Audit 399117

This finding impacts the reporting compliance requirement for the major program, Assistance Listing Numbers 84.282, Charter Schools, funded by the U.S. Department of Education and passed through by RIDE. Criteria: The School is required to recognize certain grants as revenue when services are rendered and the provisions of the grants have been met, in accordance with generally accepted accounting standards and principles (U.S. GAAP). Condition: A reconciliation of costs incurred versus revenue recognized was not being performed on certain grants and the School did not recognize revenue in accordance with U.S. GAAP. Cause: The School had turnover in the Finance department and poorly designed internal control procedures surrounding revenue recognition. Effect: This resulted in an understatement of operating revenues and support by $95,276 during fiscal year 2025. Questioned Costs: There were no questioned costs as a result of the significant deficiency. Was the finding a repeat of a finding in the immediately prior year?: No Recommendation: We recommend the School develop policies and procedures surrounding revenue recognition. These procedures should also include a reconciliation of expenses incurred versus revenue recognized, ensuring revenue is recognized when services are rendered and the provisions of the grants have been met. Management’s Response: Revenue recognition issues that occurred in the fiscal year 2024 audit flowed through to fiscal year 2025 and were not caught in time for the fiscal year 2025 audit. The School continues to adhere to the matching policy.

This finding impacts the reporting compliance requirement for the major program, Assistance Listing Numbers 84.010, Title I Grants to Local Educational Agencies, funded by the U.S. Department of Education and passed through by RIDE. Criteria: Per the Immigration Reform and Control Act of 1986, employers must complete Federal Form I-9 for each individual hired for employment in the United States. The form must be completed within three business days of the employee’s start date and retained in accordance with Federal regulations. Condition: During testing of thirty-five employee files, we identified eight instances where Form I-9s were either missing or not properly completed. Cause: The School does not have adequate internal controls to ensure consistent completion and retention of Form I-9s during the hiring process. Effect: Incomplete or missing employment documentation may result in non-compliance with Federal regulations, potentially subjecting the School to penalties or fines and increasing the risk of tax withholding errors. Questioned Costs: There were no questioned costs as a result of the material weakness. Was the finding a repeat of a finding in the immediately prior year?: Yes Recommendation: AAFCPAs recommends the School implement a standardized checklist and conduct periodic internal reviews of onboarding documentation to ensure all required forms are properly completed and retained in accordance with Federal regulations. Management Response: The School acknowledged the material weaknesses identified in the fiscal year 2024 audit and continues to acknowledge that the issue persisted in the fiscal year 2025 audit, due in part to the late issuance of the prior audit and the resulting inability to fully resolve outstanding matters. The School is actively addressing these deficiencies through the implementation of a standardized onboarding checklist, which was introduced during the latter part of the 2025 school year. This checklist is now used for all personnel files to ensure that all required documentation is completed in full at the time of hire. In addition, the Business Office and Human Resources meet prior to the start of the school year and again during the third quarter to review all personnel files using the standardized checklist to confirm ongoing compliance.