Audit 351014

Criteria: The Schools implemented an internal control system to reduce the risk of misappropriation of assets and/or invalid payments by establishing a general policy regarding cash disbursements via the use of Building Hope’s third-party accounting services and CharterAce software for approvals. It is important to reconcile database ledgers or supporting schedules to the general ledger to ensure the accuracy of financial information related to shared expenses with other charter schools.Condition: During our audit, we noted various disbursements without supporting invoices and/or lack of appropriate approvals on the supporting CharterAce software. In addition, we identified instances in which invoices relating to goods received or services performed prior to the year-end date were not recorded as payables in the proper period. Cause: During our audit, we noted that the third-party accountant did not have access to certain expense databases for shared expenses with other charter schools under Bold City Education, Inc. maintained by Schools’ management. In addition, schools’ personnel did not consistently adhere to the procedures regarding cash disbursements. Effect: Significant adjustments were required relating to operating expenses and accounts payable, as a result of our audit. Failure to perform procedures mentioned above could result in misstatement of liabilities, misappropriation of assets and/or invalid payments. 36 Recommendation: We recommend that the School adhere to the internal control policies and procedures relating to cash disbursements so that all disbursements are properly approved and have the appropriate source documentation on file. In addition, we recommend that a policy be implemented where all database ledgers and/or supporting schedules are reconciled monthly to the general ledger. Invoices received subsequent to year-end should also be reviewed in order to determine if any unrecorded liabilities exist at year-end, and if necessary, an accrual should be recorded for those items identified as relating to the prior period.

Criteria: The Schools implemented an internal control system to reduce the risk of misappropriation of assets and/or invalid payments by establishing a general policy regarding cash disbursements via the use of Building Hope’s third-party accounting services and CharterAce software for approvals. It is important to reconcile database ledgers or supporting schedules to the general ledger to ensure the accuracy of financial information related to shared expenses with other charter schools.Condition: During our audit, we noted various disbursements without supporting invoices and/or lack of appropriate approvals on the supporting CharterAce software. In addition, we identified instances in which invoices relating to goods received or services performed prior to the year-end date were not recorded as payables in the proper period. Cause: During our audit, we noted that the third-party accountant did not have access to certain expense databases for shared expenses with other charter schools under Bold City Education, Inc. maintained by Schools’ management. In addition, schools’ personnel did not consistently adhere to the procedures regarding cash disbursements. Effect: Significant adjustments were required relating to operating expenses and accounts payable, as a result of our audit. Failure to perform procedures mentioned above could result in misstatement of liabilities, misappropriation of assets and/or invalid payments. 36 Recommendation: We recommend that the School adhere to the internal control policies and procedures relating to cash disbursements so that all disbursements are properly approved and have the appropriate source documentation on file. In addition, we recommend that a policy be implemented where all database ledgers and/or supporting schedules are reconciled monthly to the general ledger. Invoices received subsequent to year-end should also be reviewed in order to determine if any unrecorded liabilities exist at year-end, and if necessary, an accrual should be recorded for those items identified as relating to the prior period.

Criteria: The Schools implemented an internal control system to reduce the risk of misappropriation of assets and/or invalid payments by establishing a general policy regarding cash disbursements via the use of Building Hope’s third-party accounting services and CharterAce software for approvals. It is important to reconcile database ledgers or supporting schedules to the general ledger to ensure the accuracy of financial information related to shared expenses with other charter schools.Condition: During our audit, we noted various disbursements without supporting invoices and/or lack of appropriate approvals on the supporting CharterAce software. In addition, we identified instances in which invoices relating to goods received or services performed prior to the year-end date were not recorded as payables in the proper period. Cause: During our audit, we noted that the third-party accountant did not have access to certain expense databases for shared expenses with other charter schools under Bold City Education, Inc. maintained by Schools’ management. In addition, schools’ personnel did not consistently adhere to the procedures regarding cash disbursements. Effect: Significant adjustments were required relating to operating expenses and accounts payable, as a result of our audit. Failure to perform procedures mentioned above could result in misstatement of liabilities, misappropriation of assets and/or invalid payments. 36 Recommendation: We recommend that the School adhere to the internal control policies and procedures relating to cash disbursements so that all disbursements are properly approved and have the appropriate source documentation on file. In addition, we recommend that a policy be implemented where all database ledgers and/or supporting schedules are reconciled monthly to the general ledger. Invoices received subsequent to year-end should also be reviewed in order to determine if any unrecorded liabilities exist at year-end, and if necessary, an accrual should be recorded for those items identified as relating to the prior period.

Criteria: The Schools implemented an internal control system to reduce the risk of misappropriation of assets and/or invalid payments by establishing a general policy regarding cash disbursements via the use of Building Hope’s third-party accounting services and CharterAce software for approvals. It is important to reconcile database ledgers or supporting schedules to the general ledger to ensure the accuracy of financial information related to shared expenses with other charter schools.Condition: During our audit, we noted various disbursements without supporting invoices and/or lack of appropriate approvals on the supporting CharterAce software. In addition, we identified instances in which invoices relating to goods received or services performed prior to the year-end date were not recorded as payables in the proper period. Cause: During our audit, we noted that the third-party accountant did not have access to certain expense databases for shared expenses with other charter schools under Bold City Education, Inc. maintained by Schools’ management. In addition, schools’ personnel did not consistently adhere to the procedures regarding cash disbursements. Effect: Significant adjustments were required relating to operating expenses and accounts payable, as a result of our audit. Failure to perform procedures mentioned above could result in misstatement of liabilities, misappropriation of assets and/or invalid payments. 36 Recommendation: We recommend that the School adhere to the internal control policies and procedures relating to cash disbursements so that all disbursements are properly approved and have the appropriate source documentation on file. In addition, we recommend that a policy be implemented where all database ledgers and/or supporting schedules are reconciled monthly to the general ledger. Invoices received subsequent to year-end should also be reviewed in order to determine if any unrecorded liabilities exist at year-end, and if necessary, an accrual should be recorded for those items identified as relating to the prior period.