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Defunct Legacy Academy $376K in arrears, audit says
By Denise Dick
Youngstown
The latest audit of a now-closed community school says the school owes more than $376,000 in taxes and Medicare costs.
State Auditor Dave Yost’s office released on Thursday the audit of Legacy Academy for Leaders and the Arts, covering fiscal years 2006 through 2010. The school, which operated inside Mount Calvary Pentecostal Church on Oak Hill Avenue, closed last June, citing declining enrollment.
The audit lists $102,768 in federal taxes, $38,777 in Medicare payments, $148,251 in Ohio income taxes and $86,367 in city income taxes that weren’t paid. It shows that money was withheld from employee paychecks, but the amount of taxes paid was less than what is due.
The findings will be reported to the Internal Revenue Service, Ohio Department of Taxation and the city, the audit says.
Officials from the school couldn’t be reached.
David Bozanich, city finance director, said the city likely would seek to recover taxes owed through its Regional Income Tax Agency, but sometimes entities aren’t able to pay, as may be the case with Legacy.
For federal taxes, the audit says, “The school properly withheld federal income taxes from employee payroll checks but did not file a return and remit the taxes to the federal government.”
This marks the third audit of the school in recent months.
In July, a special audit listed $352,000 in findings for recovery against the school and personnel for unpaid rent and unsupported payments. An August audit listed $54,570 in findings for recovery for electricity and telephone charges.
Additionally, the latest audit listed other nonmonetary findings. Among these, the school didn’t execute a bond for its fiscal officer and couldn’t provide sufficient payroll documentation to enable auditors to determine if employees were being paid properly.
The school’s bank reconciliations didn’t agree with the cash balances as shown on the statement of cash bank balance. The audit said checks were posted to the school’s system that never cleared the bank; checks cleared the bank that were never entered into the schools’ computer system, and checks were being altered on the school’s computer system after they had cleared the bank.
“This situation has led to the inability of the school to perform accurate bank reconciliations, detect accounting errors or other irregularities on a timely basis, and of maintaining proper cash management over these accounts,” auditors wrote. “This could result in material misstatements to the financial statements.”
In a separate management letter, auditors listed several more noncompliance citations including the board’s not properly advertising meetings as required by law, not adopting a spending plan, failing to provide enrollment applications to verify that tuition wasn’t being charged and failing to provide copies of the treasurer’s license or teachers’ licenses for the 2006 and 2007 fiscal years as the law requires.
A community school is a public school that operates independently of any school district. Because these schools receive state funding per students, students aren’t charged tuition.