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Home My WebLink AboutRes 08-24 WA Approving 2007-2008 Audit Report WESTLAKE ACADEMY RESOLUTION NO. 08-24 APPROVING THE FISCAL YEAR 2007/2008 ANNUAL AUDIT REPORT FROM PATTILLO, BROWN & HILL, LLP. BE IT RESOLVED BY THE BOARD OF TRUSTEES WESTLAKE ACADEMY: WHEREAS, Section 7.3.6 of the Data Collection & Reporting section of the Financial Accountability System Resource Guide Update 11.0 requires that the annual financial and compliance report be audited by an independent auditor, and WHEREAS, Section 7.3.6 of the Data Collection & Reporting section of the Financial Accountability System Resource Guide Update 11.0 requires the audit report be submitted to the Division of School Financial Audits of TEA no later than 150 days after the close of the fiscal year, and WHEREAS, the audit report must be approved by the Board of Trustees. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF TRUSTEES OF THE WESTLAKE ACADEMY: SECTION 1. The above findings are hereby found to be true and correct and are incorporated herein in its entirety. SECTION 2. That the Board of Trustees of Westlake Academy hereby approves the fiscal year 2007/2008 annual audit report from Pattillo, Brown& Hill, LLP. PASSED AND APPROVED ON THIS 8 DAY OF DECEMBER 2008. ATTEST: Laura Wheat, President r° Sutter, TRMC, Town Secretary Thomas er CEO APPROVE AS T ORM: L" ool Attorney PATTILLO, BROWN & HILL, L.L-P- CERTIFIED PUBLIC ACCOUNTANTS ■ BUSINESS CONSULTANTS To the Board of Trustees Westlake Academy We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Westlake Academy for the year ended August 31, 2008, and have issued our report thereon dated November 10, 2008. Professional standards require that we provide you with the following information related to our audit. Our Responsibilities under U. S. Generally Accepted Auditini;_Standards and Government Auditin,-Standards As stated in our engagement letter dated September 10, 2008, our responsibility, as described by professional standards, is to express opinions about whether the financial statements prepared by management with your oversight are fairly presented, in all material respects, in conformity with U. S. generally accepted accounting principles. Our audit of the financial statements does not relieve you or management of your responsibilities. Significant Audit Findings Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by Westlake Academy are described in Note I to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during 2008. We noted no transactions entered into by the governmental unit during the year for which there is a lack of authoritative guidance or consensus. There are no significant transactions that have been recognized in the financial statements in a different period than when the transaction occurred. 115 SOUTH CHURCH STREET■HILLSBORO,TX 76645 2(254)582-2583■FAX:(254)582-5731 ■www.pbhcpa.com AFFILIATE OFFICES:BROWNSVILLE,TX(956)544-7778■TEMPLE,TX(254)791-3460 WACO,TX(254)772-4901 ■ALBUQUERQUE,NM(505)266-5904 Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimate affecting the financial statements was: Management's estimate is foundation revenue receivable. We evaluated the key factors and assumptions used to develop the receivable in determining that it is reasonable in relation to the financial statements taken as a whole. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Audit Adjustments For the purposes of this letter, professional standards define an adjustment as a proposed correction of the financial statements that, in our judgment, may not have been detected except through our auditing procedures. An audit adjustment may or may not indicate matters that could have a significant effect on the Academy's financial reporting process (that is, cause future financial statements to be materially misstated). See attached schedule for a complete listing of all adjusting journal entries. The Academy has approved all proposed audit adjustments. There were no audit adjustments that were not recorded by the Academy. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditors' report. We are pleased to report that no such disagreements arose during the course of our audit. Management_Representations We have requested certain representations from management that are included in the management representation letter dated November 10, 2008. t 2 Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the governmental unit's financial statements or a determination of the type of auditors' opinion that may be expressed on those statements, our professional standards -require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the governmental unit's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. This information is intended solely for the use of the Board of Trustees and management of Westlake Academy and is not intended to be and should not be used by anyone other than these specified parties. P'tol , � ,,, 4 November 10, 2008 3 A0J,usting Entries By Entry NuMber FY 2008 Westlake Academy 12/2/2008 Adjusting Entries Must A�ijustrhei T be Approved by District. Account Number DabiE Credit APPROVED BY: Adjusting Entry Number: 1 199 -04-1290-00 -000 -8 -00 -000 (12.441:00) 1.99 -0D-5744-01 -0100 -8. 00 -QOO l2,441,00 12,441.00. ('12,441,00} Remarks:: Adjust;farrec.npt reversed,from prior year Adiusting Entry Number: 2 990 -00-1011 00'_;000 8 00 -000 225f338..00 990 -00-1290-00:-000 -6 00 .0130. 538 605.00 990 -00-1292-00 _000 --8 -00 -000 244;00. 990 -40-2110-0,0 -400-0 -00 -OHO) {683 00) 9:90 -'0.0.-2190-00:-:D00.-8 -04 _0003 (12,441 0.0) 990 00-3600-0p:=.000 -$ -DD _000 {174 OOZ.00) 990 -00-5744-00'-000 -8 -00 -000 (1,235,255.00) $00 t]0-. 494-00-=.POO�8.. -P.O. -000 fi�8,17d�Q _ 1,422 861.00, 11422,361.00) Remarks'. Aid roundafibn - 11 - Adiustin❑Entry Number . 3, 19,9 -00-1414 00 --.0017 -8' -00 -Q010 41,486:50, -99 -000 P,6tto(rksi To adjust pdn ipAl'pmtto prepaid Adjusting Nurriber, 4 ; 990 -Q.0-i101 -00 -000:gig -.00_000 632,0151 A0 - 990 -=-1290 030-'000'-9.. -00 -0010 (120,63P.001 99.0 -QO-1292-00-:0100 -:8 QO -GOO (244,.0:0) 190' -00-1280-030.-000 -8 -00'-000 225.00 990 -00=21 TQ-00 -0043 --a Op -aw (,2,1 T5_00) 99.0 -GO-2190-00:-:DUO -8'' Oa -Biro 12,441..00 990 -00 5T"-00-000 -8 0 0 -009 36,434;00 990 -00-:6400 -DO-000 -8 -00 -Q00: (4:1,453:00). 9.914 -00-3600 -0.0-000 -8 -.00 -000 990 -0 0-110'1-00 -0.00 -8 -00 -00U 225,334100 99;0. -00-1:0°11 -00 -000-8: -00 -QGQ. (22'5.,33100} 99.0 00-23103-00 -DOD -6 00 -0903 (40;506.00) 990 00-:600-,OQ:-:000.-5: -00 -0003 4C1,QQ�.-Q. K47,€�44.0 0 (847,844 00) Remarks: Adjust Foundation Adiustfqg Entry Number 8 990. -00 2370-00-;000 -8. 00 400 15,00:000, 990 -00=12130_00r 000'_8. 00 _000. (8,28001}) 990 °W-2110-Ob-000-a 00 660 (2160.Q.00) 990 00-5744-00 -000 -8' 00 60901 993 -:Q0.-64.00-00 - 9. -Q0, -GQO Remarks. AdjUstfor Foun0ationCharlge 1 Westlake Academy y s a convergence o quality- y a commitment to exceCCence` Al'*�,, AL FINANCIAL REPORT I I FOR YEAR ENDED AUGUST 31 2008 I I i P A T T I L L O, BROWN CERTIFIED PUBLIC ACC40UNTANTS M BUSINESS CONSULTANTS I i 7 r I I , . WESTLAKE ACADEMY (A COMPONENT UNIT OF THE TOWN OF WESTLAKE) ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED AUGUST 31,2008 TABLE OF CONTENTS i Exhibit page Certificate of Board I Independent Auditor's Report 2-3 Management's Discussion and Analysis 4- 11 Basic Financial Statements Government-wide Statements: A-1 Statement of Net Assets 12 B-1 Statement of Activities 13 - 14 Governmental Fund Financial Statements: C-1 Balance Sheet 15 C-2 Statement of Revenues,Expenditures,and Changes in Fund Balance 16 D-1 Statement of Fiduciary Net Assets 17 Notes to the Financial Statements 18-25 Required Supplementary Information E-1 Statement of Revenues,Expenditures,and Changes in Fund Balance Budget and Actual—General Fund 26 Notes to Required Supplementary Information 27 Combinin Statements Nonmajor Governmental Funds: F-1 . Combining Balance Sheet 28 -29 F-2 Combining Statement of Revenues,Expenditures, and Changes in Fund Balances 30-31 Internal Control Report 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 32-33 CERTIFICATE OF BOARD I i Westlakg Academy Tarrant 220-810 Name of School County Co.-Dist.Number I i I We, the undersigned, certify that the attached annual financial reports of the above-named school district were reviewed and (check one) approved disapproved for the year ended August 31, 2008, at a meeting of the Board of Trustees of such school district on the 8h day of December 2008. i Signature of Board Secretary - Signature of Board President If the Board of Trustees disapproved of the auditors'report,the reason(s)for disapproving it is(are): (attach list as necessary) I i i 1 I � PATTILLO, BROWN & HILL, L.L_P. CERTIFIED PUBLIC ACCOUNTANTS 0 BUSINESS CONSULTANTS 4 INDEPENDENT AUDITOR'S REPORT Board of Trustees Westlake Academy s Members of the Board: We have audited the accompanying financial statements of the governmental activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of Westlake Academy (the "Academy") as of and for the year ended August 31, 2008,which collectively comprise the Academy's basic financial statements as listed in the table of contents. These financial statements ate the responsibility of the Westlake Academy's management. Our responsibility is to express opinions on these financial 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 financial 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 financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities,the discretely presented component unit, each major fund and the aggregate remaining fund information of the Westlake Academy as of August 31,2008, and the respective changes in financial position for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated November 10, 2008, on our consideration of the Academy's internal control over financial 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 financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an -audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. The Management's Discussion and Analysis and budgetary comparison information on pages 4 through 11 and 26, are not a required part of the basic financial statements,but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However,we did not audit the information and express no opinion on it. i 2 I 115 SOUTH CHURCH STREET■HILLSBORO,TX 76645 N(254)582-25$3■FAX:(254)582-5731 IN www.pbhcpa.com AFFILIATE OFFICES:BROWNSVILLE,TX(956)544-7778■TEMPLE.,TX(254)791-3460 WACO,TX(254)7724901 ■ALBUQUERQUE,NM(505)266-5904 I I Our audit was conducted for the purpose of forming opinions on the basic financial statements that collectively comprise the Westlake Academy's basic financial statements. The combining fund statements are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining fund financial statements have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. i November 10, 2008 I I I 3 I WESTLAKE ACADEMY (A COMPONENT UNIT OF TOWN OF WESTLAKE) MANAGEMENT'S DISCUSSION AND ANALYSIS AUGUST 31,2008 This section of Westlake Academy's (the "Academy") annual financial report presents our discussion and analysis of the Academy's financial performance during the fiscal year ended August 31, 2008. Please read it in conjunction with the Academy's financial statements,which follow this section. FINANCIAL HIGHLIGHTS • On the government-wide financial statements, the assets of the Academy exceeded liabilities by $634,454(Net Assets). This is a decrease of$57,286 for the year ended August 31,2008. • The Academy had$3,305,220 in expenses related to governmental activities of which$270,895 of these expenses were offset by program-specific charges for services or grants and contributions. This is a total expense increase of$632,522 over the prior year. • The General Fund reported a fund balance this year of$634,454, a decrease of$57,286 from the prior year. i I OVERVIEW OF THE FINANCIAL STATEMENTS This annual report consists of three parts management's discussion and analysis (this section), the basic financial statements, and required supplementary information. The basic financial statements include two kinds of statements that present different views of the Academy: Figure A-1,Required Components of the • The first two statements are government-wide financial statements that provide both long-term and short-term Academy's Annual Financial Report information about the Academy's overall financial I status. Vtk*a9emwr'a Basic Required • The remaining statements are fund financial statements D&ut"4w Financial Supplementary ithat focus on individual parts of the government, Statements Information reporting the Academy's operations in more detail than the government-wide statements. I • The governmental funds statements tell how general government services were financed in the short term as well as what remains for future -------------------- spending. Government-Wide Fund Financial Financial Statements Statements �r.'atgarEuui� .St9�estsen�d Summary Detail I w y 4 Component Unit The government-wide financial statements also present the activity of Westlake Academy Foundation, a discretely presented component unit. The Foundation was organized exclusively for charitable and educational purposes and provides funds to help support the Academy. During 2008, the Foundation contributed $394,571 to the Academy to enhance educational opportunities. Fund Financial Statements The fund financial statements provide more detailed information about the Academy's most significant funds not the Academy as a whole. Funds are accounting devices that the Academy uses to keep track of specific sources of funding and spending for particular purposes. • Some funds are required by State law and by bond covenants. • The Board of Trustees establishes other funds to control and manage money for particular purposes or to show that it is properly using certain taxes and grants. Below are the three types of funds. The Academy had only"Governmental Funds"and"Fiduciary Funds" for the year ended August 31,2008. • Governmental funds Most of the Academy's basic services are included in governmental funds, which focus on(1) how cash and other financial assets that can readily be converted to cash flow in and out and (2) the balances left at year-end that are available for spending. Consequently, the governmental fund statements provide a detailed short-term view that helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the Academy's programs. Because this information does not encompass the additional long-term focus of the government-wide statements, we provide additional information at the bottom of the governmental funds statement or on the e subsequent page, explain the relationship q p g , p p(or differences)between them. • Fiduciary funds—Some schools are the trustee, or fiduciary, for certain funds. It is also responsible for other assets that—because of a trust arrangement—can be used only for the trust beneficiaries. These schools are responsible for ensuring that the assets reported in these funds are used for their intended purposes. All of these fiduciary activities are reported in a separate statement of fiduciary net assets and a statement of changes in fiduciary net assets. These activities are excluded from the school's government-wide financial statements because they cannot use these assets to finance their operations. • Proprietary funds--(None at August 31, 2008). Services for which the Academy would charge customers a fee are generally reported in proprietary funds. Proprietary funds, like the government- wide statements,provide both long and short-term financial information. • Internal Service funds to report activities that provide supplies and services for the Academy's other programs and activities–such as a School's Self Insurance Fund or Print Shop. G Changes in net assets. The Academy's total revenues were $3,247,934. A significant portion, 77%, of the Academy's revenue came from state funding. (See Figure A-3). 7%of total revenues were from operating grants and contributions, 14% from gifts,bequests and miscellaneous, 1%from interest and 1%from charges for services. The total cost of all programs and services was$3,305,220; 61%of these costs are for instructional and instructional related costs. Table A-3 Westlake Academy's Changes in Net Assets Governmental Activities Component Unit Activities Totals 2008 2007 2008 2007 2008 2007 Revenues Program revenues: Charges for services $ 42,839 $ 85,925 $ - $ - 42,839 $ 85,925 Operating grants and contributions 228,056 164,740 1,192,307 1,108,013 1,420,363 1,272,753 General revenues: Grants and contributions non restricted 2,500,817 2,259,643 - - 2,500,817 2,259,643 Investment earnings 22,335 23,644 13,184 - 35,519 23,644 Miscellaneous 453,887 402,766 11,000 453,887 413,766 Total revenues 3,247,934 2,936,718 1,205,491 1,119,013 4,453,425 4,055,731 Expenses Instruction and instructional related 2,017,334 1,743,520 - - 2,017,334 1,743,520 Instructional leadership/ school administration 154,123 225,662 - - 154,123 225,662 Guidance,social work, health,transportation 137,283 67,500 - - 137,283 67,500 Food services 31,516 84,484 - - 31,516 84,484 Extracurricular activities 49,484 53,463 - - 49,484 53,463 General administration 510,966 218,670 - - 510,966 218,670 Plant maintenance and security 235,381 195,264 - - 235,381 195,264 Data processing services 103,498 68,177 - - 103,498 68,177 Community services 65,635 15,958 - - 65,635 15,958 Program/support services - - 619,221 741,930 619,221 74I,930 Total liabilities 3,305,220 2,672,698 619,221 741,930 3,924,441 3,414,628 ' Increase in net assets ( 57,286) 264,020 586,270 377,083 528,984 641,103 Beginning net assets 691,740 427,720 551,085 174,002 1,242,825 601,722 P Ending et assets $ 634,454 g $ 691,740 $ 1,137,355 $ 551,085 $ 1,771,809 $ 1,242,825 Table A-4 (below)presents the cost of each of the Academy's largest functions as well as each function's net cost(total cost less fees generated by the activities and intergovernmental aid). The net cost reflects what was funded by state revenues as well as local tax dollars. • The cost of governmental activities this year was$3,305,220. • Some of the cost was paid by those who directly benefited from the programs,$42,839. • By grants and contributions$228,056. o Seven international stipends were paid in FY 2007-2008 and only three budgeted for FY 2008- 2009. i o In FY 2007-2008 the recruitment of a new Head of School (HOS) necessitated a transition period during which the outgoing HOS and incoming HOS were both paid concurrently for approximately 1.5 months. o Recruitment of incoming HOS included a moving allowance in the prior fiscal year • If the FY 2008-2009 budget estimates are realized, the Academy's General Fund's budgetary fund balance is expected to decrease approximately$127 thousand by the close of FY 2009. ACHIEVEMENTS DURING FISCAL YEAR 2007-2008: • The Diploma Program(DP) received IB Authorization, making the Academy the only school in Texas to have all three: Primary Year Program(PYP),Middle Year Program(MYP)and DP programs. • Westlake Academy held the first MYP graduation in the state of Texas. • Achieved TEA Exemplary rating. • Gold Medalist School in 7 out of 8 possible categories: Reading, Writing, Math, Science, Social studies,Improvement in Reading and Attendance. • Held third student exchange visit with Greengates School in Mexico. N • Increased the number of sports teams during FY 2007-2008. • Organized CLT--Campus Leadership Team made up of parents, students, Board members, staff and members of the community. • The`Black Cow"was again named one of the top school newspapers and won 47 awards at the annual UIL conference,the most of any school in Texas. • Organized a Math and Science Team with two students winning state awards. i • Organized a Word Masters team for grade 6 students. • Increased the number of residential held trips and made one of them a service project. • Increased the number and scope of student initiated service projects. • A faculty member was selected to be a faculty member of People to People and traveled to New Zealand and Australia with a group of teenagers.. • IBO/PYP Candidate schools are being sent to visit Westlake Academy as a model. • Westlake Academy is among the 14 highest performing Texas Charter Schools. • Westlake Academy students continued to score very high with many scoring at the Post High School Level on the Standard Achievements Tests. • MYP Students competed at the MUN(Model United Nations)competition. i • Three students chosen as winners and published as part of a poetry contest. • Became test site for PSAT with a number of Westlake Academy students scoring well above the state and national norms. • The waiting list continues to grow, 1,265 students to date. . i 10 i i I I BASIC FINANCIAL STATEMENTS i i I i i I I i I I i } i I I I i r r. EXHIBIT A-1 WESTLAKE ACADEMY STATEMENT OF NET ASSETS AUGUST 31,2008 I 1 4 Primary Government COMPonent Unit Data Control Governmental WA Codes � Activities Foundation i ASSETS 1110 Cash and Cash Equivalents $ 65,952 $ 758,188 1120 Current Investments 600,262 - 1240 Due from Other Governments 72,720 1290 Other Receivables,net 5,750 410,011 1410 Deferred Expenses 41,486 - 1000 Total Assets 786,170 1,168,199 LIABILITIES 2110. Accounts Payable 100,275 5,338 2160 Accrued Wages Payable 50,309 - 2200 Accrued Expenses 1,132 - 2300 Deferred Revenues - 25,506 2000 Total Liabilities 151,716 30,844 NET ASSETS 3890 Restricted for Other Purposes 41,486 1,069,587 3900 Unrestricted Net Assets 592,968 67,768 3000 Total Net Assets $ 634,454 $ 1,137,355 r i I I t The notes to the financial statements are an integral part of this statement. I 12 EXHIBIT B-1 Net(Expense)Revenue and Changes in Net Assets 6 9 Fcimary Government Component Unit Governmental WA Activities Foundation $ (1,734,173) $ - (57,278) - (27,743) - (11,502) - (134,333) (108,451) - (23,217) - (7,160) (48,758) - (496,714) - (235,381) (100,182) - (49,433) - (3,034,325) - - 573,086 - 573,086 2,500,817 - 22,335 13,184 453,887 - 2,977,039 13,184 (57,286) 586,270 691,740 551,085 $ 634,454 $ 1,137,355 i l i 14 EXHIBIT C-I WESTLAKE ACADEMY BALANCE SHEET GOVERNMENTALFUNDS AUGUST 31,2008 Data Control 10 Total Codes General Other Goverrunental Fund Funds Funds ASSETS 1110 Cash and Cash Equivalents $ 63,952 $ 2,400 $ 65,952 1120 Investments-Current 600,262 - 600,262 1240 Due from Other Governments 71,414 1,306 72,720 1290 Other Receivables 5,750 - 5,750 1410 Prepaid Expenditures 41,486 - 41,486 1000 Total Assets $ 782,864 $ 3,306 $ 786,170 LIABILITIES AND FUND BALANCES Liabilities: 2110 Accounts Payable $ 98,275 $ 2,000 $ 100,275 2160 Accrued Wages Payable 49,118 1,191 50,309 2200 Accrued Expenditures 1,017 115 1,132 2000 Total Liabilities $ 148,410 $ 3,306 $ 151,716 Fund Balances: Reserved For: 3430 Prepaid Items $ 41,486 $ - $ 41,486 Unreserved and Undesignated: V 3600 Reported in the General Fund 592,968 - 592,968 3000 Total Fund Balances $ 634,454 $ - $ 634,454 4000 Total Liabilities and Fund Balances $ 782,864 $ 3,306 $ 786,170 i A I i I The notes to the financial statements are an integral part of this statement. 15 A 4 EXI4IBIT C-2 WESTLAKE ACADEMY STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS FOR THE YEAR ENDED AUGUST 31,2008 Data 10 Total Control General Other Governmental Codes Fund Funds Funds REVENUES: - 5700 Total Local and Intermediate Sources $ 519,061 $ - $ 519,061 5800 State Program Revenues 2,649,907 23,773 2,673,680 5900 Federal Program Revenues - 55,193 55,193 5020 Total Revenues 3,168,968 78,966 3,247,934 EXPENDITURES: Current: 0011 Instruction 1,849,711 73,216 1,922,927 0012 Instructional Resources and Media Services 60,914 - 60,914 0013 Curriculum and Instructional Staff Development 27,743 5,750 33,493 0021 Instructional Leadership 12,295 - 12,295 0023 School Leadership 141,828 - 141,828 0031 Guidance, Counseling and Evaluation Services 112,350 - 112,350 0033 Health Services 24,933 - 24,933 0035 Food Services 31,516 - 31,516 0036 Extracurricular Activities 49,484 - 49,484 0041 General Administration 510,966 - 510,966 0051 Facilities Maintenance and Operations 235,381 - 235,381 0053 Data Processing Services 103,498 - 103,498 0061 Community Services 65,635 - 65,635 6030 Total Expenditures .3,226,254 78,966 . 3,305,220 i 1200 Net Change in Fund Balances (57,286) - (57,286) 0100 Fund Balance-September 1 (Beginning) 691,740 - 691,740 3000 Fund Balance-August 31 (Ending) $ 634,454 $ $ 634,454 I I I I I k i f The notes to the financial statements are an integral part of this statement. 16 i EXHIBIT D-1 WESTLAKE ACADEMY STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS AUGUST 31,2008 Agency Fund ASSETS Cash and Cash Equivalents $ 46,187 Investments-Current 17,406 Total Assets $ 63,593 s LIABILITIES Accounts Payable $ 4,033 Due to Student Groups 59,560 Total Liabilities 63,593 I i i - i - 1 The notes to the financial statements are an integral part of this statement. 17 WESTLAKE ACADEMY (A COMPONENT UNIT OF THE'TOWN OF WESTLAKE) NOTES TO THE FINANCIAL STATEMENTS AUGUST 31,2008 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity Westlake Academy (the "Academy"), a blended component unit of the Town of Westlake (the "Town"), is a Texas nonprofit Corporation under Chapter 12, Subchapter D of the Educations Code to provide education. The Board of Trustees (the "Board") consists of five trustees and is appointed by the Town's governing body. Currently, all members of the Board are members of the Town's governing body. The Academy prepares its basic financial statements in conformity with generally accepted accounting principles promulgated by the Governmental Accounting Standards Board (the "GASB") and other authoritative sources identified in Statement on Auditing Standards No. 69 of the American Institute of Certified Public Accountants; and it complies with the requirements of the appropriate version of Texas Education Agency's Financial Accountability System Resource Guide(the"Resource Guide") and the requirements of contracts and grants of agencies from which it receives funds. The Board is appointed by the governing Board of the Town and it has the authority to make decisions, appoint administrators and managers, and significantly influence operations. It also has the primary accountability for fiscal matters. Therefore, the Academy is a financial reporting entity as defined by the GASB in its Statement No. 14,"The Financial Reporting Entity." The Academy's basic financial statements include a separate governmental entity that is controlled by or dependent on the Academy. The determination to include separate governmental entities is based on the criteria of GASB Statement No. 14, "The Financial Reporting Entity" as amended by GASB Statement No. 39, "Determining Whether Certain Organizations Are Component Units." GASB defines the reporting entity as the primary government and those component units for which the primary government is financially accountable. To be financially accountable, a voting majority of the component unit's ruling body must be appointed by the primary government, and either(a) the primary government must be able to impose its will, or(b) the primary government may potentially benefit financially or be financially responsible for the component unit. The Westlake Academy Foundation (the "Foundation") is a 501(c)3 nonprofit organization which was established exclusively for the purposes of supporting the Academy. This includes fundraising for and contributing raised funds to the Academy. The Foundation has been discretely presented in the accompanying financial statements and reported in a separate column to emphasize that it is legally separate from the Academy. See Note II E for additional information relating to the Foundation. Separate audited financial statements of the Foundation are available from the Academy/Town Finance Director's office, #3 Village Circle,Suite 202,Westlake,Texas 76262. B. Government-wide and Fund Financial Statements The Statement of Net Assets and the Statement of Activities are government-wide financial statements. They report information on all of the Academy's nonfiduciary activities with most of the interfund activities removed. Governmental activities include programs supported primarily by state and federal grants,the Foundation, and the Town. The Academy has no business-type activities that rely to a significant extent, on fees and charges for support. i (continued) 1& I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus,Basis of Accounting and Financial Statement Presentation(Continued) The proprietary fund types and fiduciary funds are accounted for on a flow of economic resources measurement focus and utilize the accrual basis of accounting_ This basis of accounting recognizes revenues in the accounting period in which they are earned and become measurable and expenses in the accounting period in which they are incurred and become measurable. The Academy applies all GASB pronouncements as well as the Financial Accounting Standards Board pronouncements issued on or before November 30, 1989, unless these pronouncements conflict or contradict GASB pronouncements. With this measurement focus, all assets and all liabilities associated with the operation of these funds are included on the fund Statement of Net Assets. The fund equity is segregated into restricted net assets,and unrestricted net assets. The Academy reports the following major governmental fund: The General Fund is the Academy's primary operating fund. It accounts for ail financial resources except those required to be accounted for in another fund. Additionally, the Academy reports the following fund types: The Special Revenue Funds account for resources restricted to, or designated for, specific purposes by the Academy or a grantor in a Special Revenue Fund. Most federal and some state financial assistance is accounted for in a Special Revenue Fund and sometimes unused balances must be returned to the grantor at the close of specified project'period. Agency Funds account for resources held for others in a custodial capacity. Fiduciary funds are reported in the fiduciary fund financial statements. However, because these assets are not available to support Academy programs, these funds are not included in the government-wide statements. The Academy's Agency Fund is a Student Activity Fund. D. Other Accounting Policies 1. For purposes of the statement of cash flows for proprietary and similar fund types, the Academy considers highly liquid investments to be cash equivalents if they have a maturity of three months or less when purchased. 2. It is the Academy's policy to permit some employees to accumulate earned but unused vacation and sick pay benefits. There is no liability for unpaid accumulated sick leave since the Academy does not have a policy to pay any amounts when employees separate from service with the government. All vacation pay is accrued when incurred in the government- wide financial statements. A liability for these amounts is reported in governmental funds only if they have matured,for example,as a result of employee resignations and retirements. 3. The Academy provides health insurance for its employees through TRS-Active-Care. The Academy meets its obligations for workers' compensation insurance through Utica National Insurance Group. 4. In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change_ 5. When the Academy incurs an expense for which it may use either restricted or unrestricted assets, it uses the restricted assets first unless unrestricted assets will have to be returned because they were not used. N (continued) 20 II. DETAILED NOTES ON ALL FUNDS (Continued) A. Deposits and Investments (Continued) TexPool is organized in conformity with the Interlocal Cooperation Act, Chapter 791 of the Texas Government Code, and the Public Funds Investment Act, Chapter 2256 of the Texas Government Code. The Texas Comptroller of Public Accounts is the sole officer, director and shareholder of the Texas Treasury Safekeeping Trust Company, which is authorized to operate TexPool. In addition, the TexPool Advisory Board advises on TexPool's Investment Policy. This Board is composed equally of participants in TexPool and other persons who do not have a business relationship with TexPool who are qualified to advise TexPool. TexPool is subject •to annual review by an independent auditor consistent with the Public Funds Investment Act. In addition, TexPool is subject to review by the State Auditor's office and by the Internal Auditor of the ComptroIler's office. In compliance with the Public Funds Investment Act, the Academy has adopted a deposit and investment policy. That policy does address the following risks: I. Custodial Credit Risk — Deposits: This is the risk that in the event of bank failure, the Academy's deposits may not be returned to it. The Academy was not exposed to custodial credit risk since its deposits at year-end and during the year ended August 31, 2008, were covered by depository insurance or by pledged collateral held by the Academy's agent bank in the Academy's name. 2. Custodial Credit Risk— Investments: This is the risk that, in the event of the failure of the counterparty, the Academy will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. Investments are subject to custodial credit risk only if they are evidenced by securities that exist in physical or book entry form. Thus positions in external investment pools are not subj ect to custodial credit risk because they are not evidenced by securities that exist in physical or book entry form. 3. Other Credit Risk: There is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. To minimize credit risk, TexPool invests only in investments authorized under the Public Funds Investment Act. As of August 31, 2008, TexPool's investments credit quality rating was AAAm(Standard&Poor's). B. Due from Other Governments The Academy participates in a variety of federal and state programs from which it receives grants to partially or filly finance certain activities. Amounts due from federal and state governments as of August 31, 2008, are summarized below. All federal grants shown below are passed through the TEA and are reported on the financial statements as Due from Other Governments. State Federal Fund Entitlements Grants Total General $ 71,414 $ - $ 71,414 Special revenue - 1,306 1,306 k Total $ 71,414 $ 1,306 $ 72,720 r (continued) 22 R. DETAILED NOTES ON ALL FUNDS (Continued) E. ComRonent Unit Activity(Continued) Statement of Activities Revenues Expenses Total Gallery night $ 245,410 $ 111,471 $ 133,939 Apprentice sponsors 411,199 394,571 16,628 Capital campaign 534,187 36,602 497,585 Endowment 1,511 - Interest 13,184 - 13,184 Management and general - 76,577 ( 76,577} Totals $ 1,205,491 $ 619,221 586,270 Beginning net assets 551,085 Ending net assets S 1,137,355 I The Foundation contributed$394,571 to the Academy during the fiscal year ended August 31,2008. i F. Defined Benefit Pension Plan Plan Description. The Westlake Academy contributes to the Teacher Retirement System of Texas (TRS), a cost--sharing multiple employer defined benefit pension plan. TRS administers ,retirement and disability . annuities, and death and survivor benefits to employees and beneficiaries of employees of the public school systems of Texas. It operates primarily under the provisions of the Texas Constitution, Article XVI, Sec. 67, and Texas Government Code, Title 8, Subtitle C. TRS also administers proportional retirement benefits and service credit transfer under Texas Government Code, Title 8, Chapters 803 and 805,respectively. The Texas state legislature has the authority to establish and amend benefit provisions of the pension plan and may,under certain circumstances, grant special authority to the TRS Board of Trustees. TRS issues a publicly available financial report that includes financial statements and required supplementary information for the defined benefit pension plan. That report may be obtained by writing to the TRS Communications Department, 1000 Red River Street, Austin, Texas 78701,by calling the TRS Communications Department at 1-800-223-8778, or by downloading the report from the TRS Internet website, www.trs.state.tx.us, under the TRS Publications R heading. p Funding Policy. Contribution requirements are not actuarially determined but are established and amended by the Texas state legislature. The state funding policy is as follows: (1) The state constitution requires the legislature to establish a member contribution rate of not less than 6.0% of the member's annual compensation and a state contribution rate of not Iess than 6.0%and not more than 10%of the aggregate annual compensation of all members of the system; (2)A state statute prohibits benefit improvements or contribution reductions if, as a result of a particular action, the time required to amortize TRS' unfunded actuarial liabilities would be increased to a period that exceeds 31 years, or, if the amortization period already exceeds 31 years, the period would be increased by such action. State law provides for a member contribution rate of 6.4% for fiscal year 2008,2007 and 2006, and a state contribution rate of 6.58%for fiscal year 2008 and 6.0%for fiscal year 2007 and 2006. In certainn instances the reporting district is required to make all or a portion of the state's 6.58% contribution for fiscal year 2008 and 6.00%for fiscal years 2007 and 2006, State contributions to TRS made on behalf of the Westlake Academy's employees for the years ended August 31, 2008, 2007 and 2006 were $149,090, $108,131,and$94,194,respectively. f (continued) 24 h h I I - N I REQTARED SUPPLEMENTARY INFORMATION i i Q - 1 I - i I i l I f i - EXHIBIT E-I WESTLAK.E ACADEMY STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL-GENERAL FUND FOR THE YEAR ENDED AUGUST 31, 2008 Data Actual Amounts Variance With (GAAP BASIS) Final Budget Control Budgeted Amounts Positive or Codes -- Original Final (Negative) REVENUES: 5700 Total Local and Intermediate Sources $ 593,498 $ 539,652 $ 519,061 $ (20,591) 5800 State Program Revenues 2,357,813 2,700,797 2,649,907 (50,890) 5020 Total Revenues 2,951,311 3,240,449 3,168,968 (71,481) EXPENDITURES: Current: 0011 Instruction 1,956,274 1,925,134 1,849,711 75,423 0012 Instructional Resources and Media Services 70,317 71,470 60,914 10,556 0013 Curriculum and Instructional Staff Development 26,000 29,275 27,743 1,532 0021 Instructional Leadership 10,968 12,776 12,295 481 0023 School Leadership 132,396 [46,079 141,828 4,251 0031 Guidance, Counseling and Evaluation Set-vices 111,926 117,272 112,350 4,922 0033 Health Services 25,248 26,426 24,933 1,493 0035 Food Services 95,918 33,489 31,516 1,973 0036 Extracurricular Activities 58,305 50,125 49,484 641 0041 General Administration 401,373 509,152 510,966 (1,814) 0051 Facilities Maintenance and Operations 233,381 245,000 235,381 9,619 ! 0053 Data Processing Services 82,401 98,796 103,498 (4,702) 0061 Community Services 66,919 66,958 65,635 1,323 Debt Service: 0071 Debt Service-Principal on Long Term Debt - 42;000 - 42,000 6030 Total Expenditures 3,271,426 3,373,952 3,226,254 147,698 1200 Net Change in Fund Balances (320,115) (133,503) (57,286) 76,217 0100 Fund Balance- September 1 (Beginning) 691,740 691,740 691,740 - f 3000 Fund Balance-August 31 (Ending) $ 371,625 $ 558,237 $ 634,454 $ 76,217 6 i I 26 i WESTLAKE ACADEMY (A COMPONENT UNIT OF THE TOWN OF WESTLAKE) NOTES TO REQUIRED SUPPLEMENTARY INFORMATION AUGUST 31, 2008 Budgetary Information The Board adopts an"appropriated budget"on a GAAP basis for the General Fund. The Academy is required to present the adopted and final amended budgeted revenues and expenditures for this fund. The General Fund budget appears in Exhibit E-1. The following procedures are followed in establishing the budgetary data reflected in the basic financial statements: 1. Prior to August 25 of the preceding fiscal year,the Academy prepares a budget for the next succeeding fiscal year beginning September 1. The operating budget includes proposed expenditures and the means of financing them. 2. A meeting of the Board is then called for the purpose of adopting the proposed budget. 3. Prior to September 1, the budget is legally enacted through resolution by the Board. Once a budget is approved,it can only be amended at the object function and fund level by approval of a majority of the members of the Board. Amendments are presented to the Board at its regular meetings. Each amendment made before the fact,is reflected in the official minutes of the Board, and is not made after fiscal year-end. 4. Budgeted amounts are amended by the Board. All budget appropriations lapse at year-end. 5. For the year ending August 31,2008,expenditures exceeded appropriations in the fallowing functions: General Administration and Data Processing Services. These over expenditures were funded by under expenditures in various other functions. I i i i I C " V M A 27 t I f 0 COMBINING STATEMENTS i I 4 f - EXHIBIT F-1 428 Total Nonmajor High School Governmental Allotment Funds $ - $ 2,000 1,306 $ - $ 3,306 $ - $ 2,000 1,191 115 - 3,306 $ - $ 3,306 I I i I a a 29 I r EXHIBIT F-2 428 Total Nonmajor High School Governmental Allotment Funds $ 7,603 $ 23,773 - 55,193 7,603 78,966 7,603 73,216 - 5,750 7,603 78,966 r 31 i - INTERNAL CONTROL REPORT i k I llro 1 PATTILLO, BROWN & HILL, L_L_P_ CERTIFIED PUBLIC ACCOUNTANTS R BUSINESS CONSULTANTS 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 UDITING STANDARDS Board of Trustees Westlake Academy Members of the Board: We have audited the accompanying financial statements of the govermnental activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of Westlake Academy (the "Academy") as of and for the year ended August 31, 2008, which collectively comprise the Academy's basic financial statements and have issued our report thereon dated November 10,2008. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered the Academy's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements,but not for the purpose of expressing an opinion on the effectiveness of the Academy's internal control over financial reporting. Accordingly,we do not express an opinion on the effectiveness of the Academy's internal control over financial reporting. A control deficiency 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 misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the Academy's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the Academy's financial statements that is more than inconsequential will not be,prevented or detected by the Academy's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not. be prevented or detected by the Academy's internal control. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. i 32 115 SOUTH CHURCH STREET■HILLSBORO,TX 76645■(254)582-2583 a FAX;(254)582-5731 ■www.pbhcpa.com AFFILIATE OFFICES:BROWNSVILLE,TX(956)544-7778■'TEMPLE,TX(254)791-3464 WACO,TX(254)77214901 ■ALBUQUERQUE,NM(505)266-5904 Com Rance and Other Matters As part of obtaining reasonable assurance about whether Westlake Academy's financial statements are free of 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 financial 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. This report is intended solely for the information and use of management, the Board of Trustees, and others within the entity and is not intended to be used and should not be used by anyone other than these specified parties. i I. Pi�" A �. November 10,200$ I P C i I - I 33 r WESTLAKE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED AUGUST 31, 2008 y PATTILLO, BROWN Sr CERTIFIED PUBLIC ACCOUNTANTS M BUSINESS CONSULTANTS I WESTLAKE ACADEMY FOUNDATION TABLE OR CONTENTS AUGUST 31,2008 I Page Number Independent Auditor's Report.............................................................................. 1 2 Financial Statements: I Statement of Financial Position.................................................................. Statement of Activities and Changes in Net Assets.................................... 4 Statement of Functional Expenses.............................................................. 5 Statement of Cash Flows ............................................................................ 6 Notes to the Financial Statements..................................................................... 7 -9 Supplementary Information: 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............... i i I I I i jr11rW7ka PATTILLO, BROWN & HILL, L.L-P. CERTIFIED PUBLIC ACCOUNTANTS r BUSINESS CONSULTANTS INDEPENDENT AUDITOR'S REPORT I Board of Directors-of Westlake Academy Foundation Westlake, Texas I Members of the Board; We have audited the accompanying statement of financial position of Westlake Academy Foundation (the "Foundation") as of August 31, 2008, and the related statement of activities and changes in net assets, functional expenses, and cash flows for the year then ended. These financial statements are the responsibility of the Foundation's management. Our responsibility is to express an opinion on these financial 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 financial 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 financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Westlake Academy Foundation, as of August 31, 2008, and the changes in its net assets and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. 1 i 115 SOUTH CHURCH STREET t HILLSBORO,TX 76645■(254)'582-2583■FAX:(254)582-5731 ■www.pbhcpa.com AFFILIATE OFFICES:BROWNSVILLE,TX(956)544-7778■TEMPLE,TX(254)791-3460 WACO,TX(254)772-4901■ALBUQUERQUE,NM(505)266-5904 In accordance with Government Auditing Standards, we have also issued our report dated November 10, 2008, on our consideration of the Foundation's internal control over financial 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 financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. November 10, 2008 i i i 2 i FINANCIAL STATEMENTS i i i I f J - WESTLAKE ACADEMY FOUNDATION i STATEMENT OF FINANCIAL POSITION AUGUST 31,2008 Temporarily Unrestricted Restricted Total ASSETS Cash and cash equivalents $ 98,387 $ 659,801 $ 758,188 Unconditional promises to give less allowance for uncollectible unconditional promises of$36,584 and present value discount of$10,932 - 409,786 409,786 Other receivables 225 - 225 Total assets $ 98,612 $ 1,069,587 $ 1,168,199 LIABILITIES AND NET ASSETS Liabilities: Accrued expenses and other payables $ 5,338 $ - $ 5,338 Deferred revenue 25,506 - 25,506 Total liabilities 30,844 - 30,844 Net assets 67,768 1,069,587 1,13.7,355 Total liabilities and net assets $ 98,612 $ 1,069,587 $ 1,168,199 F I See accompanying notes to financial statements. 3 I WESTLAKE ACADEMY FOUNDATION I STATEMENT OF ACTIVITIES FOR THE YEAR ENDED AUGUST 31,2008 I Temporarily Unrestricted Restricted Total REVENUES, GAINS AND OTHER SUPPORT Contributions: Gallery Night $ 245,410 $ - $ 245,410 Apprentice sponsors 411,199 - 411,199 Capital campaign - 534,187 534,187 Endowment - 1,511 1,511 Interest and dividend income 2,907 10,277 13,184 Total revenues, gains and other support 659,516 545,975 1,205,491 FUNCTIONAL EXPENSES Program services 394,571 - 394,571 Support services 224,650 - 224,550 Total allocations and fumetional expenses 619,221 - 619,221 INCREASE IN NET ASSETS 40,295 545,975 586 270 NET ASSETS,BEGINNING 27,473 523,612 551,085 NET ASSETS,ENDING $ 67,768 $ 1,069,587 $ 1,137,355 I I I I See accompanying notes to financial statements. 4 o M Ln rn N -,Y o �n o0 m r o �,q 00 O 00 v7 G N Ln is t— N o, w w sn � eR CD nrnN �ta � oom G ) O v3 �D%C [Ct F N O 00 00 N 00 v� O � N N oa O oo 0 In CA P, G � CIS G +O 00 F'- Ln DO tiD , Ln N "6 f— 17 , < 00. Cd N -z, dk l CD ta 'D 4S � D O 'D V, 11) Ln rl) Ln Lo 00 Ln c+1 w E1 �" r; t Q w GOS o rn � � cNV p ►f7 ° m m W G U Cy sO� s� bll c UO w o It w o e m 64 69 iA t K by C by b9 b0 `n m �' •� u G IE N b G V WESTLAKE ACADEMY FOUNDATION STATEMENT OF CASH FLOWS FOR THE YEAR ENDED AUGUST 31,2008 Unrestricted CAH FLOWS FROM OPERATING ACTIVITIES Increase in net assets $ 586,270 Adjustments to reconcile increase irn.net assets to net cash provided by operating activities: Discount of unconditional promises to give ( 12,340) Changes in operating assets and liabilities: Increase in unconditional promises to give ( 58,841) Decrease in other receivables 21 Increase in accounts payable and accrued expenses 4,675 Decrease in due to academy ( 12,441) Increase in deferred revenue 25,506 a Net cash provided by operating activities 532,850 NET INCREASE IN CASH 532,850 CASH,BEGINNING 225,338 CASH,ENDING $ 758,188 See accompanying notes to financial statements. 6 WESTLAKE ACADEMY FOUNDATION NOTES TO THE FINANCIAL STATEMENTS AUGUST 31,2008 I. NATURE OF BUSINESS Westlake Academy Foundation (the "Foundation") was organized exclusively for charitable and educational purposes, including for such purposes, the making of distributions to organizations under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended. The purpose of the Foundation is to act on behalf of the Town of Westlake (the "Town") as its duly constituted authority and instrumentality and, in connection therewith, to exercise all powers and authority granted under the Texas Nonprofit Corporation Act and other applicable law. Among other things, the Foundation is to raise funds and take other actions in order to enhance the educational opportunities to be offered by the open-enrollment charter school, Westlake Academy (the "Academy"), operated by the Town. The Foundation has three major programs 1) Blacksmith Apprentice Program, 2) Capital Campaign, and 3) Gallery Night. The Blacksmith Apprentice Program raises funds from parents and other interested individuals for the operations of the Academy. The purpose of the Capital j Campaign is to raise funds for a building that will benefit both the Academy and the Town. Revenue received as a part of Gallery Night is used for the operations of the Foundation or other areas as determined by the Foundation's Board of Directors, The Foundation is included as a discretely presented component unit of the Academy. The determination to include separate governmental entities is based on the criteria of GASB Statement No. 14, "The Financial Reporting Entity" as amended by GASB Statement No. 39, "Determining Whether Certain Organizations Are Component Units." GASB defines the reporting entity as the primary government and those component units for which the primary government is financially accountable. To be financially accountable, a voting majority of the component unit's ruling body must be appointed by the primary government, and either (a) the primary government must be able to impose its will, or (b) the primary government may potentially benefit financially or be financially responsible for the component unit. II. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A summary of the Foundation's significant accounting policies consistently applied in the preparation of the accompanying financial statements follows. Basis of Accounting The financial statements of the Foundation have been prepared on the accrual basis of accounting in accordance with accounting standards generally accepted in the United States of America and, accordingly, reflect all significant receivables, payables, and other liabilities. (continued) 7 IV. DEPOSITS AND INVESTMENT'S i The funds of the Foundation must be deposited and invested under the terms of a contract, contents of which are set out in the Depository Contract Law. The Depository bank places approved pledged securities for safekeeping and trust with the Foundation's agent bank in an amount sufficient to protect Foundation funds on a day-to-day basis during the period of the contract. The pledge of approved securities is waived only to the extent of the depository bank's dollar amount of Federal Deposit Insurance Corporation("FDIC") insurance. V. PROMISES TO GIVE The Foundation is conducting a capital campaign for funds for the construction of a building that will benefit both the Academy and the Town. Promises to give are restricted to payment of the costs of the construction of the building. The promises to give as of August 31, 2008, are unconditional and due $254,393 in 2009 and $202,909 over the following three years. Promises to give to be received after 2009 are discounted at 4.58°/x. The unamortized discount on promises to give is $10,932 as of August 31, 2008. Allowance for uncollectable promises at August 31, 2008 is $36,584. VI. DEFERRED REVENUE Income from contributions is deferred and recognized over the periods to which the contributions relate. At August 31, 2008, deferred revenue is $25,506. i 9 f SUPPLEMENTARY INFORMATION I PATTILLO, BROWN & HILL, L.L.P- CERTIFIED PUBLIC ACCOUNTANTS ■ BUSINESS CONSULTANTS I 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 Board of Directors Westlake Academy Foundation Members of the Board: We have audited the accompanying financial position and the related statement of activities and changes in net assets, functional expenses, and cash flows of Westlake Academy Foundation (the "Foundation") as of and for the year ended August 31, 2008, and have issued our report thereon dated November 10, 2008. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Re ortin In planning and performing our audit, we considered the Foundation's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Foundation's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Foundation's internal control over financial reporting. A control deficiency 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 misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the Foundation's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the Foundation's financial statements that is more than inconsequential will not be prevented or detected by the Foundation's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the Foundation's internal control. 10 I I5 SOUTH CHURCH STREET■HILLSBORO,TX 76645■(254)582-2583 ■FAX:(254)582-5731 ■www.phhcpa.com AFFILIATE OFFICES:BROWNMLLE,TX(956)544-7778■TEMPLE,TX(254)791-3460 WACO,TX(254)772-4901 ■ALBUQUERQUE,NM(505)265-5904 Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. Compliance and Other Matters 'As part of obtaining reasonable assurance about whether the Foundation's financial statements are free of 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 financial 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. We noted no matters involving noncompliance that are required to be reported under Government Auditing Standards. This report is intended solely for the information and use of management, the Foundation's Board of Directors, and others within the entity and is not intended to be used and should not be used by janyone other than these specified parties. I November 10, 2008 s i u i 11 w .