Summary

This report provides a summary of the significant findings and financial trends that were identified in the audit reports submitted to us for 290 charter schools and charter technical career centers (hereinafter referred to as charter schools).  A total of 303 charter schools were in operation during the 2004-05 fiscal year.  Eleven of the 303 charter schools were closed during the 2004-05 fiscal year or subsequent to fiscal year-end and one merged with another charter school.  Audit reports for 12 charter schools, which included the 11 charter schools that closed, were not submitted to us.  The audit reports for the fiscal year ended June 30, 2005, were required to be filed with us no later than June 30, 2006.

Audit Findings

·        The audit reports for 16 charter schools included findings that were considered by the independent certified public accountants (CPAs) to be material weaknesses in internal controls.  For 2 reports, the CPA considered the material weaknesses to have a material impact on the charter schools’ financial statements.

·        The audit reports for 13 charter schools included a statement by the CPA regarding the schools’ ability to continue operations on an ongoing basis. 

·        Many of the audit reports included audit findings that were not material to the financial statements, but needed to be addressed by the management of the schools involved.  Such findings included weaknesses in internal control and instances of noncompliance with applicable laws or rules.

Financial Trends

·        Eighty-one of the 290 charter schools ended the fiscal year with a deficit unreserved fund balance in their general fund (for financial statements using the governmental model) or deficit unrestricted net assets in their unrestricted fund (for financial statements using the not‑for‑profit model).

Statutory Changes

·        Pursuant to Chapter 2006-190, Laws of Florida, the provisions of Section 218.503, Florida Statutes, regarding financial emergencies are made applicable to charter schools effective July 1, 2006.  Also, charter schools must file a detailed financial recovery plan with the sponsor within 30 days after receipt of a financial audit that finds the charter school to be in a state of financial emergency.