The Commission Issues a Notice of Prospect of Revocation

At its General Business Meeting on Tuesday, November 28, 2017, the State Public Charter School Commission voted unanimously to issue a Notice of Prospect of Revocation for Kaʻu Learning Academy (KLA). The Commission’s determination to issue the Notice of Prospect of Revocation was a result of a review of an independent auditor’s audit report which cited KLA for several material weaknesses and incidents of non-compliance and after hearing from the school’s director, managing director, and other testimony during the meeting.

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Section 302D-32, Hawaii Revised Statutes (HRS), requires that “each charter school shall annually complete an independent financial audit that complies with the requirements of its authorizer.” In addition, the Charter Contract for KLA, in Section 11.3.4, states “Each fiscal year, the School shall provide for an independent annual financial audit conducted in accordance with Generally Accepted Auditing Standards and Governmental Auditing Standards and performed by a certified public accountant (CPA) ...” On November 15, 2017, Commission staff received KLA’s Independent Financial Audit for Fiscal Year 2016-2017.

​The audit found a lack of internal controls and additional oversight which included reimbursements for personal travel costs, payment for a personal utility bill, and a lack of documentation for a dozen charges made on the school debit account. The lack of internal controls was also a finding in the previous year’s audit for the school.

​The audit also found that the school did not follow generally accepted accounting principles which resulted in significant adjustments to the school’s financial reports at the end of the fiscal year and that financial reports completed during the school year were not an accurate representation of the school’s financial status.

Additionally, the audit found that the school is not in compliance with Department of Labor laws and regulations. Employee compensation, specifically bonuses were not run through payroll and educational assistants were paid as independent contractors.

​KLA is located in Ka’u on Hawai’i Island and currently serves 94 students in grades 3-7. The Commission is committed to working with Kaʻu Learning Academy, its students, families, and community in a neighborly and respectful way.

​For more information on the November 28 agenda click here.

​For additional information on the submittal for Ka'u Learning Academy, click here.

​To view the full audit and submittal, click here.