Purpose of Audit

The purpose of our audit was to examine the School’s process for acquiring building space and the adequacy of the School’s leave accrual records for the period July 1, 2011 through August 22, 2013.

Background

The Oracle Charter School is located in the City of Buffalo. The School is governed by an 11-member Board of Trustees that includes one parent representative. The School’s 2012-13 fiscal year operating expenses totaled approximately $4.7 million.

Key Findings

• The Board did not demonstrate that it used an appropriate process to ensure it obtained a suitable building site at a reasonable cost. School officials did not document that the Board performed an appropriate cost analysis of the selected site or alternative sites. Consequently, the School agreed to an arrangement requiring it to pay more than $5.1 million for the acquisition and renovation of its building financed at a 20 percent interest rate. We found that the building was acquired and renovated for approximately $1.4 million, and that a developer fee and interest costs will total more than $3.7 million over the term of the School’s 15-year lease. As a result of a recent decision to prepay a portion of the debt, the School was able to save approximately $136,000.
• The business office did not maintain accurate and supported leave accrual records for all School employees. The School does not require that all employees submit leave request forms. Those employees required to submit forms did not do so consistently, and the forms did not always include evidence of required approvals.

Key Recommendations

• Ensure that all Board proceedings are properly documented, and all such records are maintained by the Board Secretary. Safeguard School resources by conducting and documenting thorough analyses of alternatives before making major financial commitments. Determine whether any outstanding loans are able to be prepaid and, if applicable, evaluate whether it would be cost beneficial to prepay the loan(s).
• Maintain a cumulative and up-to-date record of leave time for each employee and review this record throughout the school year to ensure its accuracy. Ensure that leave request forms are completed and include required authorizations. Develop and implement a process to compare leave accrual records with other attendance records to ensure that the leave records are complete and accurate.