EL CAMINO REAL ALLIANCE INDEPENDENT REPORT FOR THE YEAR ENDED JUNE 30, 2015 Operating: EL CAMINO REAL CHARTER HIGH SCHOOL EL CAMINO REAL ALLIANCE TABLE OF CONTENTS JUNE 30, 2015 PAGE INTRODUCTORY SECTION Table of Contents i ii FINANCIAL SECTION Independent Auditor?s Report 1 2 Management?s Discussion and Analysis 3 7 Statement of Financial Position 8 Statement of Activities 9 Statement of Cash Flows 10 Notes to the Financial Statements 19 SUPPLEMENTARY INFORMATION SECTION Local Education Agency Organization Structure 21 Schedule of Average Daily Attendance 22 Schedule of Instructional Time 23 Schedule of Functional Expenses 24 Schedule of Expenditures of Federal Awards 25 Notes to Schedule of Expenditures of Federal Awards 26 Reconciliation of Annual Financial and Budget Report With Audited Financial Statements 27 Notes to Supplementary Information 28 OTHER INDEPENDENT REPORTS Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards _30 31 Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by OMB Circular A-l33 __32 33 Report on State Compliance __34 36 EL CAMINO REAL ALLIANCE TABLE OF CONTENTS JUNE 30, 2015 PAGE FINDINGS AND RECOMMENDATIONS SECTION Schedule of Findings and Questioned Costs __38 40 Schedule of Prior Audit Findings 41 Feddersen Company, LLP Certi?ed Public Accountants INDEPENDENT REPORT Members ofthe Governing Board El Camino Real Alliance Woodland Hills, California Report on the Financial Statements We have audited the accompanying ?nancial statements of El Camino Real Alliance (a nonpro?t organization), which comprise the statement of ?nancial position as of June 30, 2015, and the related statements of activities and cash flows for the year then ended, and the related notes to the ?nancial statements. Management?s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these ?nancial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of ?nancial statements that are free from material misstatement, whether due to fraud or error. Auditor?s Our responsibility is to express an opinion on these ?nancial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to ?nancial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the ?nancial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the ?nancial statements. The procedures selected depend on the auditor?s judgment, including the assessment of the risks of material misstatement of the ?nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity?s preparation and fair presentation of the ?nancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity?s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of signi?cant accounting estimates made by management, as well as evaluating the overall presentation of the ?nancial statements. We believe that the audit evidence we have obtained is suf?cient and appropriate to provide a basis for our audit opinion. 28632 Roadside Drive 0 Suite 265 Agoura Hills, California 91301 Telephone (818) 707-4] 1 I 0 Fax (818) 707-4110 Independent Auditor?s Report Members of the Governing Board El Camino Real Alliance Woodland Hills, California Page 2 Opinion In our opinion, the ?nancial statements referred to above present fairly, in all material respects, the ?nancial position of El Camino Real Alliance as ofJune 30, 2015, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Supplementary and Other Information Our audit was conducted for the purpose of forming an opinion on the ?nancial statements as a whole. The accompanying schedule of expenditures of federal awards, as required by Of?ce of Management and Budget Circular A-l33, Audits of States, Local Governments, and Non-Pro?t Organizations, is presented for purposes of additional analysis and is not a required part of the ?nancial statements. The Management?s Discussion and Analysis on pages 3 7 and the accompanying supplementary information on pages 2] 28, are presented for purposes of additional analysis and are also not a required part of the ?nancial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the ?nancial statements. The information has been subjected to the auditing procedures applied in the audit of the ?nancial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the ?nancial statements or to the ?nancial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the ?nancial statements taken as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 13, 2015 on our consideration of El Camino Real Alliance?s internal control over ?nancial 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 scope of our testing of internal control over ?nancial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over ?nancial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering El Camino Real Alliance?s internal control over ?nancial reporting and compliance. WM WW, Agoura Hills, California November 13, 2015 EL CAMINO REAL ALLIANCE DISCUSSION AND ANALYSIS For the Year Ended June 30, 2015 The Management Discussion and Analysis section of El Camino Real Alliance?s (the Organization) ?nancial report presents an overall review of the Organization?s ?nancial performance during the ?scal year that ended on June 30, 2015. Readers should also review the notes to the ?nancial statements to enhance their understanding ofthe Organization?s ?nancial performance. FINANCIAL HIGHLIGHTS 0 Net assets increased $4,352,683 or 43.5 percent over the course of the year. 0 Total revenues received were $34,152,922 for the ?scal year ended June 30, 2015. The Organization incurred $29,800,239 in expenses for the ?scal year ended June 30, 2015. OVERVIEW OF THE FINANCIAL STATEMENTS This annual report consists of three parts Management?s Discussion and Analysis (this section), the basic ?nancial statements, and supplementary information. The ?nancial statements also include notes that explain some of the statements and provide more detailed data. The statements are followed by a section of supplementary infm?mation that further explains and supports the ?nancial statements. FINANCIAL ANALYSIS OF THE SCHOOL Net assets. The Organization?s net assets of $14,357,676 were greater on June 30, 2015 than they were the prior year, increasing by $4,352,683 or 43.5 percent (See Table 1.) Table 1 provides a summary ofthe Organization?s net assets for the ?scal years ended 2015 and 2014. Table 1 El Camino Real Alliance?s Net Assets Governmental Total Total 0/0 Activities Change Change Summary of Statement of Net Assets 2014 2015 Cash and cash equivalents 5,434,638 7,499,034 2,064,396 38.0 Cash held in trust 113,347 - (113,347) (100.0 Certi?cates of deposit 1,989,329 5,243,447 3,254,] 18 163.6 Accounts receivable 4,208,221 3,152,569 (1,055,652) (25.1 0/o) Prepaid expenditures and deposits 396,243 674,769 278,526 70.3 Property and equipment, net 618,1 17 999,942 381,825 61.8 Total Assets 12,759,895 17,569,761 4,809,866 37.7 Current liabilities 2,754,902 3,212,085 457,183 16.6 Total Liabilities 2,754,902 3,212,085 457,183 16.6 Net assets unrestricted operational 5,004,993 9,357,676 4,352,683 87.0 Net assets unrestricted facilities 5,000,000 5,000,000 - - Total Net Assets $10,004,993 $14,357,676 4,352,683 43.5 0/0 EL CAMINO REAL ALLIANCE DISCUSSION AND ANALYSIS For the Year Ended June 30, 2015 Net assets continued. Total assets were $17,569,761, 42.7 percent in cash in banks, 29.8 percent in certi?cates of deposit, 17.9 percent in accounts receivable, 5.8 percent in property and equipment, and 3.8 percent in prepaid expenses and deposits. Total liabilities were $3,212,085. Current liabilities account for 100.0 percent of the total liabilities and consist of 43.2 percent in accounts payable, 3.3 percent in accrued payroll and payroll liabilities, 22.9 percent in due to grantor, and 30.6 percent in unearned revenue. Of the Organization?s $14,357,676 net assets, 100.0 percent were unrestricted. The board of directors has designated an unrestricted amount of $5,000,000 for facilities. Table 2 Analysis of El Camino Real Alliance?s Net Assets Summary of Statement of Activities 2014 2015 Program revenues 29,572,955 34,1 15,143 General revenues 5,746 37,779 Total Revenues 29,578,701 34,152,922 Program expenses 21,254,218 24,002,621 Management and general expenses 5,024,319 5,797,618 Total Expenses 26,278,537 29,800,239 Change in Net Assets 3,3 00,164 4,352,683 Net Assets, Beginning 6,704,829 10,004,993 Net Assets, Ending 10.004.993 14.357.676 Statement of Revenues, Expenses and Changes in Net Assets. Changes in total net assets, as presented on the Statement of Net Assets, are based on the activity presented in the Statement of Activities. The purpose of this statement is to present the revenues earned, whether received or not, by the Organization, and the expenses incurred, whether paid or not, by the Organization. Thus, this statement presents the Organization?s results of operations. EL CAMINO REAL ALLIANCE DISCUSSION AND ANALYSIS For the Year Ended June 30, 2015 Governmental Activities By the end of the ?scal year, the revenues for the Organization?s activities totaled $34,152,922. LCFF principal apportionment was 45.0 percent of total funding, 17.3 percent from education protection account and 17.2 percent from in?lieu of property taxes. State lottery funds comprised 1.7 percent and all other state funding was 9.1 percent of total funding. Federal funding was 3.5 percent and the remaining 6.2 percent was from all other local revenue sources. Figure 1 El Camino Real Alliance?s Revenues for Fiscal Year 2015 Analysis of Revenue Sources Lottery 1 All Other State 9. 1% In-Lieu of Property Tax 17.twat? Apportionment All OtherLocal 45.0% Revenues 6.2% Federal Revenues 3:152:52}- 3.5% .. Education 3 Protection Account 17.3% EL CAMINO REAL ALLIANCE DISCUSSION AND ANALYSIS For the Year Ended June 30, 2015 The cost of all the Organization?s major activities: instruction, guidance, counseling, evaluation, school leadership, administration, maintenance and operations was $29,800,239. Program service expenses accounted for $24,002,621 or 80.5 percent of total expenses, while $5,797,618 or 19.5 percent were management and general support expenses. Figure 2 El Camino Real Alliance?s Expenses for Fiscal Year 2015 Services Other District Oversight Operating 0.9% 14.0% rt i 0 ate (1 Salaries -. Employee Bene?ts 20.Depreciation 0.8% - Books Supplies 95% Classi?ed Salaries 9.9% General Budgetary Highlights Per the charter for El Camino Real Charter High School, the Los Angeles Uni?ed School District requires that the school shall prepare and submit to the District a provisional budget, interim biannual ?nancial projections, and ?nal budgets that certify the school is able to meet its ?nancial obligations for the remainder of the ?scal year. EL CAMINO REAL ALLIANCE DISCUSSION AND ANALYSIS For the Year Ended June 30, 2015 Average Daily Attendance Average Daily Attendance at the second period report for El Camino Real Charter High School increased by 61.12 to 3,576.22 for the ?scal year ended June 30, 2015. El Camino Real Charter High School continues to focus on attendance in the 2015-16 school year. Second Period Report Average Daily Attendance 3,260.46 3,497.66 3,515.10 3,576.22 4,000.00 - 3,500.00 3,000.00 2,500.00 2.000.00 2011-12 2012-13 2013?14 2014-15 Factors Bearing on the School?s Future 0 Although the Organization is ?nancially stable, its ?nancial condition is highly dependent upon the economic condition of the State of California. CONTACTING THE FINANCIAL MANAGEMENT This ?nancial report is designed to provide our citizens, taxpayers, parents, and creditors with a general overview of the School?s ?nances and to demonstrate the School?s accountability for the money it receives. If you have questions about this report or need additional information, contact Mr. David Fehte, Principal at (818) 595-7500. EL CAMINO REAL ALLIANCE STATEMENT OF FINANCIAL POSITION JUNE 30, 2015 ASSETS El Camino Real Charter High School CURRENT ASSETS Cash and Cash Equivalents 7,499,034 Certi?cates of Deposit 5,243,447 Accounts Receivable 3,152,569 Prepaid Expenditures 674,769 Total Current Assets 16,569,819 PROPERTY AND EQUIPMENT, NET 999,942 Total Assets 17,569,761 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts Payable 1,390,302 Accrued Payroll and Payroll Liabilities 105,023 Due to Grantor 734,455 Uneamed Revenue 982,305 Total Current Liabilities 3,212,085 Total Liabilities 3,212,085 NET ASSETS Unrestricted Available for Operations 9,357,676 Board Designated - Facilities 5,000,000 Total Net Assets 14,357,676 Total Liabilities and Net Assets 17,569,761 The accompanying notes are an integral part of these ?nancial statements 8 EL CAMINO REAL ALLIANCE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2015 UNRESTRICTED NET ASSETS SUPPORT AND REVENUES LCFF Sources: Principal Apportionment State Aid Education Protection Account In-Lieu of Property Taxes Federal Revenue Other State Revenue: Special Education Lottery Revenue All Other Local Revenue: Food Service Sales All Other Other Revenue: Interest Income Unrealized Gain on Investments Total Unrestricted Revenue EXPENSES PROGRAM EXPENSES Educational SUPPORT SERVICES Management and General Total Unrestricted Expenses Increase in Unrestricted Net Assets UNRESTRICTED NET ASSETS Beginning of Year End of Year El Camino Real Charter High School 15,382,100 5,897,720 5,882,059 1,190,975 1,994,959 574,029 1,1 13,569 69,115 2,010,617 32,325 5,454 34,152,922 24,002,621 5,797,618 29,800,239 4,352,683 10,004,993 14,357,676 The accompanying notes are an integral part ofthese ?nancial statements 9 EL CAMINO REAL ALLIANCE STATEMENT OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2015 CASH FLOWS FROM OPERATING ACTIVITIES: Increase in Net Assets Adjustments to Reconcile Changes in Nest Assets to Net Cash Provided by Operating Activities: Depreciation Unrealized Gain on Investments (Increase) Decrease in Assets: Cash Held in Trust Accounts Receivable Prepaid Expenditures Increase (Decrease) in Liabilities: Accounts Payable Accrued Payroll and Payroll Liabilities Amount Held for Others Due to Grantor Unearned Revenue Net Cash Provided by Operating Activities CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of Property and Equipment Construction in Progress Investments in Certi?cates of Deposit Net Cash Used for Investing Activities CASH FLOWS FROM FINANCING ACTIVITIES: Net Cash Used for Financing Activities Net Increase in Cash and Cash Equivalents Cash, Beginning of Year Cash, End of Year El Camino Real Charter High School 4,352,683 252,573 (5,454) 113,347 1,055,652 (278,526) 1,193,076 (48,962) (450,071) (26,536) (210,324) 5,947,458 (432,584) (201,814) (3,248,664) (3,883,062) 2,064,396 5,434,638 7,499,034 The accompanying notes are an integral part of these financial statements 10 EL CAMINO REAL ALLIANCE NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 1 NATURE OF THE ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Nature of Activities El Camino Real Alliance (the Organization) is a California non-pro?t public bene?t corporation and is organized to manage and operate public charter schools. For the year ended June 30, 20l5, the Organization operated one public charter school: El Camino Real Charter High School (the School). The School serves students in grades nine through twelve and is funded principally through State of California public education monies received through the California Department of Education and the Los Angeles Uni?ed School District. The Los Angeles Uni?ed School District (the District) is the chartering authority for the School. California Education Code section 47604(c) states that the District shall not be liable for the debts or obligations Of the charter school. The District granted the School its ?rst charter in May 201 l. The current charter granted is for the period from August 15, 201 to June 30, 2016. Charters may be revoked by the District for material violations of the charter, failure to meet pupil outcomes identi?ed in the charter, failure to meet generally accepted standards of ?scal management. or violation of any provision Ofthe law. Basis of Accounting The ?nancial statements were prepared in accordance with accounting principles generally accepted in the United States Of America as applicable to not-for?pro?t organizations. Basis of accounting refers to when revenues and expenses are recognized in the accounts and reported on the ?nancial statements. The School uses the accrual basis of accounting. Revenues are recognized when they are earned and expenditures are recognized in the accounting period in which the liability is incurred. Basis of Presentation The accompanying ?nancial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. Net assets of the School and changes therein are classi?ed and reported as follows: - Unrestricted All resources over which the governing board has discretionary control to use in carrying on the general operations of the School. a emporarily Restricted These net assets are restricted by donors to be used for speci?c purposes. The School does not currently have any temporarily restricted net assets. 0 Permanently Restricted These net assets are permanently restricted by donors and cannot be used by the School. The School does not currently have any permanently restricted net assets. Contributions All contributions are considered to be available for unrestricted use unless speci?cally restricted by the donor. Amounts received that are restricted to speci?c use or future periods are reported as temporarily restricted. Restricted contributions that are received and released in the same period are reported as unrestricted revenue. All other restricted revenues are reported as increases in temporarily restricted net assets. EL CAMINO REAL ALLIANCE NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 1 NATURE OF THE ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Revenue Recognition The School receives Federal, State and local revenues for their various educational programs. This assistance is generally received based on applications submitted to and approved by various granting agencies. Amounts received from the California Department of Education are recognized as revenue by the School based on the average daily attendance of students. Unearned revenue is recorded to the extent cash received on grants exceeds quali?ed expenses. Some government grants are based on reimbursable costs as de?ned by the grants. Reimbursements recorded under these grants are subject to audit by the granting agency. Management believes that no material adjustments will result from subsequent audits of costs reflected in the accompanying ?nancial statements. Cash and Cash Equivalents For purposes of reporting cash flows, cash is de?ned as cash on hand, amounts held at ?nancial institutions, and short-term highly liquid investments that are readily convertible to known amounts of cash. Investments with an original maturity of three months or less are considered short-term for these purposes. Unearned Revenue Unearned revenue results from the School?s foreign exchange student program recognizing the revenue in the period in which the related educational instruction is performed. Accordingly, foreign exchange student program revenues received for the next school year are deferred until the instruction commences and the common core implementation funds expenditures are recorded. Accounts Receivable Accounts receivable primarily represent amounts due from federal, state and local governments as of June 30, 2015. Management believes that all receivables are fully collectible, therefore no provisions for uncollectible accounts were recorded. Fixed Assets Property and equipment are recorded at cost when purchased. Donated ?xed assets are recorded at fair value on the date of donation. Purchases and donations greater than $1,000 are capitalized. Contributions of donated ?xed assets are reported as increases to unrestricted net assets unless the donor has stipulated that the donation has a specific purpose. Expenditures for repairs and maintenance are charged to expense as incurred, whereas renewals and betterments that extend the lives of property are capitalized. Depreciation is computed on the straight?line method over the estimated useful lives of the assets. For additional information, see Note 5. Use of Estimates The preparation of ?nancial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the ?nancial statements and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates. Signi?cant management estimates included in the ?nancial statements are the collectability of the receivables, the estimated useful lives of ?xed assets, and the functional allocation of expenses. 12 EL CAMINO REAL ALLIANCE NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 1 NATURE OF THE ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Functional Allocation of Expenses The costs of providing various programs and other activities have been summarized on a functional basis in the Statement of Activities. Expenses are charged to each program based on direct expenses incurred. Any program expenses not directly chargeable to a program are allocated among program and support services by a method that best measures the relative degree of bene?t. Income Taxes The Organization is exempt from federal and state income tax under 501(c)(3) of the Internal Revenue Code and Section 23701(d) of the California Revenue and Taxation Code. However, income from certain activities not directly related to the Organization?s tax?exempt purpose is subject to taxation as unrelated business income. In addition, the Organization quali?es for the charitable contribution deduction under Section l70(b)(l)(A) and has been classi?ed as an organization other than a private foundation under Section 509(a)(2). Accordingly, no provision for income taxes has been reflected in these ?nancial statements. The Organization has considered its tax positions and believes that all of the positions taken in its federal and state exempt organization tax returns are more likely than not to be sustained upon examination; therefore, no accounting adjustment has been made to the ?nancial statements and no disclosures of uncertain income tax positions are required. The Organization?s returns are subject to examination by federal and state taxing authorities, generally for three years and four years, respectively, after they are ?led. NOTE 2 CONCENTRATION OF CREDIT RISK Cash balances held in banks are insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC). The School maintains its cash in bank deposit accounts that at times may exceed federally insured limits. The School has not experienced any losses in such accounts. At June 30, 2015, deposits in excess of the FDIC limit amount to approximately $7,250,000. Management believes the School is not exposed to any signi?cant credit risk related to cash. NOTE 3 - CERTIFICATES OF DEPOSIT The certi?cates bear interest ranging from 0.2 percent to 3.3 percent and have maturities ranging from 14 months to 60 months. Any penalties for early withdrawal would not have a material effect on the ?nancial statements. NOTE 4 EMPLOYEE BENEFIT PLANS Quali?ed employees of the School are covered under multiple?employer de?ned bene?t pension plans maintained by agencies of the State of California. Certi?cated employees are members of the California State Teachers? Retirement System and classi?ed employees are members of the California Public Employees? Retirement System All employees who are not members of or must contribute to the federal Social Security system. 13 EL CAMINO REAL ALLIANCE NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 4 EMPLOYEE BENEFIT PLANS (CONTINUED) California State Teachers? Retirement System Plan 94-62916]? Actuarial value of assets: $158,495 Actuarial accrued liability: $231,213 Funded status: 68.5 percent The actuarial value of assets and accrued liability are expressed in millions and are valued as of June 30, 2014, the most recent actuarial valuation date. Plan Description The School contributes to a cost-sharing multiple-employer public employee retirement system de?ned bene?t pension plan administered by The plan provides retirement and disability bene?ts, annual cost-of-living adjustments, and survivor bene?ts to bene?ciaries. Bene?t provisions are established by state statutes, as legislatively amended, within the State Teachers? Retirement Law. issues a separate comprehensive annual ?nancial report that includes ?nancial statements and required supplementary information. Copies of the annual ?nancial report may be obtained from 100 Waterfront Place, West Sacramento, California 95605. Funding Policy Increases in pension contributions for all parties took effect July l, 2014, and will be phased in over the next several ?scal years. ?Classic? active plan members, not subject to provisions of the Public Employees? Pension Reform Act of 201 3 (PERPA), are required to contribute 8.15 percent of their salary, and will see their contributions increase by a total of 2.25 percent of payroll phased in over the next three ?scal years, capped at 10.25 percent. Active new members subject to PERPA, are required to contribute 8.15 percent of their salary, and will see their contributions increase by a total of 1.205 percent, capped at 9.205 percent. The School is required to contribute an actuarially determined rate. The actuarial methods and assumptions used for determining the rate are those adopted by the Teachers? Retirement Board. The required employer contribution rate for the ?scal year 2014-2015 was 8.88 percent of annual payroll. The contribution requirements of the plan members are established and may be amended by state statute. The School?s required contributions to for the ?scal years ending June 30, 2015, 2014 and 2013 was $1,145,994, $1,028,236, and $986,764 respectively, and equals 100.0 percent of the required contributions for each year. For the ?scal year 2016, the School is required to contribute 10.73 percent of annual payroll. California Public Employees? Retirement Svstem Plan EIN: 94?6207465 Market value of assets: $56,838 Actuarial accrued liability: $65,599 Funded status: 86.6 percent 14 EL CAMINO REAL ALLIANCE NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 4 EMPLOYEE BENEFIT PLANS (CONTINUED) California Public Employees? Retirement System (Continued) The market value of assets and the actuarial accrued liability are expressed in millions and are valued as ofJune 30, 2014, the most recent actuarial valuation date. Plan Description The School contributes to the School Employer Pool under the a cost?sharing multiple- employee retirement system de?ned bene?t pension plan administered by The plan provides retirement and disability bene?ts, annual cost-of-living adjustments, and death bene?ts to plan members and bene?ciaries. Bene?t provisions are established by State statutes, as legislatively amended, within the Public Employees? Retirement Law. issues a separate comprehensive annual ?nancial report that includes ?nancial statements and required supplementary information. Copies of the annual ?nancial report may be obtained from the Executive Of?ce, 400 Street, Sacramento, CA 9581 1. Funding Policy Classic active plan members are required to contribute 7.0 percent of their salary. Active new members subject to PERPA are required to contribute 6.0 percent of their salary. The School is required to contribute an actuarially determined rate. The actuarial methods and assumptions used for determining the rate are those adopted by the Board of Administration. The required employer contribution rate for the ?scal year 2014-2015 was 11.77] percent of annual payroll. The contribution requirements of the plan members are established and may be amended by state statute. The School?s required contributions to for the ?scal years ending June 30, 2015, 2014 and 2013 were $323,686, $317,803, and $284,871 respectively, and equals 100.0 percent of the required contributions for the year. For the ?scal year 2016, the School is required to contribute 1 1.847 percent of annual payroll. NOTE 5 FIXED ASSETS A schedule of changes in property and equipment and accumulated depreciation for the year ended June 30, 2015, is as follows: SUMMARY OF CHANGES IN PROPERTY AND EQUIPMENT Beginning Ending Balance Additions Subtractions Balance Computer and Equipment 55 486,798 181,305 - 668,103 Buildings 141,467 - - 141,467 Furniture 80,963 186,069 267,032 Leasehold Improvements 91,025 65,210 156,235 Construction in Progress - 201,814 - 201,814 Totals 8&25; 15 EL CAMINO REAL ALLIANCE NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 5 FIXED ASSETS (CONTINUED) SUMMARY OF CHANGES IN ACCUMULATED DEPRECIATION Beginning Ending Balance Additions Subtractions Balance Computer and Equipment 98,499 126,254 - 224,753 Buildings 47,399 47,034 - 94,433 Furniture 18,043 23,008 - 41,051 Leasehold Improvements 18,195 56,277 - 74 472 Totals 3 L334j? During the ?scal year ended June 30, 2015, $252,573 was charged to depreciation expense. NOTE 6 OPERATING LEASE The School is a party to one operating lease for operational facilities to provide a ?continuation education program? for 125 to 200 students in grades nine through twelve who are at risk of not completing their education. Los Angeles Uni?ed School District The lease is co?terminus with the School?s charter petition, commencing August 15, 2012 with the term ending June 30, 2016. There is a first option period to extend the term of this lease for a period not to exceed June 30, 2021. The lease is payable annually in the amount of 10.0 percent of Average Daily Attendance at the site or $72,000, whichever is greater. Rent expense for the year ended June 30, 2015 was $72,000. Future minimum lease payments under the lease agreement are as follow as ofJune 30, 2015: Year Ending Minimum June 30 Lease Payments 2016 72,000 ?2,000. NOTE 7 COMMITMENTS In October 2012, the School signed a sole occupant agreement with the Los Angeles Uni?ed School District (the District) for use of property located at 5440 Valley Circle Blvd., Woodland Hills, California. The agreement carries a term that coincides with the School?s charter. The agreement does not require the School to pay a lease amount for the use of the property, but instead, the Schools pays a Pro Rata Share Charge based on the square feet used. This Pro Rata Share Charge paid to the District for the School for the year ended June 30, 2015 was $217,036. EL CAMINO REAL ALLIANCE NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 8 LINE OF CREDIT The School has a line of credit with Paci?c Western Bank, allowing for borrowings up to $4,500,000 with a maturity date of October 15, 2015. lnterest accrues at a variable rate based on the bank?s base rate plus 1.5 percent, with a floor of 5.5 percent. The rate at June 30, 2015 was 5.5 percent. There was no outstanding balance on the line of credit at June 30, 2015 and 2014. NOTE 9 BENEFITS On .lune 1. 2015, the El Camino Real Alliance Public School Employee Retirement Healthcare Bene?ts Trust (the Trust) was established. The trust was established to hold assets solely for the bene?t of one or more speci?ed retirement healthcare bene?t plans (the Plans) sponsored and pr0vided to quali?ed public school employees and bene?ciaries of the Organization. The trust is not established for retirement benefits other than public school employee retirement bene?ts under the Plans or for retirement bene?ts with respect to any employee of any employer other than the School. The Plan is a single employer plan and provides medical, dental and vision bene?ts to quali?ed employees who retire from the School. The Plan provides for a bene?t determined by a formula based on the employees? years of service and age at retirement. An actuarial calculation of the estimated present value of medical, dental and vision bene?ts to the participants of El Camino Real High School Post-Retirement Medical Plan was performed for the year ended June 30, 2015 that amount is approximately 47,100,000. The 47,100,000 represents the present value of all bene?ts expected to be paid in the future, which includes bene?ts attributable to both past and future services. The calculation did not reflect the potential impact of the Medicare Part bene?ts. Information relating to the School?s Post-Retirement Medical Plan is shown in the following table: Discount rate to compute the" present 5.00 percent compounded annually value ofthe estimated bene?ts Health Care Cost Trend Factors 7 Medical premiums will increase by: 5.30 percent in the Pre?Retirement Trend Rate ?rst year, 5.20 percent for the through year, 5.10 percent for the through 10?? year, 5.20 percent for the through 13?? year, 5.30 percent for the 14?? year. 5.40 percent for the 15?? year, 5.80 percent for the 16?? year, 6.20 percent for the 17?? through 20?? year, and slowly trends down to 4.40 percent in year 2084. Dental and vision premiums will increase by 5.00 percent from year 2015 through year 2064. and slowly trends down to 4.40 percent in year 2084. Health Care Cost Trend Factors Medical premiums will increase by: 5.60 percent in the Post-Retirement Trend Rate ?rst year. 5.40 percent in the second year, 5.20 percent in the through year, 5.10 percent in the and 10?? year, 5.20 percent in the ll?l through 18?? year, 5.30 percent in the 19?? and 20?? year, and eventually trends to 4.50 percent in year 2088. Dental premiums will increase by 5.0 percent from years 2015 to 2057, and eventually stays level at 4.50 percent in year 2088. l7 EL CAMINO REAL ALLIANCE NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 9 POST-RETIREMENT BENEFITS (CONTINUED) Effect of a one?percentage-point increase in trend rates APBO (Accumulated Post Retirement Bene?t) Trend $20.9 million. APBO trend +1 is $25.7 million an? APBO trend ?1 is $17.2 million. Trend in compensation costs Not applicable Discount rate used to compute the accumulated post-retirement bene?t obligation 5.00 percent compounded annually. Funding policy and status The School will fund the plan for the ?scal year ended June 30, 2015 by $l,000,000 and by at least $1,200,000 for each ?scal year thereafter. Cost of providing termination benefits recognized during the period The cost of providing bene?ts for the ?scal year ended .lune 30. 2015 Not calculated. Components of expense post-reti rem ent Service cost is $1.8 million, interest cost is $1.04 million. Accumulated post?retirement bene?t obligation showing separately the amount applicable to retirees, other eligible participants. and other active participants Retirees Eligible 7$2.1 million, and ineligible - $18.8 million. Fair market value of plan assets None at the time of calculated liabilities. June 30. 2015. $1.000,000 at Return on plan assets on an after-tax basis It is estimated that the future return on plan assets will be 4.00 6.00 percent per annum. Amount by which APBO is reduced for the subsidy The APBO is reduced by 240.000 if excise tax is excluded. Effect of subsidy in the measurement of net periodic post-retirement bene?t cost Service cost remains at 1.8 million and interest cost is reduced to 1 million ifexcise tax is excluded. The post-retirement plan exposes the School to actuarial risks. such as longevity risk; market risk; interest rate risk and liquidity risk. EL CAMINO REAL ALLIANCE NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 10 PARTICIPATION IN JOINT POWERS AUTHORITY The Organization is a participant in the California Charter Schools Joint Powers Authority (CCS- JPA) dba CharterSAFE for risk management services for workers? compensation insurance and charter school liability insurance. The relationship between the Organization and CharterSAFE is such that CharterSAFE is not considered a component unit of the Organization for financial reporting purposes. CharterSAFE has budgeting and ?nancial reporting requirements independent of member units and CharterSAFE?s financial statements are not presented in these financial statements; however. transactions between CharterSAF and the Organization are included in these statements. Audited financial statements for CharterSAFE are available from the respective agency. NOTE 11 CONTINGENCIES The School has received federal, state and local funds for speci?c purposes subject to review and audit by the grantor agencies. Although such audits could generate disallowances under terms of the grants. management believes that any required reimbursement, would not be material. NOTE 12 SUBSEQUENT EVENTS The School?s management has evaluated events or transactions that may occur for potential recognition or disclosure in the ?nancial statements from the balance sheet date through November 13, 2015, the date the ?nancial statements were available to be issued. Management has determined that there were no subsequent events or transactions that would have a material impact on the current year financial statements. 19 EL CAMINO REAL ALLIANCE SUPPLEMENTARY INFORMATION SECTION FOR THE YEAR ENDED JUNE 30, 2015 Operating: EL CAMINO REAL CHARTER HIGH SCHOOL EL CAMINO REAL ALLIANCE LOCAL EDUCATION AGENCY ORGANIZATION STRUCTURE JUNE 30, 2015 ORGANIZATION El Camino Real Alliance (the Organization) was established in 2011 and is a non-profit public bene?t corporation organized to manage and operate public charter schools. For the year ended June 30, 2015, the Organization operated one public charter school: El Camino Real Charter High School (the School). The School began serving students in August 2011. The School?s charter was approved in May 2011 and is Sponsored by the Los Angeles Unified School District. El Camino Real Charter High School?s charter number authorized by the state of California is 1314. GOVERNING BOARD MEMBER OFFICE EM TERM EXPIRES Jeffrey Falgien President Three Years June 30, 2017 Donna Slamon Secretary Three Years June 30, 2016 Jackie Keene Treasurer Three Years June 30, 2017 Denny Thompson Member Three Years June 30, 2017 Odus Caldwell Member Three Years June 30, 2016 Jonthan Wasser Member Three Years June 30, 2017 Peter Vastenhold Member Three Years June 30, 2016 EXECUTIVE DIRECTOR PRINCIPAL David ehte CHIEF BUSINESS OFFICIAL Marshall Mayotte See auditor?s report and the notes to supplementary information 21 EL CAMINO REAL ALLIANCE SCHEDULE OF AVERAGE DAILY ATTENDANCE FOR THE YEAR ENDED JUNE 30, 2015 El Camino Real Charter High School: Second Period Report Annual Report Classroom Independent Total Classroom Independent Total Based Study ADA Based Study ADA Grades 9 through 12 3,525.69 50.53 3,576.22 3,494.31 52.36 3,546.67 ADA Totals 3,525.69 50.53 3,576.22 3,494.31 52.36 3,546.67 See auditor's report and the notes to supplementary information 22 EL CAMINO REAL ALLIANCE SCHEDULE OF INSTRUCTIONAL TIME FOR THE YEAR ENDED JUNE 30, 2015 El Camino Real Charter High School: Grade 9 Grade 10 Grade 1 1 Grade 12 2014?15 Minutes Requirement* Actual 62,949 65,675 62,949 65,675 62,949 65,675 62,949 65,675 As reduced pursuant to the provision of Education Code Section 46201.2. Number of Days Traditional Calendar Status 180 180 180 180 See auditor's report and the notes to supplementary information 23 In Compliance In Compliance In Compliance In Compliance EL CAMINO REAL ALLICANCE SCHEDULE OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED JUNE 30, 2015 El Camino Real Charter High School: Compensation and Related Expenses Salaries - Certi?cated Salaries - Classi?ed Employee Benefits Total Compensation and Related Expenses Books and Supplies Services and Other Operating Expenses Depreciation and Amortization District Oversight Total See auditor's report and the notes to supplementary information Program Support Services Services Management Educational and General Total 12,189,849 987,125 13,176,974 1,538,813 1,398,207 2,937,020 5,231,890 939,162 6,171,052 18,960,552 3,324,494 22,285,046 1,912,686 910,750 2,823,436 3,129,383 1,038,182 4,167,565 - 252,573 252,573 271,619 271,619 24,002,621 5,797,618 29,800,239 24 EL CAMINO REAL ALLIANCE SCHEDULE OF EXPENDITURES 0F FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2015 Federal Federal Grantor/ Pass?Through Grantor/ CFDA Pass-Through Entity Federal Program or Cluster Title Number Identifying Number Expenditures U.S. Department of Agriculture Pass-Through Program from California Department of Education: National School Lunch Program 10.555 13523 231,863 Total U.S. Department of Agriculture 231,863 U.S. Department of Education Pass-Through Program from California Department of Education: Special Education Grants to States; Indiviudals with Disabilities Education Act (IDEA, Part B) 84.027 13379 682030 Title 1 Grants to Local Educational Agencies 84.010 14329 254,869 Advanced Placement Program (Advanced Placement Test Fee; Advanced Placement Incentive Program Grants) 84.330 14831 14,319 Improving Teacher Quality State Grants 84.367 14341 7,894 Total U.S. Department of Education 959,1 12 Total Expenditures of Federal Awards See accompanying notes to the schedule of expenditures of federal awards 25 1,190,975 EL CAMINO REAL ALLIANCE NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2015 NOTE 1 BASIS OF PRESENTATION The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal grant activity of El Camino Real Alliance under programs of the federal government for the year ended June 30, 2015. The information in this Schedule is presented in accordance with the requirements of OMB Circular A-l33, Audits of States, Local Governments, and Non-Profit Organizations. Because the Schedule presents only a selected portion of the operations of El Camino Real Alliance, it is not intended to and does not present the ?nancial position, changes in net assets, or cash flows of El Camino Real Alliance. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in OMB Circular A-122, Cost Principles for Non-Pro?t Organizations, wherein certain types of expenditures are not allowable or are limited as to reimbursement. B. Pass-through entity identifying numbers are presented where available. 26 EL CAMINO REAL ALLIANCE RECONCILIATION OF ANNUAL FINANCIAL AND BUDGET REPORT WITH AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 El Camino Real Charter High School June 30, 2015 Annual Financial and Budget Report Fund Balance (Net Assets) 13,768,487 Adjustments and Reclassi?cations Increase (Decrease): Current Liabilities Other Local Revenue 589,189 June 30, 2015 Audited Financial Statement Fund Balance (Net Assets) 14,357,676 See auditor's report and the notes to supplementary information 27 EL CAMINO REAL ALLIANCE NOTES TO SUPPLEMENTARY INFORMATION JUNE 30, 2015 NOTE 1 PURPOSE OF SCHEDULES: A. Local Education Agency Organization Structure This schedule provides information about the date and granting authority for the Schools that El Camino Real Alliance (the Organization) operates, members of the governing board, and members of the administration. Schedule of Average Daily Attendance Average daily attendance is a measurement of the number of pupils attending classes of the Schools operated by the Organization. The purpose of attendance accounting from a fiscal standpoint is to provide the basis on which apportionments of state funds are made to charter schools. This schedule provides information regarding the attendance of students at various grade levels. Schedule of Instructional Time This schedule presents information on the amount of instructional time offered by the Schools and whether the Schools complied with the provisions of Education Code Sections 46200 through 46206. Schedule of Functional Expenses The cost of providing various programs and other activities has been summarized on a functional basis in the Statement of Activities. Accordingly, certain costs have been allocated among the instructional programs and supportng services benefited. All costs have been allocated based on their type, based on management?s estimates. Reconciliation of Annual Financial and Budget Report with Audited Financial Statements This schedule provides the information necessary to reconcile the fund balances (net assets) of the Schools as reported on the Annual Financial and Budget Report form to the audited ?nancial statements. 28 EL CAMINO REAL ALLIANCE OTHER INDEPENDENT REPORTS FOR THE YEAR ENDED JUNE 30, 2015 Operating: EL CAMINO REAL CHARTER HIGH SCHOOL Feddersen Company, LLP Certi?ed Public Accountants INDEPENDENT REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT A UDI TING STANDARDS Members of the Governing Board El Camino Real Alliance Woodland Hills, California We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to ?nancial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the ?nancial statements of El Camino Real Alliance (a nonpro?t organization), which comprise the statement of ?nancial position as of June 30, 2015, and the related statements of activities and cash flows for the year then ended, and the related notes to the ?nancial statements, and have issued our report thereon dated November 13, 2015. Internal Control over Financial Reporting In planning and performing our audit of the ?nancial statements, we considered El Camino Real Alliance?s internal control over ?nancial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the ?nancial statements, but not for the purpose of expressing an opinion on the effectiveness of El Camino Real Alliance?s internal control. Accordingly, we do not express an opinion on the effectiveness of El Camino Real Alliance?s internal control. A de?ciency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a de?ciency, or a combination of de?ciencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity?s ?nancial statements will not be prevented, or detected and corrected on a timely basis. A signi?cant de?ciency is a de?ciency, or a combination of de?ciencies, 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 ?rst paragraph of this section and was not designed to identify all de?ciencies in internal control that might be material weaknesses or signi?cant de?ciencies and therefore, material weaknesses or signi?cant de?ciencies may exist that were not identi?ed. Given these limitations, during our audit we did not identify any de?ciencies in internal control that we consider to be material weaknesses. We did identify certain de?ciencies in internal control, described in the accompanying schedule of ?ndings and questioned costs that we consider to be signi?cant de?ciencies. 2015-01 and 2015-02 30 28632 Roadside Drive 0 Suite 265 0 Agoura Hills, California 9130] Telephone (818) 707-4111 0 Fax (818) 707-4] l0 Report on Internal Control Members of the Governing Board El Camino Real Alliance Woodland Hills, California Page 2 Compliance and Other Matters As part of obtaining reasonable assurance about whether El Camino Real Alliance?s ?nancial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of ?nancial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. El Camino Real Alliance?s Response to Findings El Camino Real Alliance?s response to the ?ndings identi?ed in our audit is described in the accompanying schedule of ?ndings and questioned costs. El Camino Real Alliance?s response was not subjected to the auditing procedures applied in the audit of the ?nancial statements and, accordingly, we express no opinlon on It. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the organization?s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the organization?s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. WE Agoura Hills, California November 13,2015 3l Feddersen Company, LLP Certi?ed Public Accountants INDEPENDENT REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-l33 Members of the Governing Board El Camino Real Alliance Woodland Hills, California Report on Compliance for Each Major Federal Program We have audited El Camino Real Alliance's compliance with the types of compliance requirements described in the OMB Circular A-l33 Compliance Supplement that could have a direct and material effect on each of El Camino Real Alliance?s major federal programs for the year ended June 30, 2015. El Camino Real Alliance?s major federal programs are identified in the summary of auditor?s results section ofthe accompanying schedule of ?ndings and questioned costs. Management?s Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs. Auditor?s Responsibility Our responsibility is to express an opinion on compliance for each of El Camino Real Alliance?s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-l33, Audits of States, Local Governments, and Non-Pro?t Organizations. Those standards and OMB Circular A?l33 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about El Camino Real Alliance?s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of El Camino Real Alliance?s compliance. Opinion on Each Major Federal Program In our opinion, El Camino Real Alliance complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2015. 32 28632 Roadside Drive 0 Suite 265 - Agoura Hills, California 91301 Telephone (818) 707-41 1 0 Fax (818) 707-4110 Report on Compliance Members of the Governing Board El Camino Real Alliance Woodland Hills, California Page 2 Report on Internal Control over Compliance Management of El Camino Real Alliance is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered El Camino Real Alliance?s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-l33, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of El Camino Real Alliance?s internal control over compliance. A de?ciency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a de?ciency, or combination of de?ciencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A signi?cant de?ciency in internal control over compliance is a de?ciency, or a combination of de?ciencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the ?rst paragraph of this section and was not designed to identify all de?ciencies in internal control over compliance that might be material weaknesses or signi?cant de?ciencies. We did not identify any de?ciencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identi?ed. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose. WW.LLP Agoura Hills, California November 13, 2015 33 Feddersen Company, LLP Certi?ed Public Accountants INDEPENDENT REPORT ON STATE COMPLIANCE Members of the Governing Board El Camino Real Alliance Woodland Hills, California We have audited El Camino Real Alliance?s (the School) compliance with the types of compliance requirements described in the 2014-2015 Guide for Annual Audits ofK-12 Local Education Agencies and State Compliance Reporting, published by the Education Audit Appeals Panel for the year ended June 30, 2015. The School?s state compliance requirements are identified in the table below. Management?s Responsibility Management is responsible for the compliance with the requirements of state laws and regulations as identified below. Auditor?s Responsibility Our responsibility is to express an opinion on the School?s compliance based on our audit of the types of compliance requirements referred to below. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the 2014-2015 Guide for Annual Audits of Local Education Agencies and State Compliance Reporting, published by the Education Audit Appeals Panel. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the state laws and regulations listed below occurred. An audit includes examining, on a test basis, evidence about the School?s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance with state laws and regulations. However, our audit does not provide a legal determination ofthe School?s compliance. Compliance Requirements Tested In connection with the audit referred to above, we selected and tested transactions and records to determine the School?s compliance with the laws and regulations applicable to the following items: Procedures Description Performed Local Education Agencies Other Than Charter Schools: Attendance Not applicable Teacher Certi?cation and Misassignments Not applicable Kindergarten Continuance Not applicable Independent Study Not applicable Continuation Education Not applicable Instructional Time Not applicable Instructional Materials Not applicable Ratio of Administrative Employees to Teachers Not applicable 34 28632 Roadside Drive 0 Suite 265 Agoura Hills, California 91301 Telephone (818) 707?4] 1 0 Fax (818) 707-41 10 Report on State Compliance El Camino Real Alliance Woodland Hills, California Page 2 Description Classroom Teacher Salaries Early Retirement Incentive Gann Limit Calculation School Accountability Report Card Juvenile Court Schools Middle or Early College High Schools K-3 Grade Span Adjustment Transportation Maintenance of Effort Regional Occupational Centers or Programs Maintenance of Effort Adult Education Maintenance of Effort School Districts, County Offices of Education, and Charter Schools: California Clean Energy Jobs Act After School Education and Safety Program Procedures Performed Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable No, see below No, see below Proper Expenditure of Education Protection Account Funds Yes Common Core Implementation Funds Yes Unduplicated Local Control Funding Formula Pupil Counts Yes Local Control and Accountability Plan Yes Charter Schools: Attendance Yes Mode of Instruction Yes Nonclassroom-Based Instruction/Independent Study for Charter Schools Yes Determination of Funding for Nonclassroom-Based Instruction No, see below Annual Instructional Minutes Classroom Based Yes Charter School Facility Grant Program No, see below The term ?Not applicable? is used above to mean that the program does not apply to charter schools. We did not perform any procedures related to the California Clean Energy Jobs Act because the School does not have expenditures for this program. We did not perform any procedures related to the After School Education and Safety Program because the School does not receive state funding for this program. We did not perform any procedures related to Determination of Funding for Nonclassroom-Based Instruction because the School did not generate more than 20.0 percent of their average daily attendance through nonclassroom?based instruction. We did not perform any procedures related to Charter School Facility Grant Program because the School does not receive state funding for this program. Opinion In our opinion, El Camino Real Alliance complied, in all material respects, with the state laws and regulations referred to above for the year ended June 30, 2015. 35 Report on State Compliance El Camino Real Alliance Woodland Hills, California Page 3 Purpose of this Report The purpose of this report on state compliance is solely to describe the scope of our testing of compliance and the results of that testing based on the requirements of the 2014-2015 Guide for Annual Audits of K- 12 Local Education Agencies and State Compliance Reporting. Accordingly, this report is not suitable for any other purpose. LL10 Agoura Hills, California November 13, 2015 36 EL CAMINO REAL ALLIANCE FINDINGS AND RECOMMENDATIONS SECTION FOR THE YEAR ENDED JUNE 30, 2015 Operating: EL CAMINO REAL CHARTER HIGH SCHOOL EL CAMINO REAL ALLIANCE SCHEDULE OF FINDINGS AND QUESTIONED COSTS JUNE 30, 2015 Section I Summary of Auditor?s Results Financial Statements Type of auditor?s report issued: Unmodi?ed Internal control over ?nancial reporting: Material weakness(es) identi?ed? Yes No Signi?cant de?ciencies identi?ed? Yes None reported Noncompliance material to ?nancial statements noted? Yes No Federal Awards Internal control over major programs: Material weakness(es) identi?ed? Yes No Signi?cant de?ciencies identi?ed? Yes None reported Type of auditor?s report issued on compliance for major programs: Unmodi?ed Any audit ?ndings disclosed that are required to be reported in accordance with section 510(a) of Circular A-l33? Yes No Major programs: CFDA Number Name of Federal Program 84.027 Special Education - Grants to States (IDEA, Part B) Dollar threshold used to distinguish between Type A and Type programs: $003000 Auditee quali?ed as low-risk auditee? Yes No mm Type of auditor?s report issued on compliance for state programs: Unmodi?ed Internal control over state programs: Material weakness(es) identi?ed? Yes No Signi?cant de?ciencies identi?ed? Yes None reported 38 EL CAMINO REAL ALLIANCE SCHEDULE OF FINDINGS AND QUESTIONED COSTS JUNE 30, 2015 Section II Financial Statement Findings This section identi?es the signi?cant de?ciencies, material weaknesses, and instances of noncompliance related to the ?nancial statements that are required to be reported in accordance with Government Auditing Standards. All audit ?ndings must be identi?ed as one or more of the following categories: Five Digit Code Finding Types 1 0000 Attendance 20000 Inventory of Equipment 30000 Internal Control 40000 State Compliance 42000 Charter School Facilities Programs 50000 Federal Compliance 60000 Miscellaneous 61000 Classroom Teacher Salaries 62000 Local Control Accountability Plan 70000 Instructional Materials 71000 Teacher Misassignments 72000 School Accountability Report Card 2015-01: 30000: CREDIT CARD CHARGES Criteria The School should have written formal internal control policies in place that are designed to provide a standard process that is followed and monitored on a regular and systematic basis to ensure that all expenditures made are School related, appropriate and properly documented. Condition Although the School has policies and procedures for credit card charges that are charged on a school issued card, and requires the completion, dating and initialing of each ?Credit Card Payment Recap? form, sometimes the detail and documentation is not as copious as necessary. Questioned Costs None. The charges reviewed in our sample were appropriate. Effect The School could potentially incur unallowable or unauthorized expenses. Cause Although the School?s management is fully aware of the policies in place it appears as though sometimes they are not being adhered to by certain employees. 39 EL CAMINO REAL ALLIANCE SCHEDULE OF FINDINGS AND QUESTIONED COSTS JUNE 30, 2015 2015-01: 30000: CREDIT CARD CHARGES (CONTINUED) Recommendation The School?s management needs to better monitor the usage of each credit card and should modify the written policy to ensure that the "Who, What, Where, Why and When? details are included for each credit card charge and ensure that all detailed receipts be attached to the recapitulation form for substantiation. School Response The School is in the process of designing a more in depth credit card usage polity that will require detailed information and substantiation for each charge made. The School will also require each employee that is issued a card to ?Sign Off? on an acknowledgement that he or she is aware of and understands the responsibilities and duties in connection with the use of a School credit card and will adhere to each and every component of the policies and procedures. 2015-02: 30000: EXPENSE REIMBURSEMENTS Criteria The School should have written formal internal control policies in place that are designed to provide a standard process that is followed and monitored on a regular and systematic basis to ensure that all expenditures made are reimbursable, appropriate and properly documented. Edith?n Although the School has policies and procedures for the reimbursement of School related expenses paid by employees, the detail is sometimes insuf?cient or incomplete to determine the exact nature of the expense and the relativity or purpose. Questioned Costs None. The expenses reviewed in our sample were appropriate. Effect The School could potentially incur unallowable or unauthorized expenses. Cause Although the School?s management is fully aware of the policies in place, it appears as though sometimes they are not being adhered to by certain employees. Recommendation The School?s management needs to better monitor the reimbursement of expenses and should modify the written policy to ensure that the ?Who, What, Where, Why and When? details are included for each credit card charge and ensure that all detailed receipts be attached to the recapitulation form for substantiation. School Response The School is in the process of designing a more in depth policy that will require detailed information and substantiation for each expense made. The School will also require each employee that requests reimbursement of expenses to ?Sign Off? on an acknowledgement that he or she is aware of the policies and procedures and will adhere to every component of the policy. 40 EL CAMINO REAL ALLIANCE SCHEDULE OF PRIOR AUDIT FINDINGS JUNE 30, 2015 Finding Code Recommendation Current Status There were no ?ndings and questioned costs for the year ended June 30, 2014. 41