International School of Arizona

What caused the $608,325 prior-period adjustment?

What the records show

The FY2025 Form 990 reports a negative $608,325 adjustment to prior-period net assets. The reviewed Schedule O does not explain that adjustment. Net assets ended at $2,130,506, compared with $2,165,081 a year earlier, despite the current-year surplus.

What this does not establish

An accounting adjustment can correct timing or classification errors. It is not, by itself, evidence of fraud or missing money. Recent operating surpluses and reported investments weaken a distress interpretation. No school explanation has been requested.

Can we obtain an audit?

The FY2025 return reports no independent or consolidated audit and no compiled or reviewed financial statements. Schedule O says financial statements are available on request. We have not established that an audit is pending or legally required for this school. Arizona’s STO audit requirement applies to scholarship organizations, not automatically to every recipient school.

What needs to happen next

1. Request FY2025 financial statements, the prior-period adjusting entry and a written explanation of the affected years and accounts.
2. Ask whether a later audit exists or is planned, and whether a lender or other agreement requires one. A tax preparer’s involvement is not an audit.
3. Review supporting records and the school’s explanation before deciding whether this is a routine correction, a control problem or something more serious.