CITIZENS OF THE WORLD CHARTER SCHOOL PROPOSAL FOR PROFESSIONAL SERVICES JANUARY 28, 2013

Transcription

1 CITIZENS OF THE WORLD CHARTER SCHOOL PROPOSAL FOR PROFESSIONAL SERVICES JANUARY 28, 2013

2 TABLE OF CONTENTS PAGE Firm description... 1 Relevant experience.. 2 Engagement team.. 4 Scope of services and approach... 6 Fee proposal Standard billing rates References

3 156 WEST 56 TH STREET NEW YORK, NEW YORK TEL: (212) FAX: (212) Board of Trustees Citizens of the World Charter School C/o 180 West End Ave, 28F New York, New York To the Board of Trustees: We are pleased to present our proposal for audit and tax services for the period from inception through June 30, 2014 for the Citizens of the World Charter School (the Organization ). The accompanying material has been prepared in response to your request for proposal and includes a summary of our firm, our qualifications for this engagement, brief summaries of our engagement team, a description of our audit approach, and our fee proposal. Our professionals are experienced in providing a wide range of services in various industries including the notfor-profit arena. We are committed to providing quality service to our not-for-profit clients, which extend beyond the standard audit and tax service. We pride ourselves in providing clients with the ability to respond quickly to the Organizations needs, many of which it has in common with others in the Charter school community and with which we are quite familiar. We currently provide auditing services to more than 40 charter schools in New York City. Our firm is unique in the fact that our partners are always available, easily accessible, and are committed to providing a high level of service to your organization throughout the year and not just during the audit process. The partners will give significant attention to your needs on a proactive basis. We are confident that our reputation, continuity and experience of our professionals assigned to your engagement, the high quality of our services, and our availability in dealing with your needs throughout the year would result in a value-added service to the Organization. Attached as page 11 to this proposal is a list of notfor-profit professionals with whom we have worked with recently (and for whom we have provided services similar to those required by your Organization) who would be pleased to discuss our qualifications with you. We thank you again for this opportunity and look forward to meeting with you to discuss any questions you may have. Very truly yours,

4 Page one Firm Description In 1990, Mr. Fruchter and Mr. Rosen were founding partners of a medium sized accounting firm with regional offices in the east and west coast. Effective January 1, 2005 Mr. Fruchter and Mr. Rosen spun their operations off from the regional firm to concentrate exclusively on their New York City office. Fruchter, Rosen & Company P.C. commenced operations servicing all of our clients from our prior firm with all of our staff from our prior firm. Throughout these twenty years and through today our firm has been engaged to perform audits and other attestation engagements, tax services, accounting and business advisory services to a diversified client base. We currently employ Seventeen professionals including three partners. We are a small boutique firm that performs quality work. Most of our senior level staff has been with our firm for at least ten years or more. This continuity at the senior level and above, along with constant communication at the partner level distinguishes us from the larger firms. We have been peer reviewed pursuant to the AICPA peer review program and the department of labor regarding ERISA engagements and have received clean opinions, as evidenced by the results of our most recent completed peer reviews in August We also implemented an internal quality review program to insure that the work performed conforms to the quality standards of the AICPA and other rule setting organizations. We are committed to keeping abreast of emerging technical and practice issues. All staff at Fruchter, Rosen & Company, P.C. participates in continuing education classes and seminars throughout the year offered by various educational bodies. In addition to formal training, our staff meets regularly to discuss issues that arise during our engagements. We are a registered member of the American Institute of Certified Public Accountants (AICPA) and the New York State Society of certified Public Accountants. All members of our engagement team have not-for-profit experience and one of our managers has worked as a controller for a New York City charter school. We are confident that we have the resources necessary to complete the audits in a timely matter and to meet various reporting deadlines as required by the New York City Education Department, Internal revenue service, other government agencies, and internal organization deadlines.

5 Page two Relevant Experience Fruchter, Rosen & Company P.C. serves a wide range of entities within the not-for-profit arena including educational, schools, community development, membership, and cultural, as well as ERISA audits. We have also provided consulting services to many of our not-for-profit clients ranging from grant management, software selection and implementation, to internal control and accounting policies evaluations. We believe that our involvement in audits and as a result of our experience in dealing with various accounting, tax, organizational structure, and compliance issues for many of our not-for-profit clients has assisted in the growth and development of these organizations. In addition, our not-forprofit clients have always received a no change opinion while representing them in various federal and state tax audits, as well as grantor audits. We have worked with various government agencies and large supporting charitable organizations that are active in the educational industry. In addition, we were asked in 2006, by the SUNY Charter School Institute to review and comment on their authorized annual Reference Guide for audits of Charter Schools. Please see page three for a selective list of our not-for-profit clients.

6 Page three Charter Schools - Bedford Stuyvesant New Beginnings Charter School - Brooklyn Ascend Charter School - Brooklyn Prospect Charter School - Community Roots Charter School - Coney Island Preparatory Charter School - Democracy Preparatory Charter School - Explore Charter School - Growing up Green Charter School - Success Academy Charter School- NYC, Bronx, Brooklyn - Harlem Village Academy Charter School - La Cima Charter School - Launch Expeditionary Learning Charter School - Manhattan Charter School - New Heights Academy Charter school - PAVE Academy Charter School - South Bronx Classical Charter School - The Equity Project Charter School Charter School Management Organizations - Ascend Learning, Inc. - Democracy Prep Public Schools - Explore Schools, Inc. - Success Academy Charter Schools - Harlem Village Academies Other Educational Not-for-Profits - Icouldbe.org - Logic Prep - Out2play, Inc. - Recruiting New Teachers, Inc. - Roads to Success - Schoolwide Education Corporation - The Smith School Other Not-for-Profits - American Association for the Treatment of Opioid Dependence, Inc. - American Friends of RAMBAM Medical Center - Chatham House Foundation - Friends of Israel Antiquities Authority Inc. - Kids with Cameras - Local No. One IATSE Annuity, Pension, and Welfare Funds - New York City Financial Network Action Consortium - The Clear Fund

7 Page four Engagement Team Leonard P. Fruchter Leonard P. Fruchter, CPA, is the managing and senior audit partner of Fruchter Rosen and Company P.C., and will serve as the concurring partner for the Organization. Len began his accounting career at Price Waterhouse and spent two years as the Chief Financial Officer for a national swimming pool/accessory retail chain before joining the firm. He has been responsible for managing financial services, business management and agreed-upon procedures engagements. In addition to solving the most sophisticated financial and tax-related matters, he provides assistance in due diligence studies and reviews of internal control and procedural effectiveness. For professional service firms, he assists in improving information provided by time and billing systems and in enhancing profits by assisting in the determination of profitability by practice area and by office location. His clients include manufacturing and distribution, retail chains, construction, not-for-profit, marketing and consulting firms. Len is an active member of the American Institute of Certified Public Accountants and the New York State Society of Certified Public Accountants. Len received his B.S. degree in Accounting from Bentley College. Gus Saliba Gus Saliba, CPA is the not-for-profit audit partner at Fruchter Rosen & Company, P.C. and will serve as the engagement partner for the Organization. Gus has over twenty years of public accounting experience and is actively involved in providing notfor-profit organizations, corporations and individuals with a wide range of accounting, auditing, and consulting services. These services include audit and tax planning, business advisory services, negotiating and securing debt and equity financing with banks, factors, and management consulting services. He is also responsible for the firm s not-for profit quality control. Gus also has extensive experience in a variety of industries including Manufacturing, Import/Export, textile and apparel, professional and consulting firms. Gus is certified in the State of Connecticut and received his BS degree in Accounting from Rutgers University.

8 Page five Joseph Ciorciari Joseph Ciorciari is a Manager at our firm and has been involved with a wide range of not-for-profit organizations for 10 years in both the public and private sectors as a Senior Auditor and as a Controller. Joseph has extensive experience in auditing, presentation of financial statements, and government information returns. Joseph will be involved in the planning, day to day performance and supervision of other accountants. In addition to the key engagement team individuals discussed above, we will employ other members of the firm as deemed necessary ensuring that all members of our staff poses adequate skills, and are properly trained and supervised.

9 Page six Scope of Service and Approach SCOPE OF SERVICE It is our understanding that we will audit the financial statements of the Organization as of and for the period then ended June 30, 2014 for the purpose of rendering an opinion on the fairness of the financial statement presentation in accordance with accounting principals accepted in the United States of America. The audit will be conducted in accordance with auditing standards generally accepted in the United States of America, as set forth by the American Institute of Certified public Accountants, and Government Auditing Standards, issued by the Comptroller General of the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financials statement presentation. We expect that our audits will provide a reasonable basis for our opinion. In addition, we would spend the time necessary to understand the Organization s internal control systems and its goals and strategies, as well as its record keeping, hardware, and software systems. As part of our engagement, we will: -Issue audited financial statements -Issue management letter recommendations, if any -Prepare federal form 990 -Attend Board of Trustees meetings upon request -Answer questions throughout the year

10 Page seven AUDIT APPROACH As part of our audit, we are required to gain an overall understanding of the Organization s operations and internal controls. This understanding will be obtained through discussions with the Organization s management and other personnel and through review of the predecessor auditor s prior year work papers. Our overall approach throughout the audit process will emphasize communication, organization and efficiency as well as timeliness. We will select our audit team; develop a timeline in which we will identify each key date from the planning phase to the field work and the issuance of our report. The development of such a timeline will assist in the organization of our overall work plan. We will encourage periodic meetings during the year, not just at year end, to discuss matters and address accounting issues on a proactive basis. This will give us the ability to efficiently and effectively plan the audit at year end. The technical aspects of our audit processes are executed in three phases: Planning: We will gather information, review internal controls, and perform a preliminary evaluation. Through inquiry of client personnel, observation, and inspection of contracts, we will obtain an understanding of the operating environment, accounting and computer systems, including internal controls over cash, accounts receivable and payable, and the payroll functions. Based on our evaluation, we will identify areas of audit significance and customize our audit procedures for substantive testing of financial statement account balances and transactions. We will also review related party transactions and consider the impact on the financial statements and required disclosures. Field work: We will perform various substantive tests, which include test of transactions and account balances. We will also analytically review the statement of activities, comparing current year actual with current year budget and prior year results. Detail tests of transactions will include review of invoices, cash receipts record and other documentation supporting transactions or processes. We will also reconcile and evaluate third party confirmation responses from attorneys, banks, insurance carriers, and others. Reporting and final evaluation: We will summarize and evaluate the results of our work and render our opinion on the financial statements and supplemental information. We will perform a final analytical review of financial information, draft financial statements including footnotes for management review. We will also issue a formal management letter if deemed necessary.

11 Page eight During the planning stage of our audits, we will confirm with management our mutual expectations with respect to the level of assistance from your Organization and timing of deliverables from both the Organization and Fruchter, Rosen & Co P.C. Regular meetings will be held with the Organization s management to provide updates on the progress of the audits. While we place emphasis on continuous communication and organization to enhance efficiency of our audits, our efficiency is also enhanced through computer-based audit techniques that we employ. Each staff member carries a laptop in the field in which we can utilize electronic schedules that might be provided by our clients. We also have the ability to research technical issues through a service provided via internet. We expect that most of the engagement partners time will be spent in the planning phase assisting and providing guidance in planning the audits and updating our understanding of the operations, financial processes and tax matters that impact the Organization. We expect that about two-thirds of the total estimated hours will be performed at manager levels or above during our audits.

12 Page nine Fee Proposal Our fee estimate for the work is based upon the amount of time we believe it will take to complete the work at our standard hourly rates (see page 10). Our estimate is also based upon the assumption that the Organization will provide assistance and financial statement supporting schedules to us to facilitate the audit process. Based on the information presented to us and on our general familiarity with Charter Schools of your size and activities, we are confident of our understanding of the scope of work involved and the level of commitment we must provide. Our fee estimate for audit services from inception to June 30, 2014 for the Citizens of the World Charter School will range from $30,000 to $35,000 for both schools, excluding reasonable out-of-pocket expenses. Other one time fees are as follows: Review of policies and procedures for the initial statements $2,500 Preparation of IRS form 990 June 30, 2013 $2,500 Our fees will be billed as work progresses and are payable upon presentation. Should we be requested to provide additional services, we would discuss the level of support required and the related fees, if any, with the Organization s representatives. Periodic fee increases are moderate for the majority of our clients with whom we have a continuing relationship and whose operations remain substantially the same. The increases are usually in the nature of cost of living increases. As the level of activity of the Organization materially increases, we would discuss the resulting fee increases. It is not our practice to lowball a fee to gain entry into a client relationship and then increase it.

13 Page ten 2013 HOURLY BILLING RATES SENIOR PARTNERS $ 350 JUNIOR PARTNERS 275 MANAGERS 225 SENIORS 195 STAFF 135 ADMINISTRATIVE 80

14 Page eleven References Stephanie Mauterstock Co-leader and Business Director Manhattan Charter School Tel Madeleine Pidel Finance Manager Explore Charter School Tel Allison Keil Director of Finance & Operations Community Roots Charter School Tel Lester Long Executive Director South Bronx Classical Charter School Tel Dan Shapiro Director of Finance Coney Island Prep Charter School Tel Matthew Greenberg School Leader Growing Up Green Charter School Tel Chuck Klein VP Finance Harlem Village Academies Tel Raj Thakkar Charter School Business Management Tel