Finance Committee Meeting Minutes

October 27, 2014

Page 1

Finance Committee of the Board of Trustees

Meeting

Monday, October 27, 2014

9:30 a.m. – 11:30 a.m.

Brooke Charter School Roslindale

I. / Call Meeting to Order
Hilary Berkman, Treasurer / 9:30 a.m.
II. / Presentation of FY 14 Audit
Alexander, Aronson, & Finning – AAF (Auditors) / 9:30 a.m. – 10:15 a.m.
III. / Questions/Discussion
Finance Committee Members & AAF / 10:15 a.m. – 10:45 a.m.
IV. / Consideration for Approval
Finance Committee Members / 10:45 a.m. – 11:00 a.m.
V. / Review of FY 14 closeout and YTD Q1
Finance Committee Members and BCS Staff / 11:00 a.m. – 11:15 a.m.
VI. / Review Capital Needs Assessment Draft for Brooke Charter School Roslindale (190 Cummins Hwy.)
Finance Committee Members and BCS Staff / 11:15 a.m. – 11:25 a.m.
VII. / New Business & Finalize FY 15 Meeting Schedule
Committee Members, BCS Staff / 11:25 a.m. – 11:30 a.m.
VIII / Adjourn / 11:30 a.m.

190 Cummins Highway, Boston, MA 02131

Finance Committee of the Board of Trustees

Meeting Minutes

  1. Attendees: Hilary Berkman (Chair), LaRoy Brantley (Cmte. Member) Peter Kramer (Cmte. Member), Jon Clark (Member Ex-Officio), Christopher Bizzacco (Staff), Matthew Cameron (Staff), Yvette Philip (Staff), John Buckley (AAF), Charles Webb (AAF)
  1. Meeting Called to Order by Chair Berkman (9:32 a.m.)
  1. Discussion regarding FY 14 Audit (9:35 a.m.)
  1. John Buckley AAF – begins presentation of 4 documents related to FY 14 Audit
  1. Discussion of audit purpose:
  2. State that statements are materially correct
  3. Review of internal controls – ensure they are working correctly to get the statements correct
  1. Board Report:
  2. Adopted a new accounting standard – GASB 65
  3. Effectively makes you expense any financing fees, in past those were capitalized and depreciated over life of debt
  4. Adopted retroactively to 2013
  5. First year that it has to be adopted
  6. Every charter school experienced same change
  1. Estimates
  2. Determined estimates were reasonable
  1. Adjustments – review of the adjustments
  2. Brooke 1 – a lot of activity related to financing transactions
  3. Brief review of the adjusting journal entries related to Brooke 1.
  4. A lot of the journal entries are balance sheet reclassifications
  5. Bulk related to financing and fixed assets
  6. Brooke 2 & Brooke 3
  7. Brief review of adjusting journal entries for Brooke 2 & 3.
  8. Entries are small in nature.
  9. Related entities
  10. Review of adjusting journal entries for related entities (Brooke Support Corporation, Brooke 2 LLC, and Brooke 2 Master Tenant LLC
  11. Adjustments relate to the NMTC transaction
  12. Foundation
  13. Review of adjusting journal entries for Brooke Foundation
  1. Question from J. Clark re: number of audit entries
  2. Discussion with AAF regarding acceptable number of journal entries in their opinion.
  3. AAF discussion regarding creating a system where prior adjustments are booked, and ensure there is a trigger for items that are non-cash and ensuring they are booked.
  4. Statement from Chair – suggestion regarding looking to additional outside consultants to review the complex financing transactions – 3rd party review on how certain items should be booked.
  1. Management Letter
  2. Review by AAF of items they are required to report
  3. Material weakness defined by the auditing standards
  4. Discussion regarding General Ledger Material Weakness
  5. Statement from Chair that the finding is taken very seriously and the committee and management have already begun steps to ensure this is avoided in the future
  6. Discussion regarding Foundation Loans owed from B1 to Foundation
  7. Need to ensure there is enough cash in the Foundation for any future unwinds
  8. Discussion regarding release of unrestricted grants
  9. Discussion regarding MTRS - Required to remit those to the state by 10th day of following month; 4 months were after 10th of the month; management has prepared a corrective action plan to address delays.
  10. Many schools have this issue
  1. Financial Statements
  2. Review of Management Discussion and Analysis report
  3. Discussion by AAF regarding component units of the school, and how Brooke Support Corporation, Brooke 2 LLC, and Brooke 2 Master Tenant LLC are presented.
  4. Discussion by AAF regarding how find and formulate the “best figure” to show a “final picture” of the school’s financial position at year end.
  5. Discussion regarding total change in net assets per the statements, and how this is a good number to show how well the schools were run during the year exclusive of the financing transactions.
  6. Discussion regarding Brooke’s position vis a vis total assets, and net operating capital.
  1. Consideration of FY 14 Audit
  2. Motion to accept the FY 14 Audit, as prepared by AAF – Peter Kramer
  3. 2nd to the motion – LaRoy Brantley
  4. Unanimous in favor
  1. Q1 financial statements and Draft Capital Needs Assessment materials for 190 Cummins Highway were then distributed.
  2. Discussion regarding revenue roll-overs from FY 14.
  3. Review of the Q1 financial statements.
  4. Request by the Committee to include related entities (i.e., Brooke Support Corporation, Brooke 2 LLC, and Brooke 2 Master Tenant LLC) in future financial statements
  5. Discussion by BCS staff that each school in Q1 and at present is following expected expense and revenue trends.
  1. Discussion finalizing FY 15 Finance Committee Meeting dates
  1. Motion to Adjourn
  2. Peter Kramer – Motion
  3. LaRoy Brantley – 2nd
  4. Meeting adjourned at 11:30 a.m.