2017-03-27T20:39:04-05:00 2016-06-30 111986323 MARCUM LLP 101 MONTGOMERY STREET 1900 SAN FRANCISCO CA 94104 990 2015-07-01 942356968 MOUNT TAMALPAIS SCHOOL MTTA 4153839434 100 HARVARD AVENUE MILL VALLEY CA 94941 ANDREW DAVIS HEAD OF SCHOOL 4153839434 2017-03-20 1 JULIET SONG P00857784 4154326200 2015 2021-01-29 14:40:06Z ANDREW DAVIS 100 HARVARD AVENUE MILL VALLEY CA 94941 9444367 0 X WWW.MTTAM.ORG X 1976 CA ELEMENTARY SCHOOL EDUCATION WITH AN EMPHASIS ON ACADEMIC AND SOCIAL DEVELOPMENT. 16 14 51 240 0 0 964224 813841 7772961 7566610 98475 122636 -71509 -68757 8764151 8434330 1078175 1005505 0 0 5070208 5126575 0 0 266695 2598087 3093589 8746470 9225669 17681 -791339 16415250 16654475 5664299 6677355 10750951 9977120 SEE SCHEDULE O. 0 0 6943258 1005505 7574635 PROGRAM EXPENSES ARE RELATED TO THE OPERATION OF A PRIVATE, CO-EDUCATIONAL SCHOOL FOR APPROXIMATELY 240 STUDENTS IN KINDERGARTEN TO 8TH GRADE. THE SCHOOL FOCUSES ON AN ENVIRONMENT THAT ENCOURAGES THE DEVELOPMENT OF THE WHOLE CHILD. 6943258 1 1 0 0 0 0 0 0 0 1 1 0 0 0 1 1 1 0 1 0 0 0 0 0 1 0 0 0 1 1 0 1 1 0 1 0 1 1 0 0 0 0 0 0 0 0 0 1 42 0 1 51 1 0 0 0 0 0 1 1 0 0 0 0 X 16 14 1 0 0 1 0 0 0 1 1 0 0 1 1 1 1 1 1 1 0 0 CA X MR JOHN KEITH-BERKLEY 4153839434 100 HARVARD AVENUE MILL VALLEY CA 94941 DR KATHLEEN MECCA PHD HEAD OF SCHOOL (TO 9/1/15) 40.00 X X 212000 0 62608 LAURA HILL SECRETARY 5.00 X X 0 0 0 MARK LOPEZ TRUSTEE 5.00 X 0 0 0 DAVID DOMINIK TRUSTEE 2.00 X 0 0 0 JOHN BELL TRUSTEE 2.00 X 0 0 0 FIONA REES TRUSTEE 2.00 X 0 0 0 PHILIP LEUNG TRUSTEE 2.00 X 0 0 0 RACHEL MARKUN PRESIDENT, BOARD OF TRUSTEES 10.00 X X 0 0 0 DR ANDREW MECCA PHD INTERIM HEAD (8/24/15-6/30/16) 40.00 X X 75000 0 6456 DAVID MOYNE TRUSTEE 2.00 X 0 0 0 DAN MURRAY TRUSTEE 2.00 X 0 0 0 ELIZABETH MURRAY TRUSTEE 2.00 X 0 0 0 BOB PAYNE TREASURER 2.00 X X 0 0 0 MICHELLE SARTI TRUSTEE 2.00 X 0 0 0 COOKSIE GIANNINI TRUSTEE 2.00 X 0 0 0 KRISTIN SENNETT TRUSTEE 2.00 X 0 0 0 MAUREEN DENICKE TRUSTEE 2.00 X 0 0 0 ANDREW DAVIS HEAD OF SCHOOL (FROM 7/1/16) 40.00 X 0 0 0 ERIC KIELICH TEACHER 40.00 X 121567 0 26082 ROSIE NICOLINI OFFICE MANAGER 40.00 X 117567 0 40090 NANCY TRACY TEACHER 40.00 X 109475 0 38258 SUZANNE O'MEARA TEACHER 40.00 X 111333 0 25250 DAVID BAKER TEACHER 40.00 X 136399 0 40648 DOUG THISTLE TEACHER 40.00 X 102498 0 29737 985839 0 269129 7 0 1 0 FIRST STUDENT 600 VINE ST STE 1400 CINCINNATI OH 45202 TRANSPORTATION 275616 FOLGER LEVIN 199 FREMONT ST SAN FRANCISCO CA 94105 LEGAL 211968 2 326961 486880 813841 TUITION AND FEES 611110 7566610 7566610 7566610 170604 170604 98925 175707 -76782 -76782 -76782 585633 633601 -47968 -47968 -47968 200729 326961 200729 0 MISCELLANEOUS INCOME 611110 8025 8025 8025 8434330 7574635 0 45854 1005505 1005505 254000 254000 3622828 3053984 413386 155458 150224 133035 14709 2480 795908 612269 148150 35489 303615 239188 52282 12145 348462 348462 246507 246507 64992 6095 58897 9175 9175 248640 81081 140031 27528 43918 34597 7560 1761 297176 243655 46686 6835 466341 466341 267197 210486 45997 10714 65501 51598 11276 2627 HOT LUNCH 279294 279294 CURRICULUM DEVELOPMENT 114720 114720 BAD DEBT EXPENSE 106238 106238 DRAMA PRODUCTION 71190 71190 464238 340220 112360 11658 9225669 6943258 2015716 266695 3024338 1110537 1913955 33528 27444 57044 128983 14119271 5585072 8555318 8534199 4745022 4939357 16415250 16654475 670981 903319 3871473 4696281 1115839 1072480 6006 5275 5664299 6677355 X 5807436 4825726 1891290 2091619 3052225 3059775 10750951 9977120 16415250 16654475 -791339 17508 0 X X 0 1 X 1 0 X RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED 4662614 60588 144491 4867693 5585429 10695 198315 1131825 4662614 4918751 19700 646978 5585429 4470251 39965 408535 4918751 4227335 100463 142453 4470251 0.63000 0.37000 0 0 2777348 2777348 8482818 3888215 4594603 1021106 886399 134707 1837999 810458 1027541 8534199 RENT DEPOSITS 5275 5275 X 7647062 17508 200729 218237 7428825 1005505 1005505 8434330 8420893 200729 200729 8220164 1005505 1005505 9225669 PART V, LINE 4: THE SCHOOL'S ENDOWMENT CONSISTS OF A NUMBER OF INDIVIDUAL FUNDS ESTABLISHED FOR VARIOUS PURPOSES. THE ENDOWMENT MAY INCLUDE BOTH DONOR-RESTRICTED ENDOWMENT FUNDS AND FUNDS DESIGNATED BY THE BOARD OF TRUSTEES TO FUNCTION AS ENDOWMENTS. AS REQUIRED BY U.S. GAAP, NET ASSETS ASSOCIATED WITH ENDOWMENT FUNDS, INCLUDING FUNDS DESIGNATED BY THE BOARD OF TRUSTEES TO FUNCTION AS ENDOWMENTS, ARE CLASSIFIED AND REPORTED BASED ON THE EXISTENCE OR ABSENCE OF DONOR-IMPOSED RESTRICTIONS. INTERPRETATION OF RELEVANT LAW THE BOARD OF TRUSTEES HAS INTERPRETED THE UNIFORM PRUDENT MANAGEMENT OF INSTITUTIONAL FUNDS ACT (UPMIFA) AS REQUIRING THE PRESERVATION OF THE FAIR VALUE OF THE ORIGINAL GIFT AS OF THE GIFT DATE OF THE DONOR-RESTRICTED ENDOWMENT FUNDS ABSENT EXPLICIT DONOR STIPULATIONS TO THE CONTRARY. AS A RESULT OF THIS INTERPRETATION, THE SCHOOL CLASSIFIES AS PERMANENTLY RESTRICTED NET ASSETS (A) THE ORIGINAL VALUE OF GIFTS DONATED TO THE PERMANENT ENDOWMENT, (B) THE ORIGINAL VALUE OF SUBSEQUENT GIFTS TO THE PERMANENT ENDOWMENT, AND (C) ACCUMULATIONS TO THE PERMANENT ENDOWMENT MADE IN ACCORDANCE WITH THE DIRECTION OF THE APPLICABLE DONOR GIFT INSTRUMENT AT THE TIME THE ACCUMULATION IS ADDED TO THE FUND. THE REMAINING PORTION OF THE DONOR-RESTRICTED ENDOWMENT FUND THAT IS NOT CLASSIFIED IN PERMANENTLY RESTRICTED NET ASSETS IS CLASSIFIED AS TEMPORARILY RESTRICTED NET ASSETS UNTIL THOSE AMOUNTS ARE APPROPRIATED FOR EXPENDITURE BY THE SCHOOL IN A MANNER CONSISTENT WITH THE STANDARD OF PRUDENCE PRESCRIBED BY UPMIFA. IN ACCORDANCE WITH UPMIFA, THE SCHOOL CONSIDERS THE FOLLOWING FACTORS IN MAKING A DETERMINATION TO APPROPRIATE OR ACCUMULATE DONOR-RESTRICTED ENDOWMENT FUNDS: (1) THE DURATION AND PRESERVATION OF THE FUND (2) THE PURPOSE OF THE SCHOOL AND THE DONOR-RESTRICTED ENDOWMENT FUND (3) GENERAL ECONOMIC CONDITIONS (4) THE POSSIBLE EFFECT OF INFLATION AND DEFLATION (5) THE EXPECTED TOTAL RETURN FROM INCOME AND THE APPRECIATION OF INVESTMENTS (6) OTHER RESOURCES OF THE SCHOOL (7) THE INVESTMENT POLICIES OF THE SCHOOL FROM TIME TO TIME, THE FAIR VALUE OF ASSETS ASSOCIATED WITH INDIVIDUAL DONOR-RESTRICTED ENDOWMENT FUNDS MAY FALL BELOW THE LEVEL THAT THE DONOR OR UPMIFA REQUIRES THE SCHOOL TO RETAIN AS A FUND OF PERPETUAL DURATION. IN ACCORDANCE WITH U.S GAAP, DEFICIENCIES OF THIS NATURE ARE TO BE REPORTED IN UNRESTRICTED NET ASSETS. THESE DEFICIENCIES CAN RESULT FROM UNFAVORABLE MARKET FLUCTUATIONS THAT OCCURRED SHORTLY AFTER THE INVESTMENT OF NEW PERMANENTLY RESTRICTED CONTRIBUTIONS AND CONTINUED APPROPRIATION FOR CERTAIN PROGRAMS THAT WAS DEEMED PRUDENT BY THE BOARD OF TRUSTEES. AS OF JUNE 30, 2016, THERE WERE NO SIGNIFICANT INVESTMENT DEFICIENCIES; AND THEREFORE, NO AMOUNTS WERE REFLECTED IN UNRESTRICTED NET ASSETS. SPENDING POLICY AND HOW THE INVESTMENT OBJECTIVES RELATE TO THE SPENDING POLICY THE SCHOOL HAS ADOPTED INVESTMENT AND SPENDING POLICIES FOR ENDOWMENT ASSETS THAT ATTEMPT TO PROVIDE A PREDICTABLE STREAM OF FUNDING TO PROGRAMS SUPPORTED BY ITS ENDOWMENT WHILE SEEKING TO MAINTAIN THE PURCHASING POWER OF THE ENDOWMENT ASSETS. ENDOWMENT ASSETS INCLUDE THOSE ASSETS OF DONOR-RESTRICTED FUNDS THAT THE SCHOOL MUST HOLD IN PERPETUITY OR FOR DONOR-SPECIFIED PERIODS. THE SCHOOL'S CURRENT INVESTMENT POLICY CALLS FOR TARGET ASSET ALLOCATION OF 60% EQUITIES AND 40% BONDS. THE PERFORMANCE OF THESE INVESTMENTS IS MEASURED AGAINST ESTABLISHED EQUITY AND FIXED INCOME INDICES TO PROVIDE FOR THE A) PRESERVATION OF CAPITAL, B) CURRENT INCOME, AND C) LONG-TERM GROWTH OF CAPITAL AND INCOME. TO SATISFY ITS LONG-TERM RATE-OF-RETURN OBJECTIVES, THE SCHOOL RELIES ON A TOTAL RETURN STRATEGY IN WHICH INVESTMENT RETURNS ARE ACHIEVED THROUGH BOTH CAPITAL APPRECIATION (REALIZED AND UNREALIZED) AND CURRENT YIELD (INTEREST AND DIVIDENDS). THE SCHOOL TARGETS A DIVERSIFIED ASSET ALLOCATION INTENDED TO ACHIEVE ITS LONG-TERM RETURN OBJECTIVES WITHIN PRUDENT RISK CONSTRAINTS. THE SCHOOL POLICY ALLOWS FOR THE ANNUAL DISTRIBUTION OF UP TO 5% OF THE LAST THREE YEARS' MARKET AVERAGE VALUATIONS; HOWEVER, THE SCHOOL IS CURRENTLY NOT MAKING DISTRIBUTIONS AS IT SEEKS TO INCREASE THE BALANCE OF ITS ENDOWMENTS TO $5 MILLION. IN ESTABLISHING THIS POLICY, THE SCHOOL CONSIDERED THE LONG-TERM EXPECTED RETURN ON ITS ENDOWMENT. ACCORDINGLY, OVER THE LONG TERM, THE SCHOOL EXPECTS THE CURRENT SPENDING POLICY TO ALLOW ITS ENDOWMENT TO GROW AT AN AVERAGE REAL RATE OF RETURN (ADJUSTED FOR INFLATION) OF GREATER THAN 5% ANNUALLY. THIS IS CONSISTENT WITH THE SCHOOL'S OBJECTIVE TO MAINTAIN THE PURCHASING POWER OF THE ENDOWMENT ASSETS HELD IN PERPETUITY OR FOR A SPECIFIED TERM AS WELL AS TO PROVIDE ADDITIONAL REAL GROWTH THROUGH NEW GIFTS AND INVESTMENT RETURN. ACTUAL RETURNS IN ANY GIVEN YEAR MAY VARY FROM THE SCHOOL'S LONG-TERM GOALS. PART X, LINE 2: THE SCHOOL IS A QUALIFIED ORGANIZATION EXEMPT FROM FEDERAL INCOME TAXES UNDER SECTION 501(C)(3) OF THE INTERNAL REVENUE CODE (IRC) AND FRANCHISE TAXES UNDER SECTION 23701D OF THE CALIFORNIA REVENUE AND TAXATION CODE, RESPECTIVELY. ACCORDINGLY, IT IS EXEMPT FROM FEDERAL AND CALIFORNIA INCOME TAXES AND IS NOT LIABLE FOR FEDERAL UNEMPLOYMENT TAXES. MANAGEMENT EVALUATED THE SCHOOL'S TAX POSITIONS AND CONCLUDED THAT THEY MAINTAINED THEIR TAX EXEMPT STATUS AND HAD TAKEN NO UNCERTAIN TAX POSITIONS THAT WOULD REQUIRE ADJUSTMENT TO THE FINANCIAL STATEMENTS. THEREFORE, NO PROVISION OR LIABILITY FOR INCOME TAXES HAS BEEN INCLUDED IN THE FINANCIAL STATEMENTS. THE SCHOOL IS SUBJECT TO ROUTINE AUDITS BY TAXING JURISDICTIONS; HOWEVER, THERE ARE NO AUDITS IN PROCESS. PART XI, LINE 2D - OTHER ADJUSTMENTS: AUCTION EXPENSE NETTED AGAINST GROSS INCOME FROM FUNDRAISING EVENTS 200,729. PART XI, LINE 4B - OTHER ADJUSTMENTS: FINANCIAL AID NETTED AGAINST TUITION 1,005,505. PART XII, LINE 2D - OTHER ADJUSTMENTS: AUCTION EXPENSE NETTED AGAINST GROSS INCOME FROM FUNDRAISING EVENTS 200,729. PART XII, LINE 4B - OTHER ADJUSTMENTS: FINANCIAL AID NETTED AGAINST REVENUE 1,005,505. 1 1 1 0 1 1 1 0 0 0 0 0 0 0 0 0 0 1 SCHEDULE E, PART I, LINE 3 THE RACIAL NON-DISCRIMINATORY POLICY WAS PUBLISHED IN THE SAN FRANCISCO CHRONICLE ON JUNE 6, 2016. SCHEDULE E, PART I, LINE 4 THE SCHOOL DOES NOT KEEP SUCH RECORDS FOR THE STUDENT BODY BUT DOES FOR THE FACULTY AND ADMINISTRATIVE STAFF. AUCTION 527690 326961 200729 7532 79032 39945 74220 527690 326961 200729 7532 79032 39945 74220 200729 0 1 TUITION ASSISTANCE 54 1005505 TUITION ASSISTANCE PART I, LINE 2: ALL AWARDS ARE NEED BASED. ALL APPLICANTS FOR FINANCIAL ASSISTANCE MUST APPLY THROUGH SSS (SCHOOL SCHOLARSHIP SERVICE) IN PRINCETON, NEW JERSEY, AN "OUT OF HOUSE" CLEARING ORGANIZATION THAT IS COORDINATED THROUGH NAIS (NATIONAL ASSOCIATION OF INDEPENDENT SCHOOLS). X 0 0 X X 0 0 0 0 0 0 0 0 0 DR KATHLEEN MECCA PHD HEAD OF SCHOOL (TO 9/1/15) 212000 0 0 0 0 0 0 0 62608 0 274608 0 0 0 ROSIE NICOLINI OFFICE MANAGER 117567 0 0 0 0 0 0 0 40090 0 157657 0 0 0 DAVID BAKER TEACHER 136399 0 0 0 0 0 0 0 40648 0 177047 0 0 0 PART I, LINE 1A THE HEAD OF SCHOOL, KATHLEEN MECCA, RECEIVED A HOUSING ALLOWANCE OF $2,500 FOR EACH OF JULY AND AUGUST AND $2,000 IN SEPTEMBER 2015. PART I, LINE 1B THE SCHOOL DOES NOT HAVE A WRITTEN POLICY REGARDING THE PAYMENT OF HOUSING ALLOWANCE. KATHLEEN MECCA FORMER HEAD OF SCHOOL DIVERSION OF ASSETS AS DESCRIBED IN SCHEDULE O. 0 KATHLEEN MECCA FORMER HEAD OF SCHOOL 26950 NONCASH FINANCIAL AID TO FAMILY MEMEBER TUITION ASSISTANCE ELIZABETH MURRAY TRUSTEE 27950 NONCASH FINANCIAL AID TO FAMILY MEMEBER TUITION ASSISTANCE MAUREEN DENICKE TRUSTEE 24000 NONCASH FINANCIAL AID TO FAMILY MEMEBER TUITION ASSISTANCE JANE SEDONEAN MS. SEDONEAN IS THE SISTER-IN-LAW OF KATHLEEN MECCA, THE FORMER HOS 15630 MS. SEDONEAN PROVIDED LANDSCAPE DESIGN CONSULTING. 0 FORM 990, PART III, LINE 1, DESCRIPTION OF ORGANIZATION'S MISSION: MOUNT TAMALPAIS SCHOOL (THE SCHOOL) IS AN INDEPENDENT, COEDUCATIONAL SCHOOL SERVING STUDENTS IN KINDERGARTEN THROUGH GRADE 8. THE SCHOOL'S PROGRAM, ATMOSPHERE AND OVERALL ENVIRONMENT HAVE BEEN DESIGNED TO ENCOURAGE THE DEVELOPMENT OF THE WHOLE CHILD, WITH AN EMPHASIS ON STRONG ACADEMIC PREPARATION, VALUES, EMOTIONAL GROWTH, PERSONAL AND SOCIAL SKILLS, EFFECTIVE THINKING AND PROBLEM SOLVING CAPABILITIES, WITH ATTENTION TO INDIVIDUAL STRENGTHS AND DIVERSITY. THE SCHOOL PLACES EQUAL EMPHASIS ON THE ACADEMIC AND SOCIAL DEVELOPMENT OF EACH STUDENT WITHIN A COMMUNITY THAT ESTEEMS FAMILY, THE PURSUIT OF PERSONAL EXCELLENCE, THE PERPETUATION OF VALUED TRADITIONS AND THE DEVELOPMENT OF A STRONG MORAL CODE. THE SYMBOLISM OF THE SCHOOL'S LOGO AND TRANSLATION OF THE SCHOOL'S MOTTO CLEARLY ILLUSTRATE THE SCHOOL'S PHILOSOPHY. THE LOGO IS A DEPICTION OF MOUNT TAMALPAIS. THIS MOUNTAIN SYMBOL REFLECTS THE SCHOOL'S COMMITMENT TO THE DEVELOPMENT OF EACH STUDENT'S POTENTIAL, ENSURING ITS REALIZATION WITH A SOLID ACADEMIC AND MORAL FOUNDATION AND THE SUPPORT OF THE COMMUNITY THAT VALUES PERSONAL ACHIEVEMENT AND INDIVIDUAL GROWTH. THE MOTTO "GRADATIM AD SUMMUM" (STEP BY STEP TO THE TOP/GRADUALLY TO THE SUMMIT) REFLECTS THE SCHOOL'S BELIEF THAT THE ATTAINMENT OF GOALS IS A GRADUAL PROCESS, ONE THAT REQUIRES NURTURING AND COMMUNITY SUPPORT. THE SCHOOL PROVIDES ITS STUDENTS WITH THE OPPORTUNITY FOR GROWTH IN A CARING, SUPPORTIVE ENVIRONMENT. THE SCHOOL FOSTERS ENTHUSIASM FOR LEARNING AND FOR THE CREATIVE PROCESS, AND CAREFULLY NURTURES IN EACH STUDENT THE DEVELOPMENT OF A SYSTEM OF INDIVIDUAL VALUES. IT IS THE SCHOOL'S MISSION THAT INTEGRITY, RESPONSIBILITY, MOTIVATION, MUTUAL RESPECT, SELF-RELIANCE, AND AN APPRECIATION OF TRADITION FLOURISH IN EACH INDIVIDUAL. FORM 990, PART VI, SECTION A, LINE 2 DR. KATHLEEN MECCA AND DR. ANDREW MECCA WERE MARRIED. BEFORE DR. ANDRW MECCA BECAME THE INTERIM HEAD OF SCHOOL, HE WAS A TRUSTEE. FORM 990, PART VI, SECTION A, LINE 2 BOARD MEMBERS DAN MURRAY AND ELIZABETH MURRAY ARE SIBLINGS. FORM 990, PART VI, SECTION A, LINE 5 IN SEPTEMBER OF 2015, THE BOARD OF TRUSTEES DISCOVERED THAT A FORMER EMPLOYEE HAD ESTABLISHED A SEPARATE BANK ACCOUNT IN THE NAME OF THE SCHOOL, AND THAT SUCH ACCOUNT WAS USED TO DIVERT SCHOOL FUNDS. THE BOARD RETAINED LEGAL COUNSEL WHO, IN TURN, ENGAGED A FORENSIC ACCOUNTANT TO CONDUCT A COMPREHENSIVE INVESTIGATION INTO THE NATURE OF THE BANK ACCOUNT, THE ACTIONS OF THE FORMER EMPLOYEE, AND THE SCHOOL'S OVERALL FINANCES. THE FORENSIC ACCOUNTANT DETERMINED THAT, BETWEEN 2008 AND 2015, THE FORMER EMPLOYEE HAD DEPOSITED $630,774 OF SCHOOL FUNDS INTO THE SEPARATE ACCOUNT. DURING THE SAME PERIOD, THE FORMER EMPLOYEE AUTHORIZED, ISSUED, OR CAUSED $651,223 IN PAYMENTS TO BE MADE FROM THAT ACCOUNT. THE PAYMENTS OUT OF THE ACCOUNT WERE PRIMARILY MADE TO THE FORMER EMPLOYEE'S PERSONAL BANK AND CREDIT CARD ACCOUNTS. THE FORENSIC ACCOUNTANT DETERMINED THAT $60,608 OF SCHOOL FUNDS WERE DIVERTED DURING THE FISCAL YEAR ENDED JUNE 30, 2015. BECAUSE THESE ASSETS WERE NEVER RECORDED ON THE SCHOOL'S GENERAL LEDGER, THE LOSSES ARE NOT RECORDED ON THE SUMMARIZED FINANCIAL STATEMENTS. THE ACCOUNT WAS CLOSED BY THE FORMER EMPLOYEE BEFORE THE BOARD BECAME AWARE OF ITS EXISTENCE. IN ADDITION TO THE AMOUNTS DEPOSITED INTO AND PAID OUT OF THE UNAUTHORIZED ACCOUNT DESCRIBED ABOVE, THE FORENSIC ACCOUNTANT DETERMINED THAT, DURING THE PERIOD FROM 2008 TO 2015, THE FORMER EMPLOYEE CAUSED THE SCHOOL TO PAY $408,903 IN PERSONAL AND SCHOOL CREDIT CARD CHARGES WITHOUT DOCUMENTATION TO SUBSTANTIATE THE BUSINESS PURPOSES THEREOF. THE FORENSIC ACCOUNTANT DETERMINED THAT $99,810 OF THAT AMOUNT WAS PAID DURING THE FISCAL YEAR ENDED JUNE 30, 2015. THIS $99,810 AMOUNT HAS BEEN INCLUDED IN DIVERSION OF ASSETS IN THE SUMMARIZED STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS FOR THE YEAR ENDED JUNE 30, 2015. THE BOARD OF TRUSTEES HAS CAREFULLY CONSIDERED VARIOUS OPTIONS OF HOW THE SCHOOL CAN BEST REPAIR THE DAMAGE CAUSED BY THE FORMER EMPLOYEE AND RECOUP AS MUCH OF THE DIVERTED FUNDS AS IS FEASIBLE, INCLUDING SUBMITTING NOTIFICATION TO THE SCHOOL'S INSURANCE CARRIER OF THE DIVERSIONS DESCRIBED ABOVE. AFTER AN EXTENSIVE PERIOD OF NEGOTIATIONS, THE SCHOOL HAS ENTERED INTO A SETTLEMENT AGREEMENT WITH THE FORMER EMPLOYEE PURSUANT TO WHICH THE FORMER EMPLOYEE HAS AGREED TO PROVIDE FOR RESTITUTION OF A SIGNIFICANT PORTION OF THE DIVERTED FUNDS. IN AUGUST 2016, THE SCHOOL RECOVERED $548,460 FROM THE FORMER EMPLOYEE ACCORDING TO THE SETTLEMENT AGREEMENT. IT WAS ALSO DISCOVERED THAT THE FORMER EMPLOYEE'S EMPLOYER MATCHING CONTRIBUTION TO HER RETIREMENT ACCOUNT WAS MORE THAN WHAT IS AUTHORIZED AND STATED IN THE PLAN DOCUMENT. BECAUSE THE FORMER EMPLOYEE IS A DISQUALIFIED PERSON, THE OVERFUNDING IS A PROHIBITED TRANSACTION. SUCH DISCRIMINATORY TRANSACTIONS COULD SUBJECT THE SCHOOL TO EXCISE TAXES AND PENALTIES WHICH CANNOT BE DETERMINED AT THIS TIME. THE EXCESS EMPLOYER CONTRIBUTION FOR THE PLAN YEARS ENDED AUGUST 31, 2008 THROUGH 2015 WAS $88,589 AND CALCULATED EARNINGS ON THE EXCESS EMPLOYER MATCHING CONTRIBUTIONS WAS $14,615. IN AUGUST 2016, THE TOTAL AMOUNT OF $103,204 WAS TRANSFERRED OUT OF THE FORMER EMPLOYEE'S RETIREMENT ACCOUNT AND DEPOSITED INTO THE RETIREMENT PLAN'S FORFEITURE ACCOUNT. THE SCHOOL HAS ENGAGED AND INVOLVED OUTSIDE LEGAL, ACCOUNTING, AND OTHER PROFESSIONAL ADVISORS IN ATTEMPTING TO UNDO THE DIVERSION OF THE FUNDS TO THE EXTENT POSSIBLE. AT NO TIME WERE ANY TRUSTEES (OTHER THAN THE FORMER EMPLOYEE WHO CAUSED THE DIVERSION OF FUNDS), OFFICERS, OR OTHER PERSONS EXERCISING SUBSTANTIAL INFLUENCE OVER THE AFFAIRS OF THE SCHOOL AWARE THAT THESE DIVERSIONS OF FUNDS WERE TAKING PLACE, AND AT NO TIME DID THE FORMER EMPLOYEE HAVE ANY AUTHORITY OR APPROVAL TO ENGAGE IN SUCH ACTIONS. THE SCHOOL HAS RETAINED THE SERVICES OF AN EXPERIENCED BUSINESS MANAGER TO IMPLEMENT FINANCIAL CONTROLS AND PRACTICES TO PROTECT THE ASSETS OF THE SCHOOL AND TO BEST ENSURE THAT NO SIMILAR DIVERSIONS OF FUNDS OCCUR IN THE FUTURE. THE SCHOOL HAS ALSO HIRED ADDITIONAL PERSONNEL TO IMPLEMENT AND ENFORCE RECOMMENDED CONTROLS AND SAFETY PRECAUTIONS SUGGESTED BY THE BUSINESS MANAGER AND CERTIFIED PUBLIC ACCOUNTANTS ENGAGED BY THE SCHOOL. SPECIFICALLY, THE BOARD OF TRUSTEES HAS ADOPTED AND IMPLEMENTED ACTIONS AND POLICIES THAT WILL REQUIRE THE FOLLOWING IMPROVEMENTS TO THE OVERSIGHT OF SCHOOL FUNDS AND THE MANNER IN WHICH SUCH FUNDS ARE HANDLED AND MONITORED: 1) THE COMPLETION OF ANNUAL AUDITS RATHER THAN REVIEWS OF THE SCHOOL'S FINANCIAL STATEMENTS BY AN INDEPENDENT ACCOUNTING FIRM FOR THE IMMEDIATE FUTURE; 2) THE DEVELOPMENT OF A REVISED GENERAL LEDGER CHART OF ACCOUNTS FOR MONITORING REVENUES AND EXPENSES; 3) IN SEPTEMBER OF 2015, A POLICY WAS IMPLEMENTED WHERE ANY CHECK ISSUED BY THE SCHOOL EXCEEDING $5,000.00 REQUIRES DUAL SIGNATURES; 4) THE SCHOOL HAS COMMENCED NEW PROCEDURES FOR HANDLING ALL RECEIPTS OF CASH, CREDIT CARDS, AND CHECKS TO ENSURE PROPER CONTROLS; 5) BEGINNING WITH THE 2016-2017 ENROLLMENT YEAR, THE SCHOOL IS USING THE QUICKBOOKS SYSTEM TO BILL AND SEPARATELY RECORD ALL TUITION, FINANCIAL ASSISTANCE, TUITION REMISSION, AND AUXILIARY CHARGES BY STUDENT; 6) THE SCHOOL HAS RETAINED AN EXPERIENCED BUSINESS MANAGER ON A PART-TIME BASIS TO ADDRESS FINANCIAL MATTERS FOR THE SCHOOL. THE SCHOOL HAS UTILIZED SEVERAL CONTRACTORS UNDER THE SUPERVISION OF THIS BUSINESS MANAGER AND HAS HIRED AN INCOMING HEAD OF SCHOOL WHO HOLDS A MASTER'S DEGREE IN BUSINESS ADMINISTRATION IN ADDITION TO EDUCATIONAL CREDENTIALS AND WILL OVERSEE THE SCHOOL'S FINANCES. THE INCOMING HEAD OF SCHOOL CONTRACTED AN EXPERIENCED DIRECTOR OF FINANCE. FORM 990, PART VI, SECTION B, LINE 11 THE SCHOOL'S FORM 990 IS PREPARED BY AN OUTSIDE ACCOUNTING FIRM. THE FORM 990 IS THEN REVIEWED BY THE SCHOOL'S CPA AND HEAD OF SCHOOL BEFORE THE RETURN IN FINALIZED. MEMBERS OF THE BOARD OF TRUSTEES ARE PROVIDED A COPY OF THE RETURN BEFORE IT IS FINALIZED. FORM 990, PART VI, SECTION B, LINE 12C MOUNT TAMALPIAS HAS A WRITTEN CONFLICT OF INTEREST POLICY AND FORM THAT THEY HAVE ALL TRUSTEES AND HEAD OF SCHOOL SIGN. THESE WERE SIGNED IN AUGUST 2016. FORM 990, PART VI, SECTION B, LINE 15A THE BOARD OR SUBCOMMITTEE APPROVED THE HEAD OF SCHOOL'S COMPENSATION. FORM 990, PART VI, SECTION C, LINE 19 RECORDS ARE AVAILABLE TO THE PUBLIC UPON REQUEST. IN ADDITION, OPERATING INFORMATION IS PUBLISHED IN THE ANNUAL REPORT. FORM 990, PART XII, LINE 2C: THERE WAS NO CHANGE IN THE OVERVIEW OR SELECTION PROCESS.