Amethod Public Schools Charter Schools #: 0014, 0883, 1441, 1660, 1661, & 1741 Financial Statements June 30, 2016

Transcription

1 Amethod Public Schools Charter Schools #: 0014, 0883, 1441, 1660, 1661, & 1741 Financial Statements June 30, 2016

2 INDEX TO THE FINANCIAL STATEMENTS Independent Auditor s Report... 2 Statement of Financial Position... 4 Statement of Activities... 5 Statement of Cash Flows... 6 Notes to Financial Statements... 7 Supplementary Information Organization Schedule of Average Daily Attendance Schedule of Instructional Time Statement of Expenditures of Federal Awards Statement of Functional Expenses Oakland Charter Academy Statement of Functional Expenses Oakland Charter High School Statement of Functional Expenses Richmond Charter Academy Statement of Functional Expenses Downtown Charter Academy Statement of Functional Expenses Benito Juarez Charter Academy Statement of Functional Expenses John Henry High School Statement of Functional Expenses Home Office Reconciliation of Charter School Unaudited Actuals Financial Report -- Alternative Form With Audited Financial Statements Other Independent Auditor s Report Section Independent Auditor s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Independent Auditor s Report on Compliance for Each Major Federal Program and on Internal Control Over Compliance Required by The OMB Uniform Guidance Independent Auditor s Report on State Compliance Findings and Recommendations Section Schedule of Audit Findings and Questioned Costs Summary Schedule of Prior Audit Findings... 42

3 INDEPENDENT AUDITOR S REPORT Board of Directors Amethod Public Schools Oakland, California Report on the Financial Statements We have audited the accompanying financial statements of Amethod Public Schools (a nonprofit organization), which comprise the statement of financial position as of June 30, 2016, and the related statements of activities and cash flows for the fiscal year then ended, and the related notes to the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

4 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Amethod Public Schools as of June 30, 2016, and the changes in its net assets and its cash flows for the fiscal year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Supplementary Information Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The supplementary information as listed in the table of contents is presented for purposes of additional analysis and is not a required part of the financial statements. The accompanying Schedule of Expenditures of Federal Awards, as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 6, 2016, on our consideration of Amethod Public Schools internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Amethod Public Schools internal control over financial reporting and compliance. SQUAR MILNER LLP San Diego, California December 6, 2016

5 STATEMENT OF FINANCIAL POSITION June 30, 2016 Oakland Oakland Richmond Downtown Benito John Henry Charter Charter Charter Charter Juarez High Home Academy High School Academy Academy Elementary School Office Total ASSETS Current assets: Cash $ 98,865 $ 882,752 $ 784,246 $ 832,558 $ 809,979 $ 170,897 $ 145,156 $ 3,724,453 Accounts receivable 398, , , ,113 1,177, ,514-3,903,294 Related party receivable/(payable) 1,270,121 1,525,000 (300,000) 300,000 (1,080,000) (115,121) (1,600,000) - Prepaid expenses 35,063 34,240 58,336 18,008 63, , ,702 Total current assets 1,802,192 3,129,843 1,012,691 1,858, , ,420 (1,372,564) 7,919,449 Fixed assets, net of depreciation 686,643 19, ,264-1,121,128 33,120 1,281,275 3,879,263 Deposits 62,050 19,000 65,000-60,000 50, ,050 TOTAL ASSETS $ 2,550,885 $ 3,168,676 $ 1,814,955 $ 1,858,679 $ 2,152,316 $ 600,540 $ (91,289) $ 12,054,762 LIABILITIES AND NET ASSETS (DEFICIT) Current liabilities: Accounts payable $ 50,284 $ 48,820 $ 62,530 $ 183,841 $ 121,118 $ 187,801 $ 229,836 $ 884,230 Accrued expenses 284, ,809 62, , ,072 19, ,937 Deferred revenue , ,225 Deferred rent 44, , , ,300-1,206,638 Notes payable, current portion 81, ,211 62, ,566 50, ,503 Total current liabilities 460, , , ,693 1,013, , ,836 3,587,533 Notes payable, net of current portion 148, ,032 62, , ,000-1,518,152 Total liabilities 608, ,629 1,385, ,193 1,732, , ,836 5,105,685 Net assets (deficit): Temporarily restricted 53,311 87,038 18,978 21,436 25, ,106 Unrestricted 1,888,793 2,862, ,929 1,417, ,102 91,213 (321,125) 6,742,971 Total net assets (deficit) 1,942,104 2,949, ,907 1,438, ,445 91,213 (321,125) 6,949,077 TOTAL LIABILITIES AND NET ASSETS (DEFICIT) $ 2,550,885 $ 3,168,676 $ 1,814,955 $ 1,858,679 $ 2,152,316 $ 600,540 $ (91,289) $ 12,054,762 Page 4 The accompanying notes are an integral part of these financial statements.

6 STATEMENT OF ACTIVITIES June 30, 2016 Oakland Oakland Richmond Downtown Benito John Henry Charter Charter Charter Charter Juarez High Home Academy High School Academy Academy Elementary School Office Total REVENUES Revenue limit sources: State aid $ 899,218 $ 2,465,435 $ 1,038,561 $ 1,710,661 $ 2,409,826 $ 829,336 $ - $ 9,353,037 Education protection account 241, , ,179 52,212 77,558 23,896-1,322,985 In-lieu of property taxes 368, , , , , ,960-3,499,905 Federal revenues 219, , , , , ,268-2,054,620 State revenues 475, , , , ,732 26,655-2,868,417 Local revenues: Miscellaneous 17,344 40,551 40,636 12,958 62,467 26,508 1,764,097 1,964,561 Total revenues before transfers 2,221,098 4,779,188 2,546,635 3,300,375 4,656,509 1,795,623 1,764,097 21,063,525 Net assets transferred to restrictions - (34,598) (2,711) (21,436) (25,343) - - (84,088) Total revenues 2,221,098 4,744,590 2,543,924 3,278,939 4,631,166 1,795,623 1,764,097 20,979,437 EXPENSES Program services: Education 1,613,668 2,406,859 1,681,916 1,812,350 2,688,528 1,154,242-11,357,563 Support services: Management and general 740,025 1,108,622 1,022, ,248 1,466, ,178 2,085,222 7,424,520 Total expenses 2,353,693 3,515,481 2,704,018 2,479,598 4,154,651 1,489,420 2,085,222 18,782,083 Change in unrestricted net assets (132,595) 1,229,109 (160,094) 799, , ,203 (321,125) 2,197,354 Increase in temporarily restricted net assets - 34,598 2,711 21,436 25, ,088 CHANGE IN NET ASSETS (132,595) 1,263,707 (157,383) 820, , ,203 (321,125) 2,281,442 NET ASSETS (DEFICIT), BEGINNING OF YEAR 2,074,699 1,685, , ,709 (82,413) (214,990) - 4,667,635 NET ASSETS (DEFICIT), END OF YEAR $ 1,942,104 $ 2,949,047 $ 429,907 $ 1,438,486 $ 419,445 $ 91,213 $ (321,125) $ 6,949,077 Page 5 The accompanying notes are an integral part of these financial statements.

7 STATEMENT OF CASH FLOWS For the Fiscal Year Ended June 30, 2016 Oakland Oakland Richmond Downtown Benito John Henry Charter Charter Charter Charter Juarez High Home Academy High School Academy Academy Elementary School Office Total CASH FLOWS FROM OPERATING ACTIVITIES: Change in net assets $ (132,595) $ 1,263,707 $ (157,383) $ 820,777 $ 501,858 $ 306,203 $ (321,125) $ 2,281,442 Adjustments to reconcile change in net assets to net cash flows (used in) provided by operating activities: Depreciation 134,674 14,400 34,079-47, ,430 (Increase) decrease in operating assets: Accounts receivable (354,742) (154,469) (69,418) (360,058) (773,835) (461,514) - (2,174,036) Related party receivable/(payable) (645,000) (1,525,000) 300,000 (300,000) 570,000-1,600,000 - Prepaid expenses 3,661 9,741 1,856 11,750 18,688 49,263 (82,280) 12,679 Increase (decrease) in operating liabilities: Accounts payable (82,410) (1,115) (315,436) 154,973 (446,738) 179, ,836 (281,151) Accrued expenses (225,458) 43,687 29,450 38,323 72,346 19,226 - (22,426) Deferred rent 13, , ,265 87,552-1,062,341 Deferred revenue , (209,572) - (41,347) Net cash flows (used in) provided by operating activities (1,288,862) (349,049) 404, , ,861 (29,103) 1,426,431 1,067,932 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of fixed assets - - (301,519) - (502,313) - (1,281,275) (2,085,107) Net cash flows used in investing activities - - (301,519) - (502,313) - (1,281,275) (2,085,107) Cash flows from financing activities: Proceeds from notes payable , , ,000-1,792,779 Payment on notes payable (74,460) - (129,141) (62,500) (181,784) (50,000) - (497,885) Net cash flows provided by (used in) financing activities (74,460) - 480,243 (62,500) 751, ,000-1,294,894 NET CHANGE IN CASH (1,363,322) (349,049) 583, , , , , ,719 CASH, BEGINNING OF YEAR 1,462,187 1,231, , ,293 22,820-3,446,734 CASH, END OF YEAR $ 98,865 $ 882,752 $ 784,246 $ 832,558 $ 809,979 $ 170,897 $ 145,156 $ 3,724,453 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid for interest $ 17,384 $ - $ 16,439 $ - $ 16,058 $ 410 $ - $ 50,291 Page 6 The accompanying notes are an integral part of these financial statements.

8 NOTES TO FINANCIAL STATEMENTS June 30, ORGANIZATION AND MISSION Amethod Public Schools (Organization) is a non-profit public benefit corporation. The Organization was incorporated on November 11, 2010, and was designed to produce the academic advancement of disenfranchised middle school and high school aged youth from East Oakland, California. Formerly known as Oakland Charter Academy, Inc., the Organization first opened in 1993, then established a high school in 2007 in pursuit of a feeder track to guide students all the way through the college application process. The Organization currently operates six charter schools: Oakland Charter Academy (OCA), Oakland Charter High School (OCHS), Richmond Charter Academy (RCA), Downtown Charter Academy (DCA), Richmond Charter Elementary Benito Juarez Elementary (BJE) and John Henry High School (JHHS). Oakland Charter Academy was both petitioned and approved through the Oakland Unified School District, and serves grades 6 through 8. OCA commenced operations in 1993 and was granted a charter renewal that expires on June 30, Oakland Charter High School was petitioned and approved through the Oakland Unified School District, and commenced operations in 2007 and was granted a charter renewal that expires on June 30, Richmond Charter Academy was petitioned and approved through the West Contra Costa Unified School District and began operations in the RCA serves grades 6 through 8 and was granted a charter that expires on June 30, Downtown Charter Academy was petitioned and approved through the Oakland Unified School District and began operations in DCA serves grades 6 through 8 and was granted a charter that expires on June 30, Richmond Charter Elementary Benito Juarez Elementary was petitioned and approved through the West Contra Costa Unified School District and began operations in BJE serves grades Kindergarten through grade 5 and was granted a charter that expires on June 30, John Henry High School was petitioned and approved through the West Contra Costa Unified School District and began operations in JHHS currently serves grades 9 through grade 10. The mission of the Organization is to provide a fundamental and rigorous college preparatory education to any student that chooses one of its schools. It is the Organization s belief that successful life in modern society can be achieved through college education, especially for historically disenfranchised populations. All graduates of the Organization will have gone through a challenging academic and character development program that will ready graduates to enter and succeed in college, and provide options for future endeavors. Page 7

9 NOTES TO FINANCIAL STATEMENTS June 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Financial Statement Presentation The financial statements are presented in conformity with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) , Not-For-Profit Entities Presentation of Financial Statements. Under ASC , the Organization reports information regarding its financial position and activities according to three classes of net assets: Unrestricted Net Assets: Unrestricted net assets are available to support all activities of the Organization, and are not subject to donor-imposed stipulations. These generally result from revenues generated by providing services, receiving unrestricted contributions, and receiving interest from investments, less expenses incurred in providing program-related services, raising contributions, and performing administrative functions. Temporarily Restricted Net Assets: Net assets that are subject to donor-imposed stipulations that will be met either by actions of the Organization and/or the passage of time. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and are reported in the statement of activities as net assets released from restrictions. There were temporarily restricted net assets of $206,106 as of June 30, Permanently Restricted Net Assets: Net assets that are subject to donor-imposed stipulations that the restrictions be maintained permanently by the Organization. Generally, the donors of these assets permit the Organization to use all or part of the income earned on the related investments for general or specific purposes. There were no permanently restricted assets as of June 30, Accounting Method - Basis of Accounting The financial statements were prepared in accordance with accounting principles generally accepted in the United States of America as applicable to not-for-profit organizations. Basis of accounting refers to when revenues and expenses are recognized in the accounts and reported on the financial statements. The Organization uses the accrual basis of accounting, under which revenues are recognized when they are earned and expenditures are recognized in the accounting period in which the liability is incurred. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Page 8

10 NOTES TO FINANCIAL STATEMENTS June 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Income Taxes The Organization is exempt from income taxes under Internal Revenue Code Section 501(c)(3). It is, however, subject to income taxes from activities unrelated to its tax-exempt purpose. The Organization uses the same accounting methods for tax and financial reporting. Generally accepted accounting principles (GAAP) provides accounting and disclosure guidance about positions taken by an entity in its tax returns that might be uncertain. Management has considered its tax positions and believes that all of the positions taken in its federal and state exempt organization tax returns are more likely than not to be sustained upon examination. The Organization s returns are subject to examination by federal and state taxing authorities, generally for three years and four years, respectively, after they are filed. Functional Allocation of Expenses The costs of providing the program services have been summarized on a functional basis in the statement of activities. Accordingly, certain costs have been allocated among the program services based on employees time incurred and management s estimates of the usage of resources. Fixed Assets Fixed assets are recorded at cost and depreciated under the straight-line method over their estimated useful lives. Repair and maintenance costs, which do not extend the useful lives of the asset, are charged to expense. The cost of assets, sold or retired, and related amounts of accumulated depreciation are eliminated from the accounts in the year of disposal, and any resulting gain or loss is included in the earnings. Management has elected to capitalize and depreciate all assets costing $5,000 or more; all other assets are charged to expense in the year incurred. Revenue Sources and Recognition The Organization receives federal, state and local revenues for the enhancement of various educational programs. This assistance is generally received based on applications submitted to and approved by various granting agencies. Page 9

11 NOTES TO FINANCIAL STATEMENTS June 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Revenue Sources and Recognition (continued) The Organization primarily receives the funds from the California Department of Education (CDE). Amounts received from the CDE are recognized by the Organization based on the average daily attendance (ADA) of students. The Organization recognizes federal revenue to the extent that eligible expenditures have been incurred. Revenue that is restricted is recorded as an increase in unrestricted net assets if the restriction expires in the reporting period in which the revenue is recognized. All other restricted revenues are reported as increases in temporarily restricted net assets. New Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) , Leases (ASU ). ASU requires a lessee to recognize a lease asset representing its right to use the underlying asset for the lease term, and a lease liability for the payments to be made to lessor, on its balance sheet for all operating leases greater than 12 months. ASU will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, The Organization has not yet assessed the potential impact of this guidance on its financial statements. In November 2016, The FASB issued ASU No , Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities (ASU ). ASU changes how a not-for-profit organization classifies its net assets, as well as the information it presents in financial statements and notes about its liquidity, financial performance, and cash flows. ASU requires amended presentation and disclosures to help not-for-profits provide more relevant information about their resources (and the changes in those resources) to donors, grantors, creditors, and other users. These include qualitative and quantitative requirements in the following areas: (1) net asset classes; (2) investment return; (3) expenses; (4) liquidity and availability of resources; and (5) presentation of operating cash flows. ASU will be effective for annual financial statements issued for fiscal years beginning after December 15, 2017, and for interim periods within fiscal years beginning after December 15, Application to interim financial statements is permitted but not required in the initial year of application. Early application of the amendments is permitted. The Organization has not yet assessed the potential impact of this guidance on its financial statements. Page 10

12 NOTES TO FINANCIAL STATEMENTS June 30, CASH Cash at June 30, 2016, consisted of the following: Cash in banks $ 3,724,453 Total cash $ 3,724,453 Cash balances held in banks are insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC). The Organization maintains its cash in bank deposit accounts that at times may exceed federally insured limits. The Organization has not experienced any losses in such accounts. At June 30, 2016, the Organization had $3,905,084of uninsured funds. 4. ACCOUNTS RECEIVABLE Accounts receivable at June 30, 2016, consisted of the following: Oakland Oakland Richmond Downtown Benito John Henry Charter Charter Charter Charter Juarez High Academy High School Academy Academy Elementary School Total Revenue limit sources: State aid $ 77,338 $ 258,663 $ 93,697 $ 157,333 $ 326,301 $ 65,718 $ 979,050 Education protection account 52, ,030 69,868 13,053 18,877 5, ,351 In-lieu of property taxes 27,736 90, ,111 48, ,455 42, ,680 Federal revenues 35,544 3,151 65, , , ,318 1,040,512 State revenues 204, , , , ,635 27,907 1,106,701 Total accounts receivable $ 398,143 $ 687,851 $ 470,109 $ 708,113 $ 1,177,564 $ 461,514 $ 3,903, FIXED ASSETS Fixed assets at June 30, 2016, consisted of the following: Oakland Oakland Richmond Benito John Henry Charter Charter Charter Juarez High Home Academy High School Academy Elementary School Office Total Leasehold improvements $ 2,436,851 $ 228,726 $ 27,895 $ - $ - $ - $ 2,693,472 Construction in progress ,120 1,281,275 1,314,395 Equipment 9,970-5, ,093 Furniture and fixtures - 14, ,544 Buildings ,579 1,168, ,913,984 Less: accumulated depreciation (1,760,178) (223,437) (41,333) (47,277) - - (2,072,225) Total fixed assets, net $ 686,643 $ 19,833 $ 737,264 $ 1,121,128 $ 33,120 $ 1,281,275 $ 3,879,263 During the fiscal year ended June 30, 2016, a total $230,430 was charged to depreciation expense. Page 11

13 NOTES TO FINANCIAL STATEMENTS June 30, NOTES PAYABLE Charter School Revolving Loan (RCA) On June 18, 2014, the Organization took out a forty-eight month Charter School Revolving Loan in the principal amount of $250,000, with interest at 0.22% per annum. Required payments of principal on the long-term notes payable as of June 30, 2016, including maturities, are as follows: Year Ending June 30, Principal Interest Total 2017 $ 62,500 $ 119 $ 62,619 $ 62,500 $ 119 $ 62,619 Charter School Revolving Loan (DCA) On June 18, 2014, the Organization took out a forty-eight month Charter School Revolving Loan in the principal amount of $250,000, with interest at 0.22% per annum. Required payments of principal on the long-term notes payable as of June 30, 2016, including maturities, are as follows: Year Ending June 30, Principal Interest Total 2017 $ 62,500 $ 240 $ 62, , ,605 $ 125,000 $ 345 $ 125,345 Charter School Revolving Loan (BJE) On June 18, 2014, the Organization took out a forty-eight month Charter School Revolving Loan in the principal amount of $250,000, with interest at 0.22% per annum. Required payments of principal on the long-term notes payable as of June 30, 2016, including maturities, are as follows: Year Ending June 30, Principal Interest Total 2017 $ 62,500 $ 240 $ 62, , ,605 $ 125,000 $ 345 $ 125,345 Page 12

14 NOTES TO FINANCIAL STATEMENTS June 30, NOTES PAYABLE (continued) Charter School Revolving Loan (JHHS) On June 26, 2015, the Organization took out a sixty month Charter School Revolving Loan in the principal amount of $250,000, with interest at 0.30% per annum. Required payments of principal on the long-term notes payable as of June 30, 2016, including maturities, are as follows: One Pacific Coast Bank Loan Year Ending June 30, Principal Interest Total 2017 $ 50,000 $ 549 $ 50, , , , , , ,107 $ 200,000 $ 1,312 $ 201,312 On January 15, 2014, the Organization entered into a note payable agreement with One Pacific Coast Bank for $400,000, with payments of principal and interest in the amount of $7,654 for sixty months commencing February 15, 2014 at an interest rate of 5.50% per annum. Required payments of principal on the long-term notes payable as of June 30, 2016, including maturities, are as follows: Year Ending June 30, Principal Interest Total 2017 $ 81,226 $ 15,148 $ 96, ,872 10,622 96, ,199 5,976 68,175 $ 229,297 $ 31,746 $ 261,043 Beneficial State Bank Loan On November 2, 2015, the Organization entered into a note payable agreement with Beneficial State Bank for $1,523,461, with payments of principal and interest in the amount of $28,443 for sixty months commencing January 2, 2016 at an interest rate of 4.50% per annum. Page 13

15 NOTES TO FINANCIAL STATEMENTS June 30, NOTES PAYABLE (continued) Beneficial State Bank Loan (continued) Required payments of principal on the long-term notes payable as of June 30, 2016, including maturities, are as follows: Year Ending June 30, Principal Interest Total 2017 $ 261,777 $ 56,279 $ 318, ,311 42, , ,209 29, , ,757 14, , ,804 1, ,417 $ 1,356,858 $ 144,541 $ 1,501,399 Changes in obligations under notes payable for the fiscal year ended June 30, 2016, are as follows: Balance Balance Due in June 30, 2015 Additions Payments June 30, 2016 one year Charter School Revolving Loan (RCA) $ 125,000 $ - $ (62,500) $ 62,500 $ 62,500 Charter School Revolving Loan (DCA) 187,500 - (62,500) 125,000 62,500 Charter School Revolving Loan (BJE) 187,504 - (62,504) 125,000 62,500 Charter School Revolving Loan (JHHS) - 250, (50,000) 200,000 50,000 One Pacific Coast Bank Loan 303,757 - (74,460) 229,297 81,226 Beneficial State Bank (RCA and BJE) - 1,542, (185,921) 1,356, ,777 Total 803,761 1,792, $ (497,885) $ 2,098,655 $ 580,503 Page 14

16 NOTES TO FINANCIAL STATEMENTS June 30, DEFERRED REVENUE Deferred revenue at June 30, 2016, consisted of the following: School facilities apportionment $ 168,225 Total deferred revenues $ 168, TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets consist of entitlements received but not expended as of June 30, At June 30, 2016, the Organization s temporarily restricted net assets consisted of: Oakland Oakland Richmond Downtown Benito Charter Charter Charter Charter Juarez Academy High School Academy Academy Elementary Total California Clean Energy Jobs Act $ 53,311 $ 52,440 $ 16,267 $ - $ - $ 122,018 Educator Effectiveness ,838-10,838 Special Education - 34,598 2,711 10,598 25,343 73,250 Total $ 53,311 $ 87,038 $ 18,978 $ 21,436 $ 25,343 $ 206, EMPLOYEE RETIREMENT PLAN The Organization established a defined contribution plan called Amethod Public Schools 401(k) Retirement Plan (Plan) under the provisions of the Employee Retirement Security Act of 1974 (ERISA). The Organization is a sponsor of the Plan. Participation in the plan is open to all employees who have attached age 21 and completed two months of service, as defined by the plan. The Organization may make a discretionary matching contribution equal to 100% of the participant s elective deferrals up to 3.0% of the participant s salary. The Organization's contribution to the Plan for the fiscal year ending June 30, 2016, was $94,204. Page 15

17 NOTES TO FINANCIAL STATEMENTS June 30, OPERATING LEASE The Organization leases its facilities under lease arrangements that are for more than one year ending in June 2017, June 2019, April 2023, November 2023, and May The future minimum lease payments are as follows: Year Ending Lease June 30, Payments 2017 $ 2,278, ,255, ,306, ,855, ,909, ,932, ,829,514 Total future lease payments $ 26,365,919 The Organization receives no sublease rental revenues nor pays any contingent rentals associated with these leases. For the fiscal year ended June 30, 2016, operating lease expense was $2,682, COMMITMENTS AND CONTINGENCIES State Allowances, Awards, and Grants The Organization has received state funds for specific purposes that are subject to review and audit by the grantor agencies. Although such audits could generate expenditure disallowances under terms of the grants, management believes that any required reimbursement will not be material. 12. SUBSEQUENT EVENTS The Organization s management has evaluated events or transactions that may occur for potential recognition or disclosure in the financial statements from the balance sheet date through December 6, 2016, which is the date the financial statements were available to be issued. Management has determined that there were no subsequent events or transactions that would have a material impact on the current year financial statements. Page 16

18 SUPPLEMENTARY INFORMATION

19 ORGANIZATION JUNE 30, 2016 Amethod Public Schools consists of six charter schools: Oakland Charter Academy, Oakland Charter High School, Richmond Charter Academy, Richmond Charter Elementary, Downtown Charter Academy, and John Henry High School. Amethod Public Schools has since opened an elementary school and now serves grades TK-12. Oakland Charter Academy [#0014] is a grade 6-8 Charter School and was granted its charter renewal by the Oakland Unified School District in January 23, 2013, pursuant to the Charter School Act of 1992, as amended. Oakland Charter High School [#0883] is a grade 9-12 Charter School and was granted its charter renewal by the Oakland Unified School District on February 8, 2012, pursuant to the Charter School Act of 1992, as amended. Richmond Charter Academy [#1441] is a grade 6-8 Charter School and was granted its charter by the West Contra Costa Unified School District on March 21, 2012, pursuant to the Charter School Act of 1992, as amended. Benito Juarez Elementary [#1660] is a Kindergarten grade 5 Charter School and was granted its charter by the West Contra Costa Unified School District on November 6, 2013, pursuant to the Charter School Act of 1992, as amended. Downtown Charter Academy [#1661] is a grade 6-8 Charter School and was granted its charter by the Oakland Unified School District on January 29, 2013, pursuant to the Charter School Act of 1992, as amended. John Henry High School [#1741] is a grade 9-10 Charter School and was granted its charter by the Oakland Unified School District, pursuant to the Charter School Act of 1992, as amended. Name Office Term Term Expiration Peter Hanely President 4 years June 30, 2016 Wil Mendoza Vice President/ Treasurer 4 years June 30, 2017 Karely Ordaz Secretary 4 years June 30, 2017 David Hoskin Member 4 years June 30, 2018 Nick Vaca Member 4 years June 30, 2017 Khalif Muhammad Member 7 years June 30, 2016 Ludmyrna Lopez Member 4 years June 30, 2016 Name Jorge Lopez Peter Cordero Administration Position Executive Director Chief Operating Officer Page 17 See accompanying independent auditor s report.

20 SCHEDULE OF AVERAGE DAILY ATTENDANCE June 30, 2016 Oakland Charter Academy Second Period Report Annual Report Grades Grades Total Oakland Charter High School Second Period Report Annual Report Grades Total Richmond Charter Academy Second Period Report Annual Report Grades Grades Total Downtown Charter Academy Second Period Report Annual Report Grades Grades Total Benito Juarez Elementary Second Period Report Annual Report TK/K Grades Total Page 18 See accompanying independent auditor s report.

21 SCHEDULE OF AVERAGE DAILY ATTENDANCE June 30, 2016 John Henry High School Second Period Report Annual Report Grades Total The Organization is 100% classroom-based and does not generate any ADA through an Independent Study program. Page 19 See accompanying independent auditor s report.

22 SCHEDULE OF INSTRUCTIONAL TIME For the Fiscal Year Ended June 30, 2016 Oakland Charter Academy Number of Days Minutes Traditional Grade Level Requirements Actual Minutes Calendar Status Grade 6 54,000 64, In compliance Grade 7 54,000 64, In compliance Grade 8 54,000 64, In compliance Oakland Charter High School Number of Days Minutes Traditional Grade Level Requirements Actual Minutes Calendar Status Grade 9 64,800 67, In compliance Grade 10 64,800 67, In compliance Grade 11 64,800 67, In compliance Grade 12 64,800 67, In compliance Richmond Charter Academy Number of Days Minutes Traditional Grade Level Requirements Actual Minutes Calendar Status Grade 6 54,000 64, In compliance Grade 7 54,000 64, In compliance Grade 8 54,000 64, In compliance Page 20 See accompanying independent auditor s report.

23 SCHEDULE OF INSTRUCTIONAL TIME For the Fiscal Year Ended June 30, 2016 Downtown Charter Academy Number of Days Minutes Traditional Grade Level Requirements Actual Minutes Calendar Status Grade 6 54,000 64, In compliance Grade 7 54,000 64, In compliance Grade 8 54,000 64, In compliance Benito Juarez Elementary Number of Days Minutes Traditional Grade Level Requirements Actual Minutes Calendar Status Kindergarten 36,000 54, In compliance Grade 1 50,400 54, In compliance Grade 2 50,400 54, In compliance Grade 3 50,400 60, In compliance Grade 4 54,000 60, In compliance Grade 5 54,000 60, In compliance John Henry High School Number of Days Minutes Traditional Grade Level Requirements Actual Minutes Calendar Status Grade 9 64,800 66, In compliance Grade 10 64,800 66, In compliance Grade 11 64,800 66, In compliance Grade 12 64,800 66, In compliance Page 21 See accompanying independent auditor s report.

24 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Fiscal Year Ended June 30, 2016 Federal Grantor/ Federal Pass-Through Pass-Through Grantor/ CFDA Entity Identifying Federal Program Title Number Number Expenditures U.S. Department of Education Passed through California Department of Education NCLB: Title I, Part A, Basic Grants Low-Income and Neglected Oakland Charter Academy $ 174,029 Oakland Charter High School 97,250 Richmond Charter Academy 67,798 Downtown Charter Academy 85,758 Benito Juarez Elementary 144,786 John Henry High School 41, ,251 NCLB: Title II, Part A, Teacher Quality Oakland Charter Academy 1,033 Oakland Charter High School 1,678 Richmond Charter Academy 1,130 Downtown Charter Academy 1,298 Benito Juarez Elementary 2,175 John Henry High School 643 7,957 NCLB: Title III, Immigrant Education Program Student Program Oakland Charter Academy 262 Oakland Charter High School 1,135 Richmond Charter Academy 87 Downtown Charter Academy 960 2,444 NCLB: Title III, Limited English Proficient (LEP) Student Program Richmond Charter Academy 58,237 58,237 NCLB: Title V, Part B, Public Charter Schools Grant Program (PCSGP) Downtown Charter Academy 312,577 Benito Juarez Elementary 226,303 John Henry High School 531,447 1,070,327 Total U.S. Department of Education 1,750,216 Page 22 See accompanying independent auditor s report.

25 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Fiscal Year Ended June 30, 2016 Federal Grantor/ Federal Pass-Through Pass-Through Grantor/ CFDA Entity Identifying Federal Program Title Number Number Expenditures U.S. Department of Agriculture Child Nutrition Program Oakland Charter Academy 37,729 Richmond Charter Academy 39,541 Downtown Charter Academy 49,240 Benito Juarez Elementary 69,938 John Henry High School 23,548 Total U.S. Department of Agriculture 219,996 TOTAL EXPENDITURES OF FEDERAL AWARDS $ 1,970,212 Basis of Presentation The accompanying Schedule of Expenditures of Federal Awards included the federal grant activity of the Amethod Public Schools, and is presented on the modified accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of OMB Uniform Guidance. Page 23 See accompanying independent auditor s report.

26 STATEMENT OF FUNCTIONAL EXPENSES OAKLAND CHARTER ACADEMY For the Fiscal Year Ended June 30, 2016 Program Support Services Services Management Education and General Total Certificated salaries $ 502,064 $ 31,703 $ 533,767 Classified salaries 346, ,998 Employee benefits 162,798 7, ,579 Books and supplies 219,206 69, ,911 Travel and conferences 15,597-15,597 Dues and memberships 1,613-1,613 Operation and housekeeping services 34,690 27,291 61,981 Rental, leases, repairs and non-capitalized improvements 11, , ,653 Professional/consulting services and operating expenditures 303, , ,859 Communications 15, ,964 Depreciation - 134, ,674 Direct support/indirect cost charges - 15,097 15,097 Total expenses $ 1,613,668 $ 740,025 $ 2,353,693 Page 24 See accompanying independent auditor s report.

27 STATEMENT OF FUNCTIONAL EXPENSES OAKLAND CHARTER HIGH SCHOOL For the Fiscal Year Ended June 30, 2016 Program Support Services Services Management Education and General Total Certificated salaries $ 1,158,330 $ 51,170 $ 1,209,500 Classified salaries 337,295 2, ,545 Employee benefits 278,632 10, ,430 Books and supplies 150,770 99, ,194 Travel and conferences 28,612-28,612 Dues and memberships 3,992-3,992 Operation and housekeeping services 50,477 37,924 88,401 Rental, leases, repairs and non-capitalized improvements 19, , ,734 Professional/consulting services and operating expenditures 358, , ,562 Communications 20, ,168 Depreciation - 14,400 14,400 Direct support/indirect cost charges - 38,943 38,943 Total expenses $ 2,406,859 $ 1,108,622 $ 3,515,481 Page 25 See accompanying independent auditor s report.

28 STATEMENT OF FUNCTIONAL EXPENSES RICHMOND CHARTER ACADEMY For the Fiscal Year Ended June 30, 2016 Program Support Services Services Management Education and General Total Certificated salaries $ 500,150 $ 17,672 $ 517,822 Classified salaries 302, ,170 Employee benefits 157,492 4, ,986 Books and supplies 186,247 46, ,450 Travel and conferences 19,577-19,577 Dues and memberships Operation and housekeeping services 44,779 28,099 72,878 Rental, leases, repairs and non-capitalized improvements 87, , ,631 Professional/consulting services and operating expenditures 359, , ,080 Communications 24, ,743 Depreciation - 34,079 34,079 Direct support/indirect cost charges - 60,566 60,566 Total expenses $ 1,681,916 $ 1,022,102 $ 2,704,018 Page 26 See accompanying independent auditor s report.

29 STATEMENT OF FUNCTIONAL EXPENSES DOWNTOWN CHARTER ACADEMY For the Fiscal Year Ended June 30, 2016 Program Support Services Services Management Education and General Total Certificated salaries $ 617,633 $ 38,592 $ 656,225 Classified salaries 306, ,800 Employee benefits 178,150 8, ,996 Books and supplies 356,083 75, ,754 Travel and conferences 17,467-17,467 Dues and memberships 1,425-1,425 Operation and housekeeping services 51,363 22,778 74,141 Rental, leases, repairs and non-capitalized improvements 9, , ,380 Professional/consulting services and operating expenditures 257, , ,545 Communications 16, ,852 Direct support/indirect cost charges - 23,013 23,013 Total expenses $ 1,812,350 $ 667,248 $ 2,479,598 Page 27 See accompanying independent auditor s report.

30 STATEMENT OF FUNCTIONAL EXPENSES BENITO JUAREZ ELEMENTARY For the Fiscal Year Ended June 30, 2016 Program Support Services Services Management Education and General Total Certificated salaries $ 871,846 $ 35,014 $ 906,860 Classified salaries 431,878 1, ,024 Employee benefits 239,609 7, ,485 Books and supplies 438, , ,529 Travel and conferences 17,049-17,049 Dues and memberships Operation and housekeeping services 68,450 29,459 97,909 Rental, leases, repairs and non-capitalized improvements 24, , ,542 Professional/consulting services and operating expenditures 560, ,115 1,010,751 Communications 36, ,244 Depreciation - 47,277 47,277 Direct support/indirect cost charges - 96,824 96,824 Total expenses $ 2,688,528 $ 1,466,123 $ 4,154,651 Page 28 See accompanying independent auditor s report.

31 STATEMENT OF FUNCTIONAL EXPENSES JOHN HENRY HIGH SCHOOL For the Fiscal Year Ended June 30, 2016 Program Support Services Services Management Education and General Total Certificated salaries $ 268,282 $ 12,254 $ 280,536 Classified salaries 92, ,915 Employee benefits 75,755 3,035 78,790 Books and supplies 465, , ,403 Travel and conferences 14,356-14,356 Dues and memberships Operation and housekeeping services 5,033 25,348 30,381 Rental, leases, repairs and non-capitalized improvements 58, , ,096 Professional/consulting services and operating expenditures 164,570 26, ,565 Communications 8, ,128 Direct support/indirect cost charges - 11,454 11,454 Total expenses $ 1,154,242 $ 335,178 $ 1,489,420 Page 29 See accompanying independent auditor s report.

32 STATEMENT OF FUNCTIONAL EXPENSES HOME OFFICE For the Fiscal Year Ended June 30, 2016 Program Support Services Services Management Education and General Total Certificated salaries $ - $ 5,342 $ 5,342 Classified salaries - 1,059,430 1,059,430 Employee benefits - 167, ,217 Books and supplies - 14,547 14,547 Travel and conferences - 17,392 17,392 Dues and memberships Operation and housekeeping services - 33,156 33,156 Rental, leases, repairs and non-capitalized improvements - 412, ,713 Professional/consulting services and operating expenditures - 371, ,807 Communications - 2,688 2,688 Total expenses $ - $ 2,085,222 $ 2,085,222 Page 30 See accompanying independent auditor s report.

33 RECONCILIATION OF CHARTER SCHOOL UNAUDITED ACTUALS FINANCIAL REPORT - - ALTERNATIVE FORM WITH AUDITED FINANCIAL STATEMENTS For the Fiscal Year Ended June 30, 2016 Oakland Charter Academy Charter School June 30, 2016, Charter School Unaudited Actuals Financial Report -- Alternative Form, Ending Fund Balance $ 1,923,324 Adjustments and reclassifications: Increasing (decreasing) the fund balance: Deferred rent overstatement 18,780 Net adjustments and reclassifications 18,780 June 30, 2016, audited financial statement net assets $ 1,942,104 Oakland Charter High School There were no changes between the net assets reported on the June 30, 2016 Charter School Unaudited Financial Report -- Alternative Form and the Audited Financial Statements. Richmond Charter Academy Charter School June 30, 2016, Charter School Unaudited Actuals Financial Report -- Alternative Form, Ending Fund Balance $ 511,888 Adjustments and reclassifications: Increasing (decreasing) the fund balance: Accounts payable understatement (41,648) Deferred rent understatement (40,333) Net adjustments and reclassifications (81,981) June 30, 2016, audited financial statement net assets $ 429,907 Downtown Charter Academy There were no changes between the net assets reported on the June 30, 2016 Charter School Unaudited Financial Report -- Alternative Form and the Audited Financial Statements. Page 31 See accompanying independent auditor s report.

34 RECONCILIATION OF CHARTER SCHOOL UNAUDITED ACTUALS FINANCIAL REPORT - - ALTERNATIVE FORM WITH AUDITED FINANCIAL STATEMENTS For the Fiscal Year Ended June 30, 2016 Benito Juarez Elementary Charter School June 30, 2016, Charter School Unaudited Actuals Financial Report -- Alternative Form, Ending Fund Balance $ 556,299 Adjustments and reclassifications: Increasing (decreasing) the fund balance: Accounts payable understatement (62,475) Deferred rent understatement (74,379) Net adjustments and reclassifications (136,854) June 30, 2016, audited financial statement net assets $ 419,445 John Henry High School Charter School June 30, 2016, Charter School Unaudited Actuals Financial Report -- Alternative Form, Ending Fund Balance $ 177,458 Adjustments and reclassifications: Increasing (decreasing) the fund balance: Cash overstatement (13,441) Deferred rent understatement (72,804) Net adjustments and reclassifications (86,245) June 30, 2016, audited financial statement net assets $ 91,213 Page 32 See accompanying independent auditor s report.

35 OTHER INDEPENDENT AUDITOR S REPORTS

36 INDEPENDENT AUDITOR S 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 Amethod Public Schools Oakland, California We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of Amethod Public Schools (a nonprofit organization), which comprise the statement of financial position as of June 30, 2016, and the related statements of activities and cash flows for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated December 6, Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered Amethod Public Schools internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Amethod Public Schools internal control. Accordingly, we do not express an opinion on the effectiveness of Amethod Public Schools internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.