Summary

Summary of Report on Financial Statements

The Chance Charter School Project, Inc. has prepared its financial statements for the fiscal year ended June 30, 1998, in accordance with prescribed financial reporting standards.

Because of the unprecedented nature of the year 2000 issue, we do not provide assurance with regard to the ultimate impact of the year 2000 issue on The Chance Charter School Project, Inc.

During the 1997-98 fiscal year, the School was continuously in a state of financial emergency. The School experienced several cash flow shortages and was unable to timely make six contracted payroll payments as further discussed in the SUMMARY OF AUDIT FINDINGS under the subheading Personnel and Payroll. Also, the School’s financial statements as of June 30, 1998, showed a weak financial condition, including a deficit fund equity balance in the General Fund in the amount of $51,155.78 which may be further negatively impacted to the extent the School is unable to document its entitlement to student transportation funding received during the 1997-98 fiscal year. The Board should take the necessary actions to ensure that expenditures are kept within available resources.

Summary of Report on Compliance and Internal Control

The School generally complied with significant provisions of laws, administrative rules, regulations, contracts and grants, and other guidelines. The School has established and implemented procedures which generally provide for internal control of School operations. We did note compliance and internal control findings and other matters which are summarized in the Summary of Audit Findings below.

Summary of Audit Findings

Public Meetings

We noted that notices to the public were not made for one meeting of the Board at which official actions were taken and minutes of the Board’s meetings were not approved by the Board at subsequent meetings. We recommend that official Board actions be made only in public meetings for which reasonable notice is provided and that Board minutes be approved in subsequent meetings.

Student Transportation Funding

Student transportation funding received during the 1997-98 fiscal year totaling $34,809 was based on all 48 students in attendance at the School. School records, however, did not evidence that all 48 students were transported by the School or that costs were paid by the School for transportation by individual vehicles. We recommend that the School document to its Sponsor and the Florida Department of Education its entitlement to the student transportation funding based on School transported students. To the extent that the School is unable to document its entitlement to such funding, the School’s current year funding may be subject to adjustment.

Liability Insurance Coverage

The School did not always maintain the required insurance coverage. The School’s automobile liability insurance was cancelled on March 4, 1998, and the commercial general liability, educational errors and omissions, and property insurance coverage was cancelled on March 27, 1998. School records show that new insurance coverage was not obtained until May 22, 1998. School management should strengthen procedures to ensure that all required insurance is maintained in accordance with the School’s charter contract.

Employee Fingerprinting and Screening

School records did not evidence that, prior to employment, three School employees were fingerprinted and screened by appropriate law enforcement agencies and, for four employees, screening results were not available from one of the appropriate law enforcement agencies. Also, there was no evidence that the School obtained copies of the fingerprint records and screening results for four employees who signed statements that they had been previously fingerprinted and screened by a previous employer. We recommend that the School enhance procedures to document that all employees were fingerprinted and screened by appropriate law enforcement agencies as required by law.

State Tax Exemption

The School had not applied to the appropriate State agency for State tax exemption. As a result, the School was assessed and paid various State taxes on several applicable purchases. To assist in providing available cash flow for other purposes by reducing unnecessary payments, we recommend that the Board apply for the State tax exemption as permitted by law.

Procedures and Practices

Established procedures and practices had not been developed and reduced to writing to provide guidance for employees in carrying out their duties and responsibilities and in conducting the day-to-day operations of the School. Such procedures and practices may be beneficial to address such matters as human resource administration; accounting and record keeping; budget preparation and amendment; cash management, including collections and disbursements; accountability and control of fixed assets; and the acquisition of goods and services. We recommend that the School give appropriate consideration to the development of written procedures and practices in areas pertinent to the day-to-day operations of the School. Obviously, such procedures should be developed with the goal to assist staff and enhance accountability without becoming a hindrance to the successful operation of the School.

Personnel and Payroll

Due to lack of funds at the School to timely pay the employee leasing company for several pay periods, the School paid direct to employees their net pay amounts with School checks rather than paying the employee leasing company the payroll amounts calculated pursuant to contract terms. As a result, for three payrolls neither the employee leasing company nor the School prepared payrolls and other payroll-related data and neither paid the delinquent payroll taxes during the 1997-98 fiscal year estimated at $13,800, not including penalties and interest. The Board should establish procedures that would ensure that sufficient funds are timely available for each pay period to pay the employee leasing company’s contracted payroll amounts.

Contingencies Pending Review by the Florida Department of Education

The School is currently the subject of a review by the Florida Department of Education regarding the School’s reporting of students in exceptional education, as well as other matters relating to the individual education plans filed for these students. As of November 23, 1998, the review was still in progress.

Year 2000

The year 2000 problem has a clearly defined and fast approaching deadline that requires timely resolution. The year 2000 problem’s impact on the operations of the School could be limited due to the size of the School’s operations and the limited number of computer resources affected; however, because of the unprecedented nature of the year 2000 issue, its effects will not be fully determinable until the year 2000 and thereafter. Accordingly, School management should take appropriate action to ensure that existing computer resources and any computer resources purchased in the future are year 2000 compliant.

The Executive Director’s written response to the audit findings and recommendations included in audit report No. 13383 is presented as Exhibit E.