BAY HAVEN CHARTER ACADEMY, INC · The analysis provides summary financial information for the School and should be read in conjunction with the School’s financial statements. Financial

Bay Haven Charter Academy, Inc. (A Component Unit of Bay District Schools, Florida)

Special-Purpose Financial Statements

June 30, 2013

Bay Haven Charter Academy, Inc. Table of Contents

June 30, 2013

Page Independent auditor’s report 1 Management’s discussion and analysis 3 Financial statements Special-purpose statement of net position 9 Special-purpose statement of activities 10 Special-purpose balance sheet - governmental funds 11 Special-purpose statement of revenues, expenditures and changes in fund balance - governmental funds

12

Special-purpose reconciliation of the governmental funds statement of revenues, expenditures and changes in fund balance to the statement of activities

13 Special-purpose statement of revenues and expenditures - budget and actual - general fund

14

Notes to special-purpose financial statements 15 Supplementary information Schedule of revenues and expenditures - general fund (management format)

29

Compliance section

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

30 Independent auditor’s management letter required by chapter 10.850 of the Rules of the State of Florida Office of the Auditor General

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Carr, Riggs & Ingram, LLC

14101 Panama City Beach Parkway

Suite 200

Panama City Beach, FL 32413

(850) 784-6733

(850) 784-4866 (fax)

www.cricpa.com

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INDEPENDENT AUDITOR’S REPORT

To the Board of Directors Bay Haven Charter Academy, Inc. Panama City, Florida

Report on the Financial Statements We have audited the accompanying special-purpose financial statements of the governmental activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of Bay Haven Charter Academy, Inc. (the "School"), a component unit of Bay County District School Board as of and for the year ended June 30, 2013, and the related notes to the special-purpose financial statements, which collectively comprise the School’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these special-purpose 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 special-purpose financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these special-purpose financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the special-purpose financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the special-purpose 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 opinions.

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Opinions

In our opinion, the special-purpose financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of Bay Haven Charter Academy, Inc., as of June 30, 2013, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters

Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and schedule of revenues and expenditures - general fund (management format) on pages 3 through 8 and page 29 be presented to supplement the basic special-purpose financial statements. Such information, although not a part of the basic special-purpose financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic special-purpose financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic special-purpose financial statements, and other knowledge we obtained during our audit of the basic special-purpose financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated October 29, 2013, on our consideration of Bay Haven Charter Academy, Inc.’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on 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 Bay Haven Charter Academy, Inc.’s internal control over financial reporting and compliance.

Certified Public Accountants October 29, 2013

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Management’s Discussion and Analysis

Management’s discussion and analysis provide an easily readable analysis of Bay Haven Charter Academy, Inc.’s (the School) financial activities. The analysis provides summary financial information for the School and should be read in conjunction with the School’s financial statements. Financial Highlights

Total assets of the School exceeded total liabilities by $9,401,875 (net position). Of this amount, $6,687,703 is unrestricted net position for governmental activities. Total net position includes $1,612,179 invested in capital assets (net of related debt) in the governmental activities.

Total net position increased by $836,430.

As of June 30, 2013, the general fund’s unassigned fund balance was $6,230,730 or 33% of total general fund expenditures.

Governmental activities revenues increased to $15,477,372 or 10%, while governmental activities expenses increased 7% to $14,640,942.

Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the School’s basic financial statements. The School’s basic financial statements are comprised of three components: 1) Government-wide financial statements, 2) Fund financial statements, and 3) Notes to financial statements. The government-wide financial statements present an overall picture of the School’s financial position and results of operations. The fund financial statements present financial information for the School’s major funds. The notes to basic special-purpose financial statements provide additional information concerning the School’s finances that are not otherwise disclosed in the government-wide or fund financial statements. Government-wide Financial Statements The government-wide financial statements include the statement of net position and statement of activities. These statements are designed to provide readers with a broad overview of the School’s financial position, in a manner similar to that of private-sector companies. Emphasis is placed on the net position of governmental activities as well as the change in net position. Governmental activities are the activities where most of the School’s programs and services are reported including, but not limited to, instruction, operation and maintenance of plants and facilities, pupil transportation, extracurricular activities and other support services. The School does not have any business-type activities. The statement of net position presents information on all assets and liabilities of the School, with the difference between the two reported as net position. Assets, liabilities and net position are reported separately for governmental activities and business-type activities. Increases or decreases in net position over time may serve as a useful indicator of the School’s improving or declining financial position.

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The statement of activities presents information on all revenues and expenditures of the School and the change in net position for the fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenditures are reported in the statement of activities for some items that will only result in cash flows in future fiscal periods (e.g., uncollected fees). Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific purposes or objectives. Individual funds have been established by the School to account for revenues that are restricted to certain uses, or to comply with legal requirements. The major categories of funds found in the School’s fund financial statements include: governmental funds. Fund financial statements provide financial information for the School’s major fund and more detailed information about the School’s activities. Governmental fund financial statements provide information on the current assets and liabilities of the funds, changes in current financial resources (revenues and expenditures), and current available resources. Fund financial statements for all governmental funds include a balance sheet and a statement of revenues, expenditures, and changes in fund balance. The School’s general fund includes a statement of revenues and expenditures - budget and actual. The government-wide financial statements and the fund financial statements provide different presentations of the School’s financial position. Categorized by Governmental Activities and Component Units, the government-wide financial statements provide an overall picture of the School’s financial standing. These statements, which are comparable to private-sector companies, provide a good understanding of the School’s overall financial health and present the means used to pay for various activities, or functions provided by the School. All assets of the School, including buildings and land are reported in the statement of net position, as well as all liabilities, including outstanding principal on bonds. The statement of activities includes depreciation on all long lived assets of the School. The fund financial statements provide a presentation of the School’s major funds. In the case of governmental activities, outlays for long lived assets are reported as expenditures and long-term liabilities, such as revenue bonds, are not included in the fund financial statements. To facilitate a comparison between the fund financial statements and the government-wide financial statements, a reconciliation is provided. Notes to financial statements provide additional detail concerning the financial activities and financial balances of the School. Additional information about the accounting practices of the School, investments of the School, and long-term debt are just a few of the items included in the notes to financial statements. Financial Analysis of the School The following schedule provides a summary of the assets, liabilities and net position of the School. At the end of the fiscal year 2013, the School is able to report positive balances in all categories of net position, for the government as a whole.

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Net Position Governmental Activities

June 30, 2013 2012

Current and other assets 25,484,279$ 6,754,659$

Capital assets (net) 16,652,127 14,994,779

Total assets 42,136,406 21,749,438

Current liabilities

(payable from current assets) 612,977 286,680

Noncurrent liabilities 32,121,554 12,720,082

Total liabilities 32,734,531 13,006,762

Net position invested in capital

assets, net of related debt

Net position – restricted 1,101,993 1,187,235

Net position – unrestricted 6,687,703 5,280,744

Total net position 9,401,875$ 8,742,676$

1,612,179 2,274,697

Investment in capital assets (e.g., land, buildings, and equipment), net of any related outstanding debt used to acquire those assets, represents a large portion of the School’s net position (17%). These capital assets are used to provide services to citizens; consequently, these assets are not available for future spending. It should be noted, that although the School’s investment in its capital assets is reported net of related debt, the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. The balance of unrestricted net position ($6,687,703) may be used to help meet the School’s ongoing obligations to citizens and creditors. The following schedule provides a summary of the changes in net position.

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Changes in Net Position Governmental Activities

Year Ended June 30, 2013 2012

Revenues

Intergovernmental 13,982,414$ 11,548,008$

Charges for services 959,004 952,119

Operating contributions and grants 306,355 651,440

Capital contributions and grants - 29,044

Other revenue from local sources 38,605 6,253

Donations 27,719 3,472

Sale of assets - 792,634

Miscellaneous 153,541 134,948

Interest income 9,734 8,964

Total revenues 15,477,372 14,126,882

Expenses

Instructional 7,897,815 7,113,350

Support services 4,816,266 4,909,484

Depreciation and amortization 1,020,345 862,122

Interest 906,516 759,191

Total expenses 14,640,942 13,644,147

Increase in net position 836,430$ 482,735$

Governmental activities revenues exceeded expenditures by $836,430. Total revenues increased $1,350,490 from the previous year. Revenues increased primarily as a result of increases in intergovernmental funds. Total expenses increased $996,795 from the previous year. 90% of the revenues for governmental activities were generated by intergovernmental receipts, while most of the governmental resources were expended for regular and exceptional instruction (54%) and support services (33%). Financial Analysis of the School’s Funds Governmental Funds

General Fund The main operating fund of the School is the general fund. As of June 30, 2013, total assets were $24,881,866 and total liabilities were $205,109. At the end of fiscal year 2013, unassigned fund balance of the general fund was $6,230,730.

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Analysis of General Fund Budgetary Variations For the year ended June 30, 2013, the general fund expenditures did exceed the budgeted amount by $4,281,094. The debt service and capital outlay associated with the land purchase for the North Bay Haven campus were not included in the School’s budget. Capital Assets Activity The following schedule provides a summary of the School’s capital assets activity. The School’s total investment in capital assets activities as of June 30, 2013, was $16,652,127 (net of accumulated depreciation). This investment in capital assets includes land, buildings, improvements, machinery and equipment, and construction in progress.

Capital Assets (net of depreciation)

Governmental Activities

June 30, 2013 2012

Land 2,305,128$ 805,128$

Construction in progress 747,556 -

Buildings 11,246,970 11,588,413

Improvements 717,838 663,630

Leasehold improvements 85,055 264,482

Computers 268,055 319,328

Machinery and equipment 1,281,525 1,353,798

Total 16,652,127$ 14,994,779$

Additional information on the School’s capital assets can be found in note 4 – Capital Assets, of the notes to financial statements. Debt Management At the end of the current fiscal year, the School had total bond debt outstanding in the amount of $31,049,316.

Outstanding Bond Debt Governmental Activities

June 30, 2013 2012

Revenue bonds 31,049,316$ 11,575,000$

At the end of the current fiscal year, the School had total debt outstanding for a capital lease in the amount of $1,072,238.

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Outstanding Capital Lease Governmental Activities

June 30, 2013 2012

Capital lease payable 1,072,238$ 1,145,082$

More detail on the School’s debt is presented in notes 5 and 6 of the notes to financial statements. Economic Factors and Next Year’s Budget In setting the budget for FY 2014, the School considered a number of issues, among them:

Increasing student enrollment

Continued curriculum content development and related IT support

Facility improvements to accommodate additional students

Increased salary costs, both voluntary and state-mandated

Establishment of a new Pre-K program Contacting the School’s Finance Department This financial report is designed to provide a general overview of the Bay Haven Charter Academy, Inc.’s finances. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the Bay Haven Charter Academy, Inc.’s Finance Department, 2501 Hawks Landing Blvd, Panama City, Florida 32405. You may visit the School’s website at http://bhca.ws.

Governmental Component

Activities Units

Assets

Cash and cash equivalents 20,291,993$ 804,735$

Investments 4,440,844 -

Accounts receivable, net 87,512 -

Prepaids 56,824 -

Inventory 4,693 -

Other assets 11,426 -

Loan issuance costs 590,987 -

Capital assets, net 16,652,127 -

Total assets 42,136,406 804,735

Liabilities

Accounts payable and

accrued expenses 142,426 -

Accrued salaries and benefits 25,590 -

Deferred revenue 37,093 -

Interest payable 407,868 -

Long-term liabilities

Due within one year

Capital lease current portion 62,331 -

Revenue bonds current portion 190,000 -

Due in more than one year

Capital lease long-term portion 1,009,907 -

Revenue bonds long-term portion, net of discount 30,859,316 -

Total liabilities 32,734,531 -

Net position

Invested in capital assets,

net of related debt 1,612,179 -

Restricted 1,101,993 750,000

Unrestricted 6,687,703 54,735

Total net position 9,401,875$ 804,735$

Bay Haven Charter Academy, Inc.

Special-Purpose Statement of Net Position

June 30, 2013

See accompanying notes

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Net (Expenses)

Revenues and Change

in Net Position

Primary Component

Government Units

Operating Capital

Charges for Grants and Grants and Governmental

Expenses Services Contributions Contributions Activities

Governmental activities

Instructional services 7,897,815$ 183,691$ -$ -$ (7,714,124)$ -$

Support services 4,816,266 775,313 306,355 - (3,734,598) -

Depreciation and amortization 1,020,345 - - - (1,020,345) -

Interest on long-term debt 906,516 - - - (906,516) -

Total primary government 14,640,942$ 959,004$ 306,355$ -$ (13,375,583) -

Total component units 25,071$ -$ -$ -$ - (25,071)

General revenues

Intergovernmental revenue 13,982,414 -

Other revenue from local sources 38,605 -

Donations 27,719 795,517

Miscellaneous 153,541 -

Total general revenues 14,202,279 795,517

Interest income 9,734 41

Total general revenues and interest 14,212,013 795,558

Change in net position 836,430 770,487

Net position - beginning 8,742,676 34,248

Prior period adjustment (177,231) -

Net position - beginning (restated) 8,565,445 34,248

Net position - ending 9,401,875$ 804,735$

Program Revenues


Special-Purpose Statement of Activities

Year Ended June 30, 2013


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General

Fund

Assets

Cash and cash equivalents 20,291,993$

Investments 4,440,844

Accounts receivable, net 87,512

Prepaids 56,824

Inventory 4,693

Total assets 24,881,866

Liabilities

Accounts payable and

accrued expenses 142,426

Accrued salaries and benefits 25,590

Deferred revenue 37,093

Total liabilities 205,109

Fund balance/net position

Nonspendable 61,517

Restricted 18,176,963

Assigned 207,547

Unassigned 6,230,730

Total fund balance 24,676,757

Amounts reported for governmental activities in the statement

of net position are different because:

Capital assets used in governmental activities are not financial resources and, 17,254,540

therefore, are not reported in the funds.

Long-term liabilities, including bonds payable, are not due and payable in the

current period and, therefore, are not reported in the funds. (32,529,422)

Net position of governmental activities 9,401,875$


Special-Purpose Balance Sheet - Governmental Funds

June 30, 2013


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General

Fund

RevenuesIntergovernmental 14,288,769$ Charges for services 183,691 Before and aftercare fees 320,417 Lunchroom fees 454,896 Other revenue from local sources 38,605 Donations 8,305 Interest 9,734 Miscellaneous 153,541

Total revenues 15,457,958

ExpendituresInstructional

Regular instruction 7,335,422 Exceptional instruction 562,393

Support services 4,816,266 Capital outlay

Site, building and equipment 2,649,372 Debt service

Principal and interest 2,454,552 Debt service fees and discounts 956,180

Total expenditures 18,774,185

Excess (deficit) of revenues over (under) expenditures (3,316,227)

Other financing sources (uses)Proceeds from debt 21,765,000

Total other financing sources (uses) 21,765,000

Net changes in fund balance 18,448,773

Fund balance

Beginning of year 6,207,156

Prior period adjustment 20,828

Beginning of year (restated) 6,227,984

End of year 24,676,757$


and Changes in Fund Balance - Governmental Funds


Special-Purpose Statement of Revenues, Expenditures


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different because

Net change in fund balance - total governmental funds (page 12) 18,448,773$

1,637,934

19,414

(19,269,691)

Change in net position of governmental activities (page 10) 836,430$

the current financial resources of governmental funds. Neither transaction, however,

has any effect on net position. Also governmental funds report the effect of the issuance

costs, premiums, discounts, and similar items when debt is first issued, whereas these

amounts are deferred and amortized in the statement of activities. This amount is the

net effect of these differences in the treatment of long-term debt and related items.

Governmental funds report capital outlays as expenditures. However, in the statement of

activities the costs of these assets are allocated over their estimated useful lives and

reported as depreciation expense. This is the amount by which capital outlays exceeded

depreciation in the current period.

to governmental funds, while the repayment of the principal of long-term debt consumes

The issuance of long-term debt (i.e. bonds, leases) provides current financial resources

in Fund Balance to the Statement of Activities



Special-Purpose Reconciliation of the Governmental

Funds Statement of Revenues, Expenditures, and Changes

Amounts reported for governmental activities in the statement of activities are

The net effect of miscellaneous noncash transactions involving capital assets (i.e. sales,

trade-ins, adjustments, and donations) is to increase net position.


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Variance with

Final Budget-

Actual Positive

Original Final Amounts (Negative)

Revenues

Intergovernmental 13,839,265$ 13,839,265$ 14,288,769$ 449,504$

Charges for services 194,300 194,300 183,691 (10,609)

Before and aftercare fees 351,172 351,172 320,417 (30,755)

Lunchroom fees 504,516 504,516 454,896 (49,620)

Other revenue from local sources 27,800 27,800 38,605 10,805

Donations - - 8,305 8,305

Interest 5,000 5,000 9,734 4,734

Miscellaneous 197,474 197,474 153,541 (43,933)

Total revenues 15,119,527 15,119,527 15,457,958 338,431

Expenditures

Instructional 8,261,039 8,261,039 7,897,815 363,224

Support services 5,038,426 5,038,426 4,816,266 222,160

Capital outlay 248,311 248,311 2,649,372 (2,401,061)

Debt service 945,315 945,315 3,410,732 (2,465,417)

Total expenditures 14,493,091 14,493,091 18,774,185 (4,281,094)

Excess (deficit) of revenues over

(under) expenditures 626,436 626,436 (3,316,227) (3,942,663)

Other financing sources (uses)

Proceeds from debt - - 21,765,000 21,765,000

Total other financing sources (uses) - - 21,765,000 21,765,000

Net changes in fund balance 626,436$ 626,436$ 18,448,773$ 17,822,337$

Budgeted Amounts


Special-Purpose Statement of Revenues and

Expenditures - Budget and Actual - General Fund



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Notes to Special-Purpose Financial Statements

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NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of operations Bay Haven Charter Academy, Inc. (the "School"), was organized in April 2001 as a Florida nonprofit corporation. The School was granted charters from Bay County District School Board (the "District") to operate public schools, grades kindergarten through 12th within the school district. The charters expire June 30, 2015 for the North Bay Haven campus and June 30, 2019 for the Bay Haven campus. The District has the option to terminate the Charters before their expiration based on circumstances, as defined in the agreement. Financial reporting entity Bay Haven Charter Academy, Inc. consists of five schools under the parent company Bay Haven Charter Academy, Inc. For financial statement and reporting purposes, the individual schools are legally separate governmental entities and separate component units of the District. Bay Haven Charter Academy Elementary School, Bay Haven Charter Academy Middle School, North Bay Haven Charter Elementary School, North Bay Haven Charter Middle School and North Bay Haven Charter Career Academy all have a common board of directors and common management under Bay Haven Charter Academy, Inc. The accounting policies of the Schools conform to accounting principles generally accepted in the United States of America, as applicable to governments. Component unit – Bay Haven Charter Academy Foundation This report includes financial statements of the funds required to account for those financial activities which are related to the School and are controlled by or dependent upon the School’s Board of Directors. The School has one component unit as defined by GASB Statement No. 39, Determining Whether Certain Organizations are Component Units – an Amendment to GASB Statement No. 14, which is required to be included in these financial statements. A component unit is an entity for which the School is considered to be financially accountable or an entity for which the nature and significance of their relations with the School are such that exclusion would cause the School’s basic financial statements to be misleading or incomplete. The Bay Haven Charter Academy Foundation (the “Foundation”) was formed as an educational support organization to solicit tax deductible contributions for construction of the school building and subsequent capital outlay projects for Bay Haven Charter Academy, Inc. The Foundation is operated solely for the benefit of the Schools. The Foundation is presented as a governmental fund type with fiscal year end of June 30. Due to the nature and significance of the Foundation’s relationship with the School, exclusion of the Foundation’s financial operations would render the School’s financial statements incomplete or misleading. Basis of presentation The accompanying special-purpose financial statements of the Schools have been prepared in conformity with accounting principles generally accepted in the United States of America ("US GAAP") as prescribed by the Governmental Accounting Standards Board ("GASB"). GASB is the accepted standard setting body for governmental accounting and financial reporting.



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NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The external statements are prepared from accounts of the Schools that are organized and operated on the basis of funds. A fund is an independent fiscal and accounting entity with a self-balancing set of accounts.

Governmental funds are used to account for the School’s general government activities, including the collection and disbursement of specific or legally restricted monies, the acquisition and construction of capital assets and the servicing of general long-term debt.

The School's governmental fund is its general fund, which is the School’s primary operating fund. The general fund is used to account for all financial activities of the School, and is included in the preparation of the entity-wide financial statements and the fund financial statements. Measurement Focus and Basis of Accounting The basic financial statements of the School are composed of the following:

Government-wide financial statements

Fund financial statements

Notes to the financial statements Government-wide Financial Statements Government-wide financial statements display information about the reporting government as a whole, except for its fiduciary activities. These statements include separate columns for the governmental and business-type activities of the primary government. Government activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely, to a significant extent, on fees and charges for support. The School has no business-type activities. Government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are proprietary fund and agency fund financial statements. Under the accrual basis of accounting, revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange-like transactions are recognized when the exchange takes place. Revenues, expenses, gains, losses, assets and liabilities resulting from nonexchange transactions are recognized in accordance with the requirements of GASB Statement 33 - Accounting and Financial Reporting for Nonexchange Transactions. Amounts paid to acquire capital assets are capitalized as assets in the government-wide financial statements, rather than reported as expenditures. Proceeds of long-term debt are recorded as liabilities in the government-wide financial statements, rather than as other financial sources. Amounts paid to reduce long-term indebtedness of the reporting government are reported as reductions of the related liabilities, rather than as expenditures. Grants, entitlements, and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.



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NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The statement of activities demonstrates the degree to which the direct expenses of a given function, segment or program are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Indirect expenses not allocated to functions are reported separately. Interest on general long-term debt is considered such an indirect expense. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and entitlement revenues that are restricted to meeting the operational or capital requirements of a particular function or segment. Other items not reported as program revenues are reported as general revenues. When both restricted and unrestricted resources are available for use, it is the School’s policy to use externally restricted resources first, then unrestricted resources – committed, assigned, and unassigned – in order as needed. Fund Financial Statements

Governmental fund types use the flow of current financial resources measurement focus and the modified accrual basis of accounting. Current financial resources measurement focus generally means that only current assets and current liabilities are included in the balance sheet. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when they are "measurable and available"). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to pay liabilities of the current period. The School considers grants, entitlements and other revenues available if collected within 60 days after year-end. Grants, entitlements and interest are all considered to be susceptible to accrual and are recognized as revenues of the fiscal year. All other revenue items are considered to be measurable and available only when cash is received by the School. Expenditures are recorded when the related fund liability is incurred, except for unmatured principle and interest on general long-term debt which is recognized when due. Encumbrances

Encumbrances represent commitments related to unperformed contracts for goods or services. Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure of resources are recorded to reserve that portion of the applicable appropriation, is used in the governmental funds. However, all encumbrances lapse at year end and, accordingly, a reserve for encumbrances is not reported in the accompanying basic financial statements. Encumbrances are reestablished at the beginning of the fiscal year if funds are appropriated in the annual budget. Encumbrances do not constitute expenditures or liabilities. Cash and cash equivalents

The School considers all demand accounts and money market funds which are not subjected to withdrawal restrictions to be cash and cash equivalents.



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NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Investments Investments are reported at fair value unless otherwise disclosed. Capital assets Capital assets are recorded as expenditures in the general fund at the time of purchase, and are capitalized at historical cost in the statement of net position. Capital assets are defined typically as assets with an initial, individual cost of $750 or more and an estimated useful life of more than one operating cycle. Items below the individual cost of $750 which were purchased with the intended purpose of being used together that exceed $750 in total are capitalized as well. Donated assets are recorded at estimated fair market value on the date received. Estimated useful life is management's estimate of how long the assets are expected to meet service demands, and ranges typically from five to ten years. Capitalized leased assets are amortized over their estimated useful lives. Amortization expense on capitalized leased assets is included with depreciation expense on owned assets. Amortization Bond finance costs are being amortized over the life of the bond using the straight-line method. Revenue recognition Student funding is provided by the State of Florida through the District. Such funding is recorded as intergovernmental revenue. An administrative fee retained by the District is recorded as other school administrative expense. This funding is received on a pro-rata basis over a twelve month period and is adjusted for changes in full-time equivalent ("FTE") student population. Income taxes The School is a nonprofit corporation whose revenue is derived primarily from other governmental entities. The School is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code. Accordingly, no provision for income taxes has been made in these financial statements. The School has no unrelated business income for the year ended June 30, 2013. The School’s federal income tax returns for 2010, 2011, and 2012 are subject to examination by the Internal Revenue Service. Use of estimates The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from these estimates.



19

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Capital lease obligations Obligations arising from capital leases are reported as liabilities.

Fund balance

The School has implemented GASB Statement 54 employing the following terminology and classifications for fund balance. Nonspendable – This category includes the resources that cannot be spent because they are either not in spendable form or are legally or contractually required to be maintained intact. The balance as of June 30, 2013 of $61,517 is from prepaids and inventory which are not in spendable form. Restricted – This category includes resources restricted by creditors, grantors, contributors, laws or regulations of other governments, constitutional provisions, or enabling legislation. The balance as of June 30, 2013 of $18,176,963 is restricted by creditors for repayment of debt issued. Committed – This category includes resources that can only be used for specific purposes pursuant to constraints imposed by formal action of the highest level of decision-making authority which is the Board of Directors. There are no committed funds as of June 30, 2013. Assigned – This category includes resources that are intended to be used for specific purposes, but is neither restricted nor committed. These are resources that have been set aside for a specific purpose by an authorized government body or official. The balance as of June 30, 2013 is $207,547. Unassigned – This category is the residual classification for the School’s fund balance. The balance as of June 30, 2013 is $6,230,730.

Net position GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, was implemented in the current year. This standard provides financial reporting guidance for deferred outflows of resources and deferred inflows of resources and this standard renames the components of net position which were previously considered net position.

Net position is classified in three categories. The general meaning of each is as follows: Invested in capital assets, net of related debt - represents the difference between the cost of

capital assets, less accumulated depreciation reduced by the outstanding balances of any borrowings used for the acquisition, construction or improvement of those assets.



20

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Restricted - This category includes resources restricted by creditors, grantors, contributors, laws or regulations of other governments, constitutional provisions, or enabling legislation.

Unrestricted - indicates that portion of net position that is available for future periods. Budget An operating budget is adopted and maintained by the governing board for the School pursuant to the requirements of Florida Statutes. The budget is adopted using the same basis of accounting that is used in the preparation of the fund financial statements. Subsequent events The School has evaluated subsequent events through the date October 29, 2013, the financial statements were available to be issued. NOTE 2 - RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS The following is an explanation of differences between the general fund balance sheet and statement of net position. The total fund balance of the School’s general fund ($24,676,757) differs from the net position of governmental activities ($9,401,875) reported in the statement of net position and governmental funds balance sheet. This difference results primarily from the long-term economic focus of the statement of net position versus the current financial resources focus of the governmental fund balance sheet. Other assets Long-term assets related to utilities and loan issuance costs are not reported as fund assets. All assets are reported in the statement of net position.

Utility deposits $ 11,426 Loan issuance costs 590,987

Total long-term other assets $ 602,413

Capital related items When capital assets (property, leasehold improvements and equipment) that are to be used in governmental activities are purchased or constructed, the costs of those assets are reported as expenditures in governmental funds. However, the statement of net position included those capital assets of the School as a whole.



21

NOTE 2 - RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (CONTINUED)

Cost of capital assets $ 20,701,988 Accumulated depreciation (4,049,861)

Capital assets net of accumulated depreciation

$ 16,652,127

Long-term debt Long-term liabilities applicable to the School's governmental activities are not reported as fund liabilities. All liabilities are reported in the statement of net position.

Bonds payable $ 31,655,000

Capital lease payable 1,072,238

Unamortized discount on bonds payable (605,684)

Total long-term liabilities $ 32,121,554

Interest on long-term liabilities Interest due on long-term liabilities applicable to the School's governmental activities are not reported as fund liabilities. All liabilities are reported in the statement of net position.

Interest payable $ 407,868

The following is an explanation of differences between the governmental funds statement of revenues, expenditures and changes in fund balance and the government-wide statement of activities. The governmental funds statement of revenues, expenditures and changes in fund balance includes a reconciliation between net changes in fund balance - total governmental funds and changes in net position of governmental activities as reported in the government-wide statement of activities. One element of that reconciliation explains, “governmental funds report capital outlays as expenditures. However, in the statement of activities the costs of these assets are allocated over their estimated useful lives and reported as depreciation expense.” The details of this difference are as follows:

Capital outlay $ 2,649,372 Depreciation expense (1,011,438)

Net adjustment to increase net change in fund balance - total governmental funds to arrive at change in net position of governmental activities

$ 1,637,934

Another element of that reconciliation states, “the issuance of long-term debt (i.e., bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds.



22

NOTE 2 - RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (CONTINUED) Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities.” The detail of this difference is as follows:

Principal payments $ 1,743,711

Discount and loan costs 956,180 Accrued interest (195,675) Debt proceeds (21,765,000)

Net adjustment to decrease net change in fund balance - total governmental funds to arrive at changes in net position of governmental activities

$ (19,260,784)

Another element of that reconciliation states, "some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds." The details of this difference are as follows:

Amortization of bond issuance costs $ (8,907)

Another element of that reconciliation states, "some revenues reported in the statement of activities do not require the use of current financial resources and therefore are not reported as revenue in governmental funds." The details of this difference are as follows:

Donation of fixed assets $ 19,414

NOTE 3 - CASH AND INVESTMENTS Deposits The School’s cash and cash equivalents include cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition. All cash and cash equivalents of the School are placed in banks that are qualified public depositories, as required by law (Florida Security for Public Deposits Act). Every qualified public depository is required by this law to deposit with the State Treasurer eligible collateral equal to, or in excess of, an amount to be determined by the State Treasurer. The State Treasurer is required by this law to ensure that the School’s funds are entirely collateralized throughout the fiscal year.

In the event of failure by a qualified public depository, losses, in excess of federal depository insurance and proceeds from the sale of the securities pledged by the defaulting depository, are assessed against the other qualified public depositories of the same type as the depository in default. When other qualified public depositories are assessed additional amounts, they are assessed on a pro-rata basis.



23

NOTE 3 - CASH AND INVESTMENTS (CONTINUED) Investments The School does not have an investment policy. As of June 30, 2013, the investment balance was $4,440,844 which consisted of U.S. government backed securities and guaranteed investment contracts with original maturities of more than three months. Interest Rate Risks At June 30, 2013, the School did not hold any investments that were considered to be an interest rate risk. Custodial Risks At June 30, 2013, the School did not hold any investments that were considered to be a custodial risk. Credit Risk As of June 30, 2013, the School did not hold any investments that were considered to be a credit risk. Concentration of Credit Risk As of June 30, 2013, the School had investments of $4,440,844 which weren’t covered by the Qualified Public Depository program through the State, Federal Deposit Insurance Corporation, or other collateral and was fully uninsured.

Total

Credit 1-5 5-10 Carrying

Rating Current Years Years Amount

Cash including money market

funds and guaranteed investment

contracts

(1)

20,291,993$ 4,440,844$ -$ 24,732,837$

Total 20,291,993$ 4,440,844$ -$ 24,732,837$

(1) These funds are not rated. Investments in these funds are restricted to cash, short-term obligations of the U.S. government and government backed securities and guaranteed investment contracts.



24

NOTE 4 - CAPITAL ASSETS

Capital assets balances and activity for the year ended June 30, 2013 are as follows:

Balance Deletions/ Balance

June 30, 2012 Adjustments June 30, 2013

Buildings 13,636,020$ -$ -$ 13,636,020$

Furniture, fixtures and equipment 2,090,253 14,808 - 2,105,061

Computers 854,631 100,578 - 955,209

Improvements other than buildings 792,684 157,924 - 950,608

Leasehold improvements 602,045 147,920 - 749,965

Land 805,128 1,500,000 - 2,305,128

Construction in process - 747,556 - 747,556

Total capital assets 18,780,761 2,668,786 - 21,449,547

Additions

Less accumulated depreciation

Buildings (2,047,607) (341,443) - (2,389,050)

Furniture, fixtures and equipment (736,455) (87,081) - (823,536)

Computers (535,303) (151,851) - (687,154)

Improvements other than

buildings (129,054) (103,716) - (232,770)

Leasehold improvements (337,563) (327,347) - (664,910)

Total accumulated depreciation (3,785,982) (1,011,438) - (4,797,420)

Capital assets, net of

accumulated depreciation 14,994,779$ 1,657,348$ -$ 16,652,127$

The cost of capital assets acquired under capital leases is $994,968, less accumulated depreciation of $278,217, for a net carrying value of $716,751 at June 30, 2013. Depreciation expense of $1,011,438 was charged to governmental activities in support services. NOTE 5 - SHORT-TERM DEBT On January 30, 2013 Bay Haven Charter Academy, Inc. obtained a $1,500,000 promissory note at a variable interest rate based on the bank’s prime rate to purchase land for the new North Bay Haven campus which was set to mature in July 2013. In April 2013 Bay Haven Charter Academy Inc. issued bonds and a portion of the proceeds from this issuance were used to repay the balance of this promissory note. The Academy has two lines of credit which are secured by a money market account and other cash accounts for a total of $750,000. Both lines of credit have variable interest rates. The first line of credit, which matures in April of 2014, has an interest rate of LIBOR plus 2.75%. The second line of credit, which matures in May of 2014, has an interest rate of 1% above the lender’s prime rate. During the year, line of credit proceeds totaled $0 and repayments totaled $0. The balance outstanding at June 30, 2013 was $0.



25

NOTE 6 - LONG-TERM DEBT

On July 1, 2004, Bay County issued $11,600,000 Educational Facilities Revenue Bonds, series 2004 for Bay Haven Charter Academy, Inc. The bonds were issued for the purpose of: (i) paying the costs to acquire and construct a school facility and (ii) paying the costs and expenses related to the issuance of the bonds. The bonds bear interest at the Weekly Rate. Amortization is forecasted using an average interest rate of 4.5%. On September 14, 2010 Bay Haven Charter Academy, Inc. refinanced its outstanding bonds in the amount of $11,755,000 at a rate starting at 3.5% increasing over the life of the bond to 6.0% that will need to be repaid or refinanced prior to September 1, 2040. The bonds are secured by a lien upon the land upon which the schools sit and all assets thereon and a pledge of all capital funds and charter school operating funds appropriated each year to the District for operation of the School and any additional revenues generated by the operation of the School or leasing of the School. The remaining principal and interest payments on this debt as of June 30, 2013 total $22,880,000. For the year ended June 30, 2013, annual principal and interest payments on the bond required 10.41% of pledged revenues. Principal and interest payments paid and pledged revenues for the year were $818,338 and $7,858,398 respectively. Debt service requirements to maturity on revenue bonds payable at June 30, 2013 are as follows:

Years ending

June 30, Principal Interest Total

2014 190,000$ 626,775$ 816,775$

2015 195,000 620,038 815,038

2016 205,000 613,038 818,038

2017 210,000 605,775 815,775

2018 220,000 596,325 816,325

2019-2023 1,290,000 2,790,524 4,080,524

2024-2028 1,685,000 2,402,681 4,087,681

2029-2033 2,195,000 1,889,044 4,084,044

2034-2038 2,955,000 1,138,350 4,093,350

2039-2041 2,245,000 207,450 2,452,450

Total 11,390,000$ 11,490,000$ 22,880,000$

On December 3, 2004, Bay Haven Charter Academy, Inc. entered into a capital lease with Geo-Energy for a geothermal heating and air unit. The payments began on August 1, 2005 with monthly payment due in the amount of $10,414 for 240 months which includes interest of 6%.

Debt service requirements for the capital lease at June 30, 2013 are as follows:

Years ending


2014 62,331$ 62,639$ 124,970$

2015 66,176 58,794 124,970

2016 70,257 54,713 124,970

2017 74,590 50,380 124,970

2018 79,191 45,779 124,970



26

NOTE 6 - LONG-TERM DEBT (CONTINUED)

Years ending


2019-2023 475,530$ 149,320$ 624,850$

2024-2026 244,163 16,139 260,302

Total 1,072,238$ 437,764$ 1,510,002$

On April 17, 2013, Bay County issued $19,800,000 Educational Facilities Revenue Bonds, series 2013A and $465,000 Taxable Educational Facilities Revenue Bonds, series 2013B for Bay Haven Charter Academy, Inc. The bonds were issued in order to: (i) finance, acquire and construct new facilities for the North Bay Haven Charter Middle School and the North Bay Haven Charter Career Academy (the "North Bay Haven Relocation Project"), (ii) refund the outstanding principal amount of a taxable land loan incurred by the Company with Branch Banking and Trust Company for purposes of financing the related land acquisition, (iii) fund general working capital needs of the Company, (iv) fund the reserve requirement to the reserve account in the bond fund, (v) fund capitalized interest with respect to the Series 2013 Bonds, and (vi) pay a portion of certain expenses incurred. The bonds bear interest at a rate of 5% for the 2013A series and 5% on the 2013B series and the bonds are set to mature starting September 1, 2033 and the last bonds will mature September 1, 2048. The bonds are secured by a lien upon the land upon which the schools sit and all assets thereon and a pledge of all capital funds and charter school operating funds appropriated each year to the District for operation of the School and any additional revenues generated by the operation of the School or leasing of the School. The remaining principal and interest payments on this debt as of June 30, 2013 total $49,614,329. For the year ended June 30, 2013, annual principal and interest payments on the bond required 0% of pledged revenues. Principal and interest payments paid and pledged revenues for the year were $0 and $7,452,472 respectively.

Debt service requirements to maturity on revenue bonds payable at June 30, 2013 are as follows:

Years ending Amortization

June 30, Principal Interest of Discounts Total

2014 -$ 864,820$ (16,825)$ 847,995$

2015 - 1,017,435 (16,825) 1,000,610

2016 55,000 1,015,813 (16,825) 1,053,988

2017 55,000 1,012,568 (16,825) 1,050,743

2018 55,000 1,009,323 (16,825) 1,047,498

2019-2023 330,000 5,045,320 (84,125) 5,291,195

2024-2028 780,000 4,869,050 (84,125) 5,564,925

2029-2033 1,370,000 4,583,250 (84,125) 5,869,125

2034-2038 1,735,000 4,196,375 (84,125) 5,847,250

2039-2043 3,960,000 3,617,500 (84,125) 7,493,375

2044-2048 8,010,000 2,020,000 (84,125) 9,945,875

2049-2053 3,915,000 97,875 (16,809) 3,996,066

Total 20,265,000$ 29,349,329$ (605,684)$ 49,008,645$



27

NOTE 7 - ACCRUED COMPENSATED ABSENCES The School's policy is to grant paid absences for vacation and sick leave. Employees should use vacation time in the benefit period in which it is earned. With supervisor approval, an employee may roll over vacation time to the next benefit period. Rolled over vacation must be used within the first thirty days of the new benefit period. Upon termination of employment, employees are eligible to receive pay for accrued unused vacation time. If an employee took more vacation time than they had accrued at the time of termination, the difference is taken out of their final paycheck. When compensatory time is granted, it must be used within sixty days of when it had been earned or it is forfeited. Compensatory time expires at the end of the year and cannot be carried over. School employees may “buy back” unused sick/personal days at a rate of $90 per day. Upon termination, any time not used will be forfeited.

NOTE 8 - PENSION PLAN

Plan Description and Administration At the beginning of FY 2010-2011, the School began participating in the Florida Retirement System (FRS) which is a multiple-employer, cost-sharing retirement system established by Chapter 121, Florida Statutes. The Florida Retirement System is administered by the Division of Retirement of the State of Florida Department of Administration. The School's payroll for employees covered by the system for the year ended June 30, 2013 was $7,859,016. FRS issues a publicly available financial report that includes financial statements and required supplementary information. The report may be obtained by writing to the State of Florida Division of Retirement, 1317 Winewood Blvd., Bldg B, Tallahassee, Florida, 32399-1560. The system provides vesting of benefits after 6 years of creditable service. Members are eligible for normal retirement after attaining age 62 or 30 years of service. Generally, membership is compulsory for all full-time and part-time employees. As of July 1, 2011 the employees contribute 3%. The rates, as a percentage of gross earnings, are as follows:

July 1, 2012 through

June 30, 2013

Regular employees

4.07%

Health insurance supplement only

1.11% The School’s retirement contributions for all employees covered by the Plan for the years ended

June 30, 2013, 2012, and 2011 were $397,499, $338,127, and $677,580, respectively, which

equal the required contributions. For the year ended June 30, 2013 retirement contributions represent 5.1% of School’s total covered payroll.



28

NOTE 8 - PENSION PLAN (CONTINUED) Three Year Trend Information

Year Ended

June 30,

Annual Pension

Cost (APC)

Percent of APC

Contribution

Net Pension

Obligation

2011 $ 677,580 100% - 2012 $ 338,127 100% - 2013 $ 397,499 100% -

NOTE 9 - CAPITAL APPROPRIATIONS FUNDING The Florida Department of Education has approved a Charter School Capital Outlay ("CSCO") award for the School. In each year that funds are appropriated by the State for charter school capital outlay purposes, those funds are allocated among eligible charter schools. The funds for the School's allocation are transferred to the School once a CSCO Plan has been provided to and approved by the sponsoring district. For the year ended June 30, 2013, the School's CSCO award totaled $744,700. CSCO funds of $744,700 have been recognized in the accompanying statement of revenues, expenditures and changes in fund balance that relate to various capital expenditures, repairs and maintenance. If the CSCO funds are used to acquire tangible property assets, Bay County District School Board has a reversionary interest in those assets. In the event of nonrenewal, termination, or breach of the Charter School Agreement, ownership of the assets would revert to the District.

NOTE 10 - RISK MANAGEMENT The School is exposed to various risks of loss related to torts, thefts of, or damage to, and destruction of assets and natural disasters. The School has obtained property insurance from commercial companies. There have been no claims in excess of insurance coverage limits during the past three years.

Account Total

Revenues

Federal sources 3100 20,180$

Federal sources through State 3200 337,506

State sources 3300 13,931,083

Local sources 3400 1,168,532

Other financing sources 3600 657

Long-term debt proceeds

and sales of capital assets 3700 21,765,000

Total revenues 37,222,958

Expenditures

Regular instruction 5100 5,484,183$ 1,214,396$ 58,060$ -$ 463,330$ 53,381$ 115,453$ 7,388,803

Exceptional instruction 5200 375,220 72,245 108,839 - 3,953 - 2,136 562,393

Pupil services 6100 171,698 40,095 3,914 - 2,251 - - 217,958

Instructional media services 6200 23,006 7,876 1,217 - 19,865 1,575 - 53,539

Instructional and curriculum

development services - - - - 52 - - 52

Instruction staff training

services - - 2,294 - 384 - - 2,678

Board services 7100 - - 71,887 - - - - 71,887

General administrative services 7200 528,517 116,898 21,522 - 6,488 22,928 6,772 703,125

School administrative services 7300 818,835 171,416 92,188 - 16,654 7,412 281,144 1,387,649

Facilities acquisition and

construction 7400 - - 5,065 - 8,283 2,551,719 - 2,565,067

Fiscal services 7500 - - - - 12,811 1,731 - 14,542

Food services 7600 199,147 53,920 3,275 - 293,733 - 7,158 557,233

Central services 7700 - - 7,729 - 6,794 3,600 - 18,123

Pupil transportation services 7800 154,782 - - - - 154,782

Operation of plant 7900 229,122 66,360 615,173 271,769 74,754 2,624 - 1,259,802

Maintenance of plant 8100 57,048 15,147 71,814 - 28,808 984 11,569 185,370

Community services 9100 146,424 35,436 12,519 - 21,500 - 1,153 217,032

Debt service 9200

Redemption of principal - - - - - - 1,743,711 1,743,711

Interest - - - - - - 710,841 710,841

Service fees - - - - - - 956,180 956,180

Internal funds - - - - - 3,418 - 3,418

Total expenditures 8,033,200$ 1,793,789$ 1,230,278$ 271,769$ 959,660$ 2,649,372$ 3,836,117$ 18,774,185

Net changes in fund balance 18,448,773$

6300

200 Employee

Benefits

100 Employee

Salaries

6400


Schedule of Revenues and Expenditures -

General Fund (Management Format)


600 Capital

Outlay

700 Other

Expenses

300

Purchased

Services

400 Energy

Services

500 Materials

& Supplies


29



Suite 200


(850) 784-6733

(850) 784-4866 (fax)

www.cricpa.com

30

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

To the Board of Directors

Bay Haven Charter Academy, Inc. Panama City, Florida

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 special-purpose financial statements of the governmental activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of Bay Haven Charter Academy, Inc. (the "School"), a component unit of Bay County District School Board, as of and for the year ended June 30, 2013, and the related notes to the special-purpose financial statements, which collectively comprise Bay Haven Charter Academy, Inc.’s basic special-purpose financial statements and have issued our report thereon dated October 29, 2013, which collectively comprise the School’s basic special-purpose financial statements and have issued our report thereon dated October 29, 2013.

Internal Control Over Financial Reporting

In planning and performing our audit of the special-purpose financial statements, we considered the School’s internal control over financial reporting to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the special-purpose financial statements, but not for the purpose of expressing an opinion on the effectiveness of the School’s internal control. Accordingly, we do not express an opinion on the effectiveness of the School’s internal control.

Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as described below we identified certain deficiencies in internal control that we consider to be material weaknesses and significant deficiencies.

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 special-purpose financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiencies described below to be material weaknesses.

31

13-1 (prior years 12-1 and 11-1) (Initially reported in 2011) Significant adjustments to the financial records were made in order for the special-purpose financial statements to conform to U.S. generally accepted accounting principles.

Management’s Response

Management has considered the above material weakness in the School’s internal control and believes the costs required to correct this would outweigh the benefits derived from implementing corrective action.

13-2 (prior years 12-2 and 11-2) (Initially reported in 2011) Inadequate design of internal control over the preparation of the special-purpose financial statements being audited gives rise to a significant deficiency in internal control.

Management’s Response

Management has considered the above material weakness in the School’s internal control and believes the costs required to correct this would outweigh the benefits derived from implementing corrective action.

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.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether Bay Haven Charter Academy, Inc.’s special-purpose financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

School’s Responses to Findings

Bay Haven Charter Academy, Inc.’s responses to the findings identified in our audit are included above. We did not audit Bay Haven Charter Academy, Inc.’s responses and, accordingly, we express no opinion on them.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

October 29, 2013



Suite 200


(850) 784-6733

(850) 784-4866 (fax)

www.cricpa.com

32

INDEPENDENT AUDITOR’S MANAGEMENT LETTER REQUIRED BY CHAPTER 10.850 OF THE RULES OF THE STATE OF FLORIDA OFFICE OF THE AUDITOR GENERAL

To the Board of Directors Bay Haven Charter Academy, Inc. Panama City, Florida

We have audited the special-purpose financial statements of Bay Haven Charter Academy, Inc. (the "School"), a component unit of Bay County District School Board as of and for the fiscal year ended June 30, 2013 and have issued our report thereon dated October 29, 2013.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. We have issued our Independent Auditor's Report on Internal Control over Financial Reporting and Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards. Disclosures in that report, which is dated October 29, 2013, should be considered in conjunction with this management letter.

Additionally, our audit was conducted in accordance with Chapter 10.850, Rules of the Auditor General, which governs the conduct of charter school and similar entity audits performed in the State of Florida. This letter includes the following information, which is not included in the aforementioned auditor’s report:

1. Section 10.854(1)(e)1., Rules of the Auditor General, requires that we determine

whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. Corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report except as noted in our Independent Auditor's Report on Internal Control over Financial Reporting and Compliance and Other Matters.

Findings reported the two previous years include 13-1 and 13-2.

2. Section 10.854(1)(e)2., Rules of the Auditor General, requires a statement be included

as to whether or not the charter school or center has met one or more of the conditions described in Section 218.503(1), Florida Statutes, and identification of the specific condition(s) met. In connection with our audit, we determined that the School did not meet any of the conditions described in Section 218.503(1), Florida Statutes.

3. Section 10.854(1)(e)3., Rules of the Auditor General, requires that we address in the management letter any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations.

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4. Section 10.854(1)(e)4., Rules of the Auditor General, requires that we address noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings.

5. Section 10.854(1)(e)5, Rules of the Auditor General, requires the name or official title of the entity. The official title of the entity is Bay Haven Charter Academy, Inc.

6. Pursuant to Sections 10.854(1)(e)6.a. and 10.855(11), Rules of the Auditor General (for charter schools and centers only), we applied financial condition assessment procedures. It is management’s responsibility to monitor the School’s financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same.

Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, Federal and other granting agencies, and applicable management and is not intended to be and should not be used by anyone other than these specified parties.

October 29, 2013

Documents

BAY HAVEN CHARTER ACADEMY, INC · The analysis provides summary financial information for the School and should be read in conjunction with the School’s financial statements. Financial