jfk medical center charter school, inc. rpts/2016 jfk medical... · jfk medical center charter...

JFK MEDICAL CENTER CHARTER

SCHOOL, INC.

REPORT ON AUDIT OF FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2016

JFK MEDICAL CENTER CHARTER SCHOOL, INC.

Table of Contents

Page Independent auditors’ report 1–2 Management’s discussion and analysis 3–4 Basic financial statements: Government – wide financial statements: Statement of net position 5 Statement of activities 6 Government fund financial statements: Balance sheet – governmental funds 7 Statement of revenues, expenditures and changes in fund balance – governmental funds 8 Notes to financial statements 9–13 Statement of revenues, expenditures and changes in fund balance – budget to actual comparison – governmental funds 14 Independent auditors’ 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 15–16 Management letter 17–18

Independent Auditors’ Report

To the Board of Directors JFK Medical Center Charter School, Inc.

Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, and each major fund, of the JFK Medical Center Charter School, Inc., a non-profit organization and a component unit of the School District of Palm Beach County, as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise JFK Medical Center Charter School, Inc.’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial 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 financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility 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 from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial 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 financial 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 significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of JFK Medical Center Charter School, Inc. as of June 30, 2016, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 3–4 and budgetary comparison information on page 14 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated September 29, 2016 on our consideration of JFK Medical Center Charter School, Inc.'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 effectiveness of internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering JFK Medical Center Charter School, Inc.’s internal control over financial reporting and compliance. West Palm Beach, Florida September 29, 2016

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MANAGEMENT’S DISCUSSION AND ANALYSIS

JFK Medical Center Charter School, Inc. (the School) is a non-profit organization that operates a public charter school in Palm Beach County, Florida, under the sponsorship of the School District of Palm Beach County (the District). Our discussion and analysis of the School’s financial performance provides an overview of the School’s activities for the fiscal year ended June 30, 2016. Please read it in conjunction with the School’s financial statements, which begin on . Overview of financial statements presented This management’s discussion and analysis introduces the School’s basic financial statements as of and for the fiscal year ended June 30, 2016. The basic financial statements include government-wide financial statements, governmental fund financial statements and the related notes to the financial statements.

Government-wide financial statements The School’s government-wide financial statements use a format similar to that of a commercial enterprise and are prepared on the accrual basis of accounting. The statement of net position presents all of the School’s assets and liabilities with the difference reported as net position. Over time, increases or decreases in net position represent an indicator of the financial health of the School. The statement of activities reports the School’s revenues and expenses for the fiscal year and includes the sources of the various School revenues. Governmental fund financial statements Governmental funds are reported in the fund financial statements and include essentially the same activities as in the government-wide financial statements. The focus of the governmental fund financial statements is to provide a view of the School’s government funds in order to help the user evaluate the annual financing requirements of governmental programs and the commitment of expendable resources in the near-term. The governmental funds include the general fund and capital projects fund. For the School, the primary difference from the government-wide financial statements is the exclusion of fixed assets and related depreciation expense.

Financial highlights The financial highlights for the fiscal year ended June 30, 2016 are as follows:

The School’s total assets at June 30, 2016 exceed its liabilities by $172,634, representing the School’s net investment in capital assets. This is a decrease of $20,516 from the net investment in capital assets of $193,150 at June 30, 2015.

The School’s revenues from full-time equivalent students increased to $3,608,775 for the year ended June 30, 2016 from $3,513,287 for the year ended June 30, 2015 as a result of an increase in the base student allocation from the prior school year.

The School’s capital outlay revenue decreased from $194,212 for the year ended June 30, 2015 to $179,314 for the year ended June 30, 2016 as a result of a decrease in funding from the Palm Beach County School Board.

Instruction expenses decreased to $2,337,110 during the year ended June 30, 2016 from $2,524,277 for the year ended June 30, 2015 primarily due to general decreases in costs.

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MANAGEMENT’S DISCUSSION AND ANALYSIS, CONTINUED Financial highlights, continued

Actual revenues for the year ended June 30, 2016 exceeded budgeted revenues by $414,204 primarily due to increased subsidies and in-kind revenues received.

Actual expenses for the year ended June 30, 2016 exceeded budgeted expenses by $414,204

primarily as a result of increased expenses in plant operations.

Condensed financial information Condensed government - wide financial information is presented below:

Summary of Net Position Governmental Activities June 30, 2016 June 30, 2015 Current assets $ 1,032,456 $ 660,840

Capital assets, net 172,634 193,150

Total assets 1,205,090 853,990

Current liabilities 1,032,456 660,840

Total net position $ 172,634 $ 193,150

Summary of Changes in Net Position Governmental Activities 2016 2015

Revenues:

FEFP fees $ 3,608,775 $ 3,513,287

Other 618,224 639,388

Total revenues 4,226,999 4,152,675

Program expenses, net:

Instruction 2,228,690 2,451,945

Rent – Bright Horizons 938,853 674,611

Other 1,079,972 1,069,286

Total expenses 4,247,515 4,195,842

Increase (decrease) in net position $ (20,516) $ (43,167)

Governmental

Activities

Cash and cash equivalents 1,032,456$

Property and equipment:

Furniture, fixtures and equipment 681,336

Less: accumulated depreciation 508,702

Property and equipment, net 172,634

Total assets 1,205,090

Accounts payable and accrued expenses 1,032,456

Net investment in capital assets 172,634

Unrestricted -

Total net position 172,634$


STATEMENT OF NET POSITION

June 30, 2016

ASSETS

LIABILITIES

NET POSITION

See accompanying notes to financial statements.

5

Net (Expense)

Revenue and

Change in

Net Position

Operating Capital

Charges for Grants and Grants and Governmental

Functions/Programs Expenses Services Contributions Contributions Activities

Governmental activities:

Instruction 2,337,110$ -$ 108,420$ -$ (2,228,690)$

School administration 704,325 - - - (704,325)

Rent - Bright Horizons 938,853 - - - (938,853)

Fiscal services 248,893 - - - (248,893)

Pupil transportation services 126,754 - - - (126,754)

Operation of plant 351,799 - 351,799 - -

Total governmental activities 4,707,734$ -$ 460,219$ -$ (4,247,515)

General revenues:

FEFP fees 3,608,775

Capital outlay grant 179,314

Subsidized income - JFK 314,928

Other income 123,982

Total general revenues 4,226,999

Change in net position (20,516)

Net position, beginning of year 193,150 Net position, end of year 172,634$

Program Revenues


STATEMENT OF ACTIVITIES

For the Year Ended June 30, 2016


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Total

General Capital Governmental

Fund Projects Funds

Cash and cash equivalents 1,032,456$ -$ 1,032,456$

Liabilities:

Accounts payable and accrued expenses 1,032,456$ -$ 1,032,456$

Fund balance:

Unassigned - - -

Total liabilities and fund balance 1,032,456$ -$ 1,032,456$

Fund balance at June 30, 2016 - above -$

Cost of property and equipment, net of accumulated

depreciation at June 30, 2016 per statement of net position 172,634

Net position at June 30, 2016 per statement of net position 172,634$


BALANCE SHEET - GOVERNMENTAL FUNDS

June 30, 2016

RECONCILIATION WITH GOVERNMENT - WIDE FINANCIAL STATEMENTS

June 30, 2016

ASSETS

LIABILITIES AND FUND BALANCE


7

Total

General Capital Governmental

Fund Projects Funds

General revenues:

FEFP fees 3,608,775$ -$ 3,608,775$

Capital outlay grant 179,314 - 179,314

Subsidized income - JFK 666,727 - 666,727

Other income 232,402 - 232,402

4,687,218 - 4,687,218

Expenditures:

Instruction 2,316,594 - 2,316,594

School administration 704,325 - 704,325

Rent - Bright Horizons 938,853 - 938,853

Fiscal services 248,893 - 248,893

Pupil transportation services 126,754 - 126,754

Operation of plant 351,799 - 351,799

4,687,218 - 4,687,218

Change in fund balance - - -

Fund balance, beginning of year - - -

Fund balance, end of year -$ -$ -$

Net change in fund balance for the year ended June 30, 2016 - above -$

Depreciation recorded during the year ended June 30, 2016 in

government-wide financial statements (20,516)

Change in net position for the year ended June 30, 2016

per statement of activities (20,516)$


STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -


GOVERNMENTAL FUNDS

RECONCILIATION WITH GOVERNMENT - WIDE FINANCIAL STATEMENTS


See acompanying notes to financial statements.

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NOTES TO FINANCIAL STATEMENTS Note 1 – Summary of Significant Accounting Policies Requests for information This financial report is designed to provide a general overview of the School’s finances and to demonstrate compliance and accountability for its resources. Questions concerning any of the information in this report or requests for any additional financial information should be addressed to Terri Clark, Office Manager, 4696 Davis Road, Lake Worth, FL 33461. Nature of activities JFK Medical Center Charter School, Inc. (the School), located in Lake Worth, Florida, was established as a non-profit organization in April 2002 under the laws of the State of Florida and is the reporting entity. The School operates as a Charter School pursuant to a Charter School Contract (the Contract) with the School District of Palm Beach County, Florida (the District). Under the Contract, the School provides an in-the-work-place school for the employees of JFK Medical Center (JFK). The School serves other students in Palm Beach County if space is available. The School is a component unit of the District. The Contract, which is effective through June 2022, requires the District to provide the School’s primary source of funding based upon the number of full-time equivalent students (FTES) registered at the School. Basis of presentation The School’s financial statements have been prepared in accordance with generally accepted accounting principles as prescribed by the Government Accounting Standards Board (GASB). Accordingly, both government-wide and governmental fund financial statements are presented. Government - wide financial statements The government - wide financial statements include the statement of net position and the statement of activities. These statements report financial information for the School as a whole. Program revenues include charges for services, operating grants and contributions, including restricted investment income, which finance annual operating activities, and capital grants and contributions which fund the acquisition of capital assets. Governmental fund financial statements Governmental fund financial statements are provided for governmental funds. Major individual governmental funds are reported in separate columns with composite columns for non-major funds. All the activities of the School are classified as governmental type activities. There are no business type activities. Basis of accounting The government-wide financial statements of the School are prepared in accordance with generally accepted accounting principles (GAAP). GASB is responsible for establishing GAAP for school districts through its statements and interpretations. The activities in the government-wide financial statements are presented using the economic resources measurement focus and the accrual basis of accounting.

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NOTES TO FINANCIAL STATEMENTS, CONTINUED Note 1 – Summary of Significant Accounting Policies, Continued Basis of accounting, continued Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when they are both measurable and available. Available means collectible within the current period or soon enough thereafter to pay current liabilities. The School considers revenues to be available if they are collected within sixty days of the end of the fiscal year. Expenditures are recorded when the related liability is incurred. Cash and cash equivalents Cash and cash equivalents include money market accounts and certificates of deposit with an original maturity of three months or less. The School maintains its cash and cash equivalents in bank accounts which, at times, may exceed federally-insured limits. The School has not experienced any losses with respect to cash and cash equivalents. Property and equipment Property and equipment is stated at cost, less accumulated depreciation. Depreciation is provided on the straight-line method over the estimated useful lives of the respective assets ranging from five to ten years. Contributed services and facilities The School recognizes certain plant expenses paid for on their behalf by JFK Medical Center as in-kind revenue and expense. These amounts are reported under operation of plant in the accompanying financial statements. The School does not recognize any support, revenue or expense from services contributed by individual volunteers since no objective basis is available to measure the value of such services. Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates. Income taxes The School is a not-for-profit organization that is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code. Accordingly, no provision for income taxes is recorded in the accompanying financial statements. Management analyzes tax positions in jurisdictions where it is required to file income tax returns. Interest and penalties attributable to income taxes, if any, are included in operating expenses. No such interest or penalties were recorded for the year ended June 30, 2016. Based on its evaluation, management did not identify any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease. The School is no longer subject to federal, state or local income tax examinations by taxing authorities for years before 2013.

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NOTES TO FINANCIAL STATEMENTS, CONTINUED

Note 1 – Summary of Significant Accounting Policies, Continued Revenue from government agencies The School receives a substantial amount of its revenue from the State of Florida through the Florida Education Finance Program (FEFP). A significant reduction in the level of this revenue may have a substantial effect on the School’s programs, activities, and its ability to continue operations. The School also receives federal awards for the enhancement of various educational programs. This assistance is generally received based on applications submitted to and approved by various granting agencies. Note 2 – Property and Equipment Property and equipment activity for the year ended June 30, 2016 is presented as follows:

July 1, 2015 Additions Deletions June 30, 2016

Furniture, fixtures and equipment $ 681,336 $ - $ - $ 681,336

Less: accumulated depreciation (488,186) (20,516) - (508,702) Property and equipment, net $ 193,150 $ (20,516) $ - $ 172,634

Note 3 – Fund Balance GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, categorizes fund balance as either non-spendable or spendable. Non-spendable is defined as the portion of fund balance that includes amounts that cannot be spent because they are either (a) not spendable in form or (b) legally or contractually required to be maintained intact. Spendable is defined as a hierarchy of fund balance classifications that is available to be spent based on the extent to which the School is bound to observe constraints imposed upon the use of resources, categorized as follows:

Restricted fund balance is constrained by external parties, constitutional provisions or enabling legislation.

Committed fund balance can only be used for specific purposes pursuant to constraints imposed by formal action of the Board of Directors.

Assigned fund balance represents amounts constrained by the Board of Directors or principal to be used for a specific purpose.

Unassigned fund balance is the residual classification for the general fund. Restricted amounts are considered spent when an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available. Committed amounts would be reduced first, followed by assigned amounts, and then unassigned amounts when expenditures are incurred for purposes for which amounts in any of those unrestricted fund balance classifications could be used.

12


NOTES TO FINANCIAL STATEMENTS, CONTINUED Note 4 – Related Party Transactions Management agreement and accounting services contract On August 6, 2003, the School entered into a management agreement (the Agreement) that expires in 2018 with Bright Horizons, Inc. (Bright Horizons). Under the terms of the Agreement, Bright Horizons provides all administrative and management services necessary to operate the School. The School has the option to renew the agreement for up to an additional 15 years. The management fee is equal to 5% of gross revenues. The Agreement also provides for Bright Horizons to receive an annual corporate services fee equal to 7% of capacity revenues (the base student allocation received from the state or district). Management and corporate services fees approximated $437,000 for the year ended June 30, 2016. Lease agreement The School leases its administrative and classroom facilities under an operating lease with Bright Horizons that expires in 2017. The School has options to renew the lease for unlimited five-year terms. Monthly rents due under the lease are $67,829 which was determined based on the approximate value of the land and buildings used by the School of $7,556,000 at the inception of the lease, a 10.5% interest rate, and a 30-year term. Under the terms of the lease, Bright Horizons is paid capital outlay amounts received from the District, plus earnings from the School’s operations, in lieu of the rentals otherwise due under the lease. Such capital outlay amounts and earnings are significantly less than the minimum lease amounts specified in the lease. For financial reporting purposes, rent expense is recorded as amounts become payable under the lease. The aggregate shortfall, comprised of the excess of amounts due under the lease over the amounts paid, represents a contingent liability of approximately $3,049,000 that is not recorded in the accompanying basic financial statements as of June 30, 2016. Specified minimum rentals due under the lease in the year subsequent to June 30, 2016 is $813,948 for the year ending June 30, 2017. Note 5 – JFK Medical Center Agreement Bright Horizons entered into a 15-year sponsorship agreement with JFK whereby the School receives an annual sponsorship fee. The sponsorship agreement requires JFK to subsidize certain facility operating expenses and allows JFK the reasonable use of the School classrooms and public areas to conduct and present educational programs and classes. During the year ended June 30, 2016, the School received the following amounts under this agreement:

Sponsorship fee $ 313,480

Subsidized expenses 353,247

Total $ 666,727

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NOTES TO FINANCIAL STATEMENTS, CONTINUED Note 6 – Concentrations and Risks Significant funding source The School receives funding from the State of Florida based on the number of FTES who attend the School. The data is compiled by the School and is subject to audit by the state and, if errors are found, could result in amounts having to be repaid to the state or decreases in future allocations. Management believes that the amounts that would be remitted back to the state due to errors in their FTES count, if any, would not be material to the School’s financial statements. Risks of loss The School is exposed to various risks of loss related to torts; theft, damage, and destruction of assets; administrative errors and omissions; injuries to personnel, students and guests; as well as natural disasters. The School’s Board of Directors annually evaluates the School’s risk of loss and the School maintains commercial insurance coverage to mitigate the potential for significant losses. The School has experienced no instances of settlements exceeding insurance coverage in any of the past three fiscal years. Note 7 – Subsequent Events The School evaluated its activities subsequent to June 30, 2016 through September 29, 2016, which was the date the financial statements were available to be issued, for events that require recognition in the financial statements or disclosure in the notes thereto. In June 2016, the School’s Board of Directors was informed that JFK wished to terminate its sponsorship agreement with the School as of June 30, 2017. As a result, Bright Horizons also informed the School’s Board of Directors that they wished to terminate their management agreements with the School as of June 30, 2017. In September 2016, the School’s Board of Directors accepted a proposal from a new management company, pending approval by the School District of Palm Beach County. Bright Horizons has agreed to continue leasing the building to the School with an option to purchase after five years.

Variance

Original and Favorable

Final Budget Actual (Unfavorable)

Revenues:

FEFP fees 3,604,876$ 3,608,775$ 3,899$

Capital outlay funding 203,820 179,314 (24,506)

Subsidized income - JFK 404,318 666,727 262,409

Other income 60,000 232,402 172,402

Total revenues 4,273,014 4,687,218 414,204

Expenditures:

Instruction 2,497,987 2,316,594 181,393

School administration 542,004 704,325 (162,321)

Rent - Bright Horizons 577,814 938,853 (361,039)

Fiscal services 464,344 248,893 215,451

Pupil transportation services 32,012 126,754 (94,742)

Operation of plant 158,853 351,799 (192,946)

Total expenditures 4,273,014 4,687,218 (414,204)

Net change in fund balance - - -

Fund balance, beginning of year - - -

Fund balance, end of year -$ -$ -$


STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -


BUDGET TO ACTUAL COMPARISON - GOVERNMENTAL FUNDS

14

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

The Board of Directors JFK Medical Center Charter School, Inc. We have audited, 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, the basic financial statements of JFK Medical Center Charter School, Inc., a non-profit organization and component unit of the School District of Palm Beach County, as of and for the year ended June 30, 2016, and the related notes to financial statements, and have issued our report thereon dated September 29, 2016.

Internal Control Over Financial Reporting

In planning and performing our audit of the basic financial statements, we considered JFK Medical Center Charter School, Inc.'s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the basic financial statements, but not for the purpose of expressing an opinion on the effectiveness of the JFK Medical Center Charter School, Inc.’s internal control. Accordingly, we do not express an opinion on the effectiveness of the JFK Medical Center Charter School, Inc.’s internal control. A deficiency 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 deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, 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 first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the JFK Medical Center Charter School, Inc.'s basic financial 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 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.

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 entity’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 entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. This report is intended solely for the information and use of JFK Medical Center Charter School, Inc.’s management, members of the Board of Directors, the Auditor General of the State of Florida and the School District of Palm Beach County and is not to be used by anyone other than these specified parties. West Palm Beach, Florida September 29, 2016

Management Letter

The Board of Directors JFK Medical Center Charter School, Inc. Report on the Financial Statements We have audited the financial statements of JFK Medical Center Charter School, Inc. (a non-profit organization) as of and for the fiscal year ended June 30, 2016, and have issued our report thereon dated September 29, 2016. Auditor’s Responsibility We conducted our audit 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 Chapter 10.850, Rules of the Auditor General. Other Reports and Schedules We have issued our Independent Auditor’s 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. Disclosures in that report, which is dated September 29, 2016, should be considered in conjunction with this management letter. Prior Audit Findings Section 10.854(1)(e)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. There were no findings and recommendations disclosed in the preceding annual financial audit report. Official Title Section 10.854(1)(e)5., Rules of the Auditor General, requires the name or official title of the entity. The official title of the entity is JFK Medical Center Charter School, Inc. Financial Condition Section 10.854(1)(e)2., Rules of the Auditor General, requires that we report the results of our determination as to whether or not the JFK Medical Center Charter School, Inc. has met one or more of the conditions described in Section 218.503(1), Florida Statutes, and identification of the specific condition(s) met. In connection with our audit, we determined that the JFK Medical Center Charter School, Inc. did not meet any of the conditions described in Section 218.503(1), Florida Statutes. Pursuant to Sections 10.854(1)(e)6.a. and 10.855(12), Rules of the Auditor General, we applied financial condition assessment procedures for JFK Medical Center Charter School, Inc. It is management’s responsibility to monitor JFK Medical Center Charter School, Inc.’s financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by the same.

Transparency Sections 10.854(1)(e)7. and 10.855(13), Rules of the Auditor General, require that we report the results of our determination as to whether the JFK Medical Center Charter School, Inc. maintains on its web site the information specified in Section 1002.33(9)(p), Florida Statutes. In connection with our audit, we determined that JFK Medical Center Charter School, Inc. maintained on its website the information specified in Section 1002.33(9)(p), Florida Statutes. Other Matters Section 10.854(1)(e)3., Rules of the Auditor General, requires that we address in the management letter any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations. Section 10.854(1)(e)4., Rules of the Auditor General, requires that we address noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings. Purpose of this Letter Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, federal and other granting agencies, the Board of Directors, applicable management, and the School Board of Palm Beach County, Florida, and is not intended to be and should not be used by anyone other than these specified parties. West Palm Beach, Florida September 29, 2016

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