Purpose of Audit

The purpose of our audit was to review the Board of Trustees’ oversight of management contracts for the period July 1, 2011 through August 13, 2013.

Background

The True North Rochester Preparatory Charter School, located in the City of Rochester, is governed by the Board of Trustees which comprises nine members. The School contracts with a charter management organization (CMO) for overall financial management and bookkeeping services. The School was established under SUNY authorization and provides education to approximately 670 students. The School’s total expenditures for the year ended June 30, 2013 were approximately $8.86 million.

Key Findings

• We identified significant concerns with the lack of detail contained in the memorandum of understanding (MOU) in the School’s contract with the CMO. Without clear and concise contract language, the School does not have a firm agreement detailing what services are included.
• School officials entered into a MOU whereby the School will annually pay a CMO nearly $700,000 for services and an additional $300,000 for expenses. This contract does not clearly define each party’s responsibilities for certain costs and allows one party − the CMO − to train the Directors of Operations, who are responsible for overseeing the School’s interests in the contract.

Key Recommendations

• Negotiate written agreements that contain clear language and thoroughly detail each party’s rights and responsibilities. Negotiated agreements also should include schedules that set timeframes for deliverables. Material changes to written agreements should be supported by addendums that have been properly authorized.
• Ensure that the School is receiving all services and benefits stipulated in the contract and are paying only for those stipulated services.