A Philadelphia School District auditor testified Monday about long-standing financial issues at a Kensington charter school during a district hearing to determine whether the school should remain open.

Mayer Krain, a certified public accountant from the district's auditing office, said Community Academy of Philadelphia failed to maintain adequate financial reserves; ended some years with deficits; and had written off the debts of a related nonprofit that owns its building on Erie Avenue.

"When you talk about an overall view . . . I'm really concerned. I'm concerned with the financial management," Krain told hearing officer Rudolph Garcia.

"This is a charter school that's been in business since 1997, so we're talking about a school that's been in business for 15 years. It's not a start-up."

In January, the School Reform Commission took the first step toward closing Community Academy when it said its operating charter should not be renewed because of poor academic performance and financial problems.

Community Academy has 1,235 students in kindergarten through 12th grade.

The district hearing gives Community Academy a chance to challenge the district's findings and present its case.

Joseph Proietta, Community Academy's chief executive and founder, arrived at Monday's session at the district's headquarters with a large contingent of students and staff carrying colorful handmade posters.

Proietta and most students left to rally outside because the room was too small to accommodate them.

During his testimony, Krain discussed the audited financial statements Community Academy had submitted to the district annually since the 2007 fiscal year.

Apart from 2009-10, when the school got a boost from federal stimulus funds, and 2011-12, when it cut instructional costs by $1.1 million, Krain said Community Academy did not have a fund balance to ensure it would be able to pay its bills.

Under questioning by David P. Heim, Community Academy's attorney, Krain agreed the charter's finances had improved in the last fiscal year.

Also Monday, Doresah Ford-Bey, executive director of the district charter school office, said that although she was not involved with the recommendation in 2011, the charter office had made two recommendations for Community's Academy's renewal.

At a SRC meeting in February 2011, officials said staff had recommended renewing Community Academy's charter with specific academic targets.

Ford-Bey said that in addition to that recommendation that was made public, the staff had recommended denying renewal because of the school's academic and financial woes.

The charter revocation hearing, which began last Monday, is set to resume May 15. The hearing officer will make a report to the SRC, which will take a final vote.

Contact Martha Woodall at 215-854-2789 or martha.woodall@phillynews.com.