North Manatee 2016 rpts/2016...35 Spyglass H elbourne, FL 3 hone: 321-757 x: 321-242-48 Board of Dir...

IMAGINE - MANATEE COUNTY, LLC

D/B/A IMAGINE CHARTER SCHOOL AT NORTH

MANATEE

Basic Financial Statements and

Supplementary Information

For the year ended June 30, 2016

TABLE OF CONTENTS

Page

INDEPENDENT AUDITOR’S REPORT 1 MANAGEMENT’S DISCUSSION AND ANALYSIS 3 BASIC FINANCIAL STATEMENTS

Government-Wide Financial Statements:

Statement of Net Position 8

Statement of Activities 9

Fund Financial Statements: Balance Sheet - Governmental Funds 10 Reconciliation of the Balance Sheet - Governmental Funds to the

Statement of Net Position 11 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds 12 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds to the Statement of Activities 13 Notes to Financial Statements 14

REQUIRED SUPPLEMENTARY INFORMATION

Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - General Fund 27 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Capital Outlay Fund 28 Note to Required Supplementary Information 29

COMPLIANCE INFORMATION

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 31

Management Letter 33 Management Findings, Recommendations, and Responses 35

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We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the School, as of June 30, 2016, and the respective changes in financial position for the year then ended in conformity with accounting principles generally accepted in the United States of America. As described in Note A-1, the accompanying financial statements referred to above present only the financial position of the School at June 30, 2016, and the results of its operation for the year then ended, and is not intended to be a complete presentation of the District. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and budgetary comparison information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 5, 2016, on our consideration of the School’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the School’s internal control over financial reporting and compliance. October 5, 2016 Melbourne, Florida

Berman Hopkins Wright & LaHam CPAs and Associates, LLP

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Management’s Discussion and Analysis As management of Imagine - Manatee County LLC d/b/a Imagine Charter School at North Manatee (the “School”), we offer readers of the School’s financial statements this narrative overview and analysis of the financial activities of the School for the fiscal year ended June 30, 2016 to (a) assist the reader in focusing on significant financial issues, (b) provide an overview and analysis of the School’s financial activities, (c) identify changes in the School’s financial position, (d) identify material deviations from the approved budget, and (e) highlight significant issues in individual funds. Since the information contained in the Management’s Discussion and Analysis (MD&A) is intended to highlight significant transactions, events, and conditions, it should be considered in conjunction with the basic financial statements found as listed on the table of contents of this report. Financial Highlights The School’s liabilities exceeded its assets at June 30, 2016 by $13,473 (deficit net

position). The School’s total net position increased by $570. At June 30, 2016, the School’s balance sheet reported a total ending fund balance of

$2,422. At June 30, 2016, the School’s general fund balance increased by $2,421. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the School’s basic financial statements. The School’s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the School’s finances, in a manner similar to a private-sector business. The statement of net position presents information on all of the School’s assets, liabilities, and deferred outflows/inflows of resources with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the School is improving or deteriorating. The statement of activities presents information showing how the School’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods.

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Both of the government-wide financial statements distinguish functions of the School that are principally supported by district, state, and federal funding (governmental activities). Basic instruction, exceptional instruction, and transportation are examples of the School’s governmental activities. The government-wide financial statements include only the School itself, which is a component unit of the School District of Manatee County, Florida. The School District of Manatee County, Florida includes the operations of the School in their operational results. The government-wide financial statements can be found as listed in the table of contents of this report. Fund financial statements. A fund is a collection of related accounts grouped together to maintain control over resources that have been segregated for specific activities or objectives. The School, like state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the operations of the School are presented in governmental funds only. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the School’s near-term financing decisions. Both the governmental fund balance sheet and the statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The School maintains two individual governmental funds. Information is presented separately in the governmental fund balance sheet and statement of revenues, expenditures and changes in fund balances. The general fund and capital outlay fund are considered to be the School’s major fund. The basic governmental fund financial statements can be found as listed in the table of contents of this report. The School adopts an annual appropriated budget for its entire operations. Budgetary comparison schedules and a note to these schedules have been provided to demonstrate compliance with these budgets and can be found as listed in the table of contents of this report. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found as listed in the table of contents of this report.

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Government-Wide Financial Analysis As noted previously, net position may serve over time as a useful indicator of the School’s financial position. In the case of the School, liabilities exceed assets by $13,473 for the year ended June 30, 2016 and liabilities exceed assets by $14,043 for the year ended June 30, 2015. At the end of the current fiscal year, the School reports a negative balance for unrestricted net position. A portion of the School’s net position reflects its net investment in capital assets (e.g., furniture, fixtures and equipment, vehicles, and IT equipment). The School uses these capital assets to provide services to students; consequently, these assets are not available for future spending. Comparison of the condensed statement of net position and the statement of activities are provided below.

2016 2015 VarianceASSETS

Current assets 238,381$ 429,508$ (191,127)$

Capital assets, net of accumulated depreciation 31,325 39,643 (8,318)

Total assets 269,706 469,151 (199,445) LIABILITIES

Current liabilities 235,959 429,507 (193,548) Noncurrent liabilities 47,220 53,687 (6,467)

Total liabilities 283,179 483,194 (200,015) NET POSITION

Net investment in capital assets 31,325 33,176 (1,851) Unrestricted (44,798) (47,219) 2,421

Total net position (13,473)$ (14,043)$ 570$

Governmental ActivitiesStatement of Net Position

Current assets decreased primarily as a result of timing of inflows and outflows of cash and collection of amounts due from Management Company. Capital assets, net of accumulated depreciation, decreased as a result of depreciation expense offset by current year additions. Current liabilities decreased primarily as a result of timing of accrued payroll liabilities. Noncurrent liabilities decreased as a result of payments on a capital lease. Governmental activities. Governmental activities increased the School‘s net position by $570 in June 30, 2016 and decreased by $136,360 in June 30, 2015.

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The following table indicates the changes in net position for the School:

Revenues: 2016 2015 VarianceProgram revenues:

Charges for services 72,805$ 77,350$ (4,545)$ Operating grants and contributions 95,231 245,798 (150,567) Capital grants and contributions 74,460 - 74,460

General revenuesState passed through local school district 3,613,964 3,157,533 456,431 Other revenues 145,839 112,730 33,109 Contributions 97,607 392,914 (295,307)

Total revenues 4,099,906 3,986,325 113,581 Expenses:

Basic instruction 1,576,685 1,639,967 (63,282) Exceptional instruction 185,384 102,658 82,726 Prekindergarten instruction 82,598 92,239 (9,641) Other instruction 2,666 7,363 (4,697) Student personnel services 19,592 53,541 (33,949) Instructional media services 9,455 23,113 (13,658) Instruction and curriculum 44,193 6,756 37,437 Staff training services 100 95 5 Instructional related technology 36,157 37,288 (1,131) Board of directors 11,500 10,000 1,500 School administration 862,481 914,312 (51,831) Food services 53,851 20,646 33,205 Central services 1,549 1,212 337 Transportation 165,339 182,527 (17,188) Operation of plant 993,864 982,815 11,049 Maintenance of plant 10,160 16,465 (6,305) Community services 42,790 30,617 12,173 Interest on long-term liabilities 972 1,071 (99)

Total expenses 4,099,336 4,122,685 (23,349) Change in net position 570 (136,360) 136,930 Net position - beginning (14,043) 122,317 (136,360)

Net position - ending (13,473)$ (14,043)$ 570$

Statement of ActivitiesGovernmental Activities

The decrease in operating grants and contributions is due to a decrease in funding for state VPK related to student enrollments, as well as reclassifying capital outlay funding amounts to capital grants and contributions. Overall, capital outlay funding decreased due to fewer contributions in the current although the capital grants and contributions increased related to reclassifying. The increase in state passed through local school district revenue resulted from an increase in FTE funding due to an increased student populations. Other revenues increased as a result of local sources. The decrease in contributions revenue resulted from a decrease in funds received from the School’s management company.

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The decrease in basic instruction resulted from a decrease in salaries and benefits. The increase in exceptional instruction is related to an increase in salaries and benefits. The decrease in student personnel services is due to the school not staffing a full time guidance counselor during the year. The decrease in school administration expense resulted from a decrease in salaries and benefits related to the principal and support staff. Food services increased due to an increase in food service support staff salaries and benefits.

Financial Analysis of the Government’s Funds

As noted previously, the School uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.

Governmental funds. The focus of the School’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the School’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a School’s net resources available for spending at the end of the fiscal year.

The general fund is the main operating fund of the School. At the end of the current fiscal year, unassigned fund balance of the general fund was $2,422. There was no net change in the fund balance of the School’s general fund during the current fiscal year. General Fund Budgetary Highlights The Board of Directors approved a budget for the general fund for fiscal year 2016. According to the approved budget, the general funds actual revenues exceeded final budgeted revenues and final budgeted expenditures exceeded actual expenditures. The budgetary information can be found as listed on the table of contents of this report. Capital Asset and Debt Administration Capital assets. The School’s net investment in capital assets, as of June 30, 2016, amounts to $31,325. This investment in capital assets includes furniture, fixtures and equipment, IT equipment, and vehicles. Additional information on the School’s capital assets can be found in Note C. Debt administration. The School’s long-term liabilities at June 30, 2016 totaled $47,220. Additional information on the School’s long-term obligations can be found in Note D. Economic Factors A majority of the School’s funding is determined by the number of enrolled students. The School is forecasting an increase in enrollment of 529 in 2016-17 from 517 students in 2015-16. Request for Information This financial report is designed to provide a general overview of Imagine - Manatee County, LLC d/b/a Imagine Charter School at North Manatee’s finances for all those with an interest in the School’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the office of the Principal at 9275 49th Street East, Palmetto, FL 34221.

Imagine-Manatee County, LLCd/b/a Imagine Charter School at North Manatee

STATEMENT OF NET POSITION

June 30, 2016

GovernmentalActivities

ASSETS CURRENT ASSETS

Cash 214,519$ Due from other agency 7,015 Due from related schools 14,847 Other current assets 2,000

Total current assets 238,381

CAPITAL ASSETS Capital assets, net of accumulated depreciation

Furniture, fixtures, and equipment 11,412 IT equipment 3,156 Vehicles 16,757

Total capital assets 31,325

Total assets 269,706

LIABILITIESAccounts payable 7,459 Accrued payroll and related benefits 165,557 Due to management company 62,943 Due in more than one year

Note payable 47,220

Total liabilities 283,179

NET POSITIONNet investment in capital assets 31,325 Unrestricted (44,798)

Total net position (13,473)$

The accompanying notes are an integral part of this financial statement.

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Imagine-Manatee County, LLC d/b/a Imagine Charter School at North Manatee

STATEMENT OF ACTIVITIES


Functions/Programs ExpensesCharges for

Services

Operating Grants and

Contributions

CapitalGrants and

Contributions

Net (Expense) Revenue

and Changes in Net Position

Governmental activities:Basic instruction 1,576,685$ -$ -$ -$ (1,576,685)$ Exceptional instruction 185,384 - - - (185,384) Prekindergarten instruction 82,598 41,194 95,231 - 53,827 Other instruction 2,666 2,420 - - (246) Student personnel services 19,592 - - - (19,592) Instructional media services 9,455 - - - (9,455) Instruction and curriculum 44,193 - - - (44,193) Staff training services 100 - - - (100) Instructional related technology 36,157 - - - (36,157) Board of directors 11,500 - - - (11,500) School administration 862,481 - - - (862,481) Food services 53,851 - - - (53,851) Central services 1,549 - - - (1,549) Transportation 165,339 - - - (165,339) Operation of plant 993,864 - - 74,460 (919,404) Maintenance of plant 10,160 - - - (10,160) Community services 42,790 29,191 - - (13,599) Interest on long-term liabilities 972 - - - (972)

Total governmental activities 4,099,336$ 72,805$ 95,231$ 74,460$ (3,856,840)

General revenues:3,613,964

Other revenues 145,839 Contributions 97,607

Total general revenues 3,857,410

Change in net position 570

(14,043)

(13,473)$

Program Revenues

Net position at July 1, 2015

Net position at June 30, 2016

State passed through local school district


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BALANCE SHEET - GOVERNMENTAL FUNDS

June 30, 2016

General FundCapital

Outlay Fund

Total Governmental

FundsASSETS

Cash 214,519$ -$ 214,519$ Due from other agencies 7,015 - 7,015 Due from related schools 14,847 - 14,847 Other current assets 2,000 - 2,000

Total assets 238,381$ -$ 238,381$

LIABILITIES AND FUND BALANCE

LIABILITIES Accounts payable 7,459$ -$ 7,459$ Accrued payroll and related benefits 165,557 - 165,557 Due to management company 62,943 - 62,943

Total liabilities 235,959 - 235,959

FUND BALANCES

Unassigned 2,422 - 2,422 Total fund balances 2,422 - 2,422

Total liabilities and fund balances $ 238,381 $ - $ 238,381


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RECONCILIATION OF THE BALANCE SHEET - GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION

June 30, 2016

Fund balances - total governmental funds 2,422$

The net position reported for governmental activities in the statement of net position is different because:

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

Furniture, fixtures and equipment, net 11,412$

IT equipment, net 3,156

Vehicles, net 16,757

Total capital assets 31,325

Noncurrent liabilities (e.g. note payable) are not due and payable in the current period and therefore are not reported in the funds.

Note payable (47,220)

Total net position of governmental activities (13,473)$


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STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS


General Fund Capital

Outlay Fund

Total Governmental

Funds Revenues

State passed through local school district 3,613,964$ $ 74,460 $ 3,688,424 Contributions 97,607 - 97,607 Other revenues 313,875 - 313,875

Total revenues 4,025,446 74,460 4,099,906

ExpendituresCurrent:

Basic instruction 1,576,685 - 1,576,685 Exceptional instruction 185,384 - 185,384 Prekindergarten instruction 82,598 - 82,598 Other instruction 2,666 - 2,666 Student personnel services 19,592 - 19,592 Instructional media services 9,455 - 9,455 Instruction and curriculum 44,193 - 44,193 Staff training services 100 - 100 Instructional related technology 36,157 - 36,157 Board of directors 11,500 - 11,500 School administration 846,527 - 846,527 Food services 53,851 - 53,851 Central services 1,549 - 1,549 Transportation 161,901 - 161,901 Operation of plant 919,404 74,460 993,864 Maintenance of plant 10,160 - 10,160 Community services 42,790 - 42,790

Fixed capital outlay 11,074 - 11,074 Debt service:

Principal 6,467 - 6,467 Interest 972 - 972

Total expenditures 4,023,025 74,460 4,097,485

Net change in fund balances 2,421 - 2,421

Fund balances at July 1, 2015 1 - 1

Fund balances at June 30, 2016 2,422$ -$ 2,422$


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Net change in fund balances - total government funds 2,421$

The change in net position reported for governmental activities in the statement of activities is different because:

Governmental funds report capital outlay as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense.

Total fixed capital outlay 11,074$ Depreciation expense (19,392)

(8,318)

The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes current financial resources of governmental funds. Neither transaction, however, has any effect on net position.

Payments on long-term debt 6,467

Change in net position of governmental activities 570$

RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS TO THE

STATEMENT OF ACTIVITIES



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NOTES TO FINANCIAL STATEMENTS

June 30, 2016

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NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1. Reporting entity Imagine - Manatee County, LLC d/b/a Imagine Charter School at North Manatee (the “School”) is a limited liability company organized pursuant to Chapter 608.407, Florida Statutes. The School provides educational services to students in grades Pre-K through 8. The governing body of the School is the Board of Directors, which is comprised of five members. The financial information presented is that of the School only and is not intended to be a complete presentation of the Charterholder. The general operating authority of the School is contained in Section 1002.33, Florida Statutes. The School operates under a charter of the sponsoring school district, which is the School District of Manatee County, Florida (the “District”) which was renewed and became effective on July 1, 2014 until June 30, 2017. At the end of the term of the charter, the District may choose not to renew the charter under grounds specified in the charter in which case the District is required to notify the School in writing at least 90 days prior to the charter’s expiration. During the term of the charter, the District may also terminate the charter if good cause is shown. Imagine - Manatee County, LLC is considered a component unit of the School District of Manatee County, Florida. 2. Government-wide and fund financial statements The government-wide financial statements consist of a statement of net position and a statement of activities. These statements report information on all of the nonfiduciary activities of the School. As part of the consolidation process, all interfund activities are eliminated from these statements. Both statements report only governmental activities as the School does not engage in any business type activities. Net position, the difference between assets, liabilities and deferred outflows/inflows, as presented in the statement of net position, is subdivided into three categories: net investment in capital assets, restricted net position, and unrestricted net position. Net investment in capital assets consists of capital assets, net of accumulated depreciation, reduced by outstanding balances of any borrowing used for the acquisition, construction or improvement of those assets. Net position is reported as restricted when constraints are imposed on the use of the amounts either externally by creditors, grantors, contributors, laws or regulations of other governments, or enabling legislation. The statement of activities presents a comparison between the direct and indirect expenses of a given function and its program revenues, and displays the extent to which each function contributes to the change in net position for the fiscal year. Direct expenses are those that are clearly identifiable to a specific function.



June 30, 2016

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NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2. Government-wide and fund financial statements (continued) Indirect expenses are costs that the School has allocated to various functions. Program revenues consist of charges for services, operating grants and contributions, and capital grants and contributions. Charges for services refer to amounts received from those who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment. Grants and contributions consist of revenues that are restricted to meeting the operational or capital requirements of a particular function. Revenues not classified as program revenues are reported as general revenues. Separate fund financial statements report detailed information about the School’s governmental funds. The focus of the governmental fund financial statements is on major funds. Therefore, major funds are reported in separate columns on the fund financial statements. The School reports the general fund and capital outlay fund as its major funds. A reconciliation is provided that converts the results of governmental fund accounting to the government wide presentation. 3. Measurement focus, basis of accounting, and financial statement presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recognized in the period earned and expenses are recognized when a liability is incurred. All governmental fund financial statements are reported using a current financial resources measurement focus on a modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues, except for certain grant revenues, are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. For this purpose, the School considers revenues to be available if they are collected within sixty days of the end of the current fiscal period. When grant terms provide that the expenditure of resources is the prime factor for determining eligibility for federal, state, and other grant resources, revenue is recognized at the time the expenditure is made. Under the modified accrual basis of accounting, expenditures are generally recorded when the related fund liability is incurred. However, principal and interest on general long-term debt are recorded as expenditures only when payment is due. The School’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America as prescribed by the Governmental Accounting Standards Board. Accordingly, the financial statements are organized on the basis of funds. A fund is an accounting entity having a self-balancing set of accounts for recording assets, liabilities, fund equity, revenues, expenditures, and other financing sources and uses.



June 30, 2016

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NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 3. Measurement focus, basis of accounting, and financial statement presentation

(continued) Resources are allocated to and accounted for in individual funds based on the purpose for which they are to be spent and the means by which spending activities are controlled. The School reports the following major governmental funds:

General Fund - is the general operating fund of the School and it is used to account for all financial resources not required to be accounted for in another fund. Capital Outlay Fund - in accordance with guidelines established by the District, this fund accounts for all resources for the leasing or acquisition of capital facilities by the School to the extent funded by capital outlay funds.

4. Cash

Cash consists of cash on hand at the School and a checking account held at a financial institution. The School has no cash equivalents.

5. Receivables

The School’s receivables typically consist of amounts due from other schools, the management company, and the district. After reviewing the individual account balances, the School’s management has determined, based on prior experience, that 100% of receivables are fully collectible. Therefore, no allowance for doubtful accounts has been provided. 6. Interfund receivables and payables Activities between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as due to/due from other funds. 7. Capital assets Capital assets are reported in the governmental columns on the government-wide financial statements. The School defines capital assets as assets with an initial individual cost of more than $1,000 and an estimated useful life of more than one year. Such assets are recorded at historical cost. Donated capital assets are recorded at their estimated fair values at the date of donation. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized.



June 30, 2016

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NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 7. Capital assets (continued) Capital assets of the School are depreciated using the straight-line method over the following estimated useful lives:

Asset Class

Estimated Useful

Lives (years)Furniture, fixtures and equipment 3-7IT equipment 3-7Vehicles 3-7

8. Prepaid expenses Payments made to vendors for services that will benefit periods beyond June 30, 2016 are recorded as prepaid expenses in both government-wide and fund financial statements. Although a component of net position, a reserve for prepaid expenses has been established for the fund financial statements because these funds do not constitute “available spendable resources.” 9. Long-term obligations In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the statement of net position. In the fund financial statements, governmental funds report the face amount of debt issued as other financing sources and the repayment of debt as debt service expenditures. 10. Revenue sources Revenues for current operations are received primarily from the state of Florida passed through the District pursuant to the funding provisions included in the School’s charter. In accordance with the funding provisions of the charter and Section 1002.33(17), Florida Statutes, the School reports the number of full-time equivalent (FTE) students and related data to the District. Under the provisions of Section 1011.62, Florida Statutes, the District reports the number of FTE students and related data to the Florida Department of Education (FDOE) for funding through the Florida Education Finance Program. Funding for the School is adjusted during the year to reflect revised calculations by the FDOE under the Florida Education Finance Program and actual weighted FTE students reported by the School during the designated FTE student survey periods.



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NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 10. Revenue sources (continued)

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 awards may have eligibility requirements whereby the issuance of grant funds is withheld until such 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 various fundraising activities, interest on bank accounts, student activities and certain other programs. 11. Unearned revenue

Unearned revenues include amounts collected before the revenue recognition criteria are met under the full accrual basis of accounting. The School had no unearned revenue as of June 30, 2016. 12. Use of estimates The process of preparing financial statements in conformity with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions regarding certain types of assets, liabilities, deferred inflows/outflows, 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. 13. Income taxes The School is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code and applicable state law. The School recognizes the financial statement effects from a tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. Examples of tax positions include the tax-exempt status of the School and various positions related to the potential sources of unrelated business taxable income. The assessment of the technical merits of a tax position is a matter of judgment. The School believes that all of its tax positions are more likely than not to be sustained upon examination. The School files Form 990 in the U.S. federal jurisdiction. The School is generally no longer subject to examination by the Internal Revenue Service three years after a return was due or filed.



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NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 14. Fund balance classification

The governmental fund financial statements present fund balances based on classifications that comprise a hierarchy that is based primarily on the extent to which the School is bound to honor constraints on the specific purposes for which amounts in the respective governmental funds can be spent. The classifications used in the governmental fund financial statements are as follows:

Nonspendable fund balance - amounts that are not spendable (such as inventory and prepaid expense) or are required to be maintained intact.

Restricted fund balance - amounts constrained to specific purposes by their providers (such as grantors, bondholders, and higher levels of government), through constitutional provisions, or by enabling legislation.

Committed fund balance - amounts constrained to specific purposes by the School itself, using its highest level of decision-making authority (i.e., Board of Directors). To be reported as committed, amounts cannot be used for any other purpose unless the School takes the same highest level action to remove or change the constraint.

Assigned fund balance - amounts the School intends to use for a specific purpose. Intent can be expressed by the Board of Directors or by an official or body to which the Board of Directors delegates the authority.

Unassigned fund balance - amounts that are available for any purpose. No other fund except the General Fund can report positive amounts of unassigned fund balance.

The School would typically use restricted fund balances first, followed by committed resources, and then assigned resources, as appropriate opportunities arise, but reserves the right to selectively spend unassigned resources first to defer the use of these other classified funds.

NOTE B - CASH

Custodial Credit Risk - Custodial credit risk is the risk that in the event of bank failure, the School’s deposits may not be returned to it. The bank balance of the School’s deposits was $222,057 at June 30, 2016. The deposits are insured by the FDIC up to $250,000 per entity. Monies invested in amounts greater than the insurance coverage are secured by the qualified public depositories pledging securities with the State Treasurer in such amounts required by the Florida Security for Public Deposits Act. In the event of a default or insolvency of a qualified public depositor, the State Treasurer will implement procedures for payment of losses according to the validated claims of the School pursuant to Section 280.08, Florida Statutes. As of June 30, 2016, none of the School’s balances held in banks were exposed to custodial credit risk.



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20

NOTE C - CAPITAL ASSETS

Capital assets activity for the year ended June 30, 2016 was as follows:

Balance atJuly 1,2015 Additions Deletions

Balance at June 30,

2016

Capital assets depreciated: Furniture, fixtures and equipment 62,890$ 11,074$ -$ 73,964$ Vehicles 152,050 - - 152,050 IT equipment 39,364 - - 39,364

Total assets depreciated 254,304 11,074$ -$ 265,378

Less accumulated depreciation:Furniture, fixtures and equipment 54,403 8,149$ -$ 62,552 Vehicles 131,855 3,438 - 135,293 IT equipment 28,403 7,805 - 36,208

Total accumulated depreciation 214,661 19,392$ -$ 234,053 Total governmental activities capital assets, net 39,643$ 31,325$

Depreciation expense for the year ended June 30, 2016 was charged to the functions of the School as follows:

Transportation 3,438$ General and administrative 15,954

19,392$

NOTE D - LONG-TERM LIABILITIES

1. Changes in long-term liabilities

A summary of changes in the long-term liabilities are as follows:

Balance at July 1, 2015 Additions Deductions

Balance at June 30, 2016

Due within one year

Note payable $ 47,220 $ - $ - $ 47,220 $ -

Capital lease 6,467 - 6,467 - -

Total 53,687$ -$ 6,467$ 47,220$ -$



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NOTE D - LONG-TERM LIABILITIES (continued)

2. Capital lease The School entered into a lease agreement for financing a capacitor in July of 2011. The lease has a term of 60 months with monthly payments of $620. This lease agreement qualifies as a capital lease for accounting purposes and, therefore, has been recorded at the present value of the future minimum lease payments as of the inception date. The assets acquired through the capital lease are as follows:

Capacitor 28,750$ Less accumulated depreciation (28,750)

Total -$

3. Notes payable The School entered into a loan agreement with its management company for $135,746. The first installment of principal and interest was payable on November 1, 2010. Payment of principal and interest on this note was deferred until August 2016. The following is a schedule of the future principal and interest payments for the above note:

Fiscal year ending June 30, Principal Interest Total

2017 47,220$ 1,095$ 48,315$



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NOTE E - CONCENTRATIONS

Revenue sources

As stated in Note A-10, the School receives revenues for current operations primarily from the State of Florida through the District. The following is a schedule of revenue sources and amounts:

Sources AmountsSchool Board of Manatee County, Florida

Base funding 3,567,968$ A+ Program 45,996

Subtotal 3,613,964 Charter school capital outlay 74,460

Total from School Board of Manatee County, Florida 3,688,424 Contribution

Voluntary pre-kindergarten funds from state 95,231 Voluntary pre-kindergarten fees 41,194 Sports program fees 2,420 Community service fees 29,191 Contributions 97,607 Other revenues 145,839

Total revenues 4,099,906$

NOTE F - COMMITMENTS AND CONTINGENCIES

1. Management service contract

The School entered into an operating agreement with the management company in August 2005. The latest revisions to this operating agreement were effective July 2011. The School pays an indirect cost allocation equal to 12% of state revenues. State revenues are defined as all state and local revenues allocated to the School based on the number of students, including Voluntary-prekindergarten students, and it excludes various revenues as defined in the agreement. In addition to this fee, the School also pays a $2,500 monthly administrative fee for the first 240 months of its operation. Current year indirect allocation fees under this agreement charged to operations were $448,807, and current year administrative fees under this agreement charged to operations were $30,000.



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NOTE F - COMMITMENTS AND CONTINGENCIES (continued)

1. Management service contract (continued) If the School has insufficient funds in its operating account to pay operating expenses, it may request an operating advance from the management company. During the fiscal year that an operating advance is made, on the first date the funds become available to the School, the management company will be automatically reimbursed for any outstanding operating advances pertaining to that fiscal year as long as these funds are not reserved under the School’s budget. If at the end of the fiscal year, the School’s defined fund balance is not positive as defined by Florida Statute 218.503(1) and the requirements of the School Board of Manatee County, Florida, the management company will forgive the outstanding capital advances made during that fiscal year in order to reflect a surplus as of the end of the fiscal year to at least $1 or, if greater, the fund balance required by the School Board. The management company will not be required to provide operating advances, which, if forgiven, may result in cumulative operating advance forgiveness in excess of $2,500,000. The management company is entitled to a fee (the fund balance assistance fee) for providing operating advances in any year where there were no amounts required to be forgiven, and the defined fund balance after consideration of repayments of all outstanding operating advances exceeds the required fund balance as mentioned in the above paragraph. The fund balance assistance fee will be equal to the lesser of the amount which will cause the defined fund balance to equal at least $1 or, if greater the fund balance required by the School Board, if any, and 2% of state revenues. No fund balance assistance fee will be due to the management company for any year in which the cumulative fund balance assistance fee paid by the School in prior years equals or exceeds the cumulative operating advances forgiven by the management company.

2. Facilities In November 2009, the School entered into a sublease for a period of 15 years with an affiliated company of the management company for the building where the School is located. In August 2012, there was an amendment to the sublease between the School and the affiliated company. Current year lease expense charged to operations totaled $775,245.



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NOTE F - COMMITMENTS AND CONTINGENCIES (continued) 2. Facilities (continued) The following is a schedule of future minimum lease payments for the following years ending June 30:

2017 789,838$ 2018 805,635 2019 821,747 2020 838,182 2021 854,946

2022-2025 3,594,227

7,704,575$

NOTE G - RELATED PARTIES

1. Due (to)/from management company

The School has entered into multiple agreements with the management company. The management company is responsible for organizing, developing, managing, staffing, and operating the School. During the current year, the management company charged fees to the School for management services as described in Note F. The due (to)/from management company also reflects activity for operating advances and certain expenses paid on behalf of the School. The due (to)/from management company activity consists of the following as of and for the year ended June 30, 2016:

Operating expenses

Management fees

Operating advances/

Contribution

Due (to)/from management

companyBalance at July 1, 2015 (79,000)$ (759,949)$ 885,342$ 46,393$

Reclass of receivable 79,000 806,342 (885,342) - Invoiced/advanced 987,606 449,306 - 1,436,912 Payments (1,104,938) (538,917) - (1,643,855) Contribution from management company - - 97,607 97,607

Balance at June 30, 2016 (117,332)$ (43,218)$ 97,607$ (62,943)$



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NOTE G - RELATED PARTIES (continued) 2. Operating lease A related party subleases property to the School (see Note F-2). Total payments charged to the School for the year ended June 30, 2016 under this lease amounts to $775,245. 3. Notes payable The School has entered into multiple loan agreements with its management company. As of June 30, 2016, the School owes $47,220 at June 30, 2016 (see Note D-3).

NOTE H - RETIREMENT PLAN

The School maintains a 401(k) Retirement Savings Plan that covers substantially all employees. Employees may elect to make contributions to the plan on a pre-tax basis up to the maximum permitted by the Internal Revenue Code. The School is currently making matching contributions up to 5% for participating employees. Contributions for fiscal year ending June 30, 2016 were $53,591. Participating employees are 100% vested in their respective account balances.

NOTE I - 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; general liabilities; and natural disasters for which the School carries commercial insurance. There have been no significant reductions in insurance coverage during fiscal year 2016. Settled claims resulting from the risks described above have not exceeded the insurance coverage during the previous three years.

NOTE J - SUBSEQUENT EVENTS The School has evaluated subsequent events through October 5, 2016 the date on which the financial statements were available for issuance and has determined that no material events occurred that would require additional disclosure in the financial statements.

26

REQUIRED SUPPLEMENTARY INFORMATION


Original Final Actual

Variance with Final

Budget Revenue

FEFP 3,358,471$ 3,621,934$ 3,613,964$ (7,970)$ Other local revenues 253,094 302,692 313,875 11,183 Gifts, grants, and bequests (Imagine Corp) 241,165 99,327 97,607 (1,720)

Total revenues 3,852,730 4,023,953 4,025,446 1,493

Expenditures

Not-for-profit expendituresFacility fee 655,488 700,786 700,785 1

Net school operating revenue 3,197,242 3,323,167 3,324,661 1,494

ExpensesSalaries and benefits 2,187,986 2,151,605 2,151,608 (3) Other school services 246,565 265,860 295,186 (29,326) Direct educational expenditures 85,670 102,413 83,666 18,747 General and administrative 141,762 209,340 197,833 11,507 Facility operating expenditures 93,898 97,599 97,599 -

School operating expenditures 2,755,881 2,826,817 2,825,892 925 Management fees and loss mitigation 441,360 478,807 478,807 -

Total expenses 3,197,241 3,305,624 3,304,699 925

Change in net position (budgetary basis) 1$ 17,543$ 19,962 2,419$

Adjustments to conform with GAAP:

Principal payment on capital lease (6,467) Capital outlay expenditures (11,074)

Net change in fund balance 2,421 Fund balance at July 1, 2015 1

Fund balance at June 30, 2016 $ 2,422

Budgeted Amounts

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGESIN FUND BALANCES - BUDGET AND ACTUAL - GENERAL FUND


See accompanying note to required supplementary information.

27


Original Final Actual

Variance with Final

Budget

RevenueState and local revenue 120,130$ 74,460$ 74,460$ -$

Expenditures

Not-for-profit expenditures

Facility fee 120,130 74,460 74,460 -

Net changes in fund balances - - - -

Fund balance at July 1, 2015 - - - -

Fund balance at June 30, 2016 -$ -$ -$ -$

Budgeted Amounts

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGESIN FUND BALANCES - BUDGET AND ACTUAL - CAPITAL OUTLAY FUND


See accompanying note to required supplementary information.

28


NOTE TO REQUIRED SUPPLEMENTARY INFORMATION

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29

NOTE A - BUDGETARY INFORMATION

The School’s annual budgets are adopted on a basis consistent with generally accepted accounting principles (GAAP) in the United States of America. Annual budgets are adopted for the entire operations at the combined governmental level and may be amended by the Board of Directors (the “Board”). A reconciliation to the excess of revenues over expenditures presented in conformity with GAAP is set forth in the adjustments to the required supplementary information. The budgets presented for fiscal year ended June 30, 2016, have been amended according to Board procedures.

Although budgets are adopted for the entire operation, budgetary comparisons have been presented for the general fund and each major special revenue fund for which a legally adopted budget exists.

Budgets are presented on the modified accrual basis of accounting. The legal level of budgetary control is the fund level.

30

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Compliance and Other Matters As part of obtaining reasonable assurance about whether the School’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the School’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the School’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. October 5, 2016 Melbourne, Florida


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Financial Condition Section 10.854(1)(e)2., Rules of the Auditor General, requires that we report the results of our determination as to whether or not the School has met one or more of the conditions described in Section 218.503(1), Florida Statutes, and identification of the specific condition(s) met. In connection with our audit, we determined that the School did not meet any of the conditions described in Section 218.503(1), Florida Statutes. Pursuant to Sections 10.854(1)(e)6.a. and 10.855(12), Rules of the Auditor General, we applied financial condition assessment procedures for the School. It is management’s responsibility to monitor the School’s financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same. Transparency Sections 10.854(1)(e)7, and 10.855(13), Rules of the Auditor General, require that we report the results of our determination as to whether the School maintains on its Web site the information specified in Section 1002.33(9)(p), Florida Statutes. In connection with our audit, we determined that the School maintains its website information specified in Section 1002.33(9)(p), Florida Statutes. Other Matters Section 10.854(1)(e)3., Rules of the Auditor General, requires that we address in the management letter any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations. Section 10.854(1)(e)4., Rules of the Auditor General, requires that we address noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, we identified one instance of noncompliance as noted on the Management Findings, Recommendations and Responses as 2016-001. Purpose of this Letter Our management letter is intended solely for the information and use of Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, Federal and other granting agencies, Board of Directors, applicable School’s management, others within the School, and the School Board of Manatee County, Florida and is not intended to be and should not be used by anyone other than these specified parties. October 5, 2016 Melbourne, Florida



MANAGEMENT FINDINGS, RECOMMENDATIONS, AND RESPONSES

June 30, 2016

35

Prior Year Findings, Recommendations, and Responses 2015-001 Website maintenance Control deficiency Criteria: Per Florida Statutes 1002.33(9)(p), each charter school shall maintain a website that enables the public to obtain information regarding the school. The School’s charter agreement requires the School to update their website quarterly for board meetings, current year budget, public accountability report, and recent independent fiscal annual audit. Condition: During our audit we were unable to find the School’s independent fiscal annual audit on the School’s website. Cause: Lack of oversight. Effect: The public should have information readily located regarding the School and its activities. Auditors’ recommendation: We recommend that the School maintain the website on a quarterly basis. Status as of June 30, 2016: The control deficiency has been cleared.


MANAGEMENT FINDINGS, RECOMMENDATIONS, AND RESPONSES

June 30, 2016

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Current Year Findings, Recommendations, and Responses 2016-001 Dual signature authorization Noncompliance Criteria: The School’s disbursement policy requires dual signature authorization on all disbursements over $5,000. Condition: During our audit testing, it was discovered that six out of forty disbursements did not have the required dual signatures on disbursements over $5,000 as required by the School’s disbursement policy. Cause: The numbers of authorized signers were not available to authorize the disbursement for timely vendor payment. Effect: If appropriate authorization of cash disbursement policy is circumvented, then internal controls regarding cash disbursements will be weakened which may cause unauthorized disbursements and misappropriation of funds. Recommendation: We recommend the School review the disbursement policy and update it for current process requirements and internal control risk for the Board to approve. Management Response: Due to time constraints resulting from the late arrival of many invoices through the mail and the availability of funds, some disbursements requiring two signatures were released without the required dual signatures in an effort to avoid late charges.

North Manatee 2016 rpts/2016...35 Spyglass H elbourne, FL 3 hone: 321-757 x: 321-242-48 Board of Dir...

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