Audit 390880

Statement of Condition/Criteria: Ohio Revised Code Section 3314.024(A) states "A management company that receives more than twenty percent of the annual gross revenues of a community school shall provide a detailed accounting including the nature and costs of goods and services it provides to the community school. This information shall be reported using the categories and designations set forth in divisions (B) and (C) of this section, as applicable." Ohio Revised Code Section 3314.024(C) states "The expenses set forth in division (B) of this section shall be disaggregated according to the following designations, as applicable: 1. Regular instruction; 2. Special instruction; 3. Vocational instruction; 4. Other instruction; 5. Support services; 6. Noninstructional activities." In order to meet these requirements, management companies may elect to have the Auditor of State (or contracting IPA) audit this information at the managemnet company or may provide independently audited financial statements and a statement showing the direct and allocated indirect (e.g., overhead) expenses for each school it manages. The companies should present this statement in a combining or consolidating format (i.e., present a column for each school). If a management company does not have audited financial statements or the audited financial statements do not present combining or consolidating columns for each of its schools, or if the management company's auditor does not provide opinion-level assurance on the combining or consolidating columns presenting each school, the Auditor of State will accept an agreed upon procedures (AUP) report per AICPA Clarified Attestation Staqndardes Section 215. Cause/Effect: New Leaf Organization, Inc., the School's management company, received more than 20 percent of the School's annual gross revenue for fiscal year 2024. Due to deficiencies in the School's internal controls over compliance, the School's management company did not provide audited financial statements, presenting combining or consolidating columns for each of its schools, or an agreed-upon proecedures (AUP) report. Without this information, the School cannot gain the necessary assurances regarding the details of the management company expenses related to monies paid to the management company by the school as reported in the notes to the basic financial statements. Recommendation; We recommend that the School obtain the necessary audit or AUP report.

Statement of Condition/Criteria: 2 CFR 200.512 outlines the reporting requirement for single audits, which states, in part: The audit, the data collection form, and the reporting package must be submitted within 30 calendar days after the auditee receives the auditor's report(S) or nine months after the end of the audit period (whichever is earlier). The audit for the year ended June 30, 2023 did not have the audit, data collection form, and the reporting package filed until after the nine-month deadline. Cause/Effect: Failure to properly file the audit, data collection form, and the reporting package prior to the nine-month deadline may result in a reduction of future funding. Recommendation: We recommend the School establish procedures in order to allow for the timely completion of the audit so that the audit, data collection form, and the reporting package are filed prior to the nine-month deadline.