ST. LOUIS CHARTER SCHOOL

Transcription

1 ST. LOUIS CHARTER SCHOOL FINANCIAL STATEMENTS, SUPPLEMENTAL INFORMATION AND INDEPENDENT AUDITORS' REPORT WITH ACCOMPANYING SINGLE AUDIT AND OMB CIRCULAR A-133 REPORTS FOR THE YEARS ENDED JUNE 30, 2012 AND 2011

2 S1. Louis Charter School CONTENTS INDEPENDENT AUDITORS' REPORT FINANCIAL STATEMENTS Statements of Financial Position..... Statements of Activities.... Statements of Cash Flows..... Notes to Financial Statements.... SUPPLEMENTAL INFORMATION Schedule of Assets, Liabilities, and Fund Balances - Governmental Funds.... Schedule of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds..... Schedule of Revenues Collected by Source..... Schedule of Expenditures Paid by Object Schedule of Selected Statistics.... Schedule of Expenditures of Federal Awards.... Notes to Schedule of Expenditures of Federal Awards.... ADDITIONAL INDEPENDENT AUDITORS' REPORTS Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards.... Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-I Schedule of Findings and Questioned Costs.... Summary Schedule of Prior Audit Findings.... Independent Auditors' Report on Compliance with Certain Laws and Regulations Specified by Missouri Statute and Supplementary Schedules in Accordance with Missouri Statute.... Report on the Administration's Assertions about Compliance with Specified Requirements of Missouri Laws and Regulations

3 IE! SCHMERSAHL lreloar & Co. it. Certified Public Accountants Independent Auditors' Report Board of Directors St. Louis, Missouri We have audited the accompanying statements of financial position of (a nonprofit organization) as of June 30, 2012 and 2011, and the related statements of activities and cash flows for the years then ended. These financial statements are the responsibility of the St. Louis Charter School's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for ouropmlon. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of as ofjune 30, 2012 and 2011, and the changes in its net assets and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated November 5, 2012 on our consideration of's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. (314) fax (314) Sunset Office Drive, Suite 400 St. Louis, MO stcpa@stcpa.com

4 Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental information presented on pages 13 through 20, is presented for purposes of complying with the requirements of the Missouri Department of Elementary and Secondary Education and is not a required part of the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments and Non-Profit Organizations, and is also not a required part of the basic financial statements. Except for the statistical information on pages 17 through 20, such information has been subjected to the auditing procedures applied in our audit ofthe basic financial statements and, in our opinion, is fairly stated in all material respects, in relation to the basic financial statements taken as whole. The statistical information has not been subjected to the auditing procedures applied in the audit ofthe basic financial statements, and accordingly, we express no opinion on it. S~~ftA,~ November 5, 2012 St. Louis, Missouri (2)

5 FINANCIAL STATEMENTS

6 STATEMENTS OF FINANCIAL POSITION CURRENT ASSETS Cash and cash equivalents Cash and cash equivalents, restricted Accounts receivable, net of allowance of$74,670 for the year ending June 30, 2011 Prepaid expenses and other current assets ASSETS 2012 $ 2,285, , ,848 91,901 June 30, $ ,383, , ,209 51,269 Total Current Assets 3,018,642 2,590,410 PROPERTY AND EQUIPMENT, net 2,194,839 2,434,360 OTHER ASSETS Cash and cash equivalents, restricted Bond issuance costs, net 1,441, ,995 1,431, ,924 Total Other Assets 1,736,141 1,799,687 Total Assets $ 6,949,622 $ 6,824,457 LIABILITIES AND NET ASSETS LIABILITIES Current portion oflong-term debt Accounts payable Accrued payroll and payroll taxes Other accrued liabilities $ 387, , ,l30 187,953 $ 370, , , ,430 Total Current Liabilities LONG-TERM DEBT 1,328,494 4,479,482 1,336,565 4,864,012 Total Liabilities 5,807,976 6,200,577 NET ASSETS Unrestricted 1,141, ,880 Total Liabilities and Net Assets $ 6,949,622 $ 6,824,457 See accompanying notes to financial statements (3)

7 STATEMENTS OF ACTIVITIES Years Ended June 30, UNRESTRICTED NET ASSETS SUPPORT AND REVENUE Federal program revenue $ 1,584,451 $ 2,158,099 State program revenue 9,052,383 8,576,604 Special education revenue 172, ,446 Local revenue 157, ,408 Interest income 20,757 20,261 Other revenue 47,682 40,291 Total Support and Revenue 11,035,228 11,128,109 EXPENSES Program Services Academic programs 9,504,268 9,414,053 Supporting Services Management and general 1,013,194 1,224,374 Total Expenses 10,517,462 10,638,427 Change in Net Assets 517, ,682 NET ASSETS, Beginning of year 623, ,198 NET ASSETS, End of year $ 1,141,646 $ 623,880 See accompanying notes to financial statements (4)

8 STATEMENTS OF CASH FLOWS Years Ended June 30, CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets $ 517,766 $ 489,682 Adjustments to reconcile change in net assets to net change in cash from operating activities: Depreciation and amortization 635, ,005 Allowance for doubtful accounts 74,670 (Increase) decrease in assets: Accounts receivable 513,361 ( 440,260) Prepaid expenses and other current assets ( 40,632) 101,175 Increase (decrease) in liabilities: Accounts payable 15, ,523 Accrued payroll and payroll taxes 19,569 ( 7,921) Other accrued liabilities ( 59,477) ( 41,402) Net Change in Cash from Operating Activities 1,601, ,472 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment ( 313,098) ( 228,239) CASH FLOWS FROM FINANCING ACTIVITIES Payments oflong-term debt ( 377,660) ( 377,786) Transfer from operating for debt reserve funds ( 475,831) ( 527,485) Transfer to operating for interest and principal payment 487, ,800 Interest income earned ( 19,677) ( 19,614) Net Change in Cash from Financing Activities ( 385,993) ( 437,085) NET CHANGE IN CASH AND CASH EQUIVALENTS 902, ,148 CASH AND CASH EQUIVALENTS, Beginning of year 1,383,757 1,127,609 CASH AND CASH EQUIVALENTS, End of year $ 2,285,768 $ 1,383,757 SUPPLEMENTAL DISCLOSURES: Cash paid for interest $ 279,785 $ 300,999 See accompanying notes to financial statements (5)

9 NOTES TO FINANCIAL STATEMENTS June 30, 2012 and 2011 A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization (the "School") was organized on March 1,2000 under Chapter 355 of the Missouri Revised Statutes to operate a charter school, which is sponsored by the University of Missouri - St. Louis (the "Charterholder") and is governed by Senate Bill Number 781 of the 89 th General Assembly of the Missouri Legislature. The School is exempt from most Missouri laws and statutes governing educational institutions. The governing body of the School is the Board of Directors, which is composed of eight members. Basis of Presentation The accompanying financial statements of the School have been prepared on the accrual basis of accounting. Financial statement presentation follows the recommendations of U.S. Generally Accepted Accounting Principles ("GAAP"). Under GAAP, the School is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets; temporarily restricted net assets; and permanently restricted net assets. There were no temporarily restricted or permanently restricted net assets at June 30, 2012 and Cash and Cash Equivalents Cash and cash equivalents include amounts in demand deposits as well as short-term investments with a maturity date within three months of the date acquired by the School. Accounts Receivable Upon reviewing the individual account balances, the School's management has determined that receivables are historically fully collectible. However, for the year ending June 30, 2011 a reserve was established in the amount of $74,670. Property and Equipment Property and equipment are valued at cost or, if donated, at the approximate fair value at the date of donation. Expenditures for repairs and maintenance are charged to operations while renewals and betterments are capitalized. Property, plant and equipment of the School is depreciated using the straight-line method over the following estimated useful lives: Buildings and leasehold improvements Furniture, fixtures, and equipment Computer software 15 years 5-20 years 3 years (6)

10 NOTES TO FINANCIAL STATEMENTS June 30, 2012 and 2011 (Continued) A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Restricted Cash Certain proceeds ofthe School's revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the statement of financial position because they are maintained in separate bank accounts and their use is limited by applicable bond covenants. The restricted cash consists of reserve funds, which are used to report resources set aside to provide additional security for the payment of principal and interest on the bonds as these payments become due. Intangible Assets Intangible assets are amortized using the straight-line method over their estimated period of benefit, considered to be 4-20 years (see Note D). Long-Term Obligations Long-term debt and other long-term obligations are reported as liabilities in the statement of financial position. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method, which approximates the effective interest method. Bonds payable are reported net of the applicable bond discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. Revenue Sources During the year ended June 30, 2008, the School became a Local Educational Agency meaning funds are received directly from the State of Missouri passed through the Bond Trustee. In accordance with the funding provisions of the charter, the School reports the number of full-time equivalent (FTE) students and related data to the State. Funding for the School is adjusted during the year to reflect revised calculations by DESE and or the school under the Missouri Education Finance Program and actual weighted Average Daily Attendance (ADA) data reported by the School during designated student survey periods. The School receives federal awards for the enhancement of various educational programs. This assistance is generally based on applications submitted to and approved by various granting agencies. These federal awards may have requirements whereby the issuance of grant funds is withheld until qualifying eligible expenditures are incurred. Revenues for these awards are recognized only to the extent that eligible expenditures have been incurred. Additionally, other revenues may be derived from certain other programs. (7)

11 NOTES TO FINANCIAL STATEMENTS June 30, 2012 and 2011 (Continued) A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Use of Estimates The process of preparing financial statements in conformity with u.s. Generally Accepted Accounting Principles requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues and expenses. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements. Accordingly, upon settlement, actual results may differ from estimated amounts. Financial Instruments The carrying amount of cash and cash equivalents, receivables, prepaid expenses, accounts payable and accrued expenses approximates fair value due to the short-term maturities of these instruments. Income Taxes The School qualifies as a nonprofit organization and is exempt from Federal and State income taxes under Section 501(c)(3) of the Internal Revenue Code. The School does not have unrelated business income, excise taxes or activities that would threaten the School's tax-exempt status. Accordingly, no provision for federal or state income taxes is provided. The School files an information return, IRS Form 990. The School adopted the provisions relating to Accounting for Uncertainty in Income Taxes and management is not aware of any uncertain tax positions of the School related to the tax filings. Subsequent Events In preparing these financial statements, the School has evaluated events and transactions for potential recognition or disclosure through November 5, 2012, the date the financial statements were available to be issued. B. RESTRICTED CASH At June 30, 2012 and 2011, restricted funds in the amounts of$1,927,271 and $1,431,763, respectively, consist primarily of Debt Service Funds. These restricted funds are maintained for the purpose of meeting principal and interest requirements of the Series 2002A and B Revenue Bonds and are mandated by the bond trust indenture. A summary of these funds at June 30 is as follows: Restricted Cash Less: Current Portion Noncurrent Portion of Restricted Cash 2012 $1,927, ,125 $1,441, $1,918, ,175 $1,431,763 (8)

12 NOTES TO FINANCIAL STATEMENTS June 30, 2012 and 2011 (Continued) C. PROPERTY AND EQUIPMENT Property and equipment are comprised of the following: 2012 June 30, 2011 Building/leasehold improvements Equipment Less accumulated depreciation $5,298,495 1,666,760 6,965,255 4,770,416 $2,194,839 $5,109,594 1,542,563 6,652,157 4,217,797 $2,434,360 Depreciation expense was $552,619 and $549,076 for the years ended June 30, 2012 and 2011, respectively. The School is the lessee of office equipment under capital leases expiring in various years through The assets and liabilities under capital leases are recorded at the lower of the present value of the minimum lease payments or the fair value of the asset. The assets are amortized over their estimated productive lives. Amortization of assets under capital leases is included in depreciation expense for the fiscal years 2012 and Following is a summary of property held under capital leases: 2012 June 30, 2011 Office equipment Accumulated amortization $312,643 ( 289,757) $ 22,886 $312,643 ( 258,171) $ 54,472 Minimum future lease payments under capital leases as ofjune 30, 2012 are detailed in Note E. Interest rates on capitalized leases vary from 9.0% to 14.8% and are imputed based on the lower of the School's incremental borrowing rate at the inception of each lease or the lessor's implicit rate of return. D. BOND ISSUANCE COSTS Legal fees, printing costs and other expenses associated with the issuance of the revenue bonds as described in Note E are being amortized on the straight-line method over the term ofthe bonds. Amortization expense charged to operations during the years ended June 30, 2012 and 2011 was $72,929. (9)

13 E. LONG-TERM DEBT NOTES TO FINANCIAL STATEMENTS June 30, 2012 and 2011 (Continued) Long-term debt and obligations payable consist of the following at June 30,: Project 2002ABonds: $6,130,000 revenue bonds due in annual principal installments of $140,000 to $945,000 from 2004 through 2023; interest accrues at 4.25% to 5.10%; secured by leasehold improvements, all personal property, a pledge of gross revenues and various bond reserve funds. $4,340,000 $4,600,000 Promissory note to the School's former management company; due in annual principal and interest payments of $150,000 through 2017; interest at 8% thereafter, unsecured. 551, ,285 Capital lease obligations: Capital lease obligation for computer equipment due in 48 monthly installments of $2,430 including interest at % through July 15, Capital lease obligation for copy machines due in 60 monthly installments of $907 including interest at 10% through December 3,2013. Less unamortized bond discount Less current portion Total Long-Term Debt 10,380 4,901,700 35, ,111 $4,479,482 2,401 20,380 5,273,066 38, ,604 $4,864,012 Total interest expense for the years ended June 30, 2012 and 2011 was $289,490 and $308,334, respectively. (10)

14 E. LONG-TERM DEBT (Continued) NOTES TO FINANCIAL STATEMENTS June 30, 2012 and 2011 (Continued) Future maturities oflong-term debt and capital lease obligations at June 30, 2012 are as follows: Gross Less Amount Year Ending Notes Lease Representing Principal June 30 Payable Payments Interest Portion Total 2013 $ 376,831 $10,380 $ 567 $10,279 $ 387, , , , , , , , , to ,905,000 1,905, , ,000 $4,891,422 $ 10,380 $ 567 $ 10,279 $4,901,700 F. CONCENTRATIONS Funding The School receives a substantial portion of its revenue from the State of Missouri. A significant reduction in the level of this support, if it were to occur, could have a significant effect on the School's programs and activities. However, the School has not received any indication from the State of Missouri of a planned decrease in future state government support. G. COMMITMENTS AND CONTINGENCIES The School has entered into various operating agreements for the school facilities. The operating agreements run through 2014 and, upon termination, do not subject the School to additional minimum rental payments. Rent expense of$695,339 and $690,186 was incurred for the years ended June 30, 2012 and 2011, respectively. (11)

15 H. RETIREMENT PLAN Participation NOTES TO FINANCIAL STATEMENTS June 30, 2012 and 2011 (Continued) The School contributes to the Public School Retirement System of the City of St. Louis, Missouri (the Retirement System), a cost-sharing, multiple-employer defined benefit pension plan. Participation is mandatory. The Retirement System provides service and disability retirement benefits to full-time employees and optional benefits to members' beneficiaries. Positions covered by the Retirement System are also covered by Social Security. The Retirement System is administered by the eleven-member Public School Retirement System Board of Trustees. The Retirement System issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing to The Public School Retirement System of the City of St. Louis, Missouri, 3641 Olive Street, Suite 300, St. Louis, Missouri 63108, by calling , or by visiting Contributions The Retirement System members are required to contribute 5% of their annual covered salary. The School was required to contribute 11.88% and 10.03% for the periods ending June 30, 2012 and 2011, respectively. The contribution requirements of members and the School are established and may be amended by the Public School Retirement System Board of Trustees. Employer contributions for the years ended June 30, 2012 and 2011 were approximately $585,893 and $488,560 respectively. 1. RISK MANAGEMENT The School is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters for which the School carries commercial insurance. Settled claims resulting from the risks described above have not exceeded the insurance coverage for the current fiscal year end. J. GAIN CONTINGENCY The School has submitted a claim to the Missouri Department of Elementary and Secondary Education (DESE) for nonpayment of funds from the St. Louis Public School District while they were the pass-through-entity. The period of nonpayment dates from the beginning of the year ending June 30, 2004 through the year ending June 30,2007. The claim asserts the School was underpaid for Basic Formula funding in the amount of $862,154 and for Proposition C education funding in the amount of$3,138,805. DESE has not yet confirmed the funds are owed to the School and, accordingly, the amount of funding noted above has not been reflected in the accompanying financial statements. (12)

16 SUPPLEMENTAL INFORMA TION

17 SCHEDULE OF ASSETS, LIABILITIES, AND FUNDBALANCES-GOVERNMENTALFUNDS June 30, 2012 ASSETS Governmental Funds Special Capital General Revenue Projects Fund Fund Fund ASSETS Cash and cash equivalents $ 2,285,768 $ $ Cash and cash equivalents, restricted 1,927,271 Due from other agencies 154,848 Prepaid expenses 91,901 Total Assets $ 4,459,788 $ $ Total $ 2,285,768 1,927, ,848 91,901 $ 4,459,788 LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable $ 201,300 $ $ Accrued liabilities 740,083 Notes payable 387,111 Total Liabilities 1,328,494 $ 201, , ,111 1,328,494 FUND BALANCES Unreserved 3,131,294 3,131,294 Total Liabilities and Fund Balances $ 4,459,788 $ $ $ 4,459,788 (13)

18 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS For the Year Ended June 30, 2012 Special Capital General Revenue Projects Fund Fund Fund Total REVENUES Federal $ 936,691 $ 647,760 $ $1,584,451 State 4,137,548 4,914,835 9,052,383 Local 157, ,074 Special education 172, ,881 Interest income 20,757 20,757 Other income 47,682 47,682 Total Revenues 5,472,633 5,562,595 11,035,228 EXPENDITURES Academic instruction 363,828 3,303,768 3,667,596 Special education 203, ,410 1,105,820 Attendance 57,889 57,889 Health services 22, , ,757 Improvement of instruction 268, , ,379 Professional development 188, ,488 Media services 10, , ,194 Building level administration 40, , ,736 Executive administration 260, ,754 Operation of plant 1,269,277 1,269,277 Pupil transportation 497, ,875 Food services 404, ,066 Central office and support services 465, ,050 Capital outlay 313, ,098 Debt service Principal 361, ,265 Interest 292, ,832 Other 8,246 8,246 Total Expenditures 5,027,727 5,562,595 10,590,322 Net Change in Fund Balance 444, ,906 FUND BALANCES, Beginning of Period 2,686,388 2,686,388 FUND BALANCES, End of Period $3,131,294 $ $ $3,131,294 (14)

19 SCHEDULE OF REVENUES COLLECTED BY SOURCE For the Year Ended June 30, 2012 Special Capital General Revenue Projects Fund Fund Fund Total LOCAL Student activities $ 6,388 $ $ $ 6,388 Food service 44,998 44,998 Summer school Daycare revenue 105, ,046 Total Local 157, ,074 STATE Basic formula 3,107,202 4,914,835 8,022,037 Transportation 86,766 86,766 State food service 2,633 2,633 Missouri Proposition C 940, ,947 Total State 4,137,548 4,914,835 9,052,383 FEDERAL Title I 175, , ,799 Title II 112, ,324 Title III 20,193 20,193 Title IV 1,624 1,624 Title I - ARRA 154, ,394 Homeless - ARRA 2,197 2,197 Basic formula - Jobs Bill 7,142 7,142 ASEP 62,625 62,625 Basic formula - ARRA 177, ,870 Transportation - ARRA 9,877 9,877 Special education - ARRA 57,139 57,139 Foodservice 350, ,267 Total Federal 936, ,760 1,584,451 SPECIAL EDUCATION Part B Special Education 145, ,415 Medicaid 27,466 27,466 Total Special Education 172, ,881 INTEREST INCOME 20,757 20,757 OTHER INCOME 47,682 47,682 TOTAL REVENUES $5,472,633 $5,562,595 $ $11,035,228 (15)

20 SCHEDULE OF EXPENDITURES PAID BY OBJECT For the Year Ended June 30, 2012 Salaries Employee benefits Purchased services Supplies Debt service Special Capital General Revenue Projects Fund Fund Fund $ 907,432 $ 4,222,921 $ 263,169 1,339,674 2,180,382 1,014, ,343 Total $ 5,130,353 1,602,843 2,180,382 1,014, ,343 Total Expenditures $ 5,027,727 $ 5,562,595 $ $ 10,590,322 (16)

21 SCHEDULE OF SELECTED STATISTICS For the Year Ended June 30, 2012 Type of audit performed: Yellow Book: ---- Single Audit: ---- x 1. Calendar (Sections and , RSMo) A. The number of actual calendar hours classes were in session and pupils were under the direction of teachers during this school year was as follows: Kindergarten - A.M. Kindergarten - P.M. Kindergarten - Full-day Hours ---- Hours ----:--- 1, Hours Grades Grades Grades Hours Hours : , Hours B. The number of days classes were in session and pupils were under the direction of teachers during this school year was as follows: Kindergarten - A.M. Days --- Kindergarten - P.M. --- Days Kindergarten - Full-day 174 Days Grades --- Grades --- Grades 1-8 Days Days 174 Days 2. Average Daily Attendance (ADA) Full-Time and Regular Term Part-Time Remedial Deseg In Federal Lands Total Deseg Out Kindergarten - A.M. Kindergarten - P.M. Kindergarten - Full-day Grades Grades Grades Subtotal Regular Term Resident Deseg In Federal Lands Total Subtotal Summer School Total Regular Term Plus Summer School ADA (17)

22 SCHEDULE OF SELECTED STATISTICS For the Year Ended June 30, 2012 (Continued) 3. September Membership Full-Time & Part-Time Deseg In Federal Lands Total Deseg Out September Membership FTE Count _9_5_1_.6 --'-1 _95_1_.6_----'- --' 4. Free and Reduced Priced Lunch FTE Count (Section (6), RSMo) Full-Time & Deseg Part-Time In Total State FTE Total Free Reduced Total Finance Fill in the blank with the appropriate response of true, false, or N/A unless otherwise noted. A. As required by Section , RSMo, a bond was purchased for the district's treasurer in the total amount of: $75,000 B. The district's deposits were secured during the year as required by Sections and , RSMo. True C. The district maintained a separate bank account for the Debt Service Fund in accordance with Section , RSMo. D. Salaries reported for educators in the October Core Data cycle are supported by payroll/contract records. E. If a $162,326 or 7% x SAT x W ADA transfer was made in excess of adjusted expenditures, the board approved a resolution to make the transfer, which identified the specific projects to be funded by the transfer and an expected expenditure date for the projects to be undertaken. True True N/A (18)

23 SCHEDULE OF SELECTED STATISTICS For the Year Ended June 30, 2012 (Continued) 5. Finance (Continued) F. The district published a summary of the prior year's audit report within thirty days of the receipt of the audit pursuant to Section , RSMo. True All above "false" answers mu~ be supported by a finding or management letter comment. Finding #: Management Letter Comment #: 6. Transportation (Section , RSMo) }'ill in the blank with the appropriate response of true, false, or N/ A unless otherwise noted. A. The school transportation allowable costs substantially conform to 5 CSR , Allowable Costs for State Transportation Aid. B. The district's school transportation ridership records are maintained in a manner to accurately disclose in all material respects the average number of regular riders transported. True True C. Based on the ridership records, the average number of students (non-disabled K-12, K-12 students with disabilities and career education) transported on a regular basis (ADT) was: II Eligible ADT # II Ineligible ADT #0 D. The district's transportation odometer mileage records are maintained in a manner to accurately disclose in all material respects the eligible and ineligible mileage for the year. True E. Actual odometer records show the total district-operated and contracted mileage for the year was: # 75,759 Of this total, the eligible non-disabled and students with disabilities route miles and the ineligible non-route and disapproved miles (combined) was: II Eligible Miles # 69,819 II Ineligible Miles (Non-Route/Disapproved) # 5,940 (19)

24 SCHEDULE OF SELECTED STATISTICS For the Year Ended June 30, 2012 (Continued) 6. Transportation (Section , RSMo) (Continued) F. Number of days the district operated the school transportation system during the regular school year: 174 All above "False" answers must be supported by a finding or management letter comment. Finding #: Management Letter Comment #: (20)

25 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Year Ended June 30, 2012 Federal Grantor! Pass-Through Grantor/ Program Title U.S. Department of Agriculture: Passed-through the Missouri Department of Elementary and Secondary Education (DESE): National School Lunch Program National School Breakfast Program After School Snack Total U.S. Department of Agriculture U.S. Department of Education: Passed-through the Missouri Department of Elementary and Secondary Education (DESE): State Fiscal Stabilization Fund - Education State Grants - ARRA State Fiscal Stabilization Fund - Government Services - ARRA Federal Education Jobs Fund State Schools Fund Title I - Grants to Local Educational Agencies Title I - Grants to Local Educational Agencies - ARRA Title I - School Improvement Grants Title II Part A - Improving Teacher Quality Title II Part D - Enhancing Education through Technology Title II Part D - Educational Technology State Grants - ARRA Title III Part A - English Language Acquisition Title IV - Safe and Drug-Free Schools Homeless Education - ARRA Special Education Part B Entitlement Special Education Part B Entitlement - ARRA Total U.S. Department of Education CFDA Number A A A A A X A A A A A Federal Expenditures $ 257,702* 87,301 * 11,391 * 356, ,870 9,877 7, ,376* 290,563* 17, ,158 4,854 6,432 34,348 1,624 6, ,281 * 141,856 1,822,742 Total Expenditures of Federal Awards $2,179,136 * Denotes Major Program for the year ended June 30,2012. (21)

26 A. GENERAL NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS June 30, 2012 The accompanying Schedule of Expenditures of Federal Awards presents the activity of all federal awards programs ofthe for the year ended June 30, 's reporting entity is defined in Note A of's basic financial statements. B. BASIS OF ACCOUNTING The accompanying Schedule of Expenditures of Federal Awards is presented using the accrual basis of accounting, which is described in Note A ofthe 's basic financial statements. (22)

27 ADDITION AL INDEPENDENT AUDITORS' REPORTS

28 m SCHMERSAHL treloar & CO. Sd. Certified Public Accountants REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Board of Directors St. Louis, Missouri We have audited the financial statements of as of and for the year ended June 30, 2012 and have issued our report thereon dated November 5, We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered 's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the entity's internal control over financial reporting. Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal 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 weaknesses have been identified. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. (23) (314) fax (314) Sunset Office Drive, Suite 400 St. Louis, MO stcpa@stcpa.com

29 Compliance and Other Matters As part of obtaining reasonable assurance about whether 's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. This report is intended solely for the information and use of the Board of Directors, management, others within the entity, the Missouri Department of Elementary and Secondary Education, and the federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. November 5,2012 St. Louis, Missouri (24)

30 IE! SCHMERSAHL lreloar & Co. _~id. Certified Public Accountants INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 Board of Directors St. Louis, Missouri Compliance We have audited 's compliance with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major federal programs for the year ended June 30,2012. 's major federal programs are identified in the summary of auditor's results section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of 's management. Our responsibility is to express an opinion on 's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A- 133, Audits ojstates, Local Governments, and Nonprofit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program identified in the accompanying schedule of findings and questioned costs occurred. An audit includes examining, on a test basis, evidence about 's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of St. Louis Charter School's compliance with those requirements. In our opinion, complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs identified in the accompanying schedule of findings and questioned costs for the year ended June 30, (25) (314) fax (314) Sunset Office Drive, Suite 400 St. Louis, MO stcpa@stcpa.com

31 Internal Control Over Compliance Management of is responsible for establishing and maintaining effective internal control over compliance with the compliance requirements the requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered S1. Louis Charter School's internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness ofthe S1. Louis Charter School's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be significant deficiencies, significant deficiencies, or material weaknesses in internal control over compliance. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. This report is intended solely for the information and use of the Board of Directors, management, others within the entity, the Missouri Department of Elementary and Secondary Education, and the federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. November 5, 2012 St.Louis, Missouri (26)

32 SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ended June 30, 2012 (1) Summary of Auditors' Results (1) The type of report issued on the financial statements: unqualified opinion. (2) Significant deficiencies in internal control were disclosed by the audit of the Financial Statements: no. Material weaknesses: no. (3) Noncompliance which is material to the financial statements: no. (4) Significant deficiencies in internal control over major programs: no Material weaknesses: no. (5) The type of report issued on compliance for major programs: unqualified opinion. (6) Any audit findings which are required to be reported under Section 51 O(a) of OMB Circular A-133: no. (7) Major programs: National School Lunch Program CFDA #10,555, National School Breakfast Program CFDA #10.553, After School Snack CFDA #10,555, Federal Education Jobs Fund CFDA #84.410A, Title I - Grants to Local Educational Agencies CFDA #84.010A, Title I Grants to Local Educational Agencies-ARRA CFDA #84.389A, Special Education Part B Entitlement CFDA #84.027A. (8) Dollar threshold used to distinguish between Type A and Type B programs: $300,000. (9) Auditee qualified as a low-risk auditee under Section 530 ofomb Circular A-133: yes. (2) Findings Relating to the Financial Statements Reported in Accordance with Government Auditing Standards: none. (3) Findings and Questioned Costs Relating to Federal Awards: none. (27)

33 SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS Year Ended June 30, 2012 NONE. (28)

34 IE! SCHMERSAHL lreloar & Co.... it. Certified Public Accountants INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH CERTAIN LAWS AND REGULATIONS SPECIFIED BY MISSOURI STATUTE AND SUPPLEMENTARY SCHEDULES IN ACCORDANCE WITH MISSOURI STATUTE Board of Directors St. Louis, Missouri Compliance We have audited the compliance of with the types of compliance requirements described in statutes of the State of Missouri for required methods of maintaining pupil attendance and pupil transportation records (Chapter (7) Revised Statutes of Missouri) as of and for the year ended June 30, Compliance with laws, regulations, contracts, and grants applicable to is the responsibility of the School's management. Our responsibility is to express an opinion on 's compliance based on our audit. We conducted our audit of compliance, except as noted in the paragraph below, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government A uditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above, that could have a direct and material effect on the School's ability to accurately disclose the average daily attendance and average daily transportation of pupils during the audit period, occurred. An audit includes examining, on a test basis, evidence about 's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on 's compliance with those requirements. In our opinion, complied, in all material respects, with the requirements referred to above that are applicable to the School's ability to accurately disclose the average daily attendance of pupils and accurate disclosure by the School's pupil transportation records of the average students scheduled to be transported eligible and ineligible for state aid, the number of miles eligible and ineligible for state aid, and the allowable costs for pupil transportation during the year ended June 30, (29) (314) fax (314) Sunset Office Drive, Suite 400 St. Louis, MO stcpa@stcpa.com

35 Missouri Supplementary Schedules We have audited the basic financial statements of as of and for the year ended June 30, 2012, and have issued our report dated November 5,2012. Our audit was performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying schedule of selected statistics is presented for purposes of additional analysis as required by Missouri statute and is not a required part of the basic financial statements. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on it. This report is intended solely for the information and use of the Board of Directors, management and the Missouri Department of Elementary and Secondary Education and is not intended to be and should not be used by anyone other than these specified parties. November 5,2012 St. Louis, Missouri (30)

36 &! SCHMERSAHL lreloar & Co. ic'. Certified Public Accountants REPORT ON THE ADMINISTRATION'S ASSERTIONS ABOUT COMPLIANCE WITH SPECIFIED REQUIREMENTS OF MISSOURI LAWS AND REGULATIONS Board of Directors St. Louis, Missouri We have audited the administration's assertions, included in its representation letter dated November 5, 2012, that complied with the requirements of Missouri Laws and Regulations regarding the operation of a charter school; accurate disclosure by the School's attendance records of average daily attendance, resident membership on the last Wednesday of September 2011 and the number of students eligible to receive free or reduced price lunches on the last Wednesday of January 2012; and accurate disclosure by the School's pupil transportation records ofthe average students scheduled to be transported eligible and ineligible for state aid, the number of miles eligible and ineligible for state aid and the allowable costs for pupil transportation during the year ended June 30, As discussed in that representation letter, the administration is responsible for the School's compliance with those requirements. Our responsibility is to express an opinion on the administration's assertions about the School's compliance based on our audit. Our audit was made in accordance with standards established by the American Institute of Certified Public Accountants and, accordingly, included examining, on a test basis evidence about the School's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion. Our opinion does not provide a legal determination on the School's compliance with specified requirements. In our opinion, administration's assertions that the School complied with the aforementioned requirements for the year ended June 30, 2012, are fairly stated in all material respects. This report is intended solely for the information and use ofthe Board of Directors, administration, and the Missouri Department of Elementary and Secondary Education and is not intended to be and should not be used by anyone other than these specified parties. November 5,2012 (31) (314) fax (314) Sunset Office Drive, Suite 400 St. Louis, MO stcpa@stcpa.com