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University of Florida Foundation, Inc. Financial and Compliance Report June 30, PDF

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University of Florida Foundation, Inc. Financial and Compliance Report Contents Independent Auditor s Report on the Financial Statements 1 2 Financial Statements Statement of Financial Position 3 Statement
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University of Florida Foundation, Inc. Financial and Compliance Report Contents Independent Auditor s Report on the Financial Statements 1 2 Financial Statements Statement of Financial Position 3 Statement of Activities 4 Statement of Cash Flows 5 6 Notes to Financial Statements 7 32 Supplemental Schedules Schedule of Receipts, Expenditures and Endowment Balances for Major Gifts Program Schedule of Receipts, Expenditures and Endowment Balances for Eminent Scholar Program 55 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 Independent Auditor s Report on Compliance for Each Major State Financial Assistance Project and Report on Internal Control Over Compliance Required by State of Florida Chapter , Rules of the Auditor General Schedule of Expenditures of State Financial Assistance 60 Notes to Schedule of Expenditures of State Financial Assistance 61 Schedule of Findings and Questioned Costs 62 Independent Auditor s Report To the Board of Directors University of Florida Foundation, Inc. Gainesville, Florida Report on the Financial Statements We have audited the accompanying financial statements of the University of Florida Foundation, Inc. (the Foundation), (a component unit of the University of Florida), which comprise the statement of financial position as of, and the related statements of activities and cash flows for the year then ended, and the related notes to the financial statements. 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 organization s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. 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. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the University of Florida Foundation, Inc. as of, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. 1 Report on Summarized Comparative Information We have previously audited the University of Florida Foundation, Inc. s financial statements, and we expressed an unmodified audit opinion on those audited financial statements in our report dated September 18, In our opinion, the summarized comparative information presented herein as of and for the year ended, is consistent, in all material respects, with the audited financial statements from which it has been derived. Other Matters Supplementary Information Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying supplemental schedules as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the financial statements. The accompanying schedule of expenditures of state financial assistance, as required by the State of Florida Chapter , Rules of the Auditor General, is presented for purposes of additional analysis and is also not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated September 24, 2015, on our consideration of the University of Florida Foundation, Inc. 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 the University of Florida Foundation, Inc. s internal control over financial reporting and compliance. Orlando, Florida September 24, Statement of Financial Position (with summarized comparative information as of ) Assets Cash $ 5,121,455 $ 12,501,703 Other receivables 48,017,886 15,449,387 Pledges receivable, net 86,923,916 83,120,382 Investments 1,615,176,856 1,771,919,258 Real estate held for sale 7,544,249 8,255,259 Other assets 7,129,433 5,009,469 Present value of amounts due from externally managed trusts 2,632,102 2,687,029 Property and equipment, net 32,921,456 19,444,592 Land preserve 15,719,467 15,719,467 Permanent collections 39,382,489 37,743,374 Total assets $ 1,860,569,309 $ 1,971,849,920 Liabilities and Net Assets Liabilities Accounts payable, accrued expenses and other liabilities $ 5,326,138 $ 3,258,660 Notes payable 20,493,258 15,902,168 Annuity liabilities 6,664,448 6,653,927 Trust liabilities 14,476,087 14,057,040 Pension liability 10,349,689 6,261,932 Deferred revenue 821,000 1,237,410 Amounts held on behalf of University of Florida related entities 38,834,077 21,405,116 Total liabilities 96,964,697 68,776,253 Net assets Unrestricted 8,266,506 15,545,661 Temporarily restricted 527,164, ,283,755 Permanently restricted 1,228,173,395 1,196,244,251 Total net assets 1,763,604,612 1,903,073,667 Total liabilities and net assets $ 1,860,569,309 $ 1,971,849,920 See Notes to Financial Statements. 3 Statement of Activities Year Ended (with summarized comparative information for the year ended ) Temporarily Permanently Total Total Unrestricted Restricted Restricted Operating revenue and other additions Contributions $ 144,158 $ 60,633,694 $ 31,138,703 $ 91,916,555 $ 111,847,401 Support from the University of Florida 14,912, ,912,304 9,954,079 Investment return, net 18,932,770 52,093,407 (367,632) 70,658, ,348,335 Alumni program support 1,849,540 24, ,837 2,617,478 3,005,022 Other 1,504,363 6,907,092 1,227,289 9,638,744 8,577,316 Net assets released from restrictions 283,679,675 (283,679,675) Total operating revenue and other additions 321,022,810 (164,021,381) 32,742, ,743, ,732,153 Operating expenses and other expenditures Program services General college support 82,483, ,483,434 63,379,628 Student financial aid 45,098, ,098,447 9,330,290 Faculty and staff support 57,213, ,213,749 10,261,821 Research 32,532, ,532,393 7,783,059 Facilities 33,498, ,498,896 17,223,190 Other 37,236, ,236,654 11,636,928 Total program services 288,063, ,063, ,614,916 Supporting services Communications and marketing 1,749, ,749, ,168 Alumni affairs 4,433, ,433,513 4,251,157 Development 20,451, ,451,979 18,995,156 Advancement services 7,485, ,485,472 5,405,591 Talent management 2,203, ,203,438 1,975,895 Total supporting services 36,323, ,323,676 31,483,967 Total operating expenses and other expenditures 324,387, ,387, ,098,883 Change in net assets from current operations (3,364,439) (164,021,381) 32,742,197 (134,643,623) 170,633,270 Other changes Change in value of split interest agreements - (187,176) (477,678) (664,854) 3,259,410 Pension changes other than net periodic pension costs (3,914,609) - - (3,914,609) 486,419 Provision for doubtful pledges (107) 89,513 (335,375) (245,969) (3,596,514) Change in net assets (7,279,155) (164,119,044) 31,929,144 (139,469,055) 170,782,585 Net assets, beginning of year 15,545, ,283,755 1,196,244,251 1,903,073,667 1,732,291,082 Net assets, end of year $ 8,266,506 $ 527,164,711 $ 1,228,173,395 $ 1,763,604,612 $ 1,903,073,667 See Notes to Financial Statements. 4 Statement of Cash Flows Year Ended (with summarized comparative information for the year ended ) Reconciliation of change in net assets to net cash used in operating activities: Change in net assets $ (139,469,055) $ 170,782,585 Adjustments to reconcile change in net assets to net cash used in operating activities: Contributions restricted for long-term investment (32,314,453) (29,001,013) Increase (decrease) in trust and annuity liabilities 429,568 (271,874) Increase (decrease) in pension liability 4,087,757 (315,199) Provision for doubtful accounts and pledges 289,644 3,596,514 Amortization of deferred revenue (416,410) (404,590) Depreciation expense 493, ,130 Gain on investments, changes in real estate held for sale, property and equipment and other assets (61,081,465) (194,567,465) Noncash contributions (6,303,117) (9,238,409) Changes in operating assets and liabilities: Pledges receivable (6,014,497) 668,629 Due from externally managed trusts 54,927 (213,382) Other receivables (32,711,887) 302,470 Accounts payable, accrued expenses and other liabilities 2,067, ,582 Net cash used in operating activities (270,888,053) (57,841,022) Cash flows from investing activities: Purchases of investments (12,858,057) (55,616,770) Proceeds from sales of investments 232,426,858 91,510,573 Proceeds from sales of real estate held for sale 2,345, ,581 Purchases of property and equipment and other assets (8,686,018) (911,995) Proceeds from sales of property and equipment and other assets 1,594,480 1,255,380 Origination of notes receivable - (70,000) Collections of notes receivable 99,713 34,770 Net cash provided by investing activities 214,922,343 37,142,539 Cash flows from financing activities: Proceeds from contributions restricted for long-term investment 32,314,453 29,001,013 Payments on long-term debt (408,910) (394,344) Proceeds from (payments to) University of Florida related entities 19,424,299 (6,157,222) (Payments to) proceeds from accounts held on behalf of employees (8,877) 499 Payments to beneficiaries and other split interest expenses (2,735,503) (2,764,398) Net cash provided by financing activities 48,585,462 19,685,548 Net decrease in cash (7,380,248) (1,012,935) Cash: Beginning of year 12,501,703 13,514,638 End of year $ 5,121,455 $ 12,501,703 (Continued) 5 Statement of Cash Flows (Continued) Year Ended (with summarized comparative information for the year ended ) Supplemental disclosure of cash flow information Cash paid for interest $ 443,824 $ 365,496 Cash received (paid) for income taxes 41,135 (1,934,730) Supplemental data for noncash investing and financing activities Purchase of land with mortgage payable $ 5,000,000 $ - Receipt of permanent collection gifts 1,021,860 2,218,904 Receipt of real estate held for sale 1,588, ,500 Receipt of real estate held for use 1,141,001 - Receipt of life insurance 1,976, ,048 Receipt of non-liquid investments 387,504 5,448,556 Receipt of livestock 187,793 13,601 See Notes to Financial Statements. 6 Notes to Financial Statements Note 1. Nature of Organization and Significant Accounting Policies Nature of Organization: University of Florida Foundation, Inc. (the Foundation) is a nonprofit entity established to solicit and manage funds for the benefit of the University of Florida (the University). The Foundation is governed by a self-perpetuating board of directors consisting of a majority of volunteer board appointed members, some of whom are significant donors to the Foundation. The Board also includes ex-officio University and Foundation officials. The Foundation functions as a direct support organization of the University and is reported as a component unit of the University in its financial statements. A summary of the Foundation s significant accounting policies follows: Comparative Financial Statements: The financial statements include certain prior-year summarized comparative information in total but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the Foundation s financial statements for the year ended, from which the summarized information was derived. Basis of Accounting: The accompanying financial statements of the Foundation have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. The Foundation follows the guidance of the provisions for accounting for nonprofit organizations. Under this guidance, the Foundation is required to report information regarding its financial position and activities according to three classes of net assets: permanently restricted, temporarily restricted and unrestricted. Accordingly, net assets of the Foundation and changes therein are classified and reported as follows: Permanently restricted net assets net assets subject to donor-imposed stipulations that they be maintained permanently by the Foundation. Generally, the donors of these assets permit the Foundation to use all or part of the income earned on related investments for general or specific purposes in the support of the University. Temporarily restricted net assets net assets subject to donor-imposed stipulations that may or will be met, either by the passage of time or satisfaction of the restriction. When the restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Unrestricted net assets net assets which represent resources generated from operations or assets not subject to donor-imposed stipulations, but may be designated for specific purposes by action of the board of directors. Revenues: Revenues are reported as increases in unrestricted net assets unless use of the related assets is limited by donor-imposed restrictions. Amounts received that are designated for future periods or restricted by the donor for specific purposes are reported as temporarily restricted or permanently restricted support that increases these net asset classes. Gains and losses on investments and other assets or liabilities are reported as increases or decreases in unrestricted net assets unless their use is restricted by explicit donor stipulations or by law. 7 Notes to Financial Statements Note 1. Nature of Organization and Significant Accounting Policies (Continued) In the normal course of business, the Foundation accepts financial assets from donors on behalf of specified beneficiaries to which it is financially interrelated and recognizes the fair value of assets received as contributions. Contributions, including unconditional promises to give, are recognized as revenues in the period received and are recorded at their estimated fair value on the date of contribution. For the years ended and 2014, the Foundation recognized $64,493,534 and $60,316,081, respectively, in in-kind operating revenue and other additions. Conditional promises to give are not recognized until they become unconditional, that is, when the conditions on which they depend are substantially met. Liquidity: Assets are presented in the accompanying statement of financial position according to their nearness of conversion to cash and liabilities according to the nearness of their maturity and resulting use of cash. Use of Estimates: Management uses estimates and assumptions in preparing financial statements in conformity with accounting principles generally accepted in the United States of America. Those estimates and assumptions affect the reported amounts of assets and liabilities, and reported revenues and expenses. Significant estimates used in preparing these financial statements include those used in calculating the pledges receivable and related allowance for doubtful amounts, the annuity and trust liabilities under split interest agreements and the pension benefits obligation, and in determining the impairment of long-lived assets and the fair value of certain investments. Actual results could differ from these estimates, and the change may be material. Cash: Cash consists of cash on hand and cash in operating accounts. Other Receivables: Other receivables primarily consist of amounts due from the University (see Note 15). Property and Equipment: All real property (buildings and land) is capitalized. Property and equipment purchased with an original cost of $5,000 or more are recorded at cost. Contributed property and equipment having a fair value of $5,000 or more are recorded at their estimated fair value on the date of donation. If donors stipulate how long the assets must be used, the contributions are recorded as restricted support for the term of the restricted period. In the absence of such stipulations, contributions of property and equipment are recorded as unrestricted support. Property and equipment are depreciated using the straight-line method of depreciation over the estimated useful lives of the assets. The estimated useful life for vehicles and equipment is 3 years and ranges from 5 years to 30 years for buildings and improvements. If equipment is donated to the Foundation for the benefit of the University, the Foundation transfers title to the specified University recipient and no amounts are capitalized in the Foundation s financial statements. Permanent Collections: The Foundation capitalizes its permanent collections. Additions are capitalized at cost if purchased and at fair value at date of contribution, if received by donation. Gains and losses on disposals of donated collections are recorded based on the presence or absence of donor restrictions placed on items at the date of donation. 8 Notes to Financial Statements Note 1. Nature of Organization and Significant Accounting Policies (Continued) Real Estate Held For Sale: The Foundation receive
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