PIVOT CHARTER SCHOOL – FORT LAUDERDALE rpts/2015 pivot charter... · American Institute of CPAs office(813) 892-4274 fax(813) 932-1913 Government Audit Quality Center Independent

PIVOT CHARTER SCHOOL –FORT LAUDERDALE

(A CHARTER SCHOOL UNDERPIVOT EDUCATION, INC.)

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

INDEPENDENT AUDITOR’S REPORT

for the fiscal year ended JUNE 30, 2015

King & Walker, CPAs, PL______________________________________________________________________________________________________________________

Certified Public Accountants

THIS PAGE IS INTENTIONALLY BLANK.

PIVOT CHARTER SCHOOL – FORT LAUDERDALE(A CHARTER SCHOOL UNDER PIVOT EDUCATION, INC.)

TABLE OF CONTENTS

PAGENO.

FINANCIAL SECTION

Independent Auditor’s Report 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

Other Required Supplementary InformationBudgetary Comparison Schedule – General Fund – (Unaudited) 25Note to Required Supplementary Information 26

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 27

Management Letter as required by Rules of the Florida Auditor General,Chapter 10.850, Florida Statutes, Charter School Audits. 29

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Members: 2803 W. Busch Blvd Ste 106Florida Institute of CPAs Tampa, FL 33618American Institute of CPAs office (813) 892-4274 fax (813) 932-1913Government Audit Quality Center www.KingandWalker.com

Independent Auditor's Report

To the Board of Directors of the Pivot Charter School - Fort Lauderdale(A charter school under Pivot Education, Inc.),

a Charter School and Component Unit of the DistrictSchool Board of Broward 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 Pivot Charter School - Fort Lauderdale(“School”), a charter school under Pivot Education, Inc. and component unit of the District SchoolBoard of Broward County, Florida, as of and for the year ended June 30, 2015, and the related notesto the financial statements, which collectively comprise the School’s basic financial statements aslisted in the table of 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 Pivot Charter School - Fort Lauderdale, as of June 30, 2015, and therespective changes in financial position thereof for the year ended in accordance with accountingprinciples generally accepted in the United States of America.

Emphasis of Matter

As described in Note 1, the accompanying financial statements referred to above present only thefinancial position of Pivot Charter School - Fort Lauderdale at June 30, 2015, and the respectivechanges in financial position for the year then ended, and is not intended to be a complete presentation ofPivot Education, Inc. These financial statements do not purport to, and do not present fairly the financialposition of Pivot Education, Inc. as of June 30, 2015 and its changes in financial position for the year thenended in conformity with accounting principles 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 the Budgetary Comparison Schedule, and Note to RequiredSupplementary Information, as shown in the table of contents, be presented to supplement the basicfinancial statements. Such information, although not a part of the basic financial statements, isrequired by the Governmental Accounting Standards Board who considers it to be an essential part offinancial reporting for placing the basic financial statements in an appropriate operational, economic,or historic context. We have applied certain limited procedures to the required supplementaryinformation in accordance with auditing standards generally accepted in the United States ofAmerica, which consisted of inquiries of management about methods of preparing the informationand comparing the information for consistency with management’s responses to our inquiries, thebasic financial statements, and other knowledge we obtained during our audit of the basic financialstatements. We do not express an opinion or provide any assurance on the information because thelimited procedures do not provide us with sufficient evidence to express an opinion or provide anyassurance.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated September10, 2015 on our consideration of Pivot Charter School - Fort Lauderdale’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 Pivot Charter School - Fort Lauderdale’s internal control over financialreporting and compliance.

Respectfully submitted,

September 10, 2015Tampa, Florida

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PIVOT CHARTER SCHOOL – FORT LAUDERDALE(A CHARTER SCHOOL UNDER PIVOT EDUCATION, INC.)

A Charter School and Component Unit of the District School Board of Broward County, Florida

MANAGEMENT’S DISCUSSION AND ANALYSIS - (Unaudited)_____________________________________________________________________________________________________________________

The Management’s Discussion and Analysis (MD&A) section of the annual financial report ofthe Pivot Charter School - Fort Lauderdale (“School”) provides an overview of the School’sactivities for the fiscal year ended June 30, 2015.

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, as listed in the table of contents.

FINANCIAL HIGHLIGHTS

For the fiscal year ended June 30, 2015, the School’s expenses exceeded revenue asshown on the School’s statement of activities by $373,970.

As shown on the statement of net position, the School reported an total net positionbalance of $712,501.

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 that aredesigned to provide consolidated financial information about the governmental activities of theSchool 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 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 statements to provideinformation on near-term inflows and outflows of spendable resources as well as balances ofspendable resources available at the end of the fiscal year.

The governmental fund statements provide a detailed short-term view that may be used toevaluate 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 the following funds: a General Fund to account for its general operations andinternal account activities, and a Capital Projects Fund to account for charter school capitaloutlay funding to be used for lease, rent or construction of school facilities. Each of these fundsis considered major funds.

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 for the fiscal years ended June 30, 2014 andJune 30, 2015 are as follows:

6-30-14 6-30-15Increase

(Decrease)ASSETS

Current and Other Assets 470,618$ 66,839$ (403,779)$

Capital Assets, net 1,000,572 779,657 (220,915)

Total Assets 1,471,190 846,496 (624,694)

LIABILITIES

Current Liabilities 384,719 133,995 (250,724)

Total Liabilities 384,719 133,995 (250,724)

NET POSITION

Net Investment in Capital Assets 1,000,572 779,657 (220,915)Unrestricted 85,899 (67,156) (153,055)

Total Net Position 1,086,471$ 712,501$ (373,970)$

Governmental Activities

Net Position, End of Year

The assets of the School primarily consist of cash, prepaid expenses and deposits, and capitalassets which include furniture, fixtures, and equipment and leasehold improvements. Liabilitiesconsist of accounts payable and other accrued expenses.

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The key elements of the changes in the School’s net position for the fiscal years ended June 30,2014 and June 30, 2015 are as follows:

6-30-14 6-30-15Increase

(Decrease)

Revenues:

State Sources 1,296,564$ 1,175,742$ (120,822)$

Local and Other 1,749,063 421,113 (1,327,950)

Total Revenues 3,045,627 1,596,855 (1,448,772)

Expenses:

Instruction 551,247 780,869 229,622

Board of Education 391,845 7,450 (384,395)

School Administration 257,518 244,958 (12,560)Facilities Acq. & Construction 230,892 256,493 25,601

Fiscal Services 78,985 143,802 64,817

Pupil Transportation 94,925 94,422 (503)

Operation of Plant 45,991 96,276 50,285Maintenance of Plant 14,295 19,070 4,775

Community Services 17 - (17)

Unallocated Depreciation 166,434 327,485 161,051

Total Expenses 1,832,149 1,970,825 138,676

Increase/(Decrease) in Net Position 1,213,478$ (373,970)$ (1,587,448)$

Governmental Activities

Operating Results for the Year

The School’s revenue from the State of Florida is 74% of total revenue. 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 were for Instruction related functions (40%), and thefacility related functions (19%).

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FINANCIAL ANALYSIS OF THE SCHOOL’S FUNDS

Governmental Funds

As the School completed the year, its governmental funds reported a total fund balance deficit of$67,156.

BUDGETARY HIGHLIGHTS

The General Fund budget for the fiscal year ended June 30, 2015, 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. For thefiscal year ended June 30, 2015, the actual expenditures were equal to the final budget. Refer tothe Budgetary Comparison Schedule for additional information.

CAPITAL ASSETS

The School’s investment in capital assets for its governmental activities as of June 30, 2015,amounts to $779,657 (net of accumulated depreciation). This investment in capital assetsincludes furniture, fixtures, and equipment and leasehold improvements. Additional informationregarding the School’s capital assets can be found in a subsequent note to the financialstatements.

REQUESTS FOR INFORMATION

This financial report is designed to provide a general overview of the Pivot Charter School - FortLauderdale’s finances. Questions concerning any of the information provided in this report orrequests for additional financial information should be addressed to Pivot Charter School – FortLauderdale, 2675 Winkler Ave., Suite 200, Ft. Myers, FL 33901.

Cash & Cash Equivalents $ 500

Due From Other Agency 106

Prepaid Expenses & Deposits 66,233

Capital Assets:

Leasehold Improvements, Net 413,205

Furniture, Fixtures, and Equipment, Net 366,452

Total Capital Assets, Net 779,657

TOTAL ASSETS 846,496

Accounts Payable & Accrued Expenses 133,995

TOTAL LIABILITIES 133,995

Net Investment in Capital Assets 779,657

Unrestricted (67,156)

TOTAL NET POSITION $ 712,501

NET POSITION

STATEMENT OF NET POSITION

June 30, 2015

ActivitiesASSETS

LIABILITIES

PIVOT CHARTER SCHOOL - FORT LAUDERDALE

A CHARTER SCHOOL AND COMPONENT UNIT OF THE

DISTRICT SCHOOL BOARD OF BROWARD COUNTY, FLORIDA

Governmental

(A CHARTER SCHOOL UNDER PIVOT EDUCATION, INC.)

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

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Net (Expenses)

RevenueExpenses and Changes

Charges Operating Capital Net Position

Expenses for Grants and Grants and Governmental Total

Services Contributions Contributions Activities

Governmental Activities:

Instruction $ 780,869 $ - $ - $ - $ (780,869) $ (780,869)

Board of Education 7,450 (7,450) (7,450)

School Administration 244,958 (244,958) (244,958)

Facilities Acquisition & Construction 256,493 (256,493) (256,493)

Fiscal Services 143,802 (143,802) (143,802)

Pupil Transportation 94,422 (94,422) (94,422)

Operation of Plant 96,276 (96,276) (96,276)

Maintenance of Plant 19,070 (19,070) (19,070)

Unallocated Depreciation 327,485 (327,485) (327,485)

Total Governmental Activities $ 1,970,825 $ - $ - $ - (1,970,825) (1,970,825)

General Revenues:State Sources 1,175,742 1,175,742Local and Other 421,113 421,113

Total General Revenues 1,596,855 1,596,855

Change in Net Position (373,970) (373,970)

Net Position - July 1, 2014 1,213,478 1,213,478Adjustment to Beginning Net Position (127,007) (127,007)

Restated Net Position - July 1, 2014 1,086,471 1,086,471Net Position - June 30, 2015 $ 712,501 $ 712,501

For the Fiscal Year Ended June 30, 2015

Program Revenues




STATEMENT OF ACTIVITIES



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Capital Total

Projects Governmental

Fund Funds

Cash & Cash Equivalents $ 500 $ - $ 500

Due From Other Agency 106 106

Prepaid Expenses & Deposits 66,233 66,233

Total Assets $ 66,839 $ - $ 66,839

Accounts Payable & Accrued Expenses $ 133,995 $ - $ 133,995

Total Liabilities 133,995 - 133,995

Nonspendable 66,233 66,233

Unassigned (133,389) (133,389)

Total Fund Balances (67,156) - (67,156)

Total Liabilities and Fund Balances $ 66,839 $ - $ 66,839




BALANCE SHEET - GOVERNMENTAL FUNDS

June 30, 2015

General


FUND BALANCE

ASSETS

LIABILITIES

Fund


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Total Fund Balances - Governmental Funds $ (67,156)

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. 779,657

Total Net Position - Governmental Activities $ 712,501

June 30, 2015


RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET POSITION




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

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Capital TotalGeneral Projects Governmental

Fund Fund Funds

Intergovernmental:

State $ 1,175,742 $ - $ 1,175,742

Local and Other 421,113 421,113

Total Revenues 1,596,855 - 1,596,855

Current - Education:

Instruction $ 780,869 $ - $ 780,869

Board of Education 7,450 7,450

School Administration 244,958 244,958

Facilities Acquisition & Construction 256,493 256,493

Fiscal Services 143,802 143,802

Pupil Transportation 94,422 94,422

Operation of Plant 96,276 96,276

Maintenance of Plant 19,070 19,070

Fixed Capital Outlay:

Other Capital Outlay 106,570 106,570

Total Expenditures 1,493,417 256,493 1,749,910

103,438 (256,493) (153,055)

Other Financing Sources (Uses):

Transfers In 256,493 256,493

Transfers (Out) (256,493) (256,493)

Total Other Financing Sources (Uses) (256,493) 256,493 -

Net Change in Fund Balances (153,055) - (153,055)

Fund Balances, July 1, 2014 85,899 - 85,899

Fund Balances, June 30, 2015 $ (67,156) $ - $ (67,156)


Excess (Deficiency) of Revenues Over

Expenditures

Expenditures

Revenues




STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES

IN FUND BALANCES - GOVERNMENTAL FUNDS


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

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Net Change in Fund Balances - Governmental Funds $ (153,055)

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 ($327,485) in excess

of capital outlay expenditures ($106,570) in the current period. (220,915)

Change in Net Position - Governmental Activities $ (373,970)


REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES


RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF

TO THE STATEMENT OF ACTIVITIES





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PIVOT CHARTER SCHOOL - FORT LAUDERDALE(A CHARTER SCHOOL UNDER PIVOT EDUCATION, INC.)


NOTES TO FINANCIAL STATEMENTSJune 30, 2015

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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reporting Entity

The Pivot Charter School – Fort Lauderdale (“School”), a charter school underPivot Education, Inc., is a component unit of the District School Board ofBroward County, Florida. The School’s charter is held by Pivot Education, Inc., anot-for-profit corporation organized pursuant to Chapter 617, Florida Statutes, theFlorida Not-For-Profit Corporation Act. The governing body of the School is thenot-for-profit corporation Board of Directors, which is comprised of not less thanthree members.

The basic financial statements of the School present only the balances, activityand disclosures related to the School. They do not purport to, and do not, presentfairly the financial position of Pivot Education, Inc. as of June 30, 2015, and itschanges in financial position or budgetary comparisons, where applicable, for theyear then ended in conformity with accounting principles generally accepted inthe United States of America.

The general operating authority of the School is contained in Section 1002.33,Florida Statutes. The School operates under a charter of the sponsoring schooldistrict, the District School Board of Broward County, Florida, (“District”). Thecurrent charter is effective until June 30, 2017 and is subject to annual review andmay be renewed by mutual agreement between the School and the District. At theend of the term of the charter, the District may choose not to renew the charterunder grounds specified in the charter. In this case, the District is required tonotify 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 goodcause is shown. In the event of termination of the charter, the District shallassume operation of the School. The School is considered a component unit ofthe District; therefore, for financial reporting purposes, the School is required tofollow generally accepted accounting principles applicable to state and localgovernmental 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.




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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 specificallyassociated 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.

Capital Projects Fund – to account for all resources for the acquisition ofcapital and related items purchased by the School with capital outlay funds.

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 fiscal




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year 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 primefactor 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.

Deposits and Investments

Cash and cash equivalents are defined as demand deposits, money marketaccounts, and short term investments with original maturities of eight months orless from date of acquisition. The School considers all demand accounts andmoney market funds which are not subjected to withdrawal restrictions to be cashand cash equivalents. The School’s deposits must be placed with banks andsavings and loans which are qualified as public depositories, prior to receipt ofpublic monies, under Chapter 280, Florida statutes and the School’s policy. TheSchool maintains its cash accounts with one qualified public depository.

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 $1,000. 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 yearsLeasehold Improvements 15 years




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Deferred Outflows/Inflows of Resources

In addition to assets, the statement of financial position will sometimes report aseparate section for deferred outflows of resources. This separate financialstatement element, deferred outflows of resources, represents a consumption ofnet position that applies to a future period(s) and so will not be recognized as anoutflow of resources (expense/expenditure) until then. The School does not haveany items that qualify for reporting in this category.

In addition to liabilities, the statement of financial position will sometimes reporta separate section for deferred inflows of resources. This separate financialstatement element, deferred inflows of resources, represents an acquisition of netposition that applies to a future period(s) and so will not be recognized as aninflow of resources (revenue) until then. The School does not have any items thatqualify for reporting in this category.

Net Position and Fund Balance Classification

Government-wide Financial Statements

Net Position are classified and reported in three components:

Net Investment in Capital Assets – consists of capital assets, net ofaccumulated depreciation, and reduced by the outstanding balances of anyborrowings that are attributed to the acquisition or improvement of thoseassets.

Restricted Net Position – consists of net position with constraints placedon their use either by external groups such as creditors, contributors, orlaws or regulations of other governments.

Unrestricted Net Position – all other net position that does not meet thedefinition of “restricted” or “net investment in capital assets.”

Fund Financial Statements

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.




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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.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 students (FTE) 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.




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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, 2015, theSchool reported 190.73 unweighted FTE and 191.47 Weighted FTE.

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). 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 receives state funds through the District under charter school capitaloutlay funding pursuant to Section 1013.62, Florida Statutes. Funds are basedupon a capital outlay plan submitted to the District and are to be used for lease,rent or construction of school facilities. The School also receives funding throughdonations and fundraising efforts, school lunch sales and local property taxcollections.

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.

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. Additionally, no uncertain tax positionshave been made requiring disclosure in the related notes to financial statements.The School’s income tax returns for the past three years are subject toexamination by tax authorities and may change upon examination.




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Use of Estimates

In preparing the financial statements in conformity with generally acceptedaccounting principles in the United States management is required to makeestimates and assumptions that affect the reported amounts of assets and liabilitiesas of the date of the statement of net position and affect revenues andexpenditures for the period presented. Actual results could differ from thoseestimates.

Subsequent Events

Management has evaluated all events subsequent to the balance sheet date andthrough the report date, which is the date these financial statements were availableto be issued. Management determined there are no subsequent events whichrequire disclosure.

2. PRIOR PERIOD ADJUSTMENT

During the current year, it was determined that accumulated depreciation wasunderstated as leasehold improvements were incorrectly being depreciated over 15 yearsinstead of the life of the lease of 5 years. To correct this error, the beginning netposition of $1,213,478, as previously reported, has been decreased by $127,007 to$1,086,471.

3. CASH DEPOSITS

Custodial Credit Risk – Deposits. In the case of deposits, this is the risk that in the eventof a bank failure, the School’s deposits may not be returned to the School. The Schooldoes not have a custodial credit risk policy. All cash deposits are held in banks thatqualify as public depositories under Florida law. All such deposits are insured by federaldepository insurance and/or collateralized with securities held in Florida’s multiplefinancial institution collateral pool as required by Chapter 280, Florida Statutes.




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4. CHANGES IN CAPITAL ASSETS

Changes in capital assets are presented in the table below.Beginning EndingBalance Additions Deletions Balance

Governmental Activities:Furniture, Fixtures and Equipment 601,244$ 6,340$ -$ 607,584$Leasehold Improvements 692,769 100,230 792,999

Total Capital Assets Being Depreciated 1,294,013 106,570 - 1,400,583

Less Accumulated Depreciation for:Furniture, Fixtures and Equipment (120,249) (120,883) (241,132)Leasehold Improvements (173,192) (206,602) (379,794)Total Accumulated Depreciation (293,441) (327,485) - (620,926)

Governmental Activities Capital Assets, net 1,000,572$ (220,915)$ -$ 779,657$

All depreciation expense was shown as unallocated on the Statement of Activities.

5. SCHEDULE OF STATE REVENUE SOURCES

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

Source Amount

Florida Education Finance Program 783,294$

Class Size Reduction 176,531

Discretionary Local Effort 73,716

ESE Guaranteed Allocation 55,355

Supplementary Academic Instruction 33,975

Transportation 22,924

Instructional Materials 14,870

Reading Programs 6,601

Safe Schools 4,410

Digital Classrooms Allocation 1,710

Teachers' Lead 1,702

Discretionary Lottery 654

Total State Revenue 1,175,742$

As provided in the charter school contract, the District has charged the School anadministrative fee totaling $58,702.




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6. INTERFUND TRANSFERS

During the 2015 fiscal year, the General Fund transferred $256,493 to the CapitalProjects Fund to provide financial support for the School’s facility rent payments. Theseamounts of interfund transfers are netted together and not reported in the statement ofactivities.

7. OPERATING LEASE

The School is currently leasing the school facility through June 30, 2017. The leasecontains varying renewal options and requires the school to pay insurance and othercosts. Rental expenditures under this lease for the fiscal year were $256,493.

Future minimum lease payments under the non-cancellable operating lease as of June 30,2015 are as follows:

Fiscal Year

Ending June 30:

Minimum Lease

Payments

2016 196,650$

2017 202,500Total 399,150$

8. CONTRACTUAL AGREEMENTS

Educational Products and Service Agreement & Master Course License Agreement

The School entered into a contract with K12 Florida LLC (K12) on January 6, 2014through June 30, 2015. The School will be provided with a nontransferable license, foraccess to K12 or its affiliate’s online courses, curriculum, learning management systemand applicable instructional tools and online services. The educational products includeAventa licensed online education courseware and materials, the Middlebury InteractiveLanguages learning management system, and the eDynamic licensed electivecourseware. Services include instructional support services, Aventa hosting, andprofessional development. Products and service fees are invoiced on a quarterly basisper user per enrollment course. Expenditures paid to K12 for licenses, products andservices totaled $197,764.

Financial Services Agreement

The School has a contract with Charter School Services Corp, a professional servicescompany, which provides accounting, payroll and financial services to the School at afixed rate of $100 per student. Approximately $19,100 was paid for these professionalservices during the fiscal year. The contract may be cancelled by either party with 30days advance notice.




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9. OPERATING AGREEMENT – RELATED PARTY

The School entered into a contract with Pivot Education, Inc., the School’s charterholder, in July 2014 to provide the School with educational administrative services.Pivot Education, Inc. agrees to provide the following services:

Serve as the liaison between each School and Pivot’s Board of Directors includingproviding financial oversight, budgeting support, communications, administrativeand clerical support;

Provide professional supervision and oversight to the School Principal; Assist each Principal to facilitate the establishment of parent groups in support of

the School’s mission, vision, goals and objectives; The School and Pivot shall be jointly responsible for all public announcement(s)

and releases related to the School; Pivot will work with the School to ensure the technology plan for the School is

consistent with its mission, vision and goals; Pivot will work with the School to oversee School facilities as is reasonably

necessary and required; Pivot will collaborate with the School in developing and implementing a

marketing and student recruitment plan; and,

Pivot will assist the School in ensuring compliance with provisions of theSchool’s contract with its Sponsor.

The total amount incurred during the year ended June 30, 2015, relating to this contractwas $66,000.

10. RELATED PARTY TRANSACTIONS

The School received contributions of $417,960 from Pivot Education, Inc., the School’scharter-holder and a related party through common control of affiliated charter schools,and reported the amount as revenue under Local and Other in the Statement of Activitiesand the Statement of Revenues, Expenditures, and Changes in Fund Balances –Governmental funds. The contributions were given to help partially fund the Schoolwith start-up costs and current operations.

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, 2015, 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.




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12. 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.

13. 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.

14. LEGAL MATTERS

In the normal course of conducting its operations, the School occasionally becomes partyto various legal actions and proceedings. The School has no legal actions or pendingproceedings in progress.

Variance withOriginal Final Final Budget -Budget Budget Actual Positive

(Negative)Revenues:Intergovernmental:

State $ 1,524,056 $ 1,175,742 $ 1,175,742 $ -Local and Other - 421,113 421,113 -

Total Revenues 1,524,056 1,596,855 1,596,855 -

Expenditures:Current - Education:

Instruction 660,553 780,869 780,869 -Board of Education 7,500 7,450 7,450 -School Administration 374,356 244,958 244,958 -Fiscal Services 127,987 143,802 143,802 -Pupil Transportation 108,000 94,422 94,422 -Operation of Plant 77,000 96,276 96,276 -Maintenance of Plant 17,500 19,070 19,070 -Community Services - - -

Fixed Capital Outlay:Other Capital Outlay 106,570 106,570 -

Total Expenditures 1,372,896 1,493,417 1,493,417 -

103,438 103,438 -Other Financing Sources (Uses):

Transfers (Out) (144,500) (256,493) (256,493) -Total Other Financing Sources (Uses) (144,500) (256,493) (256,493) -

Net Change in Fund Balance 6,660 (153,055) (153,055) -Fund Balance, July 1, 2014 85,899 85,899 85,899 -Fund Balance, June 30, 2015 $ 92,559 $ (67,156) $ (67,156) $ -


General Fund

Excess (Deficiency) of Revenues Over

Expenditures




REQUIRED SUPPLEMENTARY INFORMATION

BUDGETARY COMPARISON SCHEDULE - GENERAL FUND - (Unaudited)

See Independent Auditor's Report.

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A Charter School and Component Unit of the District School Board ofBroward County, Florida

NOTE TO REQUIRED SUPPLEMENTARY INFORMATIONJune 30, 2015

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1. BUDGETARY BASIS OF ACCOUNTING

Budgets are presented on the modified accrual basis of accounting. During the fiscalyear, expenditures were controlled at the object level (e.g., salaries and benefits,purchased services, materials and supplies and capital outlay) within each activity (e.g.,instruction, pupil personnel services and school administration). Budgets may beamended by resolution at any Board meeting prior to the date for the annual report.

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Independent Auditor's Report on Internal Control Over Financial Reporting and onCompliance and Other Matters Based on an Audit of Financial Statements Performed

in Accordance with Government Auditing Standards

To the Board of Directors of the Pivot Charter School – Fort Lauderdale(A charter school under Pivot Education, Inc.),


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 Pivot Charter School - Fort Lauderdale (“School”), a charter school under PivotEducation, Inc. and component unit of the District School Board of Broward County, Florida, asof and for the year ended June 30, 2015, and the related notes to the financial statements, whichcollectively comprise the School’s basic financial statements, and have issued our report thereondated September 10, 2015.

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

To the Board of Directors of the Pivot Charter School - Fort Lauderdale(A charter school under Pivot Education, Inc.),


Report on the Financial Statements

We have audited the financial statements of the Pivot Charter School – Fort Lauderdale(“School”), a charter school under Pivot Education, Inc. and component unit of the DistrictSchool Board of Broward County, Florida, as of and for the fiscal year ended June 30, 2015,and have issued our report thereon dated September 10, 2015.

Auditor’s Responsibility

We conducted our audit in accordance with auditing standards generally accepted in the UnitedStates of America; the standards applicable to financial audits contained in Government AuditingStandards, issued by the Comptroller General of the United States and Chapter 10.850, Rules ofthe Auditor General.

Other Reports and Schedules

We have issued our Independent Auditor's Report on Internal Control over Financial Reportingand Compliance and Other Matters Based on an Audit of the Financial Statements Performed inAccordance with Government Auditing Standards. Disclosures in those reports and schedule,which are dated September 10, 2015, should be considered in conjunction with this managementletter.

Prior Audit Findings

Section 10.854(1)(e)1., Rules of the Auditor General, requires that we determine whether or notcorrective actions have been taken to address findings and recommendations made in thepreceding annual financial audit report. There were no prior audit findings or recommendations.

Official Title

Section 10.854(1)(e)5, Rules of the Auditor General, requires the name or official title of theentity. The official title of the entity is Pivot Charter School - Fort Lauderdale.

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Financial Condition

Sections 10.854(1)(e)2., Rules of the Auditor General, requires that we report the results ofour determination as to whether or not the School has met one or more of the conditionsdescribed in Section 218.503(1), Florida Statutes, and identification of the specificcondition(s) met. In connection with our audit, we determined that the School did not meet anyof 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 appliedfinancial condition assessment procedures for the School. It is management’s responsibility tomonitor the School’s financial condition, and our financial condition assessment was based inpart on representations made by management and the review of financial information provided bysame.

Transparency

Sections 10.854(1)(e)7. and 10.855(13), Rules of the Auditor General, require that we report theresults of our determination as to whether the School maintains on its Web site the informationspecified in Section 1002.33(9)(p), Florida Statutes. In connection with our audit, we determinedthat the School maintained on its Web site the 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 themanagement letter any recommendations to improve financial management. In connection withour audit, we did not have any such recommendations.

Section 10.854(1)(e)4., Rules of the Auditor General, requires that we address noncompliancewith provisions of contracts or grant agreements, or abuse, that have occurred, or are likely tohave occurred, that have an effect on the financial statements that is less than material but whichwarrants the attention of those charged with governance. In connection with our audit, we didnot have any such findings.

Purpose of this Letter

Our management letter is intended solely for the information and use of the Legislative AuditingCommittee, members of the Florida Senate and the Florida House of Representatives, theFlorida Auditor General, Federal and other granting agencies, the Board of Directors, applicablemanagement, and the District School Board of Broward County and is not intended to be andshould not be used by anyone other than these specified parties.



Documents

PIVOT CHARTER SCHOOL – FORT LAUDERDALE rpts/2015 pivot charter... · American Institute of CPAs office(813) 892-4274 fax(813) 932-1913 Government Audit Quality Center Independent