Hanley International Academy Hamtramck, Michigan Audited Financial Statements June 30, 2015
C O N T E N T S Page
Independent Auditor’s Report i – iii Management’s Discussion and Analysis iv Ͳ ix Basic Financial Statements Statement of Net Position 1 Statement of Activities 2 Combined Balance Sheet – All Governmental Funds 3 Reconciliation of Total Governmental Fund Balance to Net Position of Governmental Activities 4 Statement of Revenues, Expenditures and Changes in Fund Balance – All Governmental Funds 5 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance of Governmental Funds to the Statement of Activities 6 Notes to Financial Statements 7 Ͳ 18 Supplemental Information Budgetary Comparison Schedule – General Fund 19 Schedule of Revenues – General Fund 20 Schedule of Expenditures – General Fund 21 Ͳ 22

C O N T E N T S – Continued

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AppendixͲ Federal Awards Report 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 AͲ1 – AͲ2 Independent Auditor’s Report on Compliance For Each Major Program and On Internal Control Over Compliance Required by OMB Circular AͲ133 AͲ3 – AͲ4 Schedule of Expenditures of Federal Awards AͲ5 – AͲ6 Reconciliation of Basic Financial Statements Federal Receivables and Revenue with Schedule of Expenditures of Federal Awards AͲ7 Notes to Schedule of Expenditures of Federal Awards AͲ8 Schedule of Findings and Questioned Costs AͲ9 – AͲ10


345 Diversion Street Ɣ Suite 400 44725 Grand River Avenue Ɣ Suite 204 2505 NW Boca Raton Blvd. Ɣ Suite 202 Rochester, MI 48307 Novi, Michigan 48375 Boca Raton, Florida 33431-6652 Phone: 248.659.5300 Phone: 248.659.5300 Phone: 561.241.1040 Fax: 248.659.5305 Fax: 248.659.5305 Fax: 561.368.4641 www.croskeylanni.com
David M. Croskey, CPA Thomas B. Lanni, CPA Carolyn A. Jones, CPA, CFP® MST Clifton F. Powell Jr., CPA, CFP®, PFS Roger J. DeJong, CPA Patrick M. Sweeney, CPA Leonard A. Geronemus, CPA, PFS
INDEPENDENT AUDITOR’S REPORT
To the Board of Directors of Hanley International Academy We have audited the accompanying financial statements of the governmental activities, each major fund and the aggregate remaining fund information of Hanley International Academy, as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise Hanley International Academy’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 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 financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these 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 financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the 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 the 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 opinion. 

Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of governmental activities, each major fund, and the aggregate remaining fund information of Hanley International Academy, as of June 30, 2015, and the respective changes in financial position 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 budgetary comparison information on pages iv Ͳ ix and 19 be presented to supplement the basic financial statements. Such information, although not a part of the basic 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 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 financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provided 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 Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise Hanley International Academy’s basic financial statements. The introductory section, combining and individual nonͲ major fund financial statements, statistical section, and schedules of revenues and expenditures are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular AͲ133, Audits of States, Local Governments, and NonͲProfit Organizations, and is also not a required part of the basic financial statements. The combining and individual nonͲmajor fund financial statements, the schedule of expenditures of federal awards, and schedules of revenues and expenditures are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonͲmajor fund financial statements, the schedule of expenditures of federal awards, and schedules of revenues and expenditures are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. ii 

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 30, 2015 on our consideration of Hanley International Academy’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 Hanley International Academy’s internal control over financial reporting and compliance.
Croskey Lanni, PC October 30, 2015 Rochester, Michigan iii
MANAGEMENT’S DISCUSSION AND ANALYSIS
This section of Hanley International Academy’s, annual financial report presents our discussion and analysis of the school’s financial performance during the fiscal year that ended on June 30, 2015. Please read it in conjunction with the school’s financial statements, which immediately follow this section. FINANCIAL HIGHLIGHTS ™ The total cost of basic programs was $2,616,525. ™ General fund revenues were at $6,767,334 while expenditures were $5,728,287. ƒ Blended enrollment used for state aid purposes was 731 students. ™ The school has a positive General Fund balance of $1,450,793. OVERVIEW OF THE FINANCIAL STATEMENTS This annual report consists of three parts – management’s discussion and analysis (this section), the basic financial statements and required supplementary information. The basic financial statements include two kinds of statements that present different views of the school: ƒ The first two statements are schoolͲwide financial statements that provide both shortͲterm and longͲ term information about the school’s overall financial status. ƒ The remaining statements are fund financial statements that focus on individual parts of the school, reporting the school’s operations in more detail. ƒ The governmental fund statements tell how basic services like regular and special education were financed. ƒ Fiduciary funds statements provide information about the financial relationships in which the school acts solely as a trustee or agent for the benefit of others. These consist of student activity funds held by the school on behalf of the student group. iv
iii

Summary Detail
The financial statements also include notes that explain some of the information in the statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the financial statements with a comparison of the school’s budget for the year. Figure AͲ1 shows how the various parts of this annual report are arranged and related to one another. Fund Financial Statements SchoolͲWide Statements Government Funds Fiduciary Funds Scope Entire school (except fiduciary funds) The activities of the school that are not proprietary or fiduciary, such as special education and building maintenance. Instances in which the school administers resources on behalf of someone else, such as scholarship programs and student activities monies Required Financial Statements *Statement of net position *Statement of activities *Balance sheet *Statement of revenues, expenditures and changes in fund balances *Statement of fiduciary net assets *Statement of changes in fiduciary net assets Accounting basis and measurement focus Accrual accounting and economic resources focus Modified accrual accounting and current financial resources Accrual accounting and economic resources focus Type of asset/liability information All assets and liabilities both financial and capital, shortͲ term and longͲterm Generally assets expected to be used up and liabilities that come due during the year or soon thereafter, no capital assets or longͲterm liabilities included All assets and liabilities, both shortͲ term and longͲterm Type of inflow/outflow information All revenues and expenses during year, regardless of when cash is received or paid Revenues for which cash is received during or soon after the end of the year, expenditures when goods or services have been received and the related liability is due and payable All additions and deductions during the year, regardless of when cash is received or paid v
Figure AͲ1 Organization of Hanley’s Annual Financial Report
Management’s Discussion and Analysis
Basic Financial Statements
Required Supplementary Information
Notes to Financial Statements
SchoolͲWide Financial Statements
Fund Financial Statements
Figure AͲ2 Major Features of SchoolͲWide and Fund Financial Statements
Figure AͲ2 summarizes the major features of the school’s financial statements, including the portion of the schools activities they cover and the types of information they contain. The remainder of this overview section of management’s discussion and analysis highlights the structure and contents of each of the statements. SCHOOLͲWIDE STATEMENTS The schoolͲwide statements report information about the school as a whole using accounting methods similar to those used by privateͲsector companies. The statement of net position includes all of the school’s assets and liabilities. All of the current year’s revenues and expenses are accounted for in the statement of activities regardless of when cash is received or paid. The two schoolͲwide statements report the school’s net position and how they have changed. Net position – the difference between the school’s assets and liabilities – are one way to measure the school’s financial health or position. ™ Over time, increases or decreases in the school’s assets are an indicator of whether its financial position is improving or deteriorating, respectively. ™ To assess the overall health of the school, you need to consider additional nonͲfinancial factors such as changes in the school’s enrollment and the condition of school buildings and other facilities. FUND FINANCIAL STATEMENTS The fund financial statements provide more detailed information about the school’s funds, focusing on its most significant or “major” funds – not the school as a whole. Funds are accounting devices the school uses to keep track of specific sources of funding and spending on particular programs: ™ Governmental activities – Most of the school’s basic services are included in the general fund, such as regular and special education and administration. State foundation aid finances most of these activities. ™ The school establishes other funds to control and manage money for particular purposes (like repaying its longͲ term debts) or to show that it is properly using certain revenues. The school has two kinds of funds: ™ Governmental funds – Most of the school’s basic services are included in governmental funds, which generally focus on (1) how cash and other financial assets that can readily be converted to cash flow in and out and (2) the balances left at yearͲend that are available for spending. Consequently, the governmental funds statements provide a detailed shortͲterm view that helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the school’s programs. Because this information does not encompass the additional longͲterm focus of the schoolͲwide statements, we provide additional information with governmental funds statements that explains the relationship (or differences) between them. ™ Fiduciary funds – The school is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. We exclude these activities from the schoolͲ wide financial statements because the school cannot use these assets to finance its operations. vi
FINANCIAL ANALYSIS OF THE SCHOOL AS A WHOLE The school’s financial position is the product of many factors. School Governmental The stability of the school’s finances is a result of the following measures: ™ Spending is controlled to insure that it aligns with revenues received from the State. General Fund Budgetary Analysis Over the course of the year, the school reviewed the annual operating budget monthly and amended the budget quarterly. All invoices were paid in a timely matter. Financial Outlook Hanley International Academy’s financial forecast continues to be optimistic heading into the 2015/2016 school year. ™ Enrollment is anticipated to remain constant for the 2015Ͳ2016 school year.
2015 2014
3,565,378$ 3,304,429 $ 7,544,398 7,776,168

11,109,776 11,080,597 8,487,794 8,823,894 1,725,935 1,571,212
10,213,729 10,395,106
896,047$ 685,491 $

Table AͲ3 Hanley International Academy Net Position
Other liabilities
Total liabilities
Total assets LongͲterm debt outstanding
Net position
Current and other assets Capital assets


vii
Revenues: 2015 2014
153,268$ 105,521 $ 1,703,572 1,756,342
5,371,443 5,289,734 16,709 60,127
7,244,992 7,211,724
Expenses:
3,520,143 3,603,798 2,607,422 2,594,432 621,525 631,535 285,346 292,104
7,034,436 7,121,869
Increase(decrease) in net position 210,556 $ 89,855 $
Program revenues: Charges for services
Changes in Hanley International Academy Net Position
Unallocated depreciation
Total expenses
Support services
Total revenues
Instruction
Interest on longͲterm debt
Federal and state operating grants General revenues: State aid Ͳ unrestricted Miscellaneous
Table AͲ4


CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets By the end of 2015, the school had invested $9,042,878 in capital assets, including equipment and a new building. See table AͲ5 below for a listing of capital assets, and the accumulated depreciation.
Balance Balance June 30, 2015 June 30, 2014 Land 927,817 $ 926,617 $ Building 7,045,876 6,998,921 Equipment and furniture 544,803 539,382 Computers 524,382 524,382
Subtotal 9,042,878 8,989,302
Less: accumulated depreciation 1,498,480 1,213,134
Total net capital assets 7,544,398 $ 7,776,168 $
Table AͲ5 Hanley International Academy's Capital Assets

viii
FACTORS BEARING ON THE SCHOOL’S FUTURE x Maintenance of current enrollment. x Aligning expenditures with available revenue sources. CONTACTING THE SCHOOL’S FINANCIAL MANAGEMENT This financial report is designed to provide our students, parents and creditors with a general overview of the school’s finances and to demonstrate the school’s accountability for the money it receives. If you have questions about this report or need additional information, contact the management office at: The Romine Group 7877 Stead, Utica, MI 48317 (586)731Ͳ5300 ix
HANLEY INTERNATIONAL ACADEMY STATEMENT OF NET POSITION JUNE 30, 2015 See Independent Auditor’s Report

Current Assets Cash and cash equivalents 585,924 $ Investments Ͳ restricted for debt service and capital projects 1,254,179 Due from other governmental units 1,707,162 Prepaid expenses 18,113 Total current assets 3,565,378
Capital Assets Ͳ Net of Accumulated Depreciation 7,544,398 Total assets and deferred outflows 11,109,776 $
Current Liabilities Accounts payable 351,832 $ Due to other governmental units 485,104 Other accrued expenses 715,949 LongͲterm debt Ͳ current portion 173,050
Total current liabilities 1,725,935
LongͲTerm Debt 8,487,794
Net Position Net investment in capital assets (1,116,446) Restricted for debt services and capital projects 1,254,179 Unrestricted 758,314
Total net position 896,047 Total liabilities, deferred inflows and net position 11,109,776 $
ASSETS AND DEFERRED OUTFLOWS
LIABILITIES, DEFERRED INFLOWS AND NET POSITION

See accompanying notes to financial statements
Ͳ 1 Ͳ
HANLEY INTERNATIONAL ACADEMY STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2015 See Independent Auditor’s Report
Net (Expense) Revenues and Changes in Program Revenues Net Assets Government Charges for Operating Type Expenses Services Grants Activities
Functions Instruction Basic programs 2,616,525 $ Ͳ $ 393,328 $ (2,223,197) $ Added needs 903,618 Ͳ 677,844 (225,774) Support services Pupil support services 47,718 Ͳ 31,946 (15,772) Instructional staff support services 32,628 Ͳ 32,517 (111) General administration 793,032 Ͳ Ͳ (793,032) School administration 527,953 Ͳ Ͳ (527,953) Business support services 31,835 Ͳ Ͳ (31,835) Operations and maintenance 446,336 Ͳ 25,919 (420,417) Central support services 247,667 Ͳ 35,567 (212,100) Athletic activities 34,407 21,258 Ͳ (13,149) Food services 445,142 161 506,451 61,470 Community services 704 Ͳ Ͳ (704) Unallocated depreciation 285,346 Ͳ Ͳ (285,346) Unallocated interest 621,525 131,849 Ͳ (489,676)
Total primary government 7,034,436 $ 153,268 $ 1,703,572 $ (5,177,596)
General Purpose Revenues State school aid Ͳ unrestricted 5,371,443 Miscellaneous revenues 16,709 Total general purpose revenues 5,388,152
Change in net position 210,556
Net position Ͳ July 1, 2014 685,491
Net position Ͳ June 30, 2015 896,047 $


See accompanying notes to financial statements
Ͳ 2 Ͳ
HANLEY INTERNATIONAL ACADEMY COMBINED BALANCE SHEET – ALL GOVERNMENTAL FUNDS JUNE 30, 2015 See Independent Auditor’s Report
Debt NonͲMajor General Service Special Revenue Total
Cash and cash equivalents 474,939 $ Ͳ $ 110,985 $ 585,924 $ Investments 112,500 1,141,679 Ͳ 1,254,179 Due from other governmental units 1,707,162 Ͳ Ͳ 1,707,162 Prepaid expenses 18,113 Ͳ Ͳ 18,113
Total assets 2,312,714 $ 1,141,679 $ 110,985 $ 3,565,378 $
Liabilities Accounts payable 351,832 $ Ͳ $ Ͳ $ 351,832 $ Due to other governmental units Ͳ 485,104 Ͳ 485,104 Other accrued expenses 510,089 Ͳ Ͳ 510,089
Total liabilities 861,921 485,104 Ͳ 1,347,025
Fund Balance Nonspendable 18,113 Ͳ Ͳ 18,113 Restricted Ͳ 656,575 110,985 767,560 Unassigned 1,432,680 Ͳ Ͳ 1,432,680
Total fund balance 1,450,793 656,575 110,985 2,218,353 Total liabilities, deferred inflows and fund balance 2,312,714 $ 1,141,679 $ 110,985 $ 3,565,378 $
ASSETS
LIABILITIES, DEFERRED INFLOWS AND FUND BALANCE

See accompanying notes to financial statements
Ͳ 3 Ͳ
HANLEY INTERNATIONAL ACADEMY RECONCILIATION OF TOTAL GOVERNMENTAL FUND BALANCE TO NET POSITION OF GOVERNMENTAL ACTIVITIES JUNE 30, 2015 See Independent Auditor’s Report Amounts reported for governmental activities in the statement of net position are different because:
Total Governmental Fund Balances 2,218,353 $
Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. The cost of the assets is $9,042,878 and the accumulated depreciation is $1,498,480. 7,544,398
Interest is not payable until due in governmental activities and, therefore, is not recorded in the funds. (205,860)
LongͲterm liabilities are not due and payable in the current period and, therefore, are not reported in the funds. (8,660,844)
Net Position of Governmental Activities 896,047 $







See accompanying notes to financial statements
Ͳ 4 Ͳ
HANLEY INTERNATIONAL ACADEMY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE – ALL GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2015 See Independent Auditor’s Report Debt NonͲMajor General Service Special Revenue Total
Revenues Local sources 211,616 $ 3 $ 161 $ 211,780 $ State sources 5,961,709 Ͳ 4,696 5,966,405 Federal sources 594,009 Ͳ 501,755 1,095,764 Total governmental fund revenues 6,767,334 3 506,612 7,273,949 Expenditures Instruction Basic programs 2,616,525 Ͳ Ͳ 2,616,525 Added needs 903,618 Ͳ Ͳ 903,618 Support services Pupil support services 47,718 Ͳ Ͳ 47,718 Instructional staff support services 32,628 Ͳ Ͳ 32,628 General administration 793,032 Ͳ Ͳ 793,032 School administration 527,953 Ͳ Ͳ 527,953 Business support services 24,123 7,712 Ͳ 31,835 Operations and maintenance 446,336 Ͳ Ͳ 446,336 Central support services 247,667 Ͳ Ͳ 247,667 Athletic activities 34,407 Ͳ Ͳ 34,407 Food services Ͳ Ͳ 445,142 445,142 Community services 704 Ͳ Ͳ 704 Capital outlay 53,576 Ͳ Ͳ 53,576 Debt principal and interest Ͳ 788,563 Ͳ 788,563 Total governmental fund expenditures 5,728,287 796,275 445,142 6,969,704 Excess (deficiency) of revenues over expenditures 1,039,047 (796,272) 61,470 304,245
Other Financing Sources (Uses) Operating transfers in Ͳ 797,556 Ͳ 797,556 Operating transfers out (797,556) Ͳ Ͳ (797,556) Total other financing sources (uses) (797,556) 797,556 Ͳ Ͳ Excess (deficiency) of revenues and other financing sources over expenditures and other uses 241,491 1,284 61,470 304,245 Fund balance Ͳ July 1, 2014 1,209,302 655,291 49,515 1,914,108 Fund balance Ͳ June 30, 2015 1,450,793 $ 656,575 $ 110,985 $ 2,218,353 $ See accompanying notes to financial statements Ͳ 5 Ͳ
HANLEY INTERNATIONAL ACADEMY RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2015 See Independent Auditor’s Report Amounts reported for governmental activities in the statement of activities are different because:
Net Change in Fund Balances Ͳ Total Governmental Funds 304,245 $
Governmental funds report capital outlays as expenditures. However, in the statement of activities, assets are capitalized and the cost is allocated over their estimated useful lives and reported as depreciation and amortization expense. This is the amount by which capital outlays exceeded depreciation and amortization in the current period
Capital outlay 53,576 $ Depreciation and amortization expense (285,346) (231,770)
Revenue is reported in the statement of activities when earned, but not reported in the funds until collected or collectible witin 60 days of year end (28,957)
The governmental funds report loan proceeds as an other financing source, while repayment of loan principal is reported as an expenditure. Interest is recognized as an expenditure in the governmental funds when it is due. The net effect of these differences in the treatment of general loan obligations is as follows:
Repayment of loan principal 165,000 $ Interest expense 2,038 167,038
Change in Net Position of Governmental Activities 210,556 $

See accompanying notes to financial statements
Ͳ 6 Ͳ
HANLEY INTERNATIONAL ACADEMY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2015 See Independent Auditor’s Report NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of Hanley International Academy (the “Academy”) conform to generally accepted accounting principles applicable to public school academies. The following is a summary of the significant accounting policies: Reporting Entity Hanley International Academy was formed as a public school academy pursuant to the Michigan School Code of 1976, as amended by Act No. 362 of the Public Acts of 1993 and Act No. 416 of the Public Acts of 1994. The Academy filed articles of incorporation as a nonprofit corporation pursuant to the provisions of the Michigan Nonprofit Corporation Act of 1982, as amended, and began operation in May 2005. In June 2012, the Academy entered into a sevenͲyear contract, expiring June 30, 2019, with Grand Valley State University's Board of Control to charter a public school academy. The contract requires the Academy to act exclusively as a governmental agency and not undertake any action inconsistent with its status as an entity authorized to receive state school aid funds pursuant to the State constitution. The University’s Board of Control is the fiscal agent for the Academy and is responsible for overseeing the Academy’s compliance with the contract and all applicable laws. The Academy pays Grand Valley State University's Board of Control three percent of state aid as administrative fees. Total administrative fees paid for the year ended June 30, 2015 were approximately $155,400. In June 2012, the Academy entered into a sevenͲyear agreement with The Romine Group, Inc. Under the terms of this agreement, The Romine Group, Inc. provides a variety of services including financial management, educational programs and consulting, as well as teacher training. The Academy is obligated to pay The Romine Group, Inc. ten percent of its state school aid revenue and all other governmental revenue sources. The total paid for these services amounted to approximately $610,000 for the year ended June 30, 2015. The accompanying financial statements have been prepared in accordance with criteria established by the Governmental Accounting Standards Board for determining the various governmental organizations to be included in the reporting entity. These criteria include significant operational or financial relationships with the public school Academy. Based on application of criteria, the Academy does not contain component units. Fund Financial Statements Fund financial statements report detailed information about the Academy. The focus of governmental fund financial statements is on major funds rather than reporting funds by type. Each major fund is presented in a separate column. NonͲmajor funds are aggregated and presented in a single column. Ͳ 7 Ͳ
HANLEY INTERNATIONAL ACADEMY NOTES TO FINANCIAL STATEMENTS Ͳ Continued FOR THE YEAR ENDED JUNE 30, 2015 See Independent Auditor’s Report
NOTE 1 Ͳ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued Basis of Presentation – Fund Accounting The accounts of the Academy are organized on the basis of funds. The operations of a fund are accounted for with a separate set of selfͲbalancing accounts that comprise its assets, liabilities, fund balance, revenue and expenditures. Government resources are allocated to and accounted for in individual funds based on the purposes for which they are to be spent and the means by which spending activities are controlled. The various funds are grouped, in the combined financial statements in this report, into generic fund types in two broad fund categories. Governmental Funds A governmental fund is a fund through which most academy functions typically are financed. The acquisition, use and balances of the Academy’s expendable financial resources and the related current liabilities are accounted for through a governmental fund. General Fund Ͳ The general fund is used to record the general operations of the Academy pertaining to education and those operations not provided for in other funds. Included are all transactions related to the approved current operating budget. Special Revenue Fund Ͳ The special revenue fund is used to account for the food service program operations. The special revenue fund is a subsidiary operation and is an obligation of the general fund. Therefore any shortfall in the special revenue fund will be covered by an operating transfer from the general fund. Debt Service Fund Ͳ The debt service fund is used to record certain revenue and the payment of interest, principal and other expenditures on longͲterm debt. Capital Projects Fund Ͳ The capital projects fund, which the Academy does not currently maintain, accounts for financial resources to be used for the acquisition, construction, or improvement of capital facilities. Fiduciary Fund Ͳ The fiduciary fund, which the Academy does not currently maintain, is used to account for assets held by the Academy in a trustee capacity or as an agent. The agency fund is custodial in nature and does not involve the measurement of results of operations. Activity (Agency) Fund Ͳ The Academy does not presently maintain an activity fund, which would be used to record the transactions of a student group for school and schoolͲrelated purposes. The fund would be segregated and held in trust for the students. Governmental and agency funds utilize the modified accrual basis of accounting. Modifications in such method from the accrual basis are as follows: Ͳ 8 Ͳ
HANLEY INTERNATIONAL ACADEMY NOTES TO FINANCIAL STATEMENTS Ͳ Continued FOR THE YEAR ENDED JUNE 30, 2015 See Independent Auditor’s Report
NOTE 1 Ͳ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Ͳ Continued a. Revenue that is both measurable and available for use to finance operations is recorded as revenue when earned. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Academy considers revenues to be available if they are collected within sixty days of the end of the current fiscal period. b. Payments for inventoriable types of supplies, which are not significant at year end, are recorded as expenditures at the time of purchase. c. Principal and interest of general longͲterm debt are not recorded as expenditures until their due dates. d. The State of Michigan utilizes a foundation allowance funding approach, which provides for specific annual amount of revenue per student based on a stateͲwide formula. The foundation allowance is funded from a combination of state and local sources. Revenue from state sources is primarily governed by the School Aid Act and the School Code of Michigan. The state portion of the foundation is provided from the State’s School Aid Fund and is recognized as revenue in accordance with state law. A major portion of the Academy’s revenue is derived from this state aid. As such, the Academy is considered to be economically dependent on this aid. The Academy’s existence is dependent upon qualification for such aid. GovernmentͲWide Financial Statements The governmentͲwide financial statements (i.e. the statement of Net Position and the Statement of Activities) report information on all of the nonͲfiduciary activities of the primary government. The governmentͲwide financial statements are prepared using the economic resources measurement focus and the accrual basis of accounting. This approach differs from the manner in which governmental fund financial statements are prepared. Therefore, governmental fund financial statements include reconciliations with brief explanations to better identify the relationships between the governmentͲwide statements and the statements for governmental funds. The governmentͲwide Statement of Activities presents a comparison between expenses and program revenues for each segment of the businessͲtype activities of the Academy and for each governmental program. Direct expenses are those that are specifically associated with a service, program or department and are therefore clearly identifiable to a particular function. The Academy does not allocate indirect expenses to programs. Program revenues include charges paid by the recipients of the goods or services offered by the programs and grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues not classified as program revenues are presented as general revenues. The comparison of program revenues and expenses identifies the extent to which each program or function is self financing or draws from the general revenues of the Academy. When both restricted and unrestricted resources are available for use, it is the Academy’s policy to use restricted resources first. Ͳ 9 Ͳ
HANLEY INTERNATIONAL ACADEMY NOTES TO FINANCIAL STATEMENTS Ͳ Continued FOR THE YEAR ENDED JUNE 30, 2015 See Independent Auditor’s Report
NOTE 1 Ͳ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Ͳ Continued Net position should be reported as restricted when constraints placed on net position’s use is either externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or imposed by law through constitutional provisions or enabling legislation. The Academy first utilizes restricted resources to finance qualifying activities. Separate financial statements are provided for governmental funds and fiduciary funds, even though the latter are excluded from the government Ͳ wide financial statements. Cash and Cash Equivalents The Academy's cash and cash equivalents are considered to be cash on hand, demand deposits and shortͲterm investments with maturities of three months or less from the date of acquisition. The Academy reports its investments in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools and GASB No. 40, Deposit and Investment Risk Disclosures. Under these standards, certain investments are valued at fair value as determined by quoted market prices or by estimated fair values when quoted market prices are not available. The standards also provide that certain investments are valued at cost (or amortized cost) when they are of a shortͲterm duration, the rate of return is fixed, and the Academy intends to hold the investment until maturity. The Academy held investments in mutual funds that invest solely in U.S. Treasury obligations. The funds are held in trust for debt service and capital projects. State statutes authorize the Academy to invest in bonds and other direct and certain indirect obligations of the U.S. Treasury; certificates of deposit, saving accounts, deposit accounts, and or depository receipts of a bank, savings and loan association, or credit union, which is a member of the Federal Deposit Insurance Corporation, Federal Savings and Loan Corporation or National Credit Union Administration, respectively; in commercial paper rated at the time of purchase within the three highest classifications established by not less than two standard rating services and which matures not more than 270 days after the date of purchase. The Academy is also authorized to invest in U.S. Government or Federal agency obligation repurchase agreements, bankers' acceptances of U.S. banks, and mutual funds composed of investments as outlined above. Receivables Receivables at June 30, 2015 consist primarily of state school aid due from the State of Michigan and the federal government. All receivables are expected to be fully collected in July and August of 2015 and are considered current for the purposes of these financial statements. Prepaid Assets Payments made to vendors for services that will benefit periods beyond June 30, 2015, are recorded as prepaid items using the consumption method. A current asset for the prepaid amount is recorded at the time of the purchase and an expenditure is reported in the year in which services are consumed. Ͳ 10 Ͳ
HANLEY INTERNATIONAL ACADEMY NOTES TO FINANCIAL STATEMENTS Ͳ Continued FOR THE YEAR ENDED JUNE 30, 2015 See Independent Auditor’s Report
NOTE 1 Ͳ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Ͳ Continued Capital Assets and Depreciation All capital assets are capitalized at cost (or estimated historical cost) and updated for additions or retirements during the year. The Academy follows the policy of not capitalizing assets with a useful life of less than one year. The Academy does not possess any infrastructure assets. All reported capital assets, with the exception of land, are depreciated. Improvements are depreciated over the remaining useful lives of the related capital assets. Depreciation is computed using the straightͲline method over the following useful lives: Building and improvements 10 – 50 years Furniture and equipment 5 – 15 years Computers and software 3 – 10 years Accrued Liabilities and LongͲTerm Obligations All payables, accrued liabilities and longͲterm obligations are reported in the governmentͲwide financial statements. In general, payables and accrued liabilities that will be paid from governmental funds are reported on the governmental fund financial statements regardless of whether they will be liquidated with current resources. However, the nonͲ current portion of capital leases that will be paid from governmental funds are reported as a liability in the fund financial statements only to the extent that they will be paid with current, expendable, available financial resources. In general, payments made within sixty days after yearͲend are considered to have been made with current available financial resources. Other longͲterm obligations that will be paid from governmental funds are not recognized as a liability in the fund financial statements until due. Deferred Inflows of Resources In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The Academy reports unavailable revenue under a modified accrual basis of accounting, as deferred inflow of resources in the governmental funds balance sheet. Revenues are considered unavailable if they are not received within 60 days of the Academy’s year end. Net Position Net position represents the difference between assets, deferred outflows and liabilities, and deferred inflows. Net position is reported as restricted when there are limitations imposed on its use either through the enabling legislation adopted by the Academy or through external restrictions imposed by creditors, grantors or laws of regulations of other governments. Ͳ 11 Ͳ
HANLEY INTERNATIONAL ACADEMY NOTES TO FINANCIAL STATEMENTS Ͳ Continued FOR THE YEAR ENDED JUNE 30, 2015 See Independent Auditor’s Report
NOTE 1 Ͳ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Ͳ Continued Fund Equity The Academy has adopted GASB 54 as part of its fiscal year reporting. The intention of the GASB is to provide a more structured classification of fund balance and to improve the usefulness of fund balance reporting to the users of the Academy’s financial statements. The reporting standard establishes a hierarchy for fund balance classifications and the constraints imposed on those resources. GASB 54 provides for two major types of fund balances, which are nonspendable and spendable. Nonspendable fund balances are balances that cannot be spent because they are not expected to be converted to cash or they are legally or contractually required to remain intact. This category typically includes prepaid items and inventories. In addition to nonspendable fund balance, GASB 54 has provided a hierarchy of spendable fund balances, based on a hierarchy of spending constraints. a. Restricted fund balance – amounts constrained to specific purposes by their providers (such as grantors, bondholders, and higher levels of government), through constitutional provisions, or by enabling legislation. b. Committed fund balance – amounts constrained to specific purposes by the Board; to be reported as committed, amounts cannot be used for any other purpose unless the Board takes action to remove or change the constraint. c. Assigned fund balance – amounts the Board intends to use for a specific purpose; intent can be expressed by the Board or by an official or committee to which the Board delegates the authority. d. Unassigned fund balance – amounts that are available for any purpose; these amounts are reported only in the general fund. The Academy follows the policy that restricted, committed, or assigned amounts will be considered to have been spent when an expenditure is incurred for purposes for which both unassigned and restricted, committed, or assigned fund balances are available. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. Ͳ 12 Ͳ
HANLEY INTERNATIONAL ACADEMY NOTES TO FINANCIAL STATEMENTS Ͳ Continued FOR THE YEAR ENDED JUNE 30, 2015 See Independent Auditor’s Report
NOTE 2 Ͳ STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY Annual budgets are adopted on a consistent basis with accounting principles generally accepted in the United States of America and state law for the general fund. All annual appropriations lapse at fiscal year end and encumbrances are not formally recorded. The budget document presents information by fund and function. The legal level of budgetary control adopted by the governing body is the function level. State law requires the Academy to have its budget in place by July 1. Expenditures in excess of amounts budgeted is a violation of Michigan Law. The Academy is required by law to adopt a general fund budget. During the year ended June 30, 2015 the budget was amended in a legally permissible manner. During the year ended June 30, 2015 the Academy incurred expenditures that were in excess of the amounts appropriated, as detailed on page 19 of these financial statements. NOTE 3 Ͳ DEPOSITS AND INVESTMENTS As of June 30, 2015, the Academy had the following investments: Type S&P Rating Maturities Carrying Value Deposits: Demand deposits 585,924 $ Investments: U.S. Treasury and agency obligations AAAm Various 1,254,179 Total deposits and investments 1,840,103 $
Deposits: Cash Ͳ General Fund 474,939 $ Cash Ͳ Special Revenue Fund 110,985
Total cash 585,924
Investments: Investments Ͳ General Fund 112,500 Investments Ͳ Debt Service 1,141,679
Total investments 1,254,179 Total deposits and investments 1,840,103 $
The above amounts are reported in the financial statements as follows:
Cash is split between unrestricted and restricted amounts. General Fund and Debt Service Fund investments are restricted for use in servicing debt obligations. Ͳ 13 Ͳ
HANLEY INTERNATIONAL ACADEMY NOTES TO FINANCIAL STATEMENTS Ͳ Continued FOR THE YEAR ENDED JUNE 30, 2015 See Independent Auditor’s Report

NOTE 3 Ͳ DEPOSITS AND INVESTMENTS Ͳ Continued Interest Rate Risk In accordance with its investment policy, the Academy will minimize interest rate risk, which is the risk that the market value of securities in the portfolio will fall due to changes in market interest rates, by; structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities in the open market; and, investing operating funds primarily in shorterͲterm securities, liquid asset funds, money market mutual funds, or similar investment pools and limiting the average maturity in accordance with the Academy's cash requirements. Credit Risk State law limits investments in commercial paper and corporate bonds to a prime or better rating issued by nationally recognized statistical rating organizations (NRSROs). As of June 30, 2015, the Academy's investments were rated AAAm by Standards & Poor's and Aaa by Moody's Investors Service. Concentration of Credit Risk The Academy will minimize concentration of credit risk, which is the risk of loss attributed to the magnitude of the Academy's investment in a single issuer, by diversifying the investment portfolio so that the impact of potential losses from any one type of security or issuer will be minimized. More than 5% of the Academy's investments are in pooled investment accounts which represents 100% of the Academy's total investments. Custodial Credit Risk Ͳ Deposits In the case of deposits, this is the risk that in the event of a bank failure, the Academy's deposits may not be returned to it. As of June 30, 2015, $435,144 of the Academy's cash was exposed to custodial credit risk because it was uninsured. All cash balances were uncollateralized as of June 30, 2015. Custodial Credit Risk Ͳ Investments For an investment, this is the risk that, in the event of the failure of the counterparty, the Academy will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The Academy will minimize custodial credit risk, which is the risk of loss due to the failure of the security issuer or backer, by; limiting investments to the types of securities allowed by law; and preͲqualifying the financial institutions, broker/dealers, intermediaries and advisors with which the District will do business. Foreign Currency Risk The Academy is not authorized to invest in investments which have this type of risk. Ͳ 14 Ͳ
HANLEY INTERNATIONAL ACADEMY NOTES TO FINANCIAL STATEMENTS Ͳ Continued FOR THE YEAR ENDED JUNE 30, 2015 See Independent Auditor’s Report

NOTE 4 – DUE FROM OTHER GOVERNMENTAL UNITS Amounts due from other governmental units consist of the following: Local sources 34,433 $ State sources 1,086,052 Federal sources 586,677
Total 1,707,162 $

NOTE 5 Ͳ CAPITAL ASSETS Capital asset activity of the Academy's governmental activities was as follows: Balance Balance July 1, 2014 Additions Disposals June 30, 2015
Capital assets not subject to depreciation Land 926,617 $ 1,200 $ Ͳ $ 927,817 $
Capital assets subject to depreciation Building 6,998,921 46,955 Ͳ 7,045,876 Equipment 142,230 Ͳ Ͳ 142,230 Furniture 397,152 5,421 Ͳ 402,573 Computer 524,382 Ͳ Ͳ 524,382
SubͲtotal 8,989,302 53,576 Ͳ 9,042,878
Accumulated depreciation Building 495,964 175,116 Ͳ 671,080 Equipment 88,168 13,404 Ͳ 101,572 Furniture 231,270 39,986 Ͳ 271,256 Computer 397,732 56,840 Ͳ 454,572
SubͲtotal 1,213,134 285,346 Ͳ 1,498,480
Total net capital assets 7,776,168 $ (231,770) $ Ͳ $ 7,544,398 $
Depreciation and amortization expense was not charged to activities as the Academy considers its assets to impact multiple activities and allocation is not practical. Ͳ 15 Ͳ
HANLEY INTERNATIONAL ACADEMY NOTES TO FINANCIAL STATEMENTS Ͳ Continued FOR THE YEAR ENDED JUNE 30, 2015 See Independent Auditor’s Report

NOTE 6 – ACCRUED EXPENSES Accrued expenses can be summarized as follows:
Net Position Funds
Purchased services Ͳ payroll and benefits 335,214 $ 335,214 $ Management fee 146,607 146,607 University oversight fee 28,269 28,269 Interest 205,860 Ͳ
Total accrued expenses 715,950 $ 510,090 $

NOTE 7 Ͳ LONGͲTERM OBLIGATIONS PAYABLE The following is a summary of longͲterm obligations for the Academy during the year ended June 30, 2015: LongͲterm obligations as of June 30, 2015 can be summarized as follows:
Loan Information
Interest Maturity Rate Date
Revenue bond 6.125% Ͳ 9.0% September, 2040
Revenue bond 2
Loan Activity
Balance Retirements Balance Due Within July 1, 2014 Additions and Payments June 30, 2015 One Year
Revenue bond 8,875,000 $ Ͳ $ 165,000 $ 8,710,000 173,050 $ Less unamortized discount 49,156 8,660,844$
Other
Twice yearly payments of principal and interest. Secured by facilities, funds held in trust, and a pledge for 20% of future State School Aid payments.


Ͳ 16 Ͳ
HANLEY INTERNATIONAL ACADEMY NOTES TO FINANCIAL STATEMENTS Ͳ Continued FOR THE YEAR ENDED JUNE 30, 2015 See Independent Auditor’s Report NOTE 7 Ͳ LONGͲTERM OBLIGATIONS PAYABLE Ͳ Continued Following are maturities of longͲterm obligations for principal and interest for the next five years and in total:
Principal Interest
2016 175,000 $ 607,756 $ 2017 180,000 591,781 2018 190,000 575,131 2019 195,000 557,806 2020 205,000 539,806 2020 Ͳ 2024 1,160,000 2,399,556 2025 Ͳ 2029 1,430,000 1,838,106 2030 Ͳ 2034 1,890,000 1,299,469 2035 Ͳ 2039 2,535,000 626,484 2040 Ͳ 2041 750,000 22,563

NOTE 8 – OPERATING LEASES Lease Information
Maturity Approximate Date Payment
Bus leases (4) June, 2015 $187,000 yearly
Other
Payable in 11 installments of $17,000

Total lease expense included in the statement of activities for the year ended June 30, 2015 amounted to $183,942. NOTE 9 Ͳ RETIREMENT PLAN All leased employees of the Academy are eligible to participate in a retirement plan established by the Academy's management company (the employer) which qualifies under the provisions of Section 401(k) of the Internal Revenue Code. The Academy, under this plan, will reimburse the employer’s contribution of 4% of salaries regardless of the amount the employee contributes. The Academy will additionally reimburse the employer’s match up to 4% of employee contributed funds. Eligible employees may contribute up to 15% of their salaries under the terms of this plan. Ͳ 17 Ͳ
HANLEY INTERNATIONAL ACADEMY NOTES TO FINANCIAL STATEMENTS Ͳ Continued FOR THE YEAR ENDED JUNE 30, 2015 See Independent Auditor’s Report NOTE 10 Ͳ INTERFUND TRANSFERS During the normal course of the school year the Academy transferred amounts between its major funds as follows: General Debt Service
Transfer In Ͳ $ 797,556 $
Transfer Out 797,556 Ͳ
As stipulated by the Academy's revenue bond agreement as described in Note 7, the Academy must transfer 20% of its state aid to a trustee. The trustee retains the required portion for debt service and returns the remainder to the Academy. NOTE 11 Ͳ RISK MANAGEMENT The Academy is exposed to various risks of loss related to property loss, torts, errors and omissions and employee injuries (worker’s compensation), as well as medical benefits provided to employees. The Academy has purchased commercial insurance for all claims. Settled claims relating to the commercial insurance have not exceeded the amount of insurance coverage in any of the past three fiscal years. Ͳ 18 Ͳ

SUPPLEMENTAL INFORMATION
HANLEY INTERNATIONAL ACADEMY REQUIRED SUPPLEMENTAL INFORMATION BUDGETARY COMPARISON SCHEDULE – GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2015 See Independent Auditor’s Report Original Budget Final Budget Actual Variance
Revenues Local sources 241,178 $ 232,000 $ 211,616 $ (20,384) $ State sources 5,892,546 5,939,709 5,961,709 22,000 Federal sources 705,443 644,563 594,009 (50,554)
Total governmental fund revenues 6,839,167 6,816,272 6,767,334 (48,938) Expenditures Instruction Basic programs 2,953,190 2,737,130 2,616,525 (120,605) Added needs 861,225 949,717 903,618 (46,099) Support services Pupil support services 66,102 67,800 47,718 (20,082) Instructional staff support services 76,585 39,589 32,628 (6,961) General administration 800,559 799,234 793,032 (6,202) School administration 532,022 539,940 527,953 (11,987) Business support services 41,000 46,000 24,123 (21,877) Operations and maintenance 461,590 514,058 446,336 (67,722) Pupil transportation services 7,180 19,293 Ͳ (19,293) Central support services 220,860 245,134 247,667 2,533 Athletic activities 28,250 36,795 34,407 (2,388) Community services 12,037 10,500 704 (9,796) Capital outlay Ͳ Ͳ 53,576 53,576
Total governmental fund expenditures 6,060,600 6,005,190 5,728,287 (276,903) Excess (deficiency) of revenues over expenditures 778,567 811,082 1,039,047 227,965
Other Financing Sources (Uses) Operating transfers out (766,801) (766,801) (797,556) (30,755)
Excess (deficiency) of revenues and other financing sources over expenditures and other uses 11,766 44,281 241,491 197,210
Fund balance Ͳ July 1, 2014 1,209,302 1,209,302 1,209,302 Ͳ Fund balance Ͳ June 30, 2015 1,221,068 $ 1,253,583 $ 1,450,793 $ 197,210 $
Ͳ 19 Ͳ
HANLEY INTERNATIONAL ACADEMY SCHEDULE OF REVENUES – GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2015 See Independent Auditor’s Report
Local Sources Student activities 21,258 $ Other local revenues 190,358
Total local sources 211,616
State Sources At risk 230,330 Great start readiness program 295,965 Special education 63,971 State aid 5,371,443
Total state sources 5,961,709
Federal Sources IDEA 103,928 Title I 397,176 Title II A 36,767 Title III 25,948 Other program revenue 30,190
Total federal sources 594,009
Total general fund revenues 6,767,334 $



Ͳ 20 Ͳ
HANLEY INTERNATIONAL ACADEMY SCHEDULE OF EXPENDITURES – GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2015 See Independent Auditor’s Report
Basic Programs Purchased services 2,441,271 $ Supplies and materials 49,279 Other expenditures 125,975
Total basic programs 2,616,525
Added Needs Purchased services 842,140 Supplies and materials 61,478
Total added needs 903,618
Pupil Support Services Social work services 42,595 Other pupil services 5,123
Total pupil support services 47,718
Instructional Staff Support Services Purchased services 31,283 Supplies and materials 1,345
Total instructional staff support services 32,628
General Administration Purchased services 26,295 Management fees 609,967 University oversight 155,407 Other expenditures 1,363
Total general administration 793,032
School Administration Purchased services 490,035 Supplies and materials 23,112 Other expenditures 14,806
Total school administration 527,953 Ͳ 21 Ͳ
HANLEY INTERNATIONAL ACADEMY SCHEDULE OF EXPENDITURES – GENERAL FUND Ͳ CONTINUED FOR THE YEAR ENDED JUNE 30, 2015 See Independent Auditor’s Report
Business Support Services Purchased services 17,180 Other expenditures 6,943
Total business support services 24,123
Operations and Maintenance Purchased services 217,825 Repairs and maintenance 96,452 Supplies and materials 132,059
Total operations and maintenance 446,336
Central Support Services Purchased services 35,567 Other expenditures 212,100
Total central support services 247,667
Athletic Activities Purchased services 23,742 Supplies and materials 3,740 Other expenditures 6,925
Total athletic activities 34,407
Community Services Purchased services 704
Capital Outlay 53,576
Total general fund expenditures 5,728,287 $

Ͳ 22 Ͳ

APPENDIX Federal Awards Supplemental Information


345 Diversion Street Ɣ Suite 400 44725 Grand River Avenue Ɣ Suite 204 2505 NW Boca Raton Blvd. Ɣ Suite 202 Rochester, MI 48307 Novi, Michigan 48375 Boca Raton, Florida 33431-6652 Phone: 248.659.5300 Phone: 248.659.5300 Phone: 561.241.1040 Fax: 248.659.5305 Fax: 248.659.5305 Fax: 561.368.4641 www.croskeylanni.com
David M. Croskey, CPA Thomas B. Lanni, CPA Carolyn A. Jones, CPA, CFP® MST Clifton F. Powell Jr., CPA, CFP®, PFS Roger J. DeJong, CPA Patrick M. Sweeney, CPA Leonard A. Geronemus, CPA, PFS

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 of Hanley International Academy 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 financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Hanley International Academy, as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise Hanley International Academy’s basic financial statements, and have issued our report thereon dated October 30, 2015. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered Hanley International Academy’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Hanley International Academy’s internal control. Accordingly, we do not express an opinion on the effectiveness of Hanley International Academy’s internal control. 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 financial statements will not be prevented, or detected and corrected on a timely basis. 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. Our consideration of internal control was for the limited purpose described in the first paragraph of this section 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. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.









































Compliance and Other Matters As part of obtaining reasonable assurance about whether Hanley International Academy’s 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. 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.
Croskey Lanni, PC October 30, 2015 Rochester, Michigan AͲ2


345 Diversion Street Ɣ Suite 400 44725 Grand River Avenue Ɣ Suite 204 2505 NW Boca Raton Blvd. Ɣ Suite 202 Rochester, MI 48307 Novi, Michigan 48375 Boca Raton, Florida 33431-6652 Phone: 248.659.5300 Phone: 248.659.5300 Phone: 561.241.1040 Fax: 248.659.5305 Fax: 248.659.5305 Fax: 561.368.4641 www.croskeylanni.com
David M. Croskey, CPA Thomas B. Lanni, CPA Carolyn A. Jones, CPA, CFP® MST Clifton F. Powell Jr., CPA, CFP®, PFS Roger J. DeJong, CPA Patrick M. Sweeney, CPA Leonard A. Geronemus, CPA, PFS

INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR AͲ133
To the Board of Directors of Hanley International Academy Report on Compliance for Each Major Federal Program We have audited Hanley International Academy’s compliance with the types of compliance requirements described in the OMB Circular AͲ133 Compliance Supplement that could have a direct and material effect on each of Hanley International Academy’s major federal programs for the year ended June 30, 2015. Hanley International Academy’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. Management’s Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs. Auditor’s Responsibility Our responsibility is to express an opinion on compliance for each of Hanley International Academy’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller of the United States, and OMB Circular AͲ133, Audits of States, Local Governments, and NonͲProfit Organizations. Those standards and OMB Circular AͲ133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Hanley International Academy’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of Hanley International Academy’s compliance. Opinion on Each Major Federal Program In our opinion, Hanley International Academy, complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2015.









































Other Matters The results of our auditing procedures disclosed instances of noncompliance, which are required to be reported in accordance with OMB Circular AͲ133 and which are described in the accompanying schedule of findings and questioned costs as item 2015Ͳ001. Our opinion on each major federal program is not modified with respect to these matters. Hanley International Academy’s response to the noncompliance findings identified in our audit is described in the accompanying schedule of findings and questioned costs. Hanley International Academy’s response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. Report on Internal Control Over Compliance Management of Hanley International Academy is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Hanley International Academy’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular AͲ 133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Hanley International Academy’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies and therefore , material weaknesses or significant deficiencies may exist that were not identified. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. However, we identified certain deficiencies in internal control over compliance as described in the accompanying schedule of findings and questioned costs as item 2015Ͳ001 that we consider to be significant deficiencies. Hanley International Academy’s response to the internal control over compliance finding identified in our audit is described in the accompanying schedule of findings and questioned costs. Hanley International Academy’s response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly we express no opinion on the response. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular AͲ133. Accordingly, this report is not suitable for any other purpose. Croskey Lanni, PC October 30, 2015 Rochester, Michigan AͲ4
HANLEY INTERNATIONAL ACADEMY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2015 AccruedFederal Funds/Accrued Approved(Memo Only)(Deferred)AdjustmentsPayments(Deferred) CFDAAwardsPrior YearRevenue atandInͲkindRevenue at NumberAmountExpendituresJuly 1, 2014TransfersReceivedExpendituresJune 30, 2015
US Department of Agriculture Passed through Michigan Department of Education:
Child Nutrition Cluster School Breakfast Program10.553164,665 $ Ͳ $ 11,339 $ Ͳ $ 164,665 $ 161,481 $ 8,155 $ National School Lunch Program10.555318,326 Ͳ 18,157 Ͳ 318,326 314,873 14,704 Entitlement 2014Ͳ1510.55525,401 Ͳ Ͳ Ͳ 25,401 25,401 Ͳ
Total US Department of Agriculture, Passed through Michigan Department of Education508,392 Ͳ 29,496 Ͳ 508,392 501,755 22,859
US Department of Education Passed through Wayne County RESA
I.D.E.A. Cluster 13Ͳ14 Flowthrough84.027105,752 101,916 101,916 Ͳ 101,916 Ͳ Ͳ 14Ͳ15 Flowthrough 111,774 Ͳ Ͳ Ͳ Ͳ 103,928 103,928
Total US Department of Education Passed through Wayne County RESA 217,526 101,916 101,916 Ͳ 101,916 103,928 103,928 US Department of Education Passed through Young Men's Christian Association
21ST Century Grant 84.287 102110 F9074124,576 100,317 39,719 Ͳ 39,719 Ͳ Ͳ
Program Title/Project Number Subrecipient Name

See accompanying notes to schedule of expenditures of federal awards
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HANLEY INTERNATIONAL ACADEMY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Ͳ Continued FOR THE YEAR ENDED JUNE 30, 2015 AccruedFederal Funds/Accrued Approved(Memo Only)(Deferred)AdjustmentsPayments(Deferred) CFDAAwardsPrior YearRevenue atandInͲkindRevenue at NumberAmountExpendituresJuly 1, 2014TransfersReceivedExpendituresJune 30, 2015
US Department of Education Passed through Michigan Association of Public School Academies (MAPSA) T.E.A.M.S Grant84.374A 13Ͳ14 Allocation65,183 28,957 28,957 Ͳ 28,957 Ͳ Ͳ 14Ͳ15 Allocation30,190 Ͳ Ͳ Ͳ 30,190 30,190 Ͳ Total US Department of Education Passed through MAPSA95,373 28,957 28,957 Ͳ 59,147 30,190 Ͳ US Department of Education Passed through the Michigan Department of Education Title I84.010 141530 1314446,083 365,534 365,534 Ͳ 365,534 Ͳ Ͳ 151530 1415466,557 Ͳ Ͳ Ͳ Ͳ 397,176 397,176
Title III 84.365 140580 131436,114 36,114 36,114 Ͳ 36,114 Ͳ Ͳ 150580 141525,948 Ͳ Ͳ Ͳ Ͳ 25,948 25,948
Title II A 84.367 140520 131428,712 8,144 8,144 8,144 Ͳ 150520 141540,284 Ͳ Ͳ Ͳ Ͳ 36,767 36,767 Total US Department of Education Passed through from Michigan Department of Education1,043,698 409,792 409,792 Ͳ 409,792 459,891 459,891
Total federal awards1,989,565 $ 640,982 $ 609,880 $ Ͳ $ 1,118,966 $ 1,095,764 $ 586,678 $
Program Title/Project Number Subrecipient Name


See accompanying notes to schedule of expenditures of federal awards
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HANLEY INTERNATIONAL ACADEMY RECONCILIATION OF BASIC FINANCIAL STATEMENTS FEDERAL RECEIVABLES AND REVENUE WITH SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2015 Revenues to Expenditures Revenue from federal sources Ͳ As reported on financial statements (includes all funds):
General Fund 594,009 $ Special Revenue Fund 501,755
Federal expenditures per the schedule of expenditures of federal awards 1,095,764 $

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HANLEY INTERNATIONAL ACADEMY NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2015 NOTE 1 Ͳ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the federal grant activity of Hanley International Academy under programs of the federal government for the year ended June 30, 2015. Expenditures reported on the Schedule are reported on the same basis of accounting as the basic financial statements, although the basis for determining when federal awards are expended is presented in accordance with requirements of OMB Circular AͲ133, Audits of States, Local Governments, and NonͲProfit Organizations. In addition, expenditures reported on the Schedule are recognized following the cost principles contained in OMB Circular AͲ87, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Therefore, some amounts presented in this Schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements. Because the Schedule presents only a selected portion of the operations of Hanley International Academy, it is not intended to and does not present the financial position, changes in net assets, or cash flows, if applicable, of Hanley International Academy. PassͲthrough entity identifying numbers are presented where available. NOTE 2 Ͳ NONCASH ASSISTANCE The value of the noncash assistance received was determined in accordance with the provisions of OMB Circular AͲ133. NOTE 3 Ͳ GRANT AUDITOR'S REPORT Management has utilized the Grant Auditor's report in preparing the schedule of expenditures of federal awards. UnͲ reconciled differences, if any, have been disclosed to the auditor. AͲ8
HANLEY INTERNATIONAL ACADEMY SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2015 SECTION I Ͳ SUMMARY OF THE AUDITOR’S RESULTS Financial Statements Type of auditor’s report issued: Unmodified Internal control over financial reporting: x Material weakness(es) identified? ___yes _X_no x Significant deficiency(ies) identified that are not considered to be a material weakness(es)? ___yes _X_no Noncompliance material to financial statements noted? ___yes _X_no Federal Awards Internal control over major programs: x Material weakness(es) identified? ___yes _X_no x Significant deficiency(ies) identified that are not considered to be a material weakness(es)? _X_yes ___no Type of auditor’s report issued on compliance for major programs: Unmodified Any audit findings disclosed that are required to be reported in accordance with Section 510(a) of Circular AͲ133? ___yes _X_no Identification of major programs: CFDA Number(s) Name of Federal Program or Cluster #10.553 and #10.555 Child Nutrition Cluster Dollar threshold used to distinguish between Type A and Type B programs: $ 300,000 Auditee qualified as lowͲrisk auditee? _X_yes ___no SECTION II – FINANCIAL STATEMENT FINDINGS None SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS See finding 2015Ͳ001 AͲ9
HANLEY INTERNATIONAL ACADEMY SCHEDULE OF FINDINGS AND QUESTIONED COSTS Ͳ Continued FOR THE YEAR ENDED JUNE 30, 2015
SECTION III Reference Number Findings ___________________________ _____________________________________________________________________________________________________________________________________________________________________________________ 2015Ͳ001 Program Name – Child Nutrition Cluster CFDA Ͳ #10.553 and #10.555 PassͲThrough Entity – Michigan Department of Education (MDE) Finding Type – Significant Deficiency Criteria – In accordance with OMB Circular AͲ133, the Academy must abide by the contract terms that were approved by its administering agency (MDE). Condition – The Academy was overcharged for meals by its food service vendor. These amounts were not consistent with the approved and agreed upon contract. The Academy’s invoice approval process did not timely identify and rectify the discrepancy. Questioned Costs – None Cause / Effect – The Academy did not properly compare invoiced prices for breakfasts and afterschool snacks to the prices agreed to in its approved food service contract. The Academy was overcharged $0.13 per breakfast and $0.05 per afterschool snack. The total amount overcharged was $11,563.14. Recommendation – The Academy should implement additional internal controls and procedures to ensure that the money is expended according to contract requirements. Auditee Response – The Academy agrees with the finding and has requested a refund for the charges that were in excess of contract. The Academy has also implemented additional procedures in the form of a multiͲlevel review process that includes comparing amounts charged to the most current contract.