Comparative Financial Statements and Auditor's Report

Latin American Montessori Bilingual

Public Charter School

Comparative Financial Statements and

Auditor’s Report

For the years ended June 30, 2019 and 2018

I N D E X

Page

Independent Auditor's Report 1-2

Comparative Statements of Financial Position, June 30, 2019 and 2018 3

Comparative Statements of Activities, For the Years Ended

June 30, 2019 and 2018 4

Comparative Statements of Functional Expenses, For the Years Ended

June 30, 2019 and 2018 5-6

Comparative Statements of Cash Flows, For the Years Ended

June 30, 2019 and 2018 7

Notes to Financial Statements 8-31

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 32-33

Summary Schedule of Prior Audit Findings, For the Year Ended June 30, 2019 34

Schedule of Findings, For the Year Ended June 30, 2019 35-36

Non-Accounting Information:

Schedule of Contracts Awarded in Excess of $25,000 37

Kendall, Prebola and Jones,

LLC

Certified Public Accountants

133 MANN STREET, P.O. BOX 259, BEDFORD, PA 15522-0259 / (814) 623-1880

Board of Directors

Latin American Montessori

Bilingual Public Charter School

1375 Missouri Avenue, NW

Washington, DC 20011

INDEPENDENT AUDITOR’S REPORT

Report on the Financial Statements

We have audited the accompanying financial statements of the Latin American Montessori Bilingual

Public Charter School (a nonprofit organization), which comprise the statements of financial position as

of June 30, 2019 and 2018, and the related statements of activities, functional expenses, and cash flows

for the years then ended, and the related notes to the financial statements.

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 audits. We

conducted our audits 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.

Board of Directors -2- December 4, 2019

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the

financial position of the Latin American Montessori Bilingual Public Charter School as of June 30, 2019

and 2018, and the changes in its net assets and its cash flows for the years then ended in accordance with

accounting principles generally accepted in the United States of America.

Other Matters

Other Information

We have audited the financial statements of the Latin American Montessori Bilingual Public Charter

School as of and for the years ended June 30, 2019 and 2018, and our report thereon dated December 4,

2019, expressed an unmodified opinion on those financial statements. Our audits were conducted for the

purpose of forming an opinion on the financial statements as a whole. The schedule of contracts awarded

in excess of $25,000, which is the responsibility of management, is presented for the purpose of additional

analysis and is not a required part of the financial statements. Such information has not been subjected to

the auditing procedures applied in the audit of the financial statements, and, accordingly, we do not

express an opinion or provide any assurance on it.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated December 4,

2019, on our consideration of the Latin American Montessori Bilingual Public Charter School’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 solely 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 the Latin American

Montessori Bilingual Public Charter School’s 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 the Latin American Montessori Bilingual Public Charter School’s internal control over

financial reporting and compliance.

Kendall, Prebola and Jones

Certified Public Accountants

Bedford, Pennsylvania

December 4, 2019

-2-

LATIN AMERICAN MONTESSORI BILINGUAL PUBLIC CHARTER SCHOOL

COMPARATIVE STATEMENTS OF FINANCIAL POSITION

JUNE 30, 2019 AND 2018

June 30, 2019

June 30, 2018

ASSETS

Current Assets:

Cash and Cash Equivalents

$ 3,065,615

$ 3,526,891

Accounts Receivable

108,351

84,370

Grants Receivable

61,393

104,103

Promises Receivable

-

3,881

Prepaid Expenses

103,730

60,596

Total Current Assets

$ 3,339,089

$ 3,779,841

Fixed Assets:

Fixed Assets, Net of Accumulated Depreciation

$ 7,559,496

$ 7,848,890

Total Fixed Assets

$ 7,559,496

$ 7,848,890

Other Assets:

Cash Restricted for Long-Term Purposes

$ 236,215

$ 230,261

Interest Rate Swap

-

36,290

Deposits

1,235,416

683,556

Total Other Assets

$ 1,471,631

$ 950,107

TOTAL ASSETS

$ 12,370,216

$ 12,578,838

LIABILITIES AND NET ASSETS

Current Liabilities:

Accounts Payable

$ 397,230

$ 258,369

Income Taxes Payable

1,258

437

Accrued Interest Payable

3,353

3,326

Accrued Salary and Vacation

779,730

848,841

Payroll Withholdings and Related Liabilities

250,530

191,064

Refundable Advances

-

155,806

Deferred Revenues

55,080

87,600

Interest Rate Swap

17,196

-

Current Portion - Long-Term Debt

4,910,237

144,537

Total Current Liabilities

$ 6,414,614

$ 1,689,980

Long-Term Liabilities:

Notes Payable

$ 4,910,237

$ 5,054,774

Less: Current Portion

(4,910,237)

(144,537)

Deferred Rent

239,727

140,433

Total Long-Term Liabilities

$ 239,727

$ 5,050,670

Total Liabilities

$ 6,654,341

$ 6,740,650

Net Assets:

Without Donor Restrictions

$ 5,715,875

$ 5,838,188

With Donor Restrictions

-

Total Net Assets

$ 5,715,875

$ 5,838,188

TOTAL LIABILITIES AND NET ASSETS

$ 12,370,216

$ 12,578,838

(See Accompanying Notes and Auditor's Report)

-3-

LATIN AMERICAN MONTESSORI BILINGUAL PUBLIC CHARTER SCHOOL

COMPARATIVE STATEMENTS OF ACTIVITIES

FOR THE YEARS ENDED JUNE 30, 2019 AND 2018

June 30, 2019

June 30, 2018

Without

With

Without

With

Donor

Restrictions

Total

Restrictions

Total

Revenues and Other Support:

Tuition - Per Pupil Funding Allocation

$ 7,524,278

$ -

$ 7,524,278

$ 7,321,480

$ -

$ 7,321,480

Tuition - Facilities Allocation

1,553,188

-

1,553,188

1,475,040

-

1,475,040

Federal Entitlements and Grants

310,304

-

310,304

261,036

-

261,036

Donated Federal Commodities

10,077

-

10,077

11,160

-

11,160

State Government Grants

27,833

-

27,833

50,138

-

50,138

Private Grants and Contributions

105,861

-

105,861

103,729

10,000

113,729

Donated Services

47,190

-

47,190

9,500

-

9,500

Student Program Fees and Other

164,782

-

164,782

173,672

-

173,672

Extended Learning Day Program Fees

970,228

-

970,228

898,430

-

898,430

Interest and Dividends

63,754

-

63,754

4,773

-

4,773

Miscellaneous Income

-

26,212

-

26,212

Loss on Disposal of Fixed Assets

(656)

-

(656)

(1,923)

-

(1,923)

Fundraisers:

Sales

$ 23,648

$ -

$ 23,648

$ 17,995

$ -

$ 17,995

Less: Cost of Direct Benefits to Donors

(10,913)

-

(10,913)

(9,407)

-

(9,407)

Net Revenue from Fundraisers

$ 12,735

$ -

$ 12,735

$ 8,588

$ -

$ 8,588

Net Assets Released from Restrictions

(Satisfaction of Program Restrictions)

-

11,091

(11,091)

-

Total Revenues and Other Support

$ 10,789,574

$ -

$ 10,789,574

$ 10,352,926

$ (1,091)

$ 10,351,835

Expenses:

Educational Services

$ 10,049,226

$ -

$ 10,049,226

$ 9,607,056

$ -

$ 9,607,056

Fundraising

31,264

-

31,264

26,750

-

26,750

General and Administrative

777,911

-

777,911

951,569

-

951,569

Total Expenses

$ 10,858,401

$ -

$ 10,858,401

$ 10,585,375

$ -

$ 10,585,375

Changes in Net Assets before Change in Fair Value of

Interest Rate Swap

$ (68,827)

$ -

$ (68,827)

$ (232,449)

$ (1,091)

$ (233,540)

Changes in Fair Value of Interest Rate Swap

(53,486)

-

(53,486)

122,197

-

122,197

Change in Net Assets

$ (122,313)

$ -

$ (122,313)

$ (110,252)

$ (1,091)

$ (111,343)

Net Assets, Beginning of Year

5,838,188

-

5,838,188

5,948,440

1,091

5,949,531

Net Assets, End of Year

$ 5,715,875

$ -

$ 5,715,875

$ 5,838,188

$ -

$ 5,838,188

(See Accompanying Notes and Auditor's Report)

-4-

LATIN AMERICAN MONTESSORI BILINGUAL PUBLIC CHARTER SCHOOL

COMPARATIVE STATEMENTS OF FUNCTIONAL EXPENSES

FOR THE YEARS ENDED JUNE 30, 2019 AND 2018

June 30, 2019

June 30, 2018

Educational

General and

Educational

General and

Total

Services

Administrative

Fundraising

Total

Services

Administrative

Fundraising

Personnel, Salaries and Benefits:

Principal/Executive Salaries

$ 460,817

$ 302,468

$ 147,091

$ 11,258

$ 571,505

$ 413,024

$ 143,754

$ 14,727

Teachers’ Salaries

2,100,720

-

1,877,756

-

Teachers’ Aides/Assistants’ Salaries

382,790

-

367,126

-

Other Educational Professional Salaries

1,364,016

-

1,535,987

-

Substitute Teacher Salaries

694,344

-

665,346

-

Clerical Salaries

252,171

200,597

51,574

-

287,362

245,499

41,863

-

Food Service Staff

-

5,814

-

Business Operation Salaries

236,117

150,051

79,260

6,806

152,177

121,742

30,435

-

Fiscal Salaries

-

58,680

-

58,680

-

Employee Benefits

703,588

665,661

35,612

2,315

640,942

613,866

25,348

1,728

Payroll Taxes

417,503

394,997

21,132

1,374

406,346

389,181

16,070

1,095

Staff Development Costs

77,510

74,798

2,712

-

15,629

15,009

620

-

Total Personnel, Salaries and Benefits

$ 6,689,576

$ 6,330,442

$ 337,381

$ 21,753

$ 6,584,670

$ 6,250,350

$ 316,770

$ 17,550

Direct Student Costs:

Food Service

$ 216,863

$ -

$ 209,153

$ -

Student Supplies and Materials

120,967

-

119,130

-

Contracted Instructional/Student Services

96,280

-

46,475

-

Special Education

493,686

-

97,506

-

Educational Subscriptions

12,589

-

19,795

-

Other Student Costs

28,914

-

42,895

-

Total Direct Student Costs

$ 969,299

$ -

$ 534,954

$ -

Occupancy Costs:

Depreciation - Building

$ 243,211

$ 234,283

$ 8,495

$ 433

$ 243,211

$ 232,937

$ 9,618

$ 656

Interest Expense - Building

254,131

244,803

8,875

453

261,430

250,386

10,339

705

Rent

1,387,301

1,336,379

48,451

2,471

1,533,852

1,469,057

60,660

4,135

Building Insurance

21,935

21,130

766

39

14,707

14,085

582

40

Utilities

78,472

75,591

2,741

140

73,988

70,863

2,926

199

Contracted Building Services

35,986

34,665

1,257

64

27,436

26,277

1,085

74

Maintenance and Repairs

138,365

133,288

4,831

246

154,404

147,882

6,106

416

Janitorial Service/Supplies

195,161

187,998

6,815

348

181,354

174,775

6,159

420

Total Occupancy Costs

$ 2,354,562

$ 2,268,137

$ 82,231

$ 4,194

$ 2,490,382

$ 2,386,262

$ 97,475

$ 6,645

(See Accompanying Notes and Auditor's Report)

-5-

LATIN AMERICAN MONTESSORI BILINGUAL PUBLIC CHARTER SCHOOL

COMPARATIVE STATEMENTS OF FUNCTIONAL EXPENSES

FOR THE YEARS ENDED JUNE 30, 2019 AND 2018

June 30, 2019

June 30, 2018

Educational

General and

Educational

General and

Total

Services

Administrative

Fundraising

Total

Services

Administrative

Fundraising

Office Expenses:

Office Supplies and Materials

$ 11,000

$ 10,596

$ 384

$ 20

$ 19,067

$ 18,262

$ 754

$ 51

Equipment Rental and Maintenance

22,950

22,107

801

42

18,503

17,721

732

50

Telecommunications

38,626

37,208

1,349

69

48,471

46,423

1,917

131

Postage and Shipping

1,023

985

36

2

1,174

1,125

46

3

Printing and Copying

6,257

6,027

219

11

9,564

9,160

378

26

Information Technology Suppport

3,544

3,414

124

6

-

Consulting

256,628

148,487

104,599

3,542

232,941

77,459

155,482

-

Marketing and Promotion

4,816

-

3,336

-

Total Office Expenses

$ 344,844

$ 233,640

$ 107,512

$ 3,692

$ 333,056

$ 173,486

$ 159,309

$ 261

General Expenses:

Insurance

$ 18,488

$ 17,841

$ 647

$ -

$ 19,667

$ 18,887

$ 780

$ -

Meeting Expenses

6,076

5,853

212

11

406

388

17

1

Licenses and Permits

2,209

2,128

77

4

3,555

3,404

141

10

Dues and Subscriptions

13,045

12,566

456

23

19,246

18,433

761

52

Travel

7,188

6,925

251

12

8,056

7,716

319

21

Accounting and Legal Services

229,002

-

229,002

-

367,186

-

367,186

-

Payroll Service Fee

21,730

20,933

758

39

19,830

18,993

784

53

Authorizer Fee

95,046

80,789

14,257

-

91,719

88,082

3,637

-

Income Taxes

1,535

-

1,535

-

437

-

437

-

Depreciation

63,324

61,000

2,211

113

71,976

68,936

2,846

194

Moving Expenses

1,595

-

10,352

-

Office Expense

40,882

38,078

1,381

1,423

29,883

26,813

1,107

1,963

Total General Expenses

$ 500,120

$ 247,708

$ 250,787

$ 1,625

$ 642,313

$ 262,004

$ 378,015

$ 2,294

TOTAL FUNCTIONAL EXPENSES

$ 10,858,401

$ 10,049,226

$ 777,911

$ 31,264

$ 10,585,375

$ 9,607,056

$ 951,569

$ 26,750

(See Accompanying Notes and Auditor's Report)

-6-

LATIN AMERICAN MONTESSORI BILINGUAL PUBLIC CHARTER SCHOOL

COMPARATIVE STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED JUNE 30, 2019 AND 2018

June 30, 2019

June 30, 2018

Cash Flows from Operating Activities:

Changes in Net Assets

$ (122,313)

$ (111,343)

Adjustments to Reconcile Changes in Net Assets

to Net Cash Flows from Operating Activities:

Depreciation

306,535

315,187

Debt Issuance Costs - Interest

14,775

Loss on Disposal of Fixed Assets

656

1,923

Unrealized Loss/(Gain) on Interest Rate Swap

53,486

(122,197)

Accounts Receivable - (Increase)/Decrease

(23,981)

(26,322)

Grants Receivable - (Increase)/Decrease

42,710

8,353

Promises Receivable - (Increase)/Decrease

3,881

2,410

Prepaid Expenses - (Increase)/Decrease

(43,134)

(12,051)

Deposits - (Increase)/Decrease

(551,860)

(630,166)

Accounts Payable - Increase/(Decrease)

138,861

28,701

Income Taxes Payable - Increase/(Decrease)

821

437

Accrued Interest Payable - Increase/(Decrease)

27

(100)

Accrued Salary and Vacation - Increase/(Decrease)

(69,111)

174,609

Payroll Withholdings and Related Liabilities - Increase/(Decrease)

Liabilities(Decrease)ease)Increase/(Decrease)

59,466

39,005

Refundable Advances - Increase/(Decrease)

(155,806)

133,968

Deferred Revenues - Increase/(Decrease)

(32,520)

(6,107)

Deferred Rent - Increase/(Decrease)

99,294

140,433

Net Cash Flows from Operating Activities

$ (278,213)

$ (48,485)

Cash Flows from Investing Activities:

Purchase of Fixed Assets

$ (17,797)

$ (117,096)

Purchase of Money Market - Restricted for Collateral

(205,000)

-

Proceeds on Sale of Money Market - Restricted for Collateral

-

205,000

Purchase of Certificates of Deposit

-

(205,000)

Proceeds on Sale of Certificates of Deposit

205,000

-

Net Cash Flows from Investing Activities

$ (17,797)

$ (117,096)

Cash Flows from Financing Activities:

Repayment on Notes

$ (159,312)

$ (152,220)

Net Cash Flows from Financing Activities

$ (159,312)

$ (152,220)

Net Increase/(Decrease) in Cash, Cash Equivalents, and Restricted Cash

$ (455,322)

$ (317,801)

Cash, Cash Equivalents, and Restricted Cash at Beginning of Year

3,757,152

4,074,953

Cash, Cash Equivalents, and Restricted Cash at End of Year

$ 3,301,830

$ 3,757,152

Supplemental Disclosures:

a) Income taxes in the amount of $277 were paid during the year ended June 30, 2019.

b) Interest in the amount of $239,329 and $246,754, respectively, was paid during the years ended June 30, 2019 and 2018.

June 30, 2019

June 30, 2018

Cash and Cash Equivalents

$ 3,065,615

$ 3,526,891

Cash Restricted for Long-Term Purposes

236,215

230,261

Total Cash, Cash Equivalents, and Restricted Cash

$ 3,301,830

$ 3,757,152

(See Accompanying Notes and Auditor's Report)

-7-

LATIN AMERICAN MONTESSORI BILINGUAL

PUBLIC CHARTER SCHOOL

NOTES TO FINANCIAL STATEMENTS

The Latin American Montessori Bilingual Public Charter School (LAMB or Charter School) is a District

of Columbia Not-for-Profit Corporation incorporated on January 6, 2003, exclusively for educational

purposes. LAMB’s mission is to lay a foundation of knowledge, habits, attitudes, and skills, which are

essential for a lifetime of creative thinking and learning. The overall goal is bi-literacy in English and

Spanish. To achieve that, LAMB creates child-centered learning environments for pre-school through 5

th

grade children, utilizing hands-on Montessori materials which are developmentally appropriate, self-

correcting, sequenced and flow from simple to complex in order for students to develop academically,

socially and emotionally. LAMB’s primary sources of support are local appropriations for Charter

Schools from the District of Columbia Government.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The significant accounting policies of the Charter School are summarized below:

(a) Basis of Accounting and Presentation:

The accompanying financial statements have been prepared on the accrual basis of accounting,

which presents financial position, activities, functional expenses, and cash flows in accordance

with accounting principles generally accepted in the United States of America.

(b) Revenue Recognition:

Contributions

Contributions received are recorded as net assets without donor restrictions or net assets with

donor restrictions, depending on the existence and/or nature of any donor-imposed restrictions.

When a restriction expires (that is, when a stipulated time restriction ends or purpose restriction is

accomplished), net assets with donor restrictions are reclassified to net assets without donor

restrictions and reported in the statement of activities as net assets released from restrictions.

Contributed property and equipment are recorded at fair value at the date of donation.

Contributions with donor-imposed stipulations regarding how long the contributed assets must be

used are recorded as net assets with donor restrictions; otherwise, the contributions are recorded

as net assets without donor restrictions.

Unconditional promises to give that are expected to be collected within one year are recorded

at their net realizable value. Unconditional promises to give that are expected to be collected

in future years are recorded at the present value of their estimated future cash flows. The

discounts on those amounts are computed using risk-adjusted interest rates applicable to the

years in which the promises are received. Amortization of the discount is recorded as additional

contribution revenue in accordance with donor-imposed restriction, if any, on the contribution.

An allowance for uncollectible contributions receivable is provided based upon management’s

judgement, including such factors as prior collection history and type of contribution.

Conditional promises, such as matching grants, are not recognized as revenue until they become

unconditional, that is, until all conditions on which they depend are substantially met.

-8-

LATIN AMERICAN MONTESSORI BILINGUAL

PUBLIC CHARTER SCHOOL

NOTES TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)

(b) Revenue Recognition: (Continued)

Federal and Charter School Funding

The Charter School receives a student allocation from the District of Columbia as well as federal

funding to cover the cost of academic expenses. The student allocation is on a per pupil basis

and includes the academic year funding, special education funding, and a facilities allotment as

well as funding for English as a second language. The Charter School recognizes this funding in

the year in which the school term is conducted. Funding received in advance of the school term

is recorded as a deferred revenue. Federal entitlements are recognized based on the allowable

costs incurred.

Extended Learning Day Program

The Charter School offers fee-based extended day programming for students in grades pre-

school through 5

th

grade. The hours of operation are structured to coincide with the typical

workday of parents of the students. Both the before and after care programs offer food services.

Tuition is collected based on a monthly fee. The amount of tuition ranges from full tuition to

reduced tuition based on the National School Lunch Program guidelines.

(c) Corporate Taxes:

The Latin American Montessori Bilingual Public Charter School is exempt from federal income

taxes (other than on unrelated business income) under the provisions of Section 501(c)(3) of the

Internal Revenue Code and similar state income tax laws. Exemption from District of Columbia

income taxes was granted to the Charter School effective February 14, 2006. The Charter

School has been classified as other than a private foundation under Section 509(a)(1) of the

Internal Revenue Code and accordingly contributions qualify as a charitable tax deduction by the

contributor under Section 170(b)(i)(A)(ii).

Under IRC Section 512(a)(7), certain transportation benefits are subject to unrelated business

income tax. As of June 30, 2019 and 2018, the Charter School recognized $844 and $437,

respectively, of income tax expense related to the filing of the 990-T tax return. In addition,

$691 of income tax expense due to the District of Columbia has been reflected in the financial

statements related to income tax on transportation benefits.

The Charter School is also exempt from District of Columbia sales, real estate, and personal

property taxes.

-9-

LATIN AMERICAN MONTESSORI BILINGUAL

PUBLIC CHARTER SCHOOL

NOTES TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)

(d) Government Grants:

The Charter School receives grants from federal and state governmental agencies for various

purposes in the form of exchange transactions. Grant revenues are recognized based on

allowable costs incurred. Receivables related to grant awards are recorded to the extent

unreimbursed expenses have been incurred for the purposes specified by an approved grant

award. Funds received in advance for these types of grants and those that are unexpended as

of year-end are reflected as a deferred revenue.

(e) Net Assets:

The Charter School reports information regarding its financial position and activities according

to two classes of net assets. Net assets and revenues, expenses, gains, and losses are classified

based on the existence or absence of restrictions on use that are placed by the donor.

Accordingly, net assets of the Charter School and changes therein are classified and reported as

follows:

Net Assets without Donor Restrictions

Net assets without donor restrictions are resources available to support operations and over

which the Board of Directors has discretionary control. The only limits on the use of these net

assets are the broad limits resulting from the Charter School’s purpose, the environment in which

it operates, the purposes specified in its corporate documents and its application for tax-exempt

status, and any limits resulting from contractual agreements that are entered into in the course of

its operations.

Net Assets with Donor Restrictions

Net assets with donor restrictions are resources that are restricted by a donor for use for a

particular purpose or in a particular future period. Some donor-imposed restrictions are

temporary in nature, and the restriction will expire when the resources are used in accordance

with the donor’s instructions or when the stipulated time has passed. Other donor-imposed

restrictions are perpetual in nature whereby the Charter School must continue to use the

resources in accordance with the donor’s instructions.

When a donor’s restriction is satisfied, either by using the resources in the manner specified by

the donor or by the passage of time, the expiration of the restriction is reported in the financial

statements by reclassifying the net assets from net assets with donor restrictions to net assets

without donor restrictions. Net assets restricted for acquisition of buildings or equipment (or the

contribution of those assets directly) are reported as net assets with donor restrictions until the

specified asset is placed in service, unless the donor provides more specific directions about the

period of its use. There were no net assets with donor restrictions available at year end.

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LATIN AMERICAN MONTESSORI BILINGUAL

PUBLIC CHARTER SCHOOL

NOTES TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)

(e) Net Assets: (Continued)

Net Assets with Donor Restrictions (Continued)

Net assets were released from donor restrictions by incurring expenses satisfying the restricted

purposes, the passage of time, or by the occurrence of other events specified by donors for the

following programs:

June 30, 2019

June 30, 2018

Art Education

$ -

$ 10,000

CHISPA Project

-

1,091

Total Net Assets Released from Restrictions

$ -

$ 11,091

(f) Donated Services and Materials:

Donated services and materials are recognized as contributions in accordance with FASB ASC

958, Accounting for Contributions Received and Contributions Made, if the services received

create or enhance nonfinancial assets or require specialized skills, are provided by individuals

possessing those skills, and would typically need to be purchased if not provided by donation.

Contributed services and promises to give services that do not meet the above criteria are not

recognized. The time contributed by the Charter School’s Board of Directors is uncompensated

and is not reflected as donated services.

In-kind contributions are recorded in the statements of activities at estimated fair value and

recognized as revenue and expense in the period they are received, except for donated fixed

assets, which are recorded as revenue in the period received and the asset depreciated over its

estimated useful life. The estimated value of donated services has been recorded in the financial

statements as follows:

June 30, 2019

June 30, 2018

Legal Services

$ 47,190

$ -

Accounting Services

-

9,500

Total

$ 47,190

$ 9,500

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LATIN AMERICAN MONTESSORI BILINGUAL

PUBLIC CHARTER SCHOOL

NOTES TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)

(g) Basic Programs:

LAMB’s mission is to create a self-directed learning environment in which children build a

foundation of knowledge essential for a lifetime of learning while developing bi-literacy in

English and Spanish. In order to accomplish our mission, LAMB utilizes the Montessori

philosophy and pedagogy to provide children with an environment of academic excellence

that celebrates their cultures and languages and leaves no question about their value as a human

being. LAMB’s goal is that students will be bilingual and bi-literate, able to read and write on

grade level in both English and Spanish by the end of 5

th

grade.

There are other Montessori schools (chartered, traditional, private) in the District of Columbia,

but LAMB is the only public, chartered, Montessori, bilingual, primary and elementary education

school in the tri-state area and one of only a few nationally. LAMB is audited annually, has a

valid Business License, and Certificate of Clean Hands. LAMB is accredited by Middle States of

Colleges and Schools and recognized by the DC Public Charter School Board as a Tier 1 school

for the fifth straight year.

LAMB serves children PK3 to 5

th

grade. LAMB classes are organized into multi-age groupings:

Primary (PK3 to Kindergarten), Lower Elementary (1

st

to 3

rd

grades) and Upper Elementary (4

th

to 5

th

grades). Traditionally, students remain in the same classroom for three years and have the

experience of being the youngest and the oldest within the group.

LAMB utilizes a variety of assessments and evaluation tools including PARCC, DIBELS

(English), IDEL (Spanish) and easyCBM (Math). LAMB tracks and reports student performance

data to determine the degree to which it is meeting its academic and non-academic goals, and to

provide increased instructional opportunities as needed.

In School Year 2018-19, LAMB has 476 students (Latino 33%, Black 17%, White 38%,

Multiracial 9%, Asian 2%). Twenty percent of LAMB students are eligible for free and reduced

lunch, 25% are English language learners and 12% are students with special needs.

LAMB is one school that operates from three facilities: 1375 Missouri Avenue, NW, in Ward 4,

1800 Perry Street, NE, in Ward 5, and 1399 Aspen Street NW, in Ward 4. Over the next five

years, LAMB will grow to serve 600 students. Each site serves approximately 180 to 220

students.

(h) Functional Expense Allocation Policies and Procedures:

The statement of functional expenses presents an allocation of each expense category between

program services, general and administrative, and fundraising activities. Program service costs

consist of those expenses incurred to fulfill the Charter School’s mission. General and

administrative costs pertain to supporting activities. Fundraising expenses relate to fundraising

activities such as generating contributions and seeking unsolicited financial support and grants.

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LATIN AMERICAN MONTESSORI BILINGUAL

PUBLIC CHARTER SCHOOL

NOTES TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)

(h) Functional Expense Allocation Policies and Procedures: (Continued)

Management has established functional expense allocation policies and procedures based on a

reasonable analysis of cost drivers and reasonable allocation methodologies based on financial

results and industry standards.

Expenses that can be identified with a specific program or support service are charged directly to

the program or support service. The Charter School has established a method to specifically

identify and record those costs that are considered to be direct student expenses. Such program

expenses consist of contracted student instruction, food service, student assessment materials,

field trips, supplies, and textbooks.

Costs common to multiple functions have been allocated among the various functions benefited

using a reasonable allocation method that is consistently applied, as follows:

• Personnel expense for salaries, payroll taxes and employee benefit plans are allocated

based on estimated amounts of time spent on particular activities.

• Costs of professional fees, legal and accounting, insurance, and other similar expenses are

allocated based on the underlying use of these costs by various programs determined by

management and evaluated annually.

• Certain staff expenses including staff development, staff recruiting, and staff events are

generally allocated between general and administrative and program functions on

estimated amounts of time spent on particular activities by utilizing a full-time employee

equivalency calculation.

• Shared costs (office supplies, telephone, equipment rental, postage and computer expense)

are allocated based on estimated amounts of time spent on particular activities by utilizing

a full-time employee equivalency calculation.

• Costs for facilities such as rent, utilities, maintenance and repairs are allocated based on

estimated amounts of time spent on particular activities by utilizing a full-time employee

equivalency calculation.

(i) Use of Estimates:

The preparation of financial statements in conformity with accounting principles generally

accepted in the United States of America requires management to make estimates and

assumptions that affect the reported amounts of assets, liabilities, the disclosure of contingent

assets and liabilities at the date of the financial statements, and the reported amounts of support

and revenues and expenses during the reporting period. Actual results could differ from those

estimates.

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LATIN AMERICAN MONTESSORI BILINGUAL

PUBLIC CHARTER SCHOOL

NOTES TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)

(j) Recognition of Salary Expense:

Salary expense is recognized in the year the service is rendered, which coincides with the

academic year. Salaries unpaid at June 30 are recognized as expense and accrued salaries.

(k) Fair Value of Certain Financial Instruments:

Some of the Charter School’s financial instruments are not measured at fair value on a recurring

basis but nevertheless are recorded at amounts that approximate fair value due to their liquid or

short-term nature. Such accounts include cash, accounts receivable, prepaid expenses, accounts

payable, and accrued expenses.

(l) Certificates of Deposit:

Certificates of deposit are other investments with original maturities greater than three months

and are carried at original cost plus reinvested interest. The certificates of deposit do not qualify

as securities as defined in Financial Accounting Standard Board (“FASB”) Accounting Standards

Codification (“ASC”) 320, Investments - Debt and Equity Securities, thus the fair value

disclosures required by ASC 820, Fair Value Measurements and Disclosures, are not provided.

(m) Change in Accounting Principles:

The Charter School implemented Financial Accounting Standard Board (FASB) ASU No. 2016-

14 “Presentation of Financial Statements of Not-for-Profit Entities” in the current year, applying

the changes retrospectively. The new standard changes the following aspects of the financial

statements:

• The previously reported temporarily and permanently restricted net asset classes have been

combined into a single net asset class called net assets with donor restrictions.

• The unrestricted net asset class has been renamed net assets without donor restrictions.

• The format of the statements of activities has been changed to present columns for both

activities with donor restrictions and activities without donor restrictions as management

believes this better reports changes in the Charter School’s changes in financial position

arising from its activities.

• The schedule of functional expenses is included as a component of the financial statements.

• The financial statements include a disclosure about liquidity and availability of resources.

The changes had no effect on net assets at July 1, 2018

-14-

LATIN AMERICAN MONTESSORI BILINGUAL

PUBLIC CHARTER SCHOOL

NOTES TO FINANCIAL STATEMENTS

2. LIQUIDITY AND AVAILABILITY OF FINANCIAL ASSETS:

The following reflects the Charter School’s financial assets as of the statement of financial position

date, reduced by amounts not available for general use because of contractual or donor-imposed

restrictions within one year of the statement of financial position date.

The Charter School has certain donor-restricted net assets that are considered to be available for

general expenditures, because the restrictions on the net assets are expected to be met by conducting

the normal activities of the programs in the coming year. Accordingly, the related resources have

been included in the quantitative information detailing the financial assets available to meet general

expenditures within one year.

June 30, 2019

Financial Assets at Year End:

Cash and Cash Equivalents

$ 3,301,830

Accounts Receivable

108,351

Grants Receivable

61,393

Total Financial Assets

$ 3,471,574

Less Amounts Not Available for General

Expenditure Within One Year Due to:

Contractual Restrictions:

Cash Held in Trust for Debt Service

$ 211,215

Cash Held in Trust for CAM Reserve

25,000

Financial Assets Available to Meet General

Expenditures Over the Next Twelve Months

$ 3,235,359

As part of the Charter School’s liquidity management, it has a policy to structure its financial assets

to be available as general expenditures, liabilities and other obligations come due.

3. ACCOUNTING FOR UNCERTAIN TAX POSITIONS:

Accounting principles generally accepted in the United States of America provide consistent guidance

for the accounting for uncertainty in income taxes recognized in the Charter School’s financial

statements and prescribe a threshold of “more likely than not” for recognition of tax positions taken

or expected to be taken in a tax return. The Latin American Montessori Bilingual Public Charter

School performed an evaluation of uncertain tax positions for the year ended June 30, 2019, and

determined that there were no matters that would require recognition in the financial statements or

that may have any effect on its tax-exempt status.

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LATIN AMERICAN MONTESSORI BILINGUAL

PUBLIC CHARTER SCHOOL

NOTES TO FINANCIAL STATEMENTS

3. ACCOUNTING FOR UNCERTAIN TAX POSITIONS: (Continued)

As of June 30, 2019, the statute of limitations for tax years 2015 through 2017 remains open with the

U.S. federal jurisdiction or the various states and local jurisdictions in which the Charter School files

tax returns. It is the Charter School’s policy to recognize interest and/or penalties related to uncertain

tax positions, if any, in income tax expense. As of June 30, 2019, the Charter School had no accruals

for interest and/or penalties.

4. CASH, CASH EQUIVALENTS, CERTIFICATES OF DEPOSIT, AND RESTRICTED CASH:

Cash and Cash Equivalents

The carrying amount of cash and cash equivalents at year end consisted of the following:

June 30, 2019

June 30, 2018

Interest Bearing Checking Accounts

$ 820,468

$ 1,697,794

Savings Account - Interest Bearing

1,018,957

1,013,892

Money Market - Interest Bearing

463,129

252,032

Non-Interest Bearing Checking Accounts

85,939

267,721

Repurchase - Sweep Checking Account

- Interest Bearing

911,337

318,713

Repurchase - Sweep Checking Account

- Non-Interest Bearing

2,000

Subtotal

$ 3,301,830

$ 3,552,152

Less: Restricted Cash not included in Cash

and Cash Equivalents

(236,215)

(25,261)

Cash and Cash Equivalents per Statements

of Financial Position

$ 3,065,615

$ 3,526,891

Certificates of Deposit

Certificates of deposit are valued at original cost. Balances at year end consisted of the following:

June 30, 2019

June 30, 2018

Certificates of Deposit

$ -

$ 205,000

For purposes of the cash flow statement and financial statement presentation, cash and cash

equivalents are short term, highly liquid investments with maturities of three months or less.

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LATIN AMERICAN MONTESSORI BILINGUAL

PUBLIC CHARTER SCHOOL

NOTES TO FINANCIAL STATEMENTS

4. CASH, CASH EQUIVALENTS, CERTIFICATES OF DEPOSIT, AND RESTRICTED CASH:

(Continued)

The Latin American Montessori Bilingual Public Charter School maintains its operating funds in

six separate financial institutions. These accounts are covered under the Federal Deposit Insurance

Corporation (FDIC) Program. Federal Deposit Insurance Corporation insurance coverage is $250,000

per financial institution, as well as account category. Deposits held in non-interest-bearing

transaction accounts are aggregated with any interest-bearing deposits and the combined total insured

up to $250,000.

As of June 30, 2019 and 2018, $1,858,721 and $2,453,267, respectively, of the bank balance was

deposited in excess of Federal Deposit Insurance Corporation limits. Due to increased cash flows at

certain times during the year, the amount of funds at risk may have been greater than at year end. The

Charter School was at risk for the funds held in excess of the insured amounts. The Charter School

has not experienced any losses related to these accounts and does not believe it is exposed to any

significant credit risk on cash and cash equivalents.

Sweep Account Agreement

The Latin American Montessori Bilingual Public Charter School has entered into a sweep-account

agreement with Industrial Bank whereby on a daily basis at the close of business available funds are

automatically invested into an interest bearing checking account. The amount transferred at the close

of business on June 30, 2019 and 2018, respectively, was $917,648 and $294,746.

Restricted Cash

As a condition of the mortgage with M&T Bank, an amount of $200,000 plus reinvested interest is

required to be deposited into a reserve account for the purpose of debt service payments in the event

the Latin American Montessori Bilingual Public Charter School lacks sufficient funds to make the

required mortgage payments. As of June 30, 2019 and 2018, $211,215 and $205,261, respectively,

was maintained in a debt service reserve account.

The Charter School entered into a second-tier lease agreement with the District of Columbia

International School for the rental of a school facility located at the former Walter Reed Army Medical

Center in Washington, DC. In accordance with the terms of this lease agreement, the Charter School

is required to maintain a Common Area Maintenance (CAM) Reserve in the amount of $25,000. The

CAM Reserve can be utilized to pay for the Charter School’s pro rate share of certain operating costs,

utilities, insurance costs and real estate taxes. The reserve is required to be replenished to $25,000

within thirty days after any draws from the reserve occur.

Total cash restricted of June 30, 2019 and 2018 was $236,215 and $230,261, respectively.

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LATIN AMERICAN MONTESSORI BILINGUAL

PUBLIC CHARTER SCHOOL

NOTES TO FINANCIAL STATEMENTS

5. FAIR VALUE MEASUREMENTS:

Financial Accounting Standards Board ASC No. 820-10, Fair Value Measurements, establishes a

framework for measuring fair value. Fair value is defined as the price that would be received to sell

an asset or paid to transfer a liability in an orderly transaction between market participants at the

measurement date. That framework provides a fair value hierarchy that prioritizes the inputs to

valuation techniques used to measure fair value. The hierarchy gives the highest priority to

unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements)

and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair

value hierarchy under FASB ASC No. 820-10 are described as follows:

Level 1 - Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets

or liabilities in active markets that the organization has the ability to access.

Level 2 - Inputs to the valuation methodology include:

• Quoted prices for similar assets or liabilities in active markets;

• Quoted prices for identical or similar assets or liabilities in inactive markets;

• Inputs other than quoted prices that are observable for the asset or liability

(such as interest note and yield curves);

• Inputs that are derived principally from or corroborated by observable market

data by correlation or other means.

If the asset or liability has a specified (contractual) term, the Level 2 input must be

observable for substantially the full term of the asset or liability.

Level 3 - Inputs to the valuation methodology are unobservable (Supported by little or

no market activity) and not corroborated by market data. Unobservable inputs

reflect the organization’s estimate of what hypothetical market participants would

use to determine a transaction price for the asset or liability at the reporting date.

The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on

the lowest level of any input that is significant to the fair value measurement. Valuation techniques

used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

Following is a description of the valuation methodologies used for assets and liabilities measured at

fair value. There have been no changes in the methodologies used at June 30, 2019.

Interest Rate Swaps: Valued based on several market inputs such as interest rates, swap spreads and

yield curves.

The methods described above may produce a fair value calculation that may not be indicative of net

realizable value or reflective of future fair values. Furthermore, while the Charter School believes its

valuation methods are appropriate and consistent with other market participants, the use of different

methodologies or assumptions to determine the fair value of certain financial instruments could result

in a different fair value measurement at the reporting date.

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LATIN AMERICAN MONTESSORI BILINGUAL

PUBLIC CHARTER SCHOOL

NOTES TO FINANCIAL STATEMENTS

5. FAIR VALUE MEASUREMENTS: (Continued)

The following tables set forth by level, within the fair value hierarchy, the Charter School's assets and

liabilities measured at fair value as of June 30, 2019 and 2018.

June 30, 2019

Level 1

Level 2

Level 3

Total

Liabilities:

Interest Rate Swap

$ -

$ 17,196

$ -

$ 17,196

Total

$ -

$ 17,196

$ -

$ 17,196

June 30, 2018

Level 1

Level 2

Level 3

Total

Assets:

Interest Rate Swap

$ -

$ 36,290

$ -

$ 36,290

Total

$ -

$ 36,290

$ -

$ 36,290

6. ACCOUNTS, GRANTS AND PROMISES RECEIVABLE:

Accounts and Grants Receivable

Accounts and grants receivable are current and considered to be fully collectible by management.

Balances as of June 30, 2019 and 2018 consisted of the following:

June 30, 2019

June 30, 2018

Accounts Receivable

Interest

$ 51,167

$ -

Per Pupil Funding

47,160

29,774

Extended Learning Day and School Lunch Fees

8,484

4,125

Reimbursable Expenses

1,540

48,230

Employees

-

2,180

Other

-

61

Total

$ 108,351

$ 84,370

Grants Receivable

National School Lunch Program

$ 22,482

$ 18,569

Individuals with Disabilities Education Act

17,096

47,538

No Child Left Behind - Entitlement

10,292

10,565

E-rate

5,938

-

DC School Choice Incentive - SOAR

3,897

25,480

State Healthy Schools Act

1,688

1,951

Total

$ 61,393

$ 104,103

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LATIN AMERICAN MONTESSORI BILINGUAL

PUBLIC CHARTER SCHOOL

NOTES TO FINANCIAL STATEMENTS

6. ACCOUNTS, GRANTS AND PROMISES RECEIVABLE: (Continued)

Accounts and Grants Receivable (Continued)

The Charter School's accounts and grants receivable consists of unsecured amounts due from funding

sources whose ability to pay is subject to changes in general economic conditions. Because the

Charter School does not require collateral, it is at credit risk for the amounts owed to it through the

year and at year end.

Accounts and grants receivable are stated at the amount management expects to collect from

outstanding balances. Management provides for probable uncollectable amounts through a provision

for bad debt expense and an adjustment to a valuation allowance based on its assessment of the

current status of individual accounts. Balances outstanding after management has used reasonable

collection efforts are written off through a charge to the valuation allowance and a credit to accounts

or grants receivable. Management believes that an allowance was not required, based on its

evaluation of collectability of receivables for the years ended June 30, 2019 and 2018.

Trade receivables related to program service fees are recognized as revenue on the accrual basis of

accounting at the time the program activity has occurred. Credit is extended for a period of 60 days

with no interest accrual at which time payment is considered delinquent. Trade receivables are

written off as uncollectable once management determines that available collection efforts have been

exhausted.

Promises Receivable

Contributions are recognized when the donor makes a promise to give that is, in substance,

unconditional. Promises to give represent amounts committed by donors that have not been received

by the Charter School. The Charter School uses the allowance method to determine uncollectible

promises to give. Balances at year end consisted of the following:

June 30, 2019

June 30, 2018

General

$ -

$ 3,881

Total

$ -

$ 3,881

The above unconditional promises are due to be received within the next year.

7. FIXED ASSETS:

Furniture and equipment are recorded at cost, or in the case of contributed property at the fair market

value at the date of contribution. If an expenditure in excess of $500 results in an asset having an

estimated useful life which extends substantially beyond the year of acquisition, the expenditure is

capitalized at cost and depreciated over the estimated useful lives of the assets. When assets are

retired, or otherwise disposed of, the cost and related accumulated depreciation is removed from the

accounts and any resulting gain or loss is reflected in income for the period.

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LATIN AMERICAN MONTESSORI BILINGUAL

PUBLIC CHARTER SCHOOL

NOTES TO FINANCIAL STATEMENTS

7. FIXED ASSETS: (Continued)

Depreciation has been provided on the straight-line method over the estimated useful lives of the

assets. Depreciation expense for the years ended June 30, 2019 and 2018 was $306,535 and $315,187,

respectively. Capitalized interest has been recorded as an addition to buildings and improvements in

the amount of $97,927 during the year ended June 30, 2009. Maintenance and repairs are charged to

expenses as incurred. Major classifications of fixed assets and their estimated useful lives are as

summarized below:

June 30, 2019:

Depreciable

Accumulated

Net Book

Life

Cost

Depreciation

Value

Building and Improvements

10-39 Years

$ 9,398,518

$ 2,683,800

$ 6,714,718

Land

-

721,000

-

721,000

Computer and Office Equipment

3-5 Years

561,355

437,577

123,778

Total

$ 10,680,873

$ 3,121,377

$ 7,559,496

June 30, 2018:

Depreciable

Accumulated

Net Book

Life

Cost

Depreciation

Value

Building and Improvements

10-39 Years

$ 9,398,518

$ 2,440,590

$ 6,957,928

Land

-

721,000

-

721,000

Computer and Office Equipment

3-5 Years

567,506

397,544

169,962

Total

$ 10,687,024

$ 2,838,134

$ 7,848,890

8. INTEREST RATE SWAP:

On June 26, 2013, the Charter School entered into an interest rate swap agreement with the

Manufacturers and Traders Bank (M & T Bank) for a notional amount equal to the obligation under

the loan payable whereby a portion of the floating rate was swapped into a fixed rate. Under the

agreement, the Charter School pays the bank interest at a fixed rate of 4.71% on the principal loan

balance through the termination date of the swap agreement, which is June 26, 2020.

The swap mechanism is intended to allow the Charter School to realize the potential benefit of a

lower fixed rate by reducing the impact of market changes in the variable interest rate. Interest

expense related to the interest rate swap for the years ended June 30, 2019 and 2018 was $(6,001)

and $37,566, respectively. At June 30, 2019 and 2018, the fair value of the interest rate swap was

$(17,196) and $36,290, respectively and has been reflected as a liability and an asset in the statements

of financial position.

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LATIN AMERICAN MONTESSORI BILINGUAL

PUBLIC CHARTER SCHOOL

NOTES TO FINANCIAL STATEMENTS

9. LOAN PAYABLE:

Manufacturers and Traders Bank

On June 26, 2013, the Latin American Montessori Bilingual Public Charter School entered into a term

loan with the Manufacturers and Traders Bank (M & T Bank) in the amount of $5,780,000. This note

was for the purpose of consolidating and refinancing all existing debt as it related to the purchase and

renovation of the building and land located at 1375 Missouri Avenue, NW. The proceeds were

utilized to extinguish debt with United Bank, Building Hope and the Reinvestment Fund in the total

amount of $5,761,692, as well as assist in the financing of a portion of the related loan acquisition and

closing costs in the amount of $18,308. This note calls for consecutive monthly installments of

principal and interest each payable over a seven (7) year period based on a twenty-five (25) year

amortization.

Maturity on this mortgage is scheduled for June 26, 2020, at which point there is a balloon payment

of any remaining outstanding principal and unpaid interest currently scheduled to be in the amount of

$4,772,739. Principal payments are to be made on a monthly basis with yearly level installments

adjusted annually on the anniversary date of the loan. The initial monthly principal installment was

due on July 26, 2013, in the amount of $10,575. This note bears interest on a variable basis at two-

and-one-half percentage points (2.50%) above the one-month LIBOR rate.

The Charter School is subject to various financial covenants including a debt service ratio of at least

1.20 to 1.0.

The Charter School entered into an interest rate swap agreement with M & T Bank to hedge floating

rate exposure. The seven (7) year swap rate that was fixed at settlement was 2.21%. The effect of

coupling the one-month LIBOR rate with a swap agreement is a fixed rate of 4.71%. This loan is

secured by the property located at 1375 Missouri Avenue, NW, Washington, DC, together with a

security interest in the organization’s assets. M & T Bank’s security interest was recorded as the first

deed of trust. As a condition of this loan, the Charter School must maintain a debt service fund with

M & T bank with a deposit in the amount of $200,000 plus reinvested interest.

As a provision of this loan, the Charter School is permitted to prepay any portion or the principal

balance, however they may be subject to a “breakage fee.” In the event the swap rate at the time of

payoff is lower than the seven (7) year rate established on the day of closing (currently 2.21%), the

Charter School would be required to pay an expense equal to the difference between 2.21% and the

swap rate at the time of payoff for the number of years remaining in the agreement.

As required by this loan, the America’s Charter School Finance Corporation, an affiliate of Building

Hope, a Charter Schools Facility Fund, has provided a limited guarantee in the amount of $340,000.

The term of the guarantee is for a seven (7) year period or until the loan to value ratio reaches the

standard 80% required by M & T Bank. The balance of this loan at June 30, 2019 and 2018 was

$4,925,012 and $5,084,324, respectively.

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LATIN AMERICAN MONTESSORI BILINGUAL

PUBLIC CHARTER SCHOOL

NOTES TO FINANCIAL STATEMENTS

9. LOAN PAYABLE: (Continued)

Manufacturers and Traders Bank (Continued)

Future minimum required payments of principal and interest on this loan for the next year is as

follows:

Year Ending June 30,

Total

Principal

Interest

2020

$ 4,948,581

$ 4,925,012

$ 23,569

Total

$ 4,948,581

$ 4,925,012

$ 23,569

Debt Issuance Costs

The Charter School adopted the requirements of FASB ASC 835-30 to present debt issuance costs as

a reduction of the carrying amount of the related debt. Amortization of the debt issuance costs is

reported as interest expense in the statments of functional expenses. Long term debt at June 30, 2019

and 2018 consisted of the following:

June 30, 2019

June 30, 2018

Notes Payable

$ 4,925,012

$ 5,084,324

Less: Unamortized Debt Issuance Costs

(14,775)

(29,550)

Subtotal

$ 4,910,237

$ 5,054,774

Less: Current Portion - Principal

(4,925,012)

(159,312)

Less: Current Portion - Debt Issuance Amortization

14,775

Total Long-Term Debt, Less Current Portion

$ -

$ 4,910,237

10. DEFERRED RENT:

Accounting principles generally accepted in the United States of America require that rent expense,

pursuant to a non-cancelable lease that includes a rent abatement period and/or fixed scheduled rent

increases, be recorded on a straight-line basis over the term of the lease. The difference between this

expense and the required lease payments is reflected as deferred rent in the accompanying statements

of financial position. As more fully discussed in Note 14, the Charter School entered into rental

operating lease agreements with the District of Columbia International School, which require annual

fixed escalations. Accordingly, future rent payments have been recorded as a liability to adjust the

actual rent paid to conform to the straight-line basis. The balance of unamortized deferred rent at

June 30, 2019, was $239,727.

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LATIN AMERICAN MONTESSORI BILINGUAL

PUBLIC CHARTER SCHOOL

NOTES TO FINANCIAL STATEMENTS

11. DISTRICT OF COLUMBIA PUBLIC CHARTER SCHOOL BOARD CONTRACT:

The Charter School was initially approved by the District of Columbia Board of Education and later

reaffirmed by the District of Columbia Public Charter School Board, to operate a charter school in

the District of Columbia. The District of Columbia Public Charter School Board (DCPCSB) is

responsible for the ongoing oversight of the School’s fiscal management and academic acceptability.

The contract dated September 19, 2001, provides for a 15-year charter, unless sooner terminated in

accordance with the contract. The charter contract may be renewed for successive 15-year periods

if the DCPCSB deems that the Latin American Montessori Bilingual Public Charter School is in

compliance with its charter contract and District statutory provisions. In addition, in accordance with

the Charter School Act, the DCPCSB is required to review the charter every five years. In February

2018, the DCPCSB renewed the Charter School’s charter for another 15-year period through June 30,

2033. The DCPCSB may revoke (or not renew) a charter school contract if a school violates

applicable law, materially violates the charter contract or fails to meet the student academic

achievement expectations set forth in the charter contract. Consequently, management does not

anticipate non-renewal or revocation of its charter.

As part of the agreement with the DCPCSB, the Charter School may be charged a public charter

school fee, which is not to exceed one percent (.9% for the 18/19 and 17/18 school years) of the total

revenues (less philanthropic and investment revenues) within the annual budget to cover the costs of

undertaking the ongoing administrative responsibilities of the Board. For the years ended June 30,

2019 and 2018, the Charter School incurred $95,046 and $91,719, respectively, in administrative fees.

The charter contract provides that the Latin American Montessori Bilingual Public Charter School

may educate up to a predetermined number of students. However, this enrollment limit may be raised

upon notification to and acceptance by the DCPCSB. The Charter School enrollment ceiling for the

year ended June 30, 2019, was not permitted to be greater than 513 students. Audit enrollment for the

2018/2019 year was 476 students and enrollment for the 2017/2018 year was 426 students.

12. PER-PUPIL FUNDING ALLOCATION:

The Charter School receives local funding from the District of Columbia in the form of per-pupil

educational allotments and facility allotments. This funding is based on the equivalent number of

full-time students and is determined annually. For the year ended June 30, 2019, the per-student rate

ranged from $10,658 to $14,282 for the educational allotment and $3,263 for the facility allotment.

For the year ended June 30, 2018, the per-student rate ranged from $10,257 to $13,744 for the

educational allotment and $3,193 for the facility allotment. Additional allotments were made for

Special Education Services and English as a Second Language.

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LATIN AMERICAN MONTESSORI BILINGUAL

PUBLIC CHARTER SCHOOL

NOTES TO FINANCIAL STATEMENTS

12. PER-PUPIL FUNDING ALLOCATION: (Continued)

Per-pupil funding for the years ended June 30, 2019 and 2018 was as follows:

June 30, 2019

June 30, 2018

Grade Level - Pre-School - 5

th

Grade

$ 5,846,126

$ 5,505,137

Special Education

960,742

908,376

English as a Second Language

626,690

683,524

Facilities Allowance

1,553,188

1,475,040

At-Risk Students

90,720

101,082

Teachers Collective Bargaining

-

123,361

Total

$ 9,077,466

$ 8,796,520

13. FEDERAL ENTITLEMENTS AND GRANTS:

During the years ended June 30, 2019 and 2018, the Charter School participated in the following

federal award programs:

June 30, 2019

June 30, 2018

National School Lunch Program

$ 106,275

$ 95,439

DC School Choice Incentive - SOAR

96,915

86,117

Individuals with Disabilities Education Act (IDEA 611)

63,870

46,534

Elementary and Secondary Education Act (Title III)

22,603

19,108

Elementary and Secondary Education Act (Title II)

18,133

12,834

Donated Commodities

10,077

11,160

Individuals with Disabilities Education Act (IDEA 619)

2,508

1,004

Total

$ 320,381

$ 272,196

Federal formula grants are allocations of money to states or their subdivisions in accordance with

distribution formulas prescribed by law or administrative regulation, for activities of a continuing

nature not confined to a specific project.

The Charter School receives federal formula grants under the provisions of the No Child Left Behind

Act (NCLB) of 2001, P.L 107-110. NCLB funds are not intended to replace state or local educational

funding. Rather, NCLB funds provide additional support to states, LEAs, and schools for specific

purposes. Grants are provided by the U.S. Department of Education and passed through the District

of Columbia Office of State Superintendent of Education.

The National School Lunch Program and School Breakfast Program are part of the child nutrition

cluster of programs operated by the U.S. Department of Agriculture. The objectives of the child

nutrition cluster programs are to: (1) assist states in administering food services that provide healthful,

nutritious meals to eligible children in public and non-profit private schools, residential childcare

institutions, and summer recreation programs; and (2) encourage the domestic consumption of

nutritious agricultural commodities.

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LATIN AMERICAN MONTESSORI BILINGUAL

PUBLIC CHARTER SCHOOL

NOTES TO FINANCIAL STATEMENTS

14. COMMITMENTS:

Building Lease - 3825 18

th

Street (Charter School Incubator Initiative)

The Latin American Montessori Bilingual Public Charter School entered into a sub-sublease rental

agreement on May 1, 2013, with the Charter School Incubator Initiative (the subleassee) for the rental

of a school facility located at 3825 18

th

Street, NE, in Washington, DC. The rental lease is effective

for a fifteen-year period commencing on July 1, 2013, and expiring on June 30, 2028. The Charter

School has the right to cancel this agreement any time after June 30, 2018, provided that a one-year

notification is given. As a requirement of this lease, a total rental security deposit of $5,000 was to be

made. This lease calls for quarterly lease payments of $163,125 based on a total “Full Service Market

Yearly Usage Fee” of $652,500 for the entirety of the lease. This fee has been calculated using a full

service market rate of $29 per square foot. The annual usage fee is full service and includes all

utilities (gas, water, electricity, and trash removal), building engineering, janitorial, maintenance and

repairs, security monitoring and property management. As a provision of this lease, the Latin

American Montessori Bilingual Public Charter School has provided the Charter School Incubator

Initiative a first priority lien on, and security interest in any and all revenues, grants, awards and other

payments, which fund in whole or in part, any of the operating costs of the subleased premises.

In addition to the sublease agreement, the Charter School Incubator Initiative (grantor) has provided

a grant to the Latin American Montessori Bilingual Public Charter School to supplement the annual

required usage fee. The grantor offers “Full Service Below Market Usage Fees” calculated as the

number of students enrolled on each census date (October) multiplied by the per pupil facilities

allowance provided by the District of Columbia Government (currently $3,263 per student). The

Charter School Incubator Initiative will provide a grant for the term of the sub-sublease (15 years)

on an annual basis as the difference between the Full Service Market Usage Fee and the Full Service

Below Market Usage Fee. Rent expense on this lease for the year ended June 30, 2019, was

$466,609, which consisted of required lease payments of $652,500 and a rent subsidy of $185,891.

Rent expense on this lease for the year ended June 30, 2018, was $462,946, which consisted of

required lease payments of $652,500 and a rent subsidy of $189,554.

Building Lease - 3825 18

th

Street (Perry Street Prep)

The Latin American Montessori Bilingual Public Charter School entered into a sub-sublease rental

agreement on June 23, 2016, with the Perry Street Prep Public Charter School (the subleassee) for

the rental of a school facility located at 3825 18

th

Street, NE, in Washington, DC. The rental lease is

effective for a twelve-year period commencing on July 1, 2016, and expiring on June 30, 2028. As a

requirement of this lease, a total rental security deposit of $48,140 was to be made. This lease called

for quarterly lease payments of $72,210 based on a total “Full Service Market Yearly Usage Fee” of

$288,840 for the entirety of the lease. This fee has been calculated using a full service market rate of

$29 per square foot. The annual usage fee is full service and includes all utilities (gas, water,

electricity, and trash removal), building engineering, janitorial, maintenance and repairs, security

monitoring and property management. As a provision of this lease, the Charter School provided the

Perry Street Prep Public Charter School a first priority lien on, and security interest in any and all

revenues, grants, awards and other payments, which fund in whole or in part, any of the operating

costs of the subleased premises. The Charter School exercised a provision within the lease agreement

permitting an early termination of this lease agreement effective June 30, 2018. Rent expense related

to this lease for the year ended June 30, 2018, was $280,840.

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LATIN AMERICAN MONTESSORI BILINGUAL

PUBLIC CHARTER SCHOOL

NOTES TO FINANCIAL STATEMENTS

14. COMMITMENTS: (Continued)

Building Lease - 1399 Aspen St, NW (District of Columbia International School)

The Latin American Montessori Bilingual Public Charter School entered into a sublease rental

agreement in November 2016 with the District of Columbia International School for the rental of

a school facility located at the former Walter Reed Army Medical Center in Washington, DC. The

rental lease is effective for a twenty-nine-year and eleven-month period after the commencement

date. The Charter School is anticipating to exit this lease agreement on or about June 30, 2022. As

a requirement of this lease, a total rental security deposit of $130,166 is to be made. A reserve in the

amount of $25,000 is also required. This lease calls for quarterly lease payments. Annual base rent

for year one is $468,600, which is from the Substantial Completion date to June 30, 2018. Year two

annual rent is $624,800 and year three annual base rent is $781,000. Each year thereafter, the base

rent will increase by the lesser of (a) the percentage increase in the per pupil facilities allowance from

the prior year or (b) three percent (3%). The Charter School is also responsible for its pro rata share

of certain operating costs, utilities, insurance costs and real estate taxes. Rent expense related to this

lease net of rent abatement for the year ended June 30, 2019, was $920,692, which included operating

costs of $196,598. Rent expense related to this lease for the year ended June 30, 2018, was $782,066,

which included operating costs of $173,033. Future minimum rental lease payments due under this

lease are as follows:

Year Ending June 30,

2020

$ 781,000

2021

804,430

2022

828,563

2023

853,420

2024

879,022

Thereafter

29,514,435

Total

$ 33,660,870

Building Lease - 5000 14th Street, NW (Building Hope)

The Charter School entered into a lease agreement with Building Hope Fourteenth Street, Inc., for

the rental of a school facility located at 5000 14th Street, NW, Washington, DC. This lease, as written,

would commence on approximately August 1, 2019, and end on June 30, 2044, but was delayed by

appeals as to zoning approvals. The Charter School has the option to extend the lease term for two

additional successive periods of five years each. There is an option to purchase the property. As a

requirement of this lease, a security deposit of $1,000,000 was required. The Security Deposit will

be reduced to $50,000 when the landlord closes on the acquisition of the property. The Charter School

has agreed to certain convents but not limited to maintaining a fixed charge coverage ratio of not less

than 1.20 to 1.00 effective for the year ending June 30, 2020. Scheduled fixed rent payments are based

on acquisition and renovation costs. Anticipated monthly base rent for year one is $94,005. There

was no rent expense related to this lease for the year ended June 30, 2019.

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LATIN AMERICAN MONTESSORI BILINGUAL

PUBLIC CHARTER SCHOOL

NOTES TO FINANCIAL STATEMENTS

14. COMMITMENTS: (Continued)

Building Lease - 5000 14th Street, NW (Building Hope) (Continued)

On October 31, 2019, the District of Columbia Court of Appeals ruled in favor of the DC Board of

Zoning Adjustment and the Charter School, affirming LAMB’s zoning application. Following the

delay, the Charter School and Building Hope Fourteenth Street are now focusing on the purchase

option and are negotiating towards that end. No new agreements have been finalized, but financing

term sheets have been received and are being evaluated, and efforts are proceeding towards that end,

with the intent of occupying the property in August 2020.

Unsecured Credit Card

The Charter School utilizes a credit card issued by Bank of America for purchases related to the

Organization’s activity. The credit card is issued in the name of the Charter School with an unsecured

credit limit of $25,000.

15. RELATED PARTY TRANSACTIONS:

Business Transactions

The Latin American Montessori Bilingual Public Charter School entered into a sub-sublease rental

agreement on May 1, 2013, with the Charter School Incubator Initiative for the rental of a school

facility located at 3825 18

th

Street, NE, in Washington, DC. The rental lease is effective for a fifteen

(15) year period commencing on July 1, 2013, and expiring on June 30, 2028. A former board

member of the Latin American Montessori Bilingual Public Charter School during the year ended

June 30, 2018, was an officer on the board of the Charter School Incubator Initiative. Rental lease

payments made to the Charter School Incubator Initiative for the year ended June 30, 2018, were

$462,946.

The Charter School entered into an agreement with the Charter School Services Corporation (CSSCI)

effective March 1, 2018, for financial and accounting services. A former board member of the Charter

School during the year ended June 30, 2018, was an officer on the board of the Charter School

Services Corporation. The Charter School recognized total accounting expense under this contract

through the year ended June 30, 2018, in an amount of $19,000, of which $9,500 was provided on a

pro-bono basis during the year.

Board Members

Some of the board members have children that are currently enrolled in the Latin American

Montessori Bilingual Public Charter School.

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LATIN AMERICAN MONTESSORI BILINGUAL

PUBLIC CHARTER SCHOOL

NOTES TO FINANCIAL STATEMENTS

16. CONCENTRATIONS:

Revenues

The Latin American Montessori Bilingual Public Charter School receives public funds from the DC

government based on the number of students they enroll according to the Uniform Per Student Funding

Formula developed by the Mayor and City Council. This per pupil allocation is supplemented with

extra funds for students with special needs. During the years ended June 30, 2019 and 2018, eighty-

four percent (84%) and eighty-five percent (85%), respectively, of total support was received from the

District of Columbia in the form of per pupil funding.

In addition to the revenue received through the Uniform Per Student Funding, the Charter School

receives state and federal grants awarded under the auspices of the U.S. Department of Education

(No Child Left Behind and special education) as well as the U.S. Department of Agriculture (Child

Nutrition). The Charter School is entitled to receive these funds by virtue of its recognition as a Local

Education Agency by the District of Columbia Public Charter School Board (DCPCSB).

The Charter School is limited to enrolling students that are residents of the District of Columbia.

As a DC Public Charter School, the School must compete for students against the DC Public School

system as well as other DC Public Charter Schools.

17. CONTINGENCIES:

Pending Litigation

From time to time, the Charter School is involved in routine litigation that arises in the ordinary

course of business. There are no significant pending legal proceedings to which the Charter School is

a party for which management believes the ultimate outcome would have a material adverse effect on

the Charter School’s financial position.

Charter School Operations

The Latin American Montessori Bilingual Public Charter School was granted its initial charter by the

District of Columbia Board of Education and then later reaffirmed by the District of Columbia Public

Charter School Board, authorized under the District of Columbia School Reform Act of 1995, Public

Law 104-134, as amended. The Latin American Montessori Bilingual Public Charter School has no

reason to believe that this relationship will be discontinued in the foreseeable future. However, any

interruption of this relationship (i.e., the failure to continue this charter authorization or withholding

funds) could adversely affect the Charter School’s ability to finance ongoing operations.

The Charter School depends on per pupil allocations, grants, and contributions for a significant portion

of its revenues. The ability of the sources of revenues to continue giving amounts comparable with

prior years may be dependent upon future economic conditions and continued deductibility for income

tax purposes of grants and contributions to the Charter School. While the Charter School’s board of

directors and management believes the Charter School has the resources to continue its programs, its

ability to do so, and the extent to which it continues, may be dependent on the above factors.

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LATIN AMERICAN MONTESSORI BILINGUAL

PUBLIC CHARTER SCHOOL

NOTES TO FINANCIAL STATEMENTS

17. CONTINGENCIES: (Continued)

Charter School Operations (Continued)

Laws and regulations governing charter schools are complex and subject to interpretation. The

Charter School receives funding from various federal and state grant reimbursement programs, which

are governed by various rules and regulations of the respective grantor agencies. To the extent that

the Charter School has not complied with the rules and regulations governing the grants, refunds of

any money received may be required. The Charter School believes that it is in compliance with all

applicable laws and regulations and is not aware of any pending or threatened investigations

involving allegations of potential wrongdoing. Therefore, no provision has been recorded in the

accompanying financial statements for such contingencies.

The viability of public charter schools and funding for these schools is dependent on the consensus

of current and future administration of the District of Columbia Government. Any future change in

dynamics could adversely affect the operations of public charter schools.

18. SUBSEQUENT EVENTS:

Financial Statement Preparation

In preparing these financial statements, management has evaluated events and transactions for

potential recognition or disclosure through December 4, 2019, the date the financial statements were

available to be issued, and has determined that no adjustments are necessary to the amounts reported

in the accompanying financial statements.

19. FUNDRAISING:

During the years ended June 30, 2019 and 2018, expenses incurred for the purpose of fundraising

were $31,264 and $26,750, respectively.

20. ADVERTISING COSTS:

Advertising and marketing costs are expensed when incurred. Marketing activities were conducted

for the purpose of promoting open enrollment and recruiting to the Charter School and to provide

outreach to the community. Advertising costs were incurred for the purpose of staff recruitment.

Advertising and marketing expenses in the amount of $4,816 and $3,336 were incurred during the

years ended June 30, 2019 and 2018, respectively.

21. RETIREMENT PLAN:

401(k) Profit Sharing Plan

The Latin American Montessori Bilingual Public Charter School provides pension benefits for its

employees through a defined contribution 401(k) retirement plan which is currently administered by

John Hancock Financial Services. In a defined contribution plan, benefits depend solely on amounts

contributed to the plan plus investment earnings. Provisions of the plan allow for the employees to

contribute up to the statutory limits set by the Internal Revenue Code. The Charter School is required

to make employer non-elective safe harbor contributions of 3% of annual employee compensation for

employees with one or more years of employment.

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LATIN AMERICAN MONTESSORI BILINGUAL

PUBLIC CHARTER SCHOOL

NOTES TO FINANCIAL STATEMENTS

21. RETIREMENT PLAN: (Continued)

401(k) Profit Sharing Plan (Continued)

Participants are 100% vested in their contributions and the 3% employer safe harbor contribution.

Authorized entry dates into the plan are January 1

st

and July 1

st

following the date that the eligibility

requirements are met. There is no unfunded past service liability. In addition, there is a discretionary

profit-sharing contribution determined on an annual basis that becomes fully vested after five years of

service. The Charter School’s contributions for the years ended June 30, 2019 and 2018 consisted of

the following:

June 30, 2019

June 30, 2018

3% Safe Harbor

$ 121,040

$ 117,363

2% Profit Sharing

69,973

61,917

Plan Fee

5,768

3,354

Total

$ 196,781

$ 182,634

22. EMPLOYEE BENEFITS:

The cost of fringe benefits incurred for the years ended June 30, 2019 and 2018 consisted of the

following:

June 30, 2019

June 30, 2018

Social Security/Medicare

$ 387,506

$ 384,567

Health Insurance

282,665

280,947

Health Reimbursement Account

152,402

107,697

Life and Disability Insurance

46,925

43,265

Retirement

196,781

182,634

Unemployment

21,421

21,779

Paid Leave Tax

8,576

-

Workers Compensation

23,464

22,363

De Minimus

1,351

4,036

Total

$ 1,121,091

$ 1,047,288

Flexible Benefits Plan

The Latin American Montessori Bilingual Public Charter School adopted a Section 125 Flexible

Benefits Plan (Cafeteria Plan). Under this plan, employees are permitted to use pre-tax benefit

dollars through payroll deduction to pay for health and dental insurance premiums.

Health Reimbursement Account

The Charter School adopted a Section 105 Health Reimbursement Account (HRA) effective August

1, 2014. Under this plan, employees are permitted to use employer provided tax-free dollars to pay

for qualified health care expenses.

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Kendall, Prebola and Jones,

LLC

Certified Public Accountants

133 MANN STREET, P.O. BOX 259, BEDFORD, PA 15522-0259 / (814) 623-1880

Board of Directors

Latin American Montessori Bilingual

Public Charter School

1375 Missouri Avenue, NW

Washington, DC 20011

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

We have audited, in accordance with the 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 financial statements of the Latin American

Montessori Bilingual Public Charter School (a nonprofit organization), which comprise the statement of

financial position as of June 30, 2019, and the related statements of activities, functional expenses, and

cash flows for the year then ended, and the related notes to the financial statements, and have issued our

report thereon dated December 4, 2019.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered the Latin American

Montessori Bilingual Public Charter School’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 financial statements, but not for the purpose of expressing an opinion on the effectiveness

of the Latin American Montessori Bilingual Public Charter School’s internal control. Accordingly, we do

not express an opinion on the effectiveness of the Organization’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.

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Board of Directors -2- December 4, 2019

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Latin American Montessori Bilingual Public

Charter School’s 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 an instance of

noncompliance or other matter that is required to be reported under Government Auditing Standards and

which is described in the accompanying schedule of findings as item 2019-001.

Latin American Montessori Bilingual Public Charter School’s Response to Findings

The Latin American Montessori Bilingual Public Charter School’s, response to the finding identified in

our audit is described in the accompanying schedule of findings. The Latin American Montessori

Bilingual Public Charter School’s, response was not subjected to the auditing procedures applied in the

audit of the financial statements and, accordingly, we express no opinion on it.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance

and the results of that testing, and not to provide an opinion on the effectiveness of the Organization’s

internal control or on compliance. This report is an integral part of an audit performed in accordance with

Government Auditing Standards in considering the Organization’s internal control and compliance.

Accordingly, this communication is not suitable for any other purpose.

Kendall, Prebola and Jones

Certified Public Accountants

Bedford, Pennsylvania

December 4, 2019

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LATIN AMERICAN MONTESSORI BILINGUAL

PUBLIC CHARTER SCHOOL

SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS

FOR THE YEAR ENDED JUNE 30, 2019

Findings relating to the financial statements which are required to be reported in accordance with

Government Auditing Standards

2018-001 Procurement and Contract Submission:

Condition: During the year ended June 30, 2018, the Latin American Montessori Bilingual

Public Charter School entered into two separate procurement contracts for services. Over the

course of the fiscal year, each of these contracts had an aggregate value exceeding $25,000,

however, neither of these contracts were competitively bid.

Status: This has been repeated as an issue in the current year ended June 30, 2019 as item

number 2019-001.

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LATIN AMERICAN MONTESSORI BILINGUAL

PUBLIC CHARTER SCHOOL

SCHEDULE OF FINDINGS

FOR THE YEAR ENDED JUNE 30, 2019

I. Summary of Audit Results

a. The auditor's report expresses an unmodified opinion on whether the financial statements of the

Latin American Montessori Bilingual Public Charter School were prepared in accordance with

generally accepted accounting principles.

b. No significant deficiencies relating to the audit of the financial statements have been reported.

c. One instance of noncompliance material to the financial statements of the Latin American

Montessori Bilingual Public Charter School which was required to be reported in accordance

with Government Auditing Standards, was disclosed during the audit.

II. Findings relating to the financial statements which are required to be reported in accordance with

Government Auditing Standards

2019-001 Procurement and Contract Submission:

Condition: During the year ended June 30, 2019, the Latin American Montessori

Bilingual Public Charter School entered into various contracts for services including

three contracts for special education services that were selected during the audit for

procurement testing. Over the course of the fiscal year, these three contracts had an

aggregate value exceeding $25,000, however they were not competitively bid.

Criteria: According to the School Reform Act, DC Code 38-1800, contracts obligating

a vendor to furnish either supplies and/or services having a total value equal to or

exceeding $25,000 within a single fiscal year are required to be competitively bid. In

addition, the School Reform Act requires the school to submit within three business

days after the contract is awarded, all bids received for the contract, as well as the

rationale for the award of the contract, to the DC Public Charter School Board. There

are certain exemptions and alternative acceptable procedures included within this Act

for certain contracts, including for emergency services and sole source needs.

Cause: Approximately halfway through the Charter School’s June 30, 2019, fiscal year,

there was turnover within the Charter School’s staffing, including executive management,

as well as finance personnel. Specifically, an Executive Director was hired, and a Chief

Financial Officer was hired to replace the outsourced bookkeeping firm. This staffing

change during 2019 was in addition to the staffing change that occurred during 2018.

There was also turnover in special education staffing. Because of staff replacement, the

procedures for awarding a contract were not conducted during the beginning of the fiscal

year. The new staff identified developing internal procurement procedures as a priority

for the 19/20 fiscal year.

Effect: When a school fails to adhere to this regulation, including bidding requirements

and document submission, the DC Public Charter School Board may issue an Early

Warning Notice. Furthermore, an “Out of Compliance Notice” is issued if the school

fails to meet the deadline set forth in the Early Warning Notice or if the school

accumulates five Early Warning Notices.

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LATIN AMERICAN MONTESSORI BILINGUAL

PUBLIC CHARTER SCHOOL

SCHEDULE OF FINDINGS

FOR THE YEAR ENDED JUNE 30, 2019

II. Findings relating to the financial statements which are required to be reported in accordance with

Government Auditing Standards (Continued)

2019-001 Procurement and Contract Submission: (Continued)

Recommendation: We recommend that one individual within the Charter School be

assigned the task of monitoring procurement contracts. This would include the

determination of whether the contract is expected to exceed $25,000 and if so, ensuring

appropriate publication of contract bidding and the respective document submission to

the DC Public Charter School Board. The status of contracts requiring procurement

should be presented to the Board of Directors on a monthly basis for their review and

discussion. We further recommend that if it is unclear whether a particular contract is

subject to bidding requirements as promogulated by the School Reform Act, the Charter

School should obtain an opinion from its internal counsel as to the applicability of the

Act.

Views of Responsible Officials: School officials understand the importance of this

matter identified by Kendall, Prebola and Jones, LLC, relating to bidding out necessary

goods and services, appropriately evaluating vendor contracts, and complying with the

DC Public Charter School Board’s procurement requirements. Moving forward, before

the Charter School begins engaging vendors for services, analyses of expected costs will

be performed by the CFO/COO, and Staff Accountant. If the expected costs will exceed

$25,000, the CFO/COO will be responsible for overseeing compliance with all the

procurement requirements stipulated by the DC Public Charter School Board. The

Executive Director will be updated throughout the process and provide guidance to the

CFO/COO as needed. Once all steps have been followed and a contract is executed, the

CFO/COO will authorize the Staff Accountant to initiate payments for invoices received

from the associated vendor.

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LATIN AMERICAN MONTESSORI BILINGUAL PUBLIC CHARTER SCHOOL

SCHEDULE OF CONTRACTS AWARDED IN EXCESS OF $25,000

UNAUDITED

FOR THE YEAR ENDED JUNE 30, 2019

Conflict of

Vendor Name

Services Provided

Value

Interest

DCI

Rent - Walter Reed Facility

576,925

no

The MECCA Group, LLC

SPED Services

387,822

no

M and G Services

Custodial/Maintenance Services

254,515

no

CareFirst BlueChoice

Employee Group Health Insurance

234,083

no

Charter School Incubator Initiative

Rent - South Dakota Facility

232,761

no

Revolution Foods, Inc.

Food Services

199,528

no

Selena Gonzales Jones

Strategic Leadership Consulting and Organizational Support

78,011

no

Brad Karrer

Director of Building Operations - Temporary Contract Services

75,233

no

Building Hope

Accounting Services - Temporary Contract

73,000

no

Fairgreen Consulting

SPED Coaching and Support Services

59,500

no

PEPCO

Electrical Utility

57,645

no

UNUM Life Insurance Co of America

Group Life/Disability Insurance

51,118

no

Dynamic Kid LLC

Occupational Therapy services

44,013

no

Venable LLP

Legal Services

42,253

no

Selective Insurance Company of America

Liability Insurance

41,567

no

MedStar-Georgetown Medical Center, Inc.

Child and Classroom Capacity Building Consultation

41,000

no

Barrie School Institute for Advanced Montessori Studies

Professional Development

29,495

no

American Montessori Society

AMS Conference Registration

29,415

no

Office Equipment Management, Inc.

Copier Maintenance and Supplies

28,795

no

Kendall, Prebola and Jones, LLC

Financial Audit/990 Services

28,730

no

SubLime Kidz, LLC

SPED Services

27,527

no

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