Palmdale Aerospace Academy board approves 2023–24 audit after staff outlines accounting adjustments and documentation gaps

At a special meeting, the Palmdale Aerospace Academy District Board of Directors voted to approve the academy's annual audit report for fiscal year 2023'24 after the district's business office reviewed the auditors' findings and the school's corrective plan.

The business office speaker cited an unmodified auditor opinion, accounting-treatment changes that produced an $8.8 million prior-period restatement and showed $9.9 million as deferred revenue on the balance sheet, and a second finding tied to incomplete documentation for free-and-reduced meal (unduplicated pupil count) eligibility that currently accounts for $1.1 million in questioned costs. "In our opinion, the financial statements referred to above present fairly," the business office speaker read from the independent auditors' report.

The nut graf: the audit approval completes the legally required filing and begins a process to correct accounting presentations and to supply additional documentation to auditors that could change the reported questioned costs. The board was told the auditors will complete a consolidated audit for affiliated entities by May 25 and that the finalized 2023'24 report will be sent to the authorizing agency after board approval.

Business office summary and key numbers The presenter described the auditors' scope and highlighted several headline figures the board asked about: a lease obligation shown at roughly $77,800,000 as both an asset and liability under current accounting rules; a reported cash balance of about $26,600,000 at June 30; and net assets without owner restrictions of roughly $24,000,000. The presenter said the prior-period restatement of $8,800,000 relates to the accounting treatment of categorical (restricted) state program revenues and that the same activity produced a deferred revenue line of about $9,900,000 on the balance sheet.

On program and expense presentation, the auditors presented the required statements and notes. The presenter explained that the audit currently covers only the charter school entity (the standalone financial statement required by the state) and that consolidated statements that include the Palmdale Aerospace Academy Foundation and the LLC that holds the bond lease will follow by the May 25 deadline.

Findings, corrective steps and potential financial exposure The auditors issued two findings. The first was characterized as a material weakness tied largely to timing and posting differences, including prior-period adjustments not recorded in the earlier year; the presenter said management will implement tighter internal controls to prevent recurrence.

The second finding relates to the district's documentation of student eligibility used to calculate the unduplicated pupil percent (UPP) that affects targeted state funding. The auditors sampled 60 students from the direct-certification list and found supporting documentation for only 14 in the files provided during fieldwork. Because the district uses CALPADS for student records and switched student information systems during the year (PowerSchool), staff said some documentation was not readily extractable within the audit timeline.

Staff described a plan to engage the auditors for a full follow-up review of the roughly 520 students on the direct-certification list: "We will engage them. They will go through it again," the business office speaker said. If the auditors verify the additional documentation, the district expects the verified UPP to be close to the originally reported count; if not, the district could owe questioned costs to the state. The presenter said the $1.1 million figure is the auditors' current amount of questioned costs based on the documentation available at the time of fieldwork and that it could change after the re-audit and any amended filings.

Board and staff directions Board members and staff discussed staffing and systems changes to reduce the risk of recurrence. The presenter described steps already under way: centralizing records in PowerSchool, working with IT staff and PowerSchool support to enable auditors to view registration data (screenshots or equivalent), increasing cross-training so more staff can extract required records, and scheduling additional professional-development training for business office personnel (including CASBO and LACOE training). Staff also said they will implement written procedures, calendars and assignment of responsibilities to improve year-end closings and documentation retention.

Vote and next steps A board member made a motion to approve the annual audit report for 2023'24; the motion passed. The presenter said the auditors will finalize the report and that the finalized document will be sent to the district's authorizer after the auditors make the report final. The presenter also said the consolidated audit for affiliated entities will be completed no later than May 25.

The board approved the audit and directed staff to carry out the corrective actions and to return to the board with amended figures if the re-audit changes the questioned-costs outcome.