School's purpose.

Management's Response The Board has adopted procedures to ensure that all debit card purchases are properly approved prior to being made, that the purchase has a public purpose relative to the school system, that the purchase is properly documented, and that the purchase is reviewed to ensure compliance with Board policy.

The Business Office is in the process of developing a fuel credit card policy for Board approval.

20



12-05 Policies and Procedures

Finding Written comprehensive policies and procedures are necessary for continuity and success of the School. The policies and procedures currently in place are repetitive in some areas and incomplete or nonexistent in other areas. Policies and procedures are not noted as to whether Board approved, date of such approval nor date of implementation. In addition, various policies and procedures in place are not being followed.

Written policies and procedures were not in place for the period with relation to:

• Budgeting, including preparing, adopting, monitoring, and amending the budget

» Purchasing, including (1) how purchases are initiated; (2) how vendors are added to the vendor list; (3) the preparation and approval process of purchase requisitions and purchase orders; (4) checks and balances to ensure compliance with the public bid law; and (5) documentation required to be maintained for all bids and price quotes.

• Disbursements, including processing, reviewing, and approving

• Receipts, including receiving, recording, and preparing deposits

• Credit cards (and debit cards if applicable) including: o How cards are to be controlled o Allowable business uses o Documentation requirements o Required approvers o Monitoring card usage

• Contracts/contracting, including leasing, and determine if the following is addressed: o Types of services requiring written contracts o Standard terms and conditions o Legal review o Approval process o Monitoring process

Written policies and procedures in place for the period were insufficient and not being followed conceming:

• Travel and expense reimbursement including:

21



o Allowable expenses o Dollar thresholds by category of expense o Documentation requirements o Required approvers

a Payroll and personnel, specifically the processing of payroll, including reviewing and approving of time and attendance records, including leave and overtime worked

Recommendation

A thorough review of all policies and procedures should be completed to ensure all items are clearly covered, including organization and indexing of policies and procedures. The Board should approve all policies and procedures prior to implementation. A master copy of all approved policies be kept on file and denote dates of approval and implementation. The articles of incorporation and by-laws should be reviewed and adhered to.

Management's Response The Board has adopted purchasing, receipt, debit card, travel, payroll, and personnel policies. The Board is currently following the requirements of the Louisiana Local Government Budget Act ™ Louisiana Revised Statutes 39:1301 through 1315. We will prepare a policy based on the requirements ofthe Budget Act for the Board to approve by January 31, 2013. We will develop a policy related to contracts for the Board's approval by January 31, 2013.

22

•'ARBONNE WOODS CHARTER SCHOOL, INC. Farmerviile, LA

Status of Prior Year Findings For the Year Ended June 30, 2012

The following is a summary of the status of the prior year findings included in the Luffey, Huffinan, Ragsdale & Soignier, APAC audit report dated April 20, 2012, covering the examination of the financial statements of D'Arbonne Woods Charter School as of and for the year ended June 30, 2011.

11-01 General Ledger Accounting

Finding There were significant deficiencies in the design and implementation of intemal control over general ledger accounting. It was recommended that intemal controls be thoroughly reviewed, implemented and enforced.

Status Referto Finding 12-01.

11-02 Board Approved Pay

Finding The Board of Directors failed to approve pay scales in accordance with school policies and state law. The recommendation stressed the need to comply with all school policies and applicable laws.


11-03 Pay Advances

Finding Pay advances were made to an employee. As this violates the state constitution, it was recommended that pay advances not be made to employees.

Status The School is now cognizant ofthe need to avoid pay advances to employees.

23



11-04 Unauthorized Expenses

Finding Purchases were made in violation of school policy and state law. It was recommended that intemal controls be thoroughly reviewed, implemented and enforced to prevent reoccurrence.

Status Partially resolved. Refer to Finding 12-01.

11-05 Open Meetings Law

Finding The Board was holding meetings not in full compliance with the Open Meetings Law. Documentation ofthe purpose of executive sessions, when held, was recommended.

Status The purpose of executive sessions, when held, is being clearly documented as to being for allowed items.

11-06 Policies and Procedures

Finding Policies and procedures in place did not meet the needs of the School and their review and revision was recommended.


11-07 Debit Card and Travel Policies

Finding Control over the debit card and documentation supporting travel were not sufficient for the School's needs and review and revision was recommended.

Status Refer to Finding 12-04

24



11-08 Transportation Contract

Finding The School did not have a contract in place for transportation of students prior to the commencement of the school year as required by state law. Future compliance was recommended.

Status The contract for the 2012-13 school year was signed within days ofthe commencement ofthe school year.

11-09 Financial Statements Not Filed Timely

Finding The audit was not completed and submitted to the Legislative Auditor within the prescribed time period. It was recommended that School records be in a condition to audit in a timely manner.

Status The School is maintaining records such that audits can be completed within the prescribed time period.

25

AGREED-UPON PROCEDURES

26

I uFFEY, HUFFMAN, RAGSDALE & SOIGNIER

John L. Luffey. MBA, CPA (1963-2002) Francis i. Huffman, CPA Philip A, Ragsdale, CPA David Ray Soignier, CPA, MBA

(A PROFBSSIONAI, ACCOUNTING CORPORATION)

CERTIFIHD PUBLIC ACCOUNTANTS


INDEPENDENT ACCOUNTANTS' REPORT ON APPLYING AGREED-UPON PROCEDURES

FOR THE YEAR ENDED JfUNE 30, 2012


We have performed the procedures included in the Louisiana Governmental Audit Guide and enumerated below, which were agreed to by the management of D'Arbonne Woods Charter School, Inc. (the School) and the Legislative Auditor, State of Louisiana (collectively, the Specified Users), solely to assist users in evaluating management's assertions about the performance and statistical data accompanying the annual financial statements of D'Arbonne Woods Charter School and to detemiine whether the specified schedules are free of obvious errors and omissions as provided by the Board of Elementary and Secondary Education (BESE). This agreed-upon procedures engagement was performed in accordance with standards established by the American Institute of Certified Public Accountants and applicable standards of Government Auditing Standards. The sufficiency of these procedures is solely the responsibility of the Specified Users of the report. Consequently, we make no representation regarding tiie sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose.

Our procedures and findings relate to the accompanying schedules required by state law and are as follows:

General Fund Instructional and Support Expenditures and Certain Local Revenue Sources (Schedule 1)

1. We examined in excess of 25 transactions and reviewed supporting documentation to deteimine if the tested expenditures/revenues are classified correctiy and are reported in the proper amounts for each ofthe following amounts reported on the schedule:

9 Total General Fund Instructional Expenditures, 9 Total General Fund Equipment Expenditures, » Total Local Taxation Revenue, o Total Local Eamings on Investment in Real Property, o Total State Revenue in Lieu of Taxes, » Nonpublic Textbook Revenue, and » Nonpublic Transportation Revenue.

1100 North 18th Street Monroe, Louisiana 71201 Tel: (318)387-2672 • Fax: (318)322-8866 • Website: www.afullservicecpafirm.com

MEMBERS OF THE AMERICAN INSTITUTE OF CERTIFIED PUBUC ACCOUNTANTS Page 27

http://www.afullservicecpafirm.com


Education Levels of Public School Staff (Schedule 2)

2. We reconciled the total number of full-time classroom teachers per the schedule "Experience of Public Principals and Full-time Classroom Teachers" (Schedule 4) to the combined total number of full-time classroom teachers per this schedule and to School supporting payroll records as of October 1st.

3. We reconciled the combined total of principals and assistant principals per the schedule "Experience of Public Principals and Full-time Classroom Teachers" (Schedule 4) to the combined total of principals and assistant principals per this schedule.

4. We obtained a list of full-time teachers, principals, and assistant principals by classification as of October 1st and as reported on the schedule. We traced all 12 teachers to the individual's personnel file and determined if the individual's education level was properly classified on the schedule.

Number and Type of Public Schools (Schedule 3)

5. We obtained a list of schools by type as reported on the schedule. We compared the list to the schools and grade levels as reported on the Title 1 Grants to Local Educational Agencies (CFDA 84.010) application and/or the National School Lunch Program (CFDA 10.555) application.

Experience of Public Principals arid Full-time Classroom Teachers (Schedule 4)

6. We obtained a list of full-time teachers, principals, and assistant principals by classification as of October 1st and as reported on the schedide and traced the same sample used in procedure 4 to the individual's personnel file and determined if the individual's experience was properly classified on the schedule.

Public School Staff Data (Schedule 5)

1. We obtained a list of all classroom teachers including their base salary, extra compensation, and ROTC or rehired retiree status as well as fiill-time equivalent as reported on the schedule and traced all 22 teachers to the individual's personnel file and determined if the individual's salary, extra compensation, and full-time equivalents were properly included on the schedule.

8. We recalculated the average salaries and full-time equivalents reported in tiie schedule.

Class Size Characteristics (Schedule 6)

9. We obtained a list of classes by school, school type, and class size as reported on the schedule and reconciled school type classifications to Schedule 3 data, as obtained in procedure 5. We then traced all 18 classes to the October 1st roll books for those classes and determined if the class was properly classified on the schedule.

28


Louisiana Educational Assessment Program (LEAP) for the 21st Century (Schedule 7)

10. We obtained test scores as provided by tiie testing authority and reconciled scores as reported by the testing authority to scores reported in the schedule by the School. As this exam is given to students in the 4^ and 8* grades and the School only offered grades kindergarten through 6 ^ grade during the audit year, only 4* grade results were reviewed.

The Graduation Exit Exam for the 21st Century (Schedule 8)

11. We obtained test scores as provided by the testing authority and reconciled scores as reported by the testing authority to scores reported in the schedule by the School. As this exam is given to students in the 10^ and 11* grades and the School only offered grades kindergarten through 6^ grade during the audit year, no results were reviewed.

The Heap Tests (Schedule 9)

12. We obtained test scores as provided by the testing authority and reconciled scores as reported by the testing authority to scores reported in the schedule by the School As this exam is given to students in the 3 *, 5*, 6^, 7*** and 9^ grades and tiie School only offered grades kindergarten through 6* grade during the audit year, only 3 , 5* and 6^ grade results were reviewed.

Our twelve procedures enumerated above did not disclose any exceptions.

We were not engaged to, and did not, perform an examination, the objective of which would be the expression of an opinion on management's assertions. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.

This report is intended solely for the use of management of the School and the Legislative Auditor, State of Louisiana, and should not be used by those who have not agreed to the procedures and taken responsibility for the sufficiency of the procedures for their purposes. Under Louisiana Revised Statute 24:513, this report is distributed by the Legislative Auditor as a public document.


November 9, 2012

29


Schedules Required by State Law (R.S. 24:514 - Performance and Statistical Data) As of and for the Year Ended June 30, 2012

Schedule 1 - General Fund Instructional and Support Expenditures and Certain Local Revenue Sources This schedule includes general fund instructional and equipment expenditures. It also contains local taxation revenue, eamings on investments, revenue in lieu of taxes, and nonpublic textbook and transportation revenue. This data is used either in the Minimum Foundation Program (MFP) formula or is presented annually in the MFP 70% Expenditure Requirement Report.

Schedule 2 - Education Levels of Public School Staff This schedule includes the certificated and uncertificated number and percentage of fijll-time classroom teachers and the number and percentage of principals and assistant principal's with less than a Bachelor's; Master's; Master's +30; Specialist in Education; and Ph. D or Ed. D. degrees. This data is currentiy reported to the Legislature in the Annual Financial and Statistical Report (AFSR).

Schedule 3 - Number and Type of Public Schools This schedule includes the nimiber of elementary, middle/junior high, secondary and combination schools in operation during the fiscal year. This data is currently reported to the Legislature in the Annual Financial and Statistical Report (AFSR).

Schedule 4 - Experience of Public Principals, Assistant Principals, and Full-time Classroom Teachers This schedule includes the number of years of experience in teaching for assistant principals, principals, and full-time classroom teachers. This data is currently reported to the Legislature in the Annual Financial and Statistical Report (AFSR).

Schedule 5 - Public School Staff Data: Average Salaries This schedule includes average classroom teachers salary using fiall-time equivalents, including and excluding ROTC and rehired retiree teachers. This data is currently reported to the Legislature in the Annual Financial and Statistical Report (AFSR).

Schedule 6 - Class Size Characteristics This schedule includes the percent and number of classes with student enrollment in the following ranges: 1-20, 21-26, 27-33, and 34+ students. This data is currently reported to the Legislature in the Annual School Report (ASR).

Schedule 7 - Louisiana Educational Assessment Program (LEAP) This schedule represents student performance testing data and includes summary scores by district for grades 4 and 8 in each category tested. Scores are reported as Advanced, Proficient, Basic, Approaching Basic, and Unsatisfactory. This schedule includes three years of data.

30


Schedules Required by State Law (R.S. 24:514 - Performance and Statistical Data) As of and for the Year Ended June 30,2012

Schedule 8 - Graduation Exit Examination (GEE) This schedule represents student performance testing data and includes summary scores by district for grades 10 and 11 in each category tested. Scores are reported as Advanced, Proficient, Basic, Approaching Basic, and Unsatisfactory. This schedule includes three years of data.

Schedule 9 -iLEAP Tests This schedule represents student performance testing data and includes a summary score for grades 3, 5, 6, 7 and 9 for each district. The summary score reported is the National Percentile Rank showing relative position or rank as compared to a large, representative sample of students in the same grade from the entire nation. This schedule includes three years of data.

31

Schedule 1 D'Arbonne Woods Charter School

Famerville, Louisiana

General Fund Instructional and Support Expenditures and Certain Local Revenue Sources

Fiscal Year Ended June 30,2012

General Fund Instructional and Equipment Expenditures General Fund Instructional Expenditures Teacher and Student Interaction Activities Classroom Teacher Salaries Other Instructional Staff Activities Instructional Staff Employee Benefits purchased Professional and Technical Services Instructional Materials and Supplies Instructional Equipment

Total Teacher and Student Interaction Activities Other Instructional Activities Pupil Support Services Less: Equipment for Pupil Support Services

Net Pupil Support Services Instructional Staff Services Less: Equipment for Instructional Staff Services

Net Instructional Staff Services School Administration Less: Equipment for School Administration Net School Administration

Total General Fund Instructional Expenditures

Total General Fund Equipment Expenditures

Certain Local Revenue Sources Local Taxation Revenue Constitutional Ad Valorem Taxes Renewable Ad Valorem Tax Debt Service Ad Valorem Tax Up to 1% of Collections by the Sheriff

on Taxes Other than School Taxes Sales and Use Taxes

Total Local Taxation Revenue

Local Earnings on Investment in Real Property Earnings from 16th Section Property Earnings from Other Real Property

Total Local Eamings on Investment in Real Property

State Revenue in Lieu of Taxes Revenue Sharing - Constitutional Tax Revenue Sharing - Other Taxes Revenue Sharing - Excess Portion Other Revenue in Lieu of Taxes

Total State Revenue in Lieu of Taxes

Nonpublic Textbook Revenue Nonpublic Transportation Revenue

32

$ 932,171 23,525

405,243 75

44,720

153,181

255,545

-

S

$

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1,405,734 4,224

153.181

255,545

-

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136,720

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Schedule 3

D'ARBONNE WOODS CHARTER SCHOOL, INC. Number and Type of Public Schools

Fiscal Year Ended June 30, 2012

Type Elementary Middle/Jr. High

Secondaiy Combination

Total

Number I „

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D'ARBONNE WOODS CHARTER SCHOOL, INC. Public Scliooi Staff Data

AsofJune30,2012

Classroom Teachers Excluding ROTC,

Average Classroom Teachers' Salary Including Extra Compensation

Average Classroom Teachers' Salary Excluding Extra Compensation

Number of Teacher Full Time Equivalents (FTEs) used in Computation of Average Salaries

Ail Classroom Teachers

$42,732

$39,386

22

Rehired Retirees, and Flagged Salary Reductions

S41,264

$38,040

19

Note: Figures reported include all sources of funding (i.e., federal, state and local) but exclude employee benefits. Generally, retired teachers rehired to teach receive less compensation than non-retired teachers and ROTC teachers receive more compensation because of federal supplement. Therefore, these teachers are excluded from the computation in the last column. This schedule excludes day-to-day substitutes and temporary employees.

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Schedule 8

D'ARBONNE WOODS CHARTER SCHOOL, INC. The Graduation Exit Exam (GEE) for the 21 st Century

For the Fiscal Year Ended June 30,2012

D'Arbonne Woods Charter School did not offer classes to grades that take the GEE. This exam is given to students in the 10th and 11th grades and the D'Arbonne Woods Charter School only offered grades kindergarten through 8th grade during the audit year.

40

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AGREED-UPON PROCEDURES

44

I uFFEY, HUFFMAN, RAGSDAI^E & SOIGNIER

John L. Luffey, MBA, CPA (1963-2002) Francis I. Huffman, CPA Philip A, Ragsdaie, CPA David Ray Soignier, CPA, MBA

(A PROFESSIONAL ACCOUNTING CORPORATION)

CERTIFIED PUBLIC ACCOUNTANTS


ON APPLYING AGREED-UPON PROCEDURES FOR THE YEAR ENDED JUNE 30, 2012

D'Arbonne Woods Charter School, Inc. FarmerviUe, Louisiana

We have perfonned the procedures included in the Louisiana Government Audit Guide and enumerated below as they are a required part of the audit engagement. We are required to perform each procedure and report the results, including any exceptions. Management is required to provide a corrective action plan that addresses all exceptions noted. For any procedures that do not apply, we have marked "not applicable."

Management of D'Arbonne Woods Charter School, Inc. (the School) is responsible for its financial records, establishing intemal controls over fmancial reporting, and compliance with applicable laws and regulations. These procedures were agreed to by management of the School and the Legislative Auditor, State of Louisiana, solely to assist the users in assessing certain controls and in evaluatmg management's assertions about the School's compUance with certain laws and regulations during the year ended June 30, 2012 included in the Louisiana Compliance Questionnaire.

This agreed-upon procedures engagement was performed in accordance with attestation standards established by the American Institute of Certified Public Accountants and applicable standards of Government Auditing Standards. The sufficiency of these procedures is solely the responsibility of the specified users of this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose.

The School did not produce policies and procedures implemented prior to the commencement of the year ended June 30, 2012. Therefore, for purposes of this engagement, we will assume that the policies and procedures in the charter application were the only ones in effect for the duration ofthe year denoted.

Page 45

1100 North 18th Street Monroe, Louisiana 71201 Tel: {318)387-2672 • Fax: (318)322-8866 • Website: www.afuHservicecpafirm.com

MEMBERS OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS

http://www.afuHservicecpafirm.com

Financial Management

1. Determine if management (cliief executive and board members) was presented with timely and accurate monthly fmancial statements, including budget-to-actual comparisons on funds ofthe entity, during the year under examination.

We inquired as to whether management was presented with timely and accurate monthly financial statements, including budget-to-actual comparisons on fiends of the entity, during the year under examination.

Exception: Management was not presented with timely and accurate monthly 0nancial statements, including budget-to-actual comparisons on funds ofthe entity, during the year under examination.

Management Corrective Action Plan: Management ofthe School Board was provided fmancial data throughout the year at each monthly finance meeting to include cash balances, outstanding invoices, checks issued during each month, grant reimbursements received during the period and outstanding reimbursements, and any other data requested by the committee. We are currently providing budget vs actual fmancial statements to the Finance Committee and tlie Board.

2. If management was deficit spending during the period under examination, determine if there is a formal/written plan to eliminate the deficit spending and whether management is monitoring the plan.

We reviewed the original and revised budgets and trial balance and determined that management was deficit spending during the period. We inquired as to whether there is a formal/written plan to eliminate the deficit spending and whether management is monitoring the plan.

Exception: Management had no formal/written plan to eliminate the deficit spending during the period.

Management Corrective Action Plan: The School District's General Fund expenditures for the year exceeded revenues; however, we had a fund balance to cover the excess of expenditures. In 2012-13 our MFP funding has increased. We are closely monitoring our expenditures to help ensure they do not exceed revenue in 2012-13. We are currently budgeting a surplus for the 2012-13 fiscal year.

46

3. Determine if there are written policies and procedures for the following financial/business functions ofthe entity:

• Budgeting, including preparing, adopting, monitoring, and amending the budget

• Purchasing, including (1) how purchases are initiated; (2) how vendors are added to the vendor list; (3) the preparation and approval process of purchase requisitions and purchase orders; (4) checks and balances to ensure compliance with the public bid law; and (5) documentation required to be maintained for all bids and price quotes.

« Disbursements, including processing, reviewing, and approving

• Receipts, including receiving, recording, and preparing deposits

We inquired as to the existence of such written policies and procedures and reviewed minutes to determine if such existed.

Exception: No such written policies and procedures were in place for the period.

Management Corrective Action Plan: The Board has adopted policies related to purchasing, disbursements, and receipts.

We are currently following Louisiana Revised Statutes 39:1301-1315, the Louisiana Local Govemment Budget Act. We will prepare a formal policy in accordance with the provisions of the Budget Act for the Board to approve by January 2013.

Credit Cards

1. Obtain from management a listing of all active credit cards (and bank debit cards if applicable) for the period under examination, including the card numbers and the names ofthe persons who maintained possession ofthe cards.

[Note: There are three types of credit cards: (1) general (e.g., VISA, MasterCard, etc.), (2) store (e.g., Wal Mart, Office Depot, Sam's Club, etc.); and (3) gasoline (e.g., Fuelman, Exxon, etc.)].

47

We obtained such a list fi-om management.

2. Obtain and review the entity's written policies and procedures for credit cards (and debit cards if applicable) and determine if the following is addressed:

a How cards are to he controlled • Allowable business uses » Documentation requirements o Required approvers ® Monitoring card usage



Management Corrective Action Plan: A debit card policy has been adopted by the Board. We will prepare a credit card fuel policy for the Board to approve by January 31, 2013.

3. Obtain the monthly statements for all credit cards (general, stores, and gasoline) used dming the period under examination and select for detailed review, the two largest (dollar amount) statements for each card. (Note: For a debit card, select the two monthly bank statements with the largest dollar amount of debit charges):

We obtained the monthly statements for both credit cards (one debit card and one fuel charge card) and selected the two with the largest dollar amount of charges.

A. Obtain the entity's supporting documentation for the purchases/charges shown on the selected monthly statements:

We obtained the supporting documentation for the purchases/charges shown on the selected monthly statements.

» Determine if each purchase is supported by:

o An original itemized receipt (i.e., identifies precisely what was purchased)

We reviewed the supporting documentation to determine if each purchase is supported by an original itemized receipt.

48

Exception: Of the 43 purchases made with the debit card that we reviewed, 13 purchases had no supporting documentation whatsoever, to include an original itemized receipt. Of the 16 purchases made with the gas card that we reviewed, 10 were not supported by an original itemized receipt

Management Corrective Action Plan: The Board has adopted a debit card policy. The Business Office is monitoring debit card purchases to ensure that purchases are in accordance with Board policy and they are properly authorized, accounted for, and documented.

o Documentation of the business/public purpose (Note: For meal charges, there should also be documentation of the individuals participating)

We reviewed the supporting documentation to determine if there was , documentation ofthe business/public purpose.

Exception: Of the 43 purchases made with the debit card that we reviewed, 21 did not document the business/public purpose. Of the 16 purchases made with the gas card that we reviewed, 13 did not document the business/public purpose.

Management Corrective Action Plan: The Board has adopted a debit card policy. The policy •wll be amended to require the purchase requisition to include a purpose ofthe item to be purchased.

We will prepare a credit card fuel policy for the Board to approve by January 31, 2013, that will require documentation to identify the use of the fuel being purchased.

o Other documentation as may be required by policy (e.g., purchase order, authorization, etc.)



49

Management Corrective Action Plan: The Board has adopted a policy for debit card purchases. The policy requires that a purchase requisition be completed and approved prior to the purchase.

Determine if each purchase is:

o In accordance with thresholds or guidelines established in the policies and procedures.



Management Corrective Action Plan: The Board has adopted a debit card policy for purchases. The policy has established thresholds and guidelines for use ofthe debit card.

We will prepare a credit card fuel policy for tlie Board to approve by January 31, 2013, that will require documentation to identify the use of the fuel being purchased and that it is for a business purpose of the school board.

o For an appropriate and necessary business purpose relative to the entity.

We reviewed the supporting documentation to determine if the purchase was for an appropriate and necessary business purpose relative to the entity.

Exception: Of the 43 purchases made with the debit card that we reviewed, we were unable to determine if 14 were for an appropriate and necessary business purpose. Of the 16 purchases made with the gas card that we reviewed, there was no way to discern from the documentation provided whether any of the purchases were for an appropriate and necessary business purpose.

50

Management Corrective Action Plan: The Board has adopted a debit card policy. The policy will be amended to require the purchase requisition to include a purpose ofthe item to be purchased.

We will prepare a credit card fuel policy for the Board to approve by January 31, 2013, to include documentation that the purchase will be appropriate and have a necessary business purpose for the school system.

Determine if any purchases were made for personal purposes. If there are purchases made for personal purposes, determine the date(s) of reimbursement.

We reviewed the supporting documentation to determine if any of the purchases were made for personal purposes.

Exception: Of the 43 purchases made with the debit card that we reviewed, 13 purchases had no supporting documentation whatsoever, to include an original itemized receipt. However, we did not determine that any of the remaining 30 transactions were for personal purposes. Of the 16 purchases made with the gas card that we reviewed, we were unable to determine who had made the purchase or the purpose for the purchase.

Management Corrective Action Plan: The Board has adopted a debit card policy. The policy will be amended to require the purchase requisition to include a purpose of the item to be purchased.

We will prepare a credit card fuel policy for the Board to approve by January 31, 2013, that will require documentation to identify the use ofthe fuel being purchased and that it is for a business purpose ofthe school.

Determine if any purchases effectively circumvented the entity's normal procurement/purchasing process and/or the Louisiana PubUc Bid Law (i.e., lai'ge or recuiring purchases requiring the solicitation of bids or quotes).

We inquired as to the existence of such written policies and procedures and reviewed minutes to determine if such existed. We reviewed Charter School law with respect to the Louisiana Public Bid Law and determined that none of the purchases made were subject to this law.

51


Management Corrective Action Plan: The Board has adopted a debit card policy for making purchases that includes procedures for authorizing, reviewing, and making purchases. The Business Office is monitoring purchases to determine they were made in accordance with Board policy.

B. Determine if there was any duplication of expenses by comparing all travel and related purchases to the appropriate person's expense reimbursement report(s).

We reviewed the supporting documentation to determine if any of the purchases were travel related. For the 30 debit card purchases for which supporting documentation was available, we determined that none were travel related.

Exception: Of the 43 purchases made with the debit card that we reviewed, we were unable to determine if 13 were travel related. Of the 16 purchases made with the gas card that we reviewed, there was no way to discern from the documentation provided who made the purchase and, therefore, no way to determine if there were any duplications of expenses.

Management Corrective Action Plan: The Board has adopted a debit card policy. The policy will be amended by January 31, 2013, to require that travel expenses paid by the debit card be compared, to the persons travel reimbursement form.

We will prepare a credit card fuel policy for the Board to approve by January 31, 2013, to include documentation for the use of the fuel. The board has adopted a ti-avel policy that prohibits the use of school board purchased fuel being used in a personal vehicle.

C. Determine if each monthly credit card statement (including supporting documentation) was reviewed and approved, in writing, by someone other than the person making the purchases. [Note: Requiring such approval may constrain the legal authority of certain public officials (e.g., mayor of a Lawrason Act municipality.)

We reviewed the bank statements and gas card statements to determine whether there was documentation that the purchases were reviewed and approved. The gas card statements were notated as having been approved.

52

Exception: There is no evidence that any of the bank statements were reviewed for approval of the debit card purchases, including supporting documentation.

Management Corrective Action Plan: The Board has adopted a debit card policy for purchases. Debit card purchases are being reviewed by the Business Office to determine that proper purchasing procedures were followed.

We will prepare a credit card fuel policy for the Board to approve by January 31, 2013, to include documentation that the monthly credit card fuel statements are properly reviewed prior to payment.

D. Determine if finance charges and/or late fees were assessed on the monthly statements.

We reviewed the bank statements and gas card statements to determine if any finance charges and/or late fees were assessed. We found none.

Travel and Expense Reimbursement

1. Obtain and review the entity's written policies and procedures for travel and expense reimbursement and detennine if the following is addressed:

•

Allowable expenses Dollar thresholds by category of expense Documentation requirements Required approvers

We obtained and reviewed the School's written policies and procedures for travel and expense reimbursement to determine if the items given were addressed. Allowable expenses, documentation requirements and required approvers are addressed.

Exceptions: There are no dollar thresholds by category of expense provided for in the written poHcies and procedures.

Management Corrective Action Plan: The Board has adopted a travel policy that includes allowable expenses, doUai-thresholds by category of expense, required documentation, and required approvals.

53

2. Obtain a listing of all travel and related expense reimbursements during the period under examination and select for review, the one person who was reimbursed the most money:

We obtained a listing of all travel and related expense reimbursements during the period under examination and reviewed the one person who was reimbursed the most money.

A. Obtain all of the expense reimbursement reports of the selected person, including the supporting documentation, and select the three largest (dollar) expense reports to review in detail (Note; If there are only three or less expense reports, review all (100%) of them.):

We obtained all of the expense reimbursement reports ofthe selected person, including the supporting documentation, and selected the three largest (dollar) expense reports to review in detail.

• Determine if each expenditure is:

o Reimbursed in accordance with written pohcy (e.g., rates established for meals, mileage, lodging, etc.)

All three travel reimbursements reviewed had payments for mileage and two ofthe three had payments for meals. We determined that two ofthe mileage and one ofthe m.eal payments were in accordance with policy.

Exceptions: One of the mileage and one of the meal payments were not in accordance with policy.

Management Corrective Action Plan: The Board has adopted a travel policy. Travel reimbursement requests are being monitored by the Business Office to ensure reimbursement requests are in compliance with Board policy. Employees are being trained in travel policies and procedures to help ensure they follow travel policies and procedures.

In accordance with thresholds or guidelines established in the policies and procedures

We reviewed the three travel reimbursements and determined that they were not in accordance with thresholds or guidelines established in the policies and procedures.

54

o

Exceptions: The policies and procedures require prior Executive Director approval for all travel. Of the three requests reviewed, only one had Executive Director approval and it failed to indicate that travel was approved prior to the trip.

Management Corrective Action Plan: The Board has adopted a travel policy. Travel reimbursement requests are being monitored by the Business Office to ensure reimbursement requests are in compliance with Board policy and that proper approval has been obtained prior to making the reimbursement.

For an appropriate and necessary business purpose relative to the travel

We reviewed the reimbursement requests and found one that had documentation to support that it was for an appropriate and necessary business purpose.

Exceptions: We found that two of the reimbursement requests had no documentation to support that they were for appropriate and necessary business purposes.

Management Corrective Action Plan: The Board has adopted a travel policy that requires the employee to document that the travel was appropriate and necessary. Travel reimbursement requests are being monitored by the Business Office to ensure reimbursement requests are in compliance with Board policy.

Detennine if each expenditure is supported by:

o An original itemized receipt (i.e., identifies precisely what was purchased) [Note: An expense that is reimbursed based on an established per diem amount (e.g., meals) generally does not require a receipt.]

None of the reimbursement requests required an original itemized receipt as all were paid based on established mileage and per diem rates.

o Documentation of the business/public purpose (Note: For meal charges, there should also be documentation of the individuals participating)

55

We reviewed the reimbursement requests and found one that had documentation to support that it was for an appropriate and necessary business/public purpose.

Exceptions: We found that two of the reimbursement requests had no documentation to support that they were for appropriate and necessary business/public purposes.

Management Corrective Action Plan: The Board has adopted a travel policy that requires the employee to document that the travel was appropriate and necessary. Travel reimbursement requests are being monitored by the Business Office to ensui-e reimbursement requests are in compliance with Board poHcy.

o Other documentation as may be required by policy (e.g., authorization for travel, conference brochure, certificate of attendance, etc.)

We reviewed the reimbursement requests for documentation required by policy.

Exceptions: The policies and procedures require a voucher be received from the Executive Director prior to travel. There were no such vouchers in the supporting documentation provided.

Management Corrective Action Plan: The Board has adopted a travel policy that requires all travel to be approved prior to travel. Travel reimbursement requests are being monitored by the Business Office to ensure reimbursement requests are in compliance with Board policy.

Determine if any of the expenditures were for personal purposes (e.g., extended hotel stays before or after training class, meals for spouses, entertainment, etc.).

We did not determine that expenditures were for personal purposes.

Determine if each expense report (including documentation) was reviewed and approved, in writing, by someone other than the person receiving reimbursement.

Two of the expense reimbursement requests reviewed were approved in writing by someone other than the person receiving reimbursement.

56

Exceptions: One of the reimbursement requests reviewed was not approved in writing by someone other than the person receiving reimbursement. One of the approved reimbursement requests was not approved until more than eight months after travel occurred.

Management Corrective Action Plan: The Board has adopted a travel policy that requires all travel reimbursement requests to be reviewed and approved prior to being paid. Travel reimbursement requests are being monitored by the Business Office to ensure reimbursement requests are in compliance with Board policy.

B. Determine if there was any dupMcation of expenses by comparing the expense reports to charges/purchases made on credit card(s).

As this travel is reimbursed at a set rate and not actual expenses, there is no way to discern by reviewing credit / debit card purchases if there was duplication.

Contracts

1. Obtain and review the entity's written policies and procedures for contracts/contracting, including leasing, and determine if the following is addressed:

» Types of services requiring written contracts » Standard terms and conditions " Legal review « Approval process o Monitoring process



Management Corrective Action Plan: A contract policy will be prepared for the Board to approve by January 31, 2013, to include procedures and approval process for entering into contracts.

57

2. Determine if the entity has centrahzed control and oversight of contracts to ensure that seivices/deliverables received and payments made comply with the terms and conditions ofthe contracts.

We determined that the Business Manager was cognizant of the terms of all contracts and ensured that services/deliverables received and payments made complied with the terms and conditions ofthe contracts for the period.

3. Obtain and review the accounting records (e.g., general ledgers, accounts payable, vendor history reports, invoices, etc.) for the period under examination to identify individuals/businesses being paid for contracted services (e.g., professional, technical, etc.). Select the five "vendors" that were paid the most money during the period and for each:

We obtained and reviewed the accounting records for the period under examination to identify individuals/businesses being paid for contracted services (e.g., professional, technical, etc.). We selected the five "vendors" that were paid the most money during the period.

o Determine if there is a formal/written contract that supports the services arrangement and the total amount paid.

We determined that there were contracts to support the services of the five vendors paid the most money during the period.

® Determine the business legitimacy of the vendor if not known by the auditor (e.g., look-up the vendor on the LA Secretary of State's website).

We determined that all five vendors reviewed are legitimate vendors.

4. Obtain a listing of all active contracts and the expenditures made during the period under examination. Select for detailed review, the largest (dollar amount) contract in each of the following categories that was entered into during the period.

(1) Services.

(2) Materials and supplies

(3) Public works

We obtained a list of all active contracts and associated expenditures made during the period and selected the largest service contract, the only contract for materials and supplies and determined that there were no public work contracts. The construction in progress on the financial statements is architectural fees

58

involved in the design of a new school For the purposes of these Agreed-Upon Procedures, we considered these fees to be service rather than public works.

A. Obtain the selected contracts and the related paid invoices and;

a Determine if the contract is a related party transaction.

We found no evidence that either contract was with a related party.

® Determine if the transaction is subject to the Louisiana Public Bid Law:

We determined that neither contract was subject to the Louisiana Public Bid Law.

o If yes, determine if the entity complied with all requirements (e.g., sohcited quotes or bids, advertisement, selected lowest bidder, etc.)

o If no, determine if the entity provided an open and competitive atmosphere (a good business practice) for the transaction/work.

We reviewed supporting documentation to determine whether the entity provided an open and competitive atmosphere for the ti-ansaction/work.

Exceptions: While documentation was provided that showed a request for bids for the service contract and a bid selection sheet notating which bid was accepted, the losing bid was not provided. For the materials and supplies contract, there was no documentation of an open or competitive atmosphere.

Management Corrective Action Plan: A contract policy will be prepared for the Board to approve by January 31, 2013, that requires purchases made tiirough a contract follow the Board adopted purchasing procedures to ensure the purchase was made through an open and competitive process.

Determine if the contract was awarded under the request for proposals (RFP) method. If done so, obtain all proposals and the evaluation/scoring documents to determine if the contract was awarded to the most responsible offeror whose proposal was the most advantageous taking into consideration price and other evaluation factors set forth in the request for proposals.

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Neither contract was awarded under the RFP method.

Determine if the procurement was made "off state contract (as opposed to following the competitive bidding requirements of the Louisiana Public Bid Law). If done so, determine if the board formally adopted the use of the Louisiana Procurement Code (R.S. 39:1551-1755), the set of laws that govern most state agencies' purchases of certain services, materials and supplies, and major repairs.

Neither contract was made off state contract.

Determine if the procurement related to homeland security and was made from federal General Services Administration (GSA) supply schedules. If done so, determine if the entity (1) utilized a Louisiana licensed distributor; (2) used the competitive ordering procedures of tlie federal GSA; and (3) received prior approval from the director ofthe State Office of Homeland Security and Emergency Preparedness, or his designee.

Neither contract was related to homeland security.

Determine if the entity "piggybacked" onto another agency's contract If done so, determine if there is documentation on file that clearly demonstrates the contract was a previously bid, viable contract and the price paid by the entity was the same as that contract's bid price.

Neither contract was piggybacked onto another agency's contract.

Determine if the contract was amended. If done so, determine whether the original contract contemplated or provided for such an amendment. Furthermore, determine if the amendment is outside the scope of the original contract, and if so, whether it should have been separately bid and contracted.

Neither contract was amended for the period.

Determine if the invoices received and payments made during the period compHed with the terms and conditions ofthe contract.

Invoices received and payments made during the period complied with the terms and conditions ofthe contract.

Determine if there is written evidence that the entity's legal advisor reviewed the contract and advised entering into the contract.

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We reviewed documentation to determine if there is written evidence that the School's legal advisor reviewed the contract and advised entering into the contract.

Exceptions: There is no evidence to indicate that the School's legal advisor reviewed contract or advised on either contract.

Management Corrective Action Plan: A contract policy will be prepared for the Board to approve by January 31, 2013, to include procedures to review and approve contracts entered into by the school system.

® Determine if there is documentation of board approval, if required.

We reviewed documentation to determine if the board approved either contract, as required.

Exceptions: There is no documentation that the board approved either contract.

Management Corrective Action Plan: A contract policy will be prepared for the Board to approve by January 31, 2013, to include procedures to review and approve contracts.

Payroll and Personnel

1. Obtain and review the entity's written pohcies and procedures for payroll and personnel and determine if they address the processing of payroll, including reviewing and approving of time and attendance records, including leave and overtime worked.

We reviewed the personnel policies in place for the period.

Exceptions: The policies and procedures do not address the processing of payroll, including reviewing and approving time and attendance records, including leave and overtime worked.

Management Corrective Action Plan: The Board has adopted a payroll policy that addresses processing payroll. We will amend the policy to include reviewing and approving time and attendance records.

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2. Obtain a listing of employment contracts/agreements in force during the period under examination. Select the largest (dollar amount) employment contract and determine if all payments issued during the period under examination were done in strict accordance with the terms and conditions ofthe contract.

We obtained a listing of employment contracts/agreements in force during the period under examination. We selected the largest (dollar amount) employment contract and determined that all salary payments issued during the period under examination were done in strict accordance with the terms and conditions ofthe contract.

Exceptions: There were payments paid to the employee for merit pay but there is no mention of merit pay in the contract. While the contract was not signed until more than a month after the contract period, employment, began (policies and procedures state that the School shall execute a contract prior to beginning work for all full-time employees), the salary payments indicated that the employee was paid for the entire contract period.

Management Corrective Action Plan: The Board has chosen not to include merit pay in an employee's contract as merit pay is not guaranteed to the employee. The Board decides if merit pay will be paid and approves payment of it in a Board meeting.

We are trying to ensure that all employees' contracts are signed prior to the employee starting to work.

3. Select the attendance and leave records for one pay period and;

• Determine if all employees are documenting their daily attendance and leave (e.g., vacation, sick, etc.). (Note: Generally, an elected official is not eligible to eam leave and does not document his/her attendance and leave. However, if the elected official is earning leave according to policy and/or contract, the official should document his/her daily attendance and leave.)

We reviewed the attendance and leave records for the pay period selected and determined whether all employees are documenting their daily attendance and leave.

Exceptions: Not all employees are documenting their daily attendance.

Management Corrective Action Plan: We are currently working under an informal policy that requires all employees to complete leave records. When preparing payroll, leave

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records are compared to leave records maintained by the school secretary. We will prepare a leave policy for the Board to approve by Januaiy 31, 2013, to include documentation of leave taken and review procedures of leave taken prior to entering leave into the payroll system.

Determine if supervisors are approving, in writing, the attendance and leave of all employees.

We reviewed the attendance and leave records for the pay period selected and determined whether supervisors are approving, in writing, the attendance and leave of all employees.

Exceptions: Supervisors did not approve attendance in writing for any of the attendance records reviewed. While leave forms appeared to be completed and approved in advance for instances that employees were requesting time off, there were no forms completed or approved in instances when employees did not request the time off in advance.

Management Corrective Action Plan: We will prepare a leave policy for the Board to approve by January 31, 2013, to include documentation of all leave taken and review procedures to ensure that leave is properly accounted for, documented, and reviewed.

Determine if the entity is maintaining accurate written leave records (e.g., hours eamed, hours used, and balance available) on all eligible employees.

We reviewed the Schools process of maintaining leave records during the period

Exceptions: The leave records were maintained in a computer program and were found to be inaccurate during the course of the audit There were two instances of employees being paid a total of $878 for leave they had not earned.

Management Corrective Action Plan: We are in the process of reviewing the leave balances in the payroll program to ensure that the balances are correct. We will estabUsh a policy for the Board to approve by January 31, 2013, to ensure proper procedures are in place to account for all leave taken.

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4. Select the five highest paid employees and determine if changes made to their hourly pay rates/salaries during the period under examination were approved in writing and in accordance with policy.

We reviewed the five highest paid employees and determined that only one had a change in their salary during the period under examination. Prior to the commencement of the school year, the Board approved her contract and associated salary. During the course ofthe year, the Board opted to decrease her salary and a new contract was approved and signed.

Exceptions: There is nothing in the policies and procedures that pertains to changing the contract terms (approving new contract in mid-term) including changes in compensation.

Management Corrective Action Plan: We will estabhsh a policy for the Board to approve by January 31, 2013, to address changes made to contracts during the fiscal year.

5. Select the five largest termination payments (e.g., vacation, sick, compensatory time, etc.) made during the period under examination. Determine if the payments were supported by documentation, made in strict accordance with policy and/or contract, and properly approved.

We reviewed the only two termination payments made during the period under examination and determined that both payments were supported by documentation and one was made in accordance with policy.

Exceptions: We determined that one of the two termination payments was not made in accordance with policy (74 hours of sick time was not paid to employee) and neither termination payments were properly approved.

Management Corrective Action Plan: 6. The Board has amended its policy regarding termination pay. In the future, any

termination payments will be reviewed by the Business Department to ensure that the payments are in accordance with the Board policy and that the payments are o if any employees were also being paid as contract labor during the period of the examination.

We determined that there were no employees that were also being paid as contract labor during the period of examination.

We were not engaged to perform, and did not perform, an audit, the objective of which would be the expression of an opinion on management's assertions. Accordingly, we do

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not express such an opinion. Had we perfonned additional procedures, other matters might have come to our attention that would have been reported to you.

This report is intended solely for the use of management of the School and the Legislative Auditor, State of Louisiana, and should not be used by those who have not agreed to the procedures and taken responsibility for the sufficiency ofthe procedures for their purposes. Under Louisiana Revised Statute 24:513, this report is distributed by the Legislative Auditor as a public document.


November 9, 2012

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