Fitch Ratings placed Chester Community Charter School's $56.115 million revenue bonds, issued by the Delaware County Industrial Development Authority Pa. and rated BB, on rating watch negative.

Fitch on Friday cited the announcement two days earlier by the Chester Upland School District that it would review the Aug. 30 audit by state Auditor General Eugene DePasquale. The charter school draws most of its 3,200 students from the distressed district, about 15 miles southwest of Philadelphia.

DePasquale's report outlined 11 findings of "significant noncompliance" by the state's largest charter school, and accused the charter school of improperly receiving $1.3 million in state money for lease reimbursements. Chester Charter officials called the accusation frivolous.

"The rating watch negative reflects uncertainty surrounding the potential actions by the charter authorizer regarding the audit. Fitch is in the process of evaluating the credit implications, if any, of the report on CCCS' operations," the rating company said in a statement.

The bonds are secured by pledged revenues of Chester Charter, backed by a mortgage on the property and facilities leased by the school and a debt service reserve cash-funded to transaction maximum annual debt service of $4.1 million due in 2013.

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