LITERACY, LEADERSHIP, TECHNOLOGY ACADEMYstorage.cloversites.com/lltacademy/documents/2013... · the Literacy, Leadership, Technology Academy (“School”) provides an overview of

LITERACY, LEADERSHIP,TECHNOLOGY ACADEMY

A Charter School and Component Unit of theDistrict School Board of Hillsborough County, Florida

INDEPENDENT AUDITOR’S REPORT

for the fiscal year ended JUNE 30, 2013

King & Walker, CPAs, PL______________________________________________________________________________________________________________________

Certified Public Accountants

THIS PAGE IS INTENTIONALLY BLANK.

LITERACY, LEADERSHIP, TECHNOLOGY ACADEMY

TABLE OF CONTENTS

PAGENO.

FINANCIAL SECTION

Independent Auditor’s Report on Basic Financial Statements andRequired Supplementary Information 1

Management’s Discussion and Analysis – (Unaudited) 3

Basic Financial Statements

Government-Wide Financial Statements:Statement of Net Position 8Statement of Activities 9

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

of Net Position 11Statement of Revenues, Expenditures, and Changes in Fund Balances -

Governmental Funds 12Reconciliation of the Governmental Funds Statement of Revenues,

Expenditures, and Changes in Fund Balances to the Statementof Activities 13

Notes to Financial Statements 14

Required Supplementary InformationBudgetary Comparison Schedule – General Fund – (Unaudited) 25

COMPLIANCE AND INTERNAL CONTROL

Independent Auditor’s Report on Internal Control Over Financial Reportingand on Compliance and Other Matters Based on an Audit of FinancialStatements Performed in Accordance with Governmental Auditing Standards 26

Management Letter as required by Rules of the Florida Auditor General,Chapter 10.850, Florida Statutes, Charter School Audits. 28

Management’s Response to Audit Findings 30

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Members: 709 W. Azeele St.Florida Institute of CPAs Tampa, FL 33606American Institute of CPAs office (813) 892-4274 fax (813) 253-0951Government Audit Quality Center www.KingandWalker.com

Independent Auditor's Report on Basic Financial Statements andRequired Supplementary Information

To the Board of Directors of Literacy, Leadership, Technology Academy,a Charter School and Component Unit of theDistrict School Board of Hillsborough County, Florida

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, each majorfund, and the aggregate remaining fund information of Literacy, Leadership, Technology Academy(“School”), a charter school and component unit of the District School Board of HillsboroughCounty, Florida, as of and for the year ended June 30, 2013, and the related notes to the financialstatements, which collectively comprise the School’s basic financial statements as listed in the tableof contents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements inaccordance with accounting principles generally accepted in the United States of America; thisincludes the design, implementation, and maintenance of internal control relevant to the preparationand fair presentation of financial statements that are free from material misstatement, whether due tofraud or error.

Auditor’s Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. Weconducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Governmental AuditingStandards, issued by the Comptroller General of the United States. Those standards require that weplan and perform the audit to obtain reasonable assurance about whether the financial statements arefree from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to theSchool’s preparation and fair presentation of the financial statements in order to design auditprocedures that are appropriate in the circumstances, but not for the purpose of expressing an opinionon the effectiveness of the School’s internal control. Accordingly, we express no such opinion. Anaudit also includes evaluating the appropriateness of accounting policies used and the reasonablenessof significant accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion.

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Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, therespective financial position of the governmental activities, each major fund, and the aggregateremaining fund information of Literacy, Leadership, Technology Academy, as of June 30, 2013, andthe respective changes in financial position thereof for the year ended in accordance with accountingprinciples generally accepted in the United States of America.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that theManagement’s Discussion and Analysis and the Budgetary Comparison Schedule on pages 3-7 and25 be presented to supplement the basic financial statements. Such information, although not a partof the basic financial statements, is required by the Governmental Accounting Standards Board whoconsiders it to be an essential part of financial reporting for placing the basic financial statements inan appropriate operational, economic, or historic context. We have applied certain limitedprocedures to the required supplementary information in accordance with auditing standardsgenerally accepted in the United States of America, which consisted of inquiries of managementabout methods of preparing the information and comparing the information for consistency withmanagement’s responses to our inquiries, the basic financial statements, and other knowledge weobtained during our audit of the basic financial statements. We do not express an opinion or provideany assurance on the information because the limited procedures do not provide us with sufficientevidence 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 September15, 2013 on our consideration of Literacy, Leadership, Technology Academy’s internal control overfinancial 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 scopeof our testing of internal control over financial reporting and compliance and the results of thattesting, 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 AuditingStandards in considering Literacy, Leadership, Technology Academy’s internal control overfinancial reporting and compliance.

Respectfully submitted,

September 15, 2013Tampa, Florida

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LITERACY, LEADERSHIP, TECHNOLOGY ACADEMYA Charter School and Component Unit of the District School Board of Hillsborough County, Florida

MANAGEMENT’S DISCUSSION AND ANALYSIS - (Unaudited)

The Management’s Discussion and Analysis (MD&A) section of the annual financial report ofthe Literacy, Leadership, Technology Academy (“School”) provides an overview of the School’sactivities for the fiscal year ended June 30, 2013.

Because the information contained in the MD&A is intended to highlight significanttransactions, events, and conditions, it should be considered in conjunction with the School’sfinancial statements and notes to financial statements found on pages 8 through 24.

FINANCIAL HIGHLIGHTS

For the fiscal year ended June 30, 2013, the School’s expenses exceeded revenues asshown on the School’s statement of activities by $90,306.

As shown on the statement of Net Position, the School reported an unrestricted NetPosition balance of $180,925.

OVERVIEW OF THE FINANCIAL STATEMENTS

The basic financial statements consist of three components:

Government-wide financial statements

Fund financial statements

Notes to financial statements

Government-Wide Financial Statements

The government-wide financial statements provide both short-term and long-term informationabout the School’s overall financial condition in a manner similar to those of a private-sectorbusiness. The statements include a statement of Net Position and a statement of activities thatare designed to provide consolidated financial information about the governmental activities ofthe School presented on the accrual basis of accounting. The statement of Net Position providesinformation about the government’s financial position, its assets and liabilities, using aneconomic resources measurement focus. The difference between the assets and liabilities, theNet Position, is a measure of the financial health of the School. The statement of activitiespresents information about the change in the School’s Net Position and the results of operations,during the fiscal year. An increase or decrease in Net Position is an indication of whether theSchool’s financial health is improving or deteriorating. To assess the overall financial positionof the School, one needs to consider additional non-financial factors such as changes in theSchool student base funding level.

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Fund Financial Statements

Fund financial statements are one of the components of the basic financial statements. A fund isa grouping of related accounts that is used to maintain control over resources that have beensegregated for specific activities or objectives. Fund financial statements provide more detailedinformation about the School’s financial activities, focusing on its most significant funds ratherthan fund types. This is in contrast to the entity-wide perspective contained in the government-wide financial statements.

Governmental Funds. Governmental funds are used to account for essentially the same functionsreported as governmental activities in the government-wide financial statements. However, thegovernmental funds utilize a spendable financial resources measurement focus rather than theeconomic resources measurement focus found in the government-wide financial statements. Thefinancial resources measurement focus allows the governmental fund financial financialstatements to provide information on near-term inflows and outflows of spendable resources aswell as balances of spendable resources available at the end of the fiscal year.

The governmental fund financial statements provide a detailed short-term view that may be usedto evaluate the School’s near-term financing requirements. This short-term view is useful whencompared to the long-term view presented as governmental activities in the government-widefinancial statements. To facilitate this comparison, both the governmental funds balance sheetand the governmental funds statement of revenues, expenditures, and changes in fund balancesprovide a reconciliation of governmental fund to governmental activities.

The governmental funds balance sheet and statement of revenues, expenditures, and changes infund balances provide detailed information about the School’s most significant funds. TheSchool operates three funds, a General Fund, a Special Revenue Fund, and a Capital ProjectsFund. The General Fund is considered to be a major fund. Data from the other governmentalfunds are combined into a single aggregate presentation.

The School adopts an annual budget for its governmental funds. A budgetary comparisonschedule, as required, has been provided for the General Fund to demonstrate compliance withthe budget.

Notes to Financial Statements

The notes provide additional information that is essential for a full understanding of the dataprovided in the government-wide and fund financial statements.

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GOVERNMENT-WIDE FINANCIAL ANALYSIS

Net Position may serve over time as a useful indicator of a government’s financial position. Thefollowing is a summary of the School’s Net Position as of June 30, 2012, and June 30, 2013:

6-30-12 6-30-13

Increase

(Decrease)

ASSETS

Current and Other Assets 249,463$ 181,320$ (68,143)$

Capital Assets, net 78,021 72,996 (5,025)

Total Assets 327,484 254,316 (73,168)

LIABILITIES

Current and Other Liabilities 1,181 395 (786)

Notes and Capital Leases 45,477 63,401 17,924

Total Liabilities 46,658 63,796 17,138

NET POSITION

Invested in Capital Assets, Net of Debt 32,544 9,595 (22,949)

Unrestricted 248,282 180,925 (67,357)

Total Net Position 280,826$ 190,520$ (90,306)$

Governmental Activities

Net Position, End of Year

Current Assets primarily consist of cash. Capital Assets are comprised of assets under capitalleases, leasehold improvements and depreciated furniture, fixtures, and equipment. Liabilitiesconsist mainly of the remaining payments on capital leases and a note payable. The School endedthe year with an unrestricted net position balance of $180,925.

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The key elements of the changes in the School’s Net Position for the fiscal years ended June 30,2012, and June 30, 2013, are as follows:

6-30-12 6-30-13

Increase

(Decrease)

Revenues:

Federal Sources 723$ -$ (723)$

State and Local Sources 1,828,367 1,816,853 (11,514)

Contributions and Other 278,516 187,351 (91,165)

Total Revenues 2,107,606 2,004,204 (103,402)

Expenses:

Instruction 1,064,295 1,082,191 17,896

Pupil Personnel Services 300 1,458 1,158

Instructional Staff Training 2,720 5,684 2,964

Board of Education 6,850 12,628 5,778

General Administration 28,464 28,680 216

School Administration 319,626 379,446 59,820

Facilities Acq. & Construction 337,215 246,023 (91,192)

Fiscal Services 3,907 813 (3,094)

Food Services 60,222 63,064 2,842

Operation of Plant 110,783 122,484 11,701

Maintenance of Plant 36,099 39,005 2,906

Community Service 58,161 67,114 8,953

Debt Service - Interest 13,490 9,116 (4,374)

Unallocated Depreciation 35,215 36,804 1,589

Total Expenses 2,077,347 2,094,510 17,163

Increase/(Decrease) in Net Position 30,259$ (90,306)$ (120,565)$

Governmental Activities

Operating Results for the Year

The largest revenue source for the School is the State of Florida (82%). Revenues from Statesources for current operations are primarily received through the Florida Education FinanceProgram (FEFP) funding formula. The FEFP formula utilizes student enrollment data todetermine the funds available for the School.

The largest concentrations of expenses during the year were for Instruction (52%), SchoolAdministration (18%), and Facilities Acquisition and Construction (12%).

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FINANCIAL ANALYSIS OF THE SCHOOL’S FUNDS

Governmental Funds

As the School completed the year, its governmental funds reported a combined fund balance of$180,925.

BUDGETARY HIGHLIGHTS

The general fund budget for the fiscal year ended June 30, 2013, was developed based on theSchool’s anticipated revenues and expenditures and the expected student population for theschool year. Over the course of the year, the school revised its general fund budget severaltimes. Refer to the Budgetary Comparison Schedule for additional information.

CAPITAL ASSETS AND DEBT ADMINISTRATION

The School’s investment in capital assets for its governmental activities as of June 30, 2013,amounts to $72,996 (net of accumulated depreciation). This investment in capital assets consistsof furniture, fixtures, and equipment, leasehold improvements, and assets under capital leaseagreements. Additional information regarding the School’s capital assets can be found in note 4to the financial statements.

The outstanding capital lease balance as of June 30, 2013, amounts to $1,050. The only otherlong-term debt outstanding consists of notes payable in the amount of $62,351. Additionalinformation regarding the School’s long-term debt can be found in the notes to financialstatements.

REQUESTS FOR INFORMATION

This financial report is designed to provide a general overview of the Literacy, Leadership,Technology Academy’s finances. Questions concerning any of the information provided in thisreport or requests for additional financial information should be addressed to the Director,Literacy, Leadership, Technology Academy, 6771 Madison Ave., Tampa, FL 33619.

Cash & Cash Equivalents $ 173,546

Due From Other Agency 3,559

Deposits and Prepaid Expenses 4,215

Capital Assets:

Assets Under Capital Leases, Net 7,275

Leasehold Improvements, Net 65,721

Total Capital Assets, Net 72,996

TOTAL ASSETS 254,316

Accounts Payable $ 395

Long-Term Liabilities:

Due within one year:

Notes Payable 32,795

Capital Leases Payable 1,050

Due after one year:


TOTAL LIABILITIES 63,796

Invested in Capital Assets, Net of Related Debt 9,595

Unrestricted 180,925

TOTAL NET POSITION $ 190,520

LITERACY, LEADERSHIP, TECHNOLOGY ACADEMYA CHARTER SCHOOL AND COMPONENT UNIT OF THE

DISTRICT SCHOOL BOARD OF HILLSBOROUGH COUNTY, FLORIDA

Governmental

NET POSITION

STATEMENT OF NET POSITION

June 30, 2013

ActivitiesASSETS

LIABILITIES

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

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Net (Expenses)Revenue

Expenses and Changes inCharges Operating Capital Net Position

for Grants and Grants and Governmental TotalServices Contributions Contributions Activities

Governmental Activities:Instruction $ 1,082,191 $ 99,428 $ - $ - $ (982,763) $ (982,763)Pupil Personnel Services 1,458 (1,458) (1,458)Instructional Staff Training 5,684 (5,684) (5,684)Board of Education 12,628 (12,628) (12,628)General Administration-District Admin Fee 28,680 (28,680) (28,680)School Administration 379,446 (379,446) (379,446)Facilities Acquisition & Construction 246,023 82,876 (163,147) (163,147)Fiscal Services 813 (813) (813)Food Services 63,064 74,884 11,820 11,820Operation of Plant 122,484 (122,484) (122,484)Maintenance of Plant 39,005 (39,005) (39,005)Community Service - Internal Accounts 67,114 64,137 (2,977) (2,977)Debt Service - Interest 9,116 (9,116) (9,116)Unallocated Depreciation 36,804 (36,804) (36,804)

Total Governmental Activities $ 2,094,510 $ 238,449 $ - $ 82,876 (1,773,185) (1,773,185)

General Revenues:State and Local Sources 1,659,093 1,659,093Contributions and Other 23,786 23,786

1,682,879 1,682,879

Change in Net Position (90,306) (90,306)Net Position - July 1, 2012 280,826 280,826

Net Position - June 30, 2013 $ 190,520 $ 190,520

For the Fiscal Year Ended June 30, 2013

Program Revenues



STATEMENT OF ACTIVITIES


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Other

General Governmental TOTAL

Fund Funds

Cash & Cash Equivalents $ 173,546 $ - $ 173,546

Due From Other Fund 3,559 3,559

Due From Other Agency 3,559 3,559

Deposits & Prepaids 4,215 4,215

Total Assets $ 181,320 $ 3,559 $ 184,879

Liabilities:

Accounts Payable $ 395 $ - $ 395

Due To Other Fund 3,559 3,559

Total Liabilities 395 3,559 3,954

Fund Balances:

Unspendable 4,215 4,215

Spendable - Unassigned 176,710 176,710

Total Fund Balances 180,925 180,925

Total Liabilities and Fund Balance $ 181,320 $ - $ 184,879

June 30, 2013

ASSETS

LIABILITIES AND FUND BALANCE



BALANCE SHEET - GOVERNMENTAL FUNDS


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Total Fund Balances - Governmental Funds $ 180,925

Amounts reported for governmental activities in the statement of

net position are different because:

Capital assets, net of accumulated depreciation, used in

governmental activities are not financial resources and

therefore, are not reported as assets in governmental funds. 72,996

Long-term liabilities are not due and payable in the current period

and, therefore, are not reported as liabilities in the governmental

funds. Long-term liabilities at year-end consist of:


Capital Leases 1,050 (63,401)

Total Net Position - Governmental Activities $ 190,520

June 30, 2013


RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET POSITION

A CHARTER SCHOOL AND COMPONENT UNIT OF THE


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

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Other TotalGeneral Governmental Governmental

Fund Funds Funds

Intergovernmental:State and Local $ 1,659,093 $ 157,760 $ 1,816,853

Contributions and Other 187,351 187,351

Total Revenues 1,846,444 157,760 2,004,204

Current - Education:Instruction $ 1,082,191 $ - $ 1,082,191Pupil Personnel Services 1,458 1,458Instructional Staff Training 5,684 5,684Board of Education 12,628 12,628General Administration-District Admin Fee 28,680 28,680School Administration 379,446 379,446Facilities Acquisition & Construction - Rent 246,023 246,023Fiscal Services 813 813Food Services 63,064 63,064Operation of Plant 122,484 122,484Maintenance of Plant 39,005 39,005Community Service - Internal Accounts 67,114 67,114

Fixed Capital Outlay:Facilities 31,779 31,779

Debt ServicePrincipal 35,076 35,076Interest and Fiscal Charges 9,116 9,116

Total Expenditures 1,783,695 340,866 2,124,561

62,749 (183,106) (120,357)

Other Financing Sources:

Proceeds from Notes Payable 53,000 53,000

Transfers In/(Out) (183,106) 183,106 -

Total Other Financing Sources: (130,106) 183,106 53,000

Net Change in Fund Balances (67,357) - (67,357)

Fund Balances, July 1, 2012 248,282 - 248,282

Fund Balances, June 30, 2013 $ 180,925 $ - $ 180,925

Excess (Deficiency) of Revenues Over

Expenditures

Expenditures

IN FUND BALANCES - GOVERNMENTAL FUNDS



STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES

Revenues


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

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Net Change in Fund Balances - Governmental Funds $ (67,357)

Amounts reported for governmental activities in the statement of activities

are different because:

Capital outlays are reported in governmental funds as expenditures.

However, in the statement of activities, the cost of those assets is

allocated over their estimated useful lives as depreciation expense.

This is the amount of depreciation expense ($36,804) in excess of

capital outlays ($31,779) in the current period. (5,025)

The proceeds from debt are reported as other financing sources in

the Governmental Funds and as long-term liabilities in the

Statement of Net Position. (53,000)

Repayment of debt principal is an expenditure in the governmental funds,

but the payment reduces long-term liabilities in the statement of

net position. 35,076

Change in Net Position - Governmental Activities $ (90,306)


REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES


RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF

TO THE STATEMENT OF ACTIVITIES




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NOTES TO FINANCIAL STATEMENTSJune 30, 2013

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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reporting Entity

The Literacy, Leadership, Technology Academy (“School”) is a component unitof the District School Board of Hillsborough County, Florida. The School issponsored by its charter-holder, Literacy, Leadership, Technology Academy, Inc.,a not-for-profit corporation organized pursuant to Chapter 617, Florida Statutes,the Florida Not-For-Profit Corporation Act and Section 1002.33, Florida Statutes.The governing body of the School is the not-for-profit corporation Board ofDirectors, which is comprised of not less than three members.

The general operating authority of the School is contained in Section 1002.33,Florida Statutes. The current charter has been renewed for an additional yearthrough June 30, 2014. Negotiations are ongoing with the District for a charteragreement that will continue until June 30, 2018. This charter agreement issubject to annual review and may be renewed by mutual agreement between theSchool and the District. At the end of the term of the charter, the District maychoose not to renew the charter under grounds specified in the charter. In thiscase, the District is required to notify the school in writing at least 90 days prior tothe charter’s expiration. During the term of the charter, the District may alsoterminate the charter if good cause is shown. In the event of termination of thecharter, the District shall assume operation of the School. The School isconsidered a component unit of the District; therefore, for financial reportingpurposes, the School is required to follow generally accepted accountingprinciples applicable to state and local governmental units.

Criteria for determining if other entities are potential component units whichshould be reported within the School's basic financial statements are identifiedand described in the Governmental Accounting Standards Board's (GASB)Codification of Governmental Accounting and Financial Reporting Standards,Sections 2100 and 2600. The application of these criteria provides foridentification of any entities for which the School is financially accountable andother organizations for which the nature and significance of their relationship withthe School are such that exclusion would cause the School's basic financialstatements to be misleading or incomplete. Based on these criteria, no componentunits are included within the reporting entity of the School.

Basis of Presentation

Government-wide Financial Statements - Government-wide financial statements,including the statement of Net Position and the statement of activities, presentinformation about the School as a whole.

Government-wide financial statements are prepared using the economic resourcesmeasurement focus. The statement of activities presents a comparison betweendirect expenses and program revenues for each function or program of theSchool’s governmental activities. Direct expenses are those that are specifically



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associated with a service, program, or department and are thereby clearlyidentifiable to a particular function.

Program revenues include charges paid by the recipient of the goods or servicesoffered by the program and grants and contributions that are restricted to meetingthe operational or capital requirements of a particular program. Revenues that arenot classified as program revenues are presented as general revenues. Thecomparison of direct expenses with program revenues identifies the extent towhich each governmental function is self-financing or draws from the generalrevenues of the School.

Fund Financial Statements - Fund financial statements report detailed informationabout the School in the governmental funds. The focus of governmental fundfinancial statements is on major funds rather than reporting funds by type. Eachmajor fund is reported in a separate column. Because the focus of governmentalfund financial statements differs from the focus of government-wide financialstatements, a reconciliation is presented with each of the governmental fundfinancial statements.

The School’s major governmental fund is as follows:

General Fund – to account for all financial resources not required to beaccounted for in another fund, and for certain revenues from the State that arelegally restricted to be expended for specific current operating purposes.

Data from the other governmental fund is combined into a single aggregatepresentation.

Basis of Accounting

Basis of accounting refers to when revenues and expenditures, or expenses, arerecognized in the accounts and reported in the financial statements. Basis ofaccounting relates to the timing of the measurements made, regardless of themeasurement focus applied.

The government-wide financial statements are prepared using the accrual basis ofaccounting. Revenues are recognized when earned and expenses are recognizedwhen a liability is incurred, regardless of the timing of the related cash flows.Revenues from grants, entitlements, and donations are recognized in the fiscalyear in which all eligibility requirements imposed by the provider have beensatisfied.

Governmental fund financial statements are prepared using the modified accrualbasis of accounting. Revenues, except for certain grant revenues, are recognizedwhen they become measurable and available. Revenues are considered to beavailable when they are collectible within the current period or soon enoughthereafter to pay liabilities of the current period. The School considers revenuesto be available if they are collected within 30 days of the end of the current fiscalyear. When grant terms provide that the expenditure of resources is the prime



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factor for determining eligibility for Federal, State, and other grant resources,revenue is recognized at the time the expenditure is made. Under the modifiedaccrual basis of accounting, expenditures are generally recognized when therelated fund liability is incurred, except for principal and interest on long-termdebt, claims and judgments, and compensated absences, which are recognizedwhen due. Allocations of cost, such as depreciation, are not recognized ingovernmental funds.

Cash and Cash Equivalents

Cash and cash equivalents consist of demand deposits with financial institutions.Deposits on hand at financial institutions are insured by the Federal DepositInsurance Company up to $250,000.

Capital Assets

Expenditures for capital assets acquired or constructed for general Schoolpurposes are reported in the governmental fund that financed the acquisition orconstruction. The capital assets so acquired are reported at cost in thegovernment-wide statement of Net Position but are not reported in thegovernmental fund financial statements. Capital assets are defined by the Schoolas those costing more than $750. Such assets are recorded at historical cost orestimated historical cost if purchased or constructed. Donated assets are recordedat fair value at the date of donation.

Capital assets are depreciated using the straight-line method over the followingestimated useful lives:

Description Estimated Lives

Furniture, Fixtures and Equipment 5 years

Leasehold Impr. & Assets Under Capital Leases 10 years

Budgets and Budgetary Accounting

Budgets are presented on the modified accrual basis of accounting. During thefiscal year, expenditures were controlled at the object level (e.g., salaries andbenefits, purchased services, materials and supplies and capital outlay) withineach activity (e.g., instruction, pupil personnel services and schooladministration). Budgets may be amended by resolution at any Board meetingprior to the date for the annual report.

Long-term Debt

Long-term obligations that will be financed by resources to be received in thefuture by the general fund are reported in the government-wide financialstatements, not in the general fund. Current-year information relative to changesin long-term debt is described in subsequent notes.



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Recently Issued Accounting Principles

In June 2011, the GASB issued Statement 63, Financial Reporting of DeferredOutflows of Resources, Deferred Inflows of Resources, and Net Position. GASB63 provides guidance for reporting deferred outflows of resources, deferredinflows of resources, and net position in the statement of financial position andrelated disclosures. The statement of net assets is renamed the statement of netposition and includes four components; assets, deferred outflows of resources,liabilities and deferred inflows of resources. The provisions of the Statement areeffective for financial statements for periods beginning after December 15, 2011.

Fund Balance Classification

GASB Codification Section 1800.142, Fund Balance Reporting andGovernmental Fund Type Definitions, defines the different types of fund balancesthat a governmental entity must use for financial reporting purposes. GASBrequires the fund balance amounts to be reported within one of the following fundbalance categories:

Nonspendable – fund balance associated with inventories, prepaidexpenses, long-term loans and notes receivable, and property held forresale (unless the proceeds are restricted, committed or assigned). Allnonspendable fund balances at year end relate to assets that are innonspendable form.

Restricted – fund balance that can be spent only for the specific purposesstipulated by the constitution, external resource providers, or throughenabling legislation.

Committed – fund balance that can be used only for the specific purposesdetermined by a formal action of the School’s Board of Governance.

Assigned – fund balance that is intended to be used by the School’smanagement for specific purposes but does not meet the criteria to beclassified as restricted or committed.

Unassigned – fund balance that is the residual amount for the School’sgeneral fund and includes all spendable amounts not contained in the otherclassifications.

Order of Fund Balance Spending Policy

The School’s policy is to apply expenditures against nonspendable fund balance,restricted fund balance, committed fund balance, assigned fund balance, andunassigned fund balance at the end of the fiscal year. First, nonspendable fundbalances are determined. Then restricted fund balances for specific purposes aredetermined (not including nonspendable amounts). Any remaining fund balanceamounts for the non-general funds are to be classified as restricted fund balance.It is possible for the non-general funds to be classified as restricted fund balance.



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It is possible for the non-general funds to have negative unassigned fund balancewhen nonspendable amounts plus the amount of restricted fund balances forspecific purposes exceed the positive fund balance for non-general fund.

Revenue Sources

Revenues for current operations are received primarily from the District pursuantto the funding provisions included in the School’s charter. In accordance with thefunding provisions of the charter and Section 1002.33(17), Florida Statutes, theSchool reports the number of full-time equivalent students and related data to theDistrict.

Under provisions of Section 1011.62, Florida Statutes, the District reports thenumber of full-time equivalent students and related data to the FloridaDepartment of Education (FDOE) for funding through the Florida EducationFinance Program (FEFP). Funding for the School is adjusted during the year toreflect the revised calculations by the FDOE under the FEFP and the actualweighted full-time equivalent (FTE) students reported by the School duringdesignated full-time equivalent student survey periods. The Department may alsoadjust subsequent fiscal period allocations based upon an audit of the School'scompliance in determining and reporting FTE and related data. Normally, suchadjustments are treated as reductions or additions of revenue in the year when theadjustments are made. The District receives a 2% administrative fee from theSchool, which is reflected in the accompanying statement of activities andstatement of revenues, expenditures and change in fund balances – governmentalfunds.

The basic amount of funding through the FEFP under Section 1011.62 is theproduct of the (1) unweighted FTE, multiplied by (2) the cost factor for eachprogram, multiplied by (3) the base student allocation established by thelegislature. Additional funds for exceptional students who do not have a matrix ofservices are provided through the guaranteed allocation designated in Section1011.62(1)(e)2., Florida Statutes. For the fiscal year ended June 30, 2013, theSchool reported 294.325 unweighted. Weighted funding represents approximately8% of total FEFP funding.

FEFP funding may also be adjusted as a result of subsequent FTE auditsconducted by the Florida Auditor General pursuant to Section 1010.305, FloridaStatutes, and Rule 6A-1.0453, Florida Administrative Code (FAC). Schools arerequired to maintain the following documentation for three years or until thecompletion of an FTE audit:

Attendance and membership documentation (Rule 6A-1.044, FAC). Teacher certificates and other certification documentation (Rule 6A-

1.0503, FAC). Documentation for instructors teaching out-of-field (Rule 6A-1.0503,

FAC).



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Procedural safeguards for weighted programs (Rule 6A-6.03411, FAC). Evaluation and planning documents for weighted programs (Section

1010.305, Florida Statutes, and Rule 6A-6.03411, FAC).

The School receives federal or state awards for the enhancement of variouseducational programs. This assistance is generally received based on applicationssubmitted to and approved by various granting agencies. For federal or stateawards in which a claim to these grant proceeds is based on incurring eligibleexpenditures, revenue is recognized to the extent that eligible expenditures havebeen incurred.

The School also receives state funds through the District under charter schoolcapital outlay funding pursuant to Section 1013.62, Florida Statutes. Funds arebased upon a capital outlay plan submitted to the District and are to be used forlease, rent or construction of school facilities. The School also receives fundingthrough donations and fundraising efforts, school lunch sales and local propertytax collections.

The School follows the policy of applying restricted resources prior to applyingunrestricted resources when an expense is incurred for purposes for which bothrestricted and unrestricted assets are available. A schedule of revenue sources forthe current year is presented in a subsequent note.

Income Taxes

The School is exempt from Federal tax under Section 501(c)(3) of the InternalRevenue Code. Accordingly, no provision for income taxes has been included inthe accompanying financial statements.

Use of Estimates

In preparing the financial statements in conformity with generally acceptedaccounting principles in the United States (GAAP) management is required tomake estimates and assumptions that affect the reported amounts of assets andliabilities as of the date of the statement of Net Position and affect revenues andexpenditures for the period presented. Actual results could differ from thoseestimates.

2. DUE FROM OTHER AGENCY

The amount due from other agency on the School’s Statement of Net Position andBalance Sheet – Governmental Funds consists of amounts due from the District SchoolBoard of Hillsborough County for Charter School Capital Outlay funds. This receivableis considered fully collectible and therefore, no allowance for uncollectible accounts hasbeen established.



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3. INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS

At June 30, 2013, the Capital Projects Fund owed the General Fund $3,559 forexpenditures accrued awaiting reimbursement. The General Fund transferred $194,926to the Capital Projects Fund to cover rent expenditures in excess of revenue. The SpecialRevenue Fund transferred $11,820 to the General Fund to provide financial support forthe School’s operations. The amounts of interfund receivables, payables, and transfersare netted together and not reported in the statement of net position and the statement ofactivities.

4. CHANGES IN CAPITAL ASSETS

Changes in capital assets are presented in the table below:

Beginning Ending

Balance Additions Deletions Balance

Governmental Activities:

Furniture, Fixtures and Equipment 32,302$ -$ -$ 32,302$

Assets Under Capital Leases 86,781 86,781

Leashold Improvements 159,887 31,779 - 191,666

Total Capital Assets Being Depreciated 278,970 31,779 - 310,749

Less Accumulated Depreciation for:

Furniture, Fixtures and Equipment (32,302) - (32,302)

Assets Under Capital Leases (60,280) (19,226) (79,506)

Leasehold Improvements (108,367) (17,578) (125,945)

Total Accumulated Depreciation (200,949) (36,804) - (237,753)

Governmental Activities Capital Assets, net 78,021$ (5,025)$ -$ 72,996$

Depreciation expense of $36,804 was charged to Unallocated Depreciation Expense.

5. NOTE PAYABLE

The School had the following notes payable:

Balance atCenter State Bank - Line of Credit 6-30-13$67,273, Refinanced 04-26-12, to fund building improvements. Interest

Rate of 2.75 Percent. Payments are to be made in 36 equal monthly

installments of $1,102.85 starting 5-26-12. 23,641$

Apple Computer - Note

$32,027, Borrowed 08-18-2012, to purchase computers and technology.

Interest Rate of 4.908%. Payments are to be made in 24 equal monthly

installments of $1,403.78 starting 09-18-2-12. 17,737

Center State Florida Leasing - Note$20,973, Borrowed 06-26-13, to finance improvements of its leased

educational facility. Interest Rate of 5.952%. Payments are to be made in

60 equal monthly installments of $405 starting 07-26-2013. 20,973

Total 62,351$



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Amounts payable for notes payable are as follows:

Fiscal Year

Ending June 30Total Principal Interest

2014 34,939$ 32,795$ 2,144$

2015 17,304 16,234 1,070

2016 4,860 4,180 680

2017 4,860 4,436 4242018 4,859 4,706 153

Total 66,822$ 62,351$ 4,471$

6. CAPITAL LEASE OBLIGATIONS

The school has entered into three 36 month agreements for computer equipment andclassroom furniture which are classified as capital leases. The economic substance ofthe leases are that the School is financing the acquisition of the assets through the leasesand, accordingly, it is recorded in the School’s statement of Net Position. Terms of theleases require the School to make monthly payments for the computer equipment andclassroom furniture through July 2013.

The net asset value of the leased computer equipment and classroom furniture are$37,784, $34,978 and $14,019, respectively at June 30, 2013.

Future minimum capital lease payments and the present value of the minimum leasepayments as of June 30 are as follows:

Fiscal Year Ending June 30: Total Principal Interest

2013 1,150$ 1,050$ 100$

Total Minimum Lease Payments 1,150$ 1,050$ 100$

Interest paid on these capital leases during the year ended June 30, 2013 was $6,448.

7. CHANGES IN LONG-TERM LIABILITIES

The following is a summary of changes in long-term liabilities:

Beginning Ending Due inBalance Additions Deductions Balance One Year

Governmental Activities:Notes Payable 36,039$ 53,000$ (26,688)$ 62,351$ 32,795$

Capital Leases Payable 9,438 - (8,388) 1,050 1,050

Total Governmental Activities 45,477$ 53,000$ (35,076)$ 63,401$ 33,845



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8. SCHEDULE OF REVENUE SOURCES

The following is a schedule of the School’s revenue:

Source Amount

STATE:

Florida Education Finance Program 1,065,308$Categorical Educational Programs:

Class Size Reduction 269,248

Supplementary Academic Instruction 57,982

Instructional Materials 22,876

Safe Schools 5,135ESE Guaranteed Allocation 131,909

Charter School Capital Outlay 82,876

Florida Teachers' Lead Program 2,548

Miscellaneous 176

Total State Revenue 1,638,058

LOCAL:

Discretionary Local Effort 64,578

Discretionary Millage 39,333Student Lunches 74,884

Total Local Revenue 178,795

Total State and Local Revenue 1,816,853$

CONTRIBUTIONS & OTHER

Supply and Other Fees 99,428$

Internal Accounts 64,137

Fund Raising 21,969

Miscellaneous Local Revenue 1,313Gifts & Donations 504

Total Contributions & Other 187,351$

As provided in the charter school contract and Florida Department of Education Rules,the District has charged the School an administrative fee of $28,680.

Accounting policies relating to certain State revenue sources are described in Note 1.

9. RISK MANAGEMENT PROGRAMS

The School is exposed to various risks of loss related to torts; theft of, damage to, anddestruction of assets; errors and omissions; and natural disasters for which the Schoolcarries commercial insurance. There have been no significant reductions in insurancecoverage and settlement amounts have not exceeded insurance coverage for the currentyear or the three prior years.



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10. FACILITY LEASE

The School leases its educational facility under a noncancelable operating lease. TheSchool entered into a new lease beginning September 1 2010 through June 30, 2028.This lease contains varying renewal options and requires the School to pay insurance andother costs. The existing lease was amended starting July 1, 2013 to include anadditional 17,500 square feet for the expansion of the School to include grades K-5starting in the 2013-14 school year. The minimum monthly lease payments will be$38,650 per month.

The following is a schedule by years of future minimum rental payments required underthe operating lease that has a remaining noncancelable lease term in excess of one year:

Fiscal Year Ending June 30 Facility Lease-

2014 463,800$

2015 463,8002016 463,800

2017 463,800

2018 463,800

2019-2023 2,319,000

2024-2028 2,319,000

Total Minimum Payments Required 6,957,000$

Rental expenditures for the fiscal year were $246,023.

11. COMMITMENTS AND CONTINGENT LIABILITIES

The School participates in state grant programs, which are governed by various rules andregulations of the grantor agencies. Costs charged to the respective grant programs aresubject to audit and adjustment by the grantor agencies, therefore, to the extent that theSchool has not complied with the rules and regulations governing the grants, refunds ofany money received may be required and the collectability of any related receivables atJune 30, 2013, may be impaired.

In the opinion of the School, there are no significant liabilities relating to compliancewith the rules and regulations governing the respective grants; therefore, no provisionhas been recorded in the accompanying financial statements for such contingencies.

12. FUNDING AND CREDIT RISK CONCENTRATIONS

The School receives substantially all of its support and revenue from federal, state andlocal funding sources, passed through the District, in the form of performance andbudget based contracts. Continuing operation of the School is greatly dependent uponthe continued support of these governmental agencies.



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13. LEGAL MATTERS

In the normal course of conducting its operations, the School occasionally becomes partyto various legal actions and proceedings. In the opinion of management, the ultimateresolution of such legal matters will not have a significant adverse effect on theaccompanying financial statements.

14. SUBSEQUENT EVENTS

Management has evaluated all events subsequent to the balance sheet date and throughthe report date, which is the date these financial statements were available to be issued.Management determined there are no subsequent events which require disclosure exceptas follows: the School was granted a charter agreement that expands its grade level toinclude kindergarten to fifth grades effective with the 2013-14 school year.

Variance with

Original Final Budget -

Budget Budget Actual Positive

(Negative)

Revenues:

Intergovernmental:

State and Local $ 1,747,062 $ 1,675,000 $ 1,659,093 $ (15,907)

Contributions and Other 120,100 194,137 187,351 (6,786)

Total Revenues 1,867,162 1,869,137 1,846,444 (22,693)

Expenditures:Current - Education:

Instruction 1,104,505 1,080,500 1,082,191 (1,691)

Pupil Personnel Services - 2,000 1,458 542

Instructional Staff Training 7,000 7,000 5,684 1,316

Board of Education 6,800 13,000 12,628 372

General Administration-District Admin Fee 29,118 29,118 28,680 438

School Administration 327,756 380,000 379,446 554

Fiscal Services - 1,000 813 187

Operation of Plant 86,500 124,000 122,484 1,516

Maintenance of Plant 63,900 37,900 39,005 (1,105)Community Service 14,500 67,127 67,114 13

Debt Service:

Principal 27,133 35,000 35,076 (76)

Interest and Fiscal Charges 30,000 10,000 9,116 884

Total Expenditures 1,697,212 1,786,645 1,783,695 2,950

169,950 82,492 62,749 (19,743)

Other Financing Sources:

Transfers In/(Out) (124,912) (180,000) (183,106) (3,106)

Total Other Financing Sources: (124,912) (127,000) (130,106) (3,106)

Net Change in Fund Balance 45,038 (44,508) (67,357) (22,849)

Fund Balance, July 1, 2012 248,282 248,282 248,282 -

Fund Balance, June 30, 2013 $ 293,320 $ 203,774 $ 180,925 $ (22,849)

Excess (Deficiency) of Revenues Over

Expenditures

General Fund




DISTRICT SCHOOL BOARD OF HILLSBOROUGH COUNTY

REQUIRED SUPPLEMENTARY INFORMATION

BUDGETARY COMPARISON SCHEDULE - GENERAL FUND - (UNAUDITED)

See Independent Auditor's Report.

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We have audited, in accordance with the auditing standards generally accepted in the UnitedStates of America and the standards applicable to financial audits contained in GovernmentAuditing Standards issued by the Comptroller General of the United States, the financialstatements of the governmental activities, each major fund, and the aggregate remaining fundinformation of Literacy, Leadership, Technology Academy (“School”), a charter school andcomponent unit of the District School Board of Hillsborough County, Florida, as of and for theyear ended June 30, 2013, and the related notes to the financial statements, which collectivelycomprise the School’s basic financial statements, and have issued our report thereon datedSeptember 15, 2013.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered the School’sinternal control over financial reporting (“internal control”) to determine the audit proceduresthat are appropriate in the circumstances for the purpose of expressing our opinions on thefinancial statements, but not for the purpose of expressing an opinion on the effectiveness of theSchool’s internal control. Accordingly, we do not express an opinion on the effectiveness of theSchool’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allowmanagement or employees, in the normal course of performing their assigned functions, toprevent, or detect and correct, misstatements on a timely basis. A material weakness is adeficiency, or combination of deficiencies, in internal control, such that there is a reasonablepossibility that a material misstatement of the School’s financial statements will not beprevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency,or 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 paragraphof this section and was not designed to identify all deficiencies in internal control that might bematerial weaknesses or significant deficiencies. Given these limitations, during our audit we didnot identify any deficiencies in internal control that we consider to be material weaknesses.However, material weaknesses may exist that have not been identified.

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Compliance and Other Matters

As part of obtaining reasonable assurance about whether the School’s financial statements arefree from material misstatement, we performed tests of compliance with certain provisions oflaws, regulations, contracts, and grant agreements, noncompliance with which could have adirect 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, andaccordingly, we do not express such an opinion. The results of our tests disclosed no instancesof noncompliance or other matters that are required to be reported under Government AuditingStandards.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control andcompliance and the results of that testing, and not to provide an opinion on the effectiveness ofthe School’s internal control or on compliance. This report is an integral part of an auditperformed in accordance with Government Auditing Standards in considering the School’sinternal control and compliance. Accordingly, this communication is not suitable for any otherpurpose.



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We have audited the basic financial statements of the Literacy, Leadership, TechnologyAcademy (“School”), a charter school and component unit of the District School Board ofHillsborough County, Florida, as of and for the fiscal year ended June 30, 2013, and have issuedour report thereon dated September 15, 2013.

We have issued our independent auditor's report on compliance and on internal control overfinancial reporting based on an audit of the financial statements performed in accordance withGovernment Auditing Standards dated September 15, 2013. Disclosures in that report, if any,should be considered in conjunction with this management letter.

We conducted our audit in accordance with generally accepted auditing standards andGovernment Auditing Standards issued by the Comptroller General of the United States. Inaddition, our audit was conducted in accordance with provisions of Chapter 10.850, Rules of theAuditor General, which govern the conduct of charter school audits performed in the State ofFlorida and require certain items be addressed in this letter.

The Rules of the Auditor General (Section 10.854(1)(e)1.), require that we comment as towhether corrective actions have been taken to address significant findings and recommendationsmade in the preceding annual financial audit report. There were no prior audit findings andrecommendations.

The Rules of the Auditor General (Section 10.854(1)(e)2.), require that we make a statement asto whether or not the School has met one or more of the conditions described in Section218.503(1), Florida Statutes, and identification of the specific conditions met. In connection withour audit, we determined that the School did not meet any of the conditions described in Section218.503(1), Florida Statutes.

Pursuant to Sections 10.854(1)(e)6.a. and 10.855(11), Rules of the Auditor General, we appliedfinancial condition assessment procedures. It is management’s responsibility to monitor theSchool’s financial condition, and our financial condition assessment was based in part onrepresentations made by management and the review of financial information provided by same.

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The Rules of the Auditor General (Section 10.854(1)(e)3.), requires that we address in themanagement letter any recommendations to improve financial management. In connection withour audit, we did not have any such recommendations.

The Rules of the Auditor General (Section 10.854(1)(e)4.), require that we addressnoncompliance with provision of contracts or grant agreements, or abuse, that have occurred orare likely to have occurred, that have an effect on the financial statements that is less thanmaterial but which warrants the attention of those charged with governance. In connection withour audit, we did not have any such findings.

The Rules of the Auditor General (Section 10.854(1)(e)5.), require we disclose the name orofficial title of the school or center. The school’s official name is Literacy, Leadership,Technology Academy.

This letter is intended for the information and use of the School and its management, the DistrictSchool Board of Hillsborough County, Florida, the Florida Department of Education, the FloridaAuditor General, and other granting agencies and is not intended to be and should not be used byanyone other than these specific parties.



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LITERACY, LEADERSHIP, TECHNOLOGY ACADEMYA Charter School and Component Unit of the District School Board of Hillsborough County

MANAGEMENT’S RESPONSE TO AUDIT FINDINGS

Year Ended June 30, 2013

The following is the School’s response to the item in the Management Letter dated September15, 2013, as required by Rule 10.857, Rules of the Auditor General:

No response required.

Documents

LITERACY, LEADERSHIP, TECHNOLOGY ACADEMYstorage.cloversites.com/lltacademy/documents/2013... · the Literacy, Leadership, Technology Academy (“School”) provides an overview of