Finding 1208208 (2025-002)

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.