We appreciate the assistance provided by management and staff from UTSA's Depaitment of Intercollegiate Athletics and other UTSA departments.

Transcription

1 ' THE UNIVERSITY of TEXAS SYSTEM FOURTEEN INSTITUTIONS. UNLIMITED POSSIBILITIES. Audit Office 210 West 6th Street, Suite B140.E Austin, Texas I Fax: January 17, 2017 Ricardo Romo, Ph.D., President The University of Texas at at San Antonio, Main Building One UTSA Circle San Antonio, Texas Dear Dr. Romo: We have completed our Independent Auditor's Report on the Application of the Agreed-Upon Procedures for the Department ofjntercollegiate Athletics at The University of Texas at San Antonio (UTSA) for the Fiscal Year Ended August 31, The results of the engagement are detailed in the attached report. We appreciate the assistance provided by management and staff from UTSA's Depaitment of Intercollegiate Athletics and other UTSA departments. Sincerely, ~~~~ J. Michael Peppers, CPA, CIA, QIAL, CRMA Chief Audit Executive cc: Steven Leslie, Ph.D., Executive Vice Chancellor for Academic Affairs, UT System Kathryn Funk-Baxter, Vice President for Business Affairs, UTSA Samuel Gonzales, Vice President for Student Affairs, UTSA Lynn Hickey, Associate Vice President and Director of Athletics, UTSA Sherman Corbett, Assistant Athletic Director for Business Operations, UTSA Nicholas Liegl, Senior Associate Athletic Director for Business and Finance, UTSA J. Richard Dawson, Chief Audit Executive, UTSA Paul Tyler, Director of Audit, UTSA Laura Buchhorn, Audit Manager, UTSA T h e Un ivc1 si ty oftex"s a l Adington T he Universi ty of Texas at Austin T h e Univc1 sity of Texas at Dallas T h e Univel'sity of Texas at El Paso The University of Texas o f the Permian Basin The Univers ity of Texas Rio Grande Va11 e)' The University o f Texas at San A nto nio T he University of Texas at Tyler T h e Univel'sity o f T exas Southwestern Medical Center The Univcl'sily o f Texas Medical Branch at Galveston The Univel'sity of Texas Health Science Ccntel' at I lo usto n The University of Texas Health Science Center al San Antonio T h e University of Texas MD Andel'son Cancer Center The U nivel'sity of T exas Health Science Center at Tyler

2 Department of Intercollegiate Athletics Independent Auditor's Report on the Application of Agreed-Upon Procedures January 2017 THE UNIVERSITY OF TEXAS SYSTEM AUDIT OFFICE 210 WEST SIXTH STREET, SUITE B.140E AUSTIN, TX (512)

3 INDEPENDENT 1 AUDITOR'S REPORT ON THE APPLICATION OF AGREED-UPON PROCEDURES We have performed the procedures enumerated below, which were agreed to by the President of The University of Texas at San Antonio (UTSA) solely to assist UTSA management in evaluating whether the accompanying Statement of Revenues and Expenses (SRE) of UTSA 's Department of Intercollegiate Athletics (Athletics) was in compliance with the National Collegiate Athletic Association (NCAA) Constitution l for the fiscal year (FY) ended August 31, Management from UTSA is responsible for UTSA's SRE and compliance with NCAA requirements. This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of the specified users of the report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other pmpose. The following pages outline the required procedures and results, including any findings identified. Reportable findings are defined as errors or misclassifications equal to or greater than one percent of total revenues or total expenses. Also attached to this report are the following appendices: Appendix A, UTSA Intercollegiate Athletics Program SRE for the Fiscal Year Ended August 31, 2016; Appendix B, Findings and Recommendations; Appendix C, Follow-up on the Prior Year's Recommendation; Appendix D, Notes to the Statement of Revenues and Expenses; Appendix E, Budget to Actual Variance Analysis of Major Revenue and Expense Accmmts; and Appendix F, FY 2015 to FY 2016 Variance Analysis of Major Revenue and Expense Accow1ts. Agreed-Upon Procedures Related to the Statement of Revenues and Expenses Agreed-Upon Procedures Related to all Revenues and Expenses Agree the amounts reported on the SRE to UTSA's general ledger. Jn most instances, revenues and expenses reported on the SRE materially agreed to the amounts reported in UTSA 's general ledger cost centers. In addition, there are certain items recorded on the SRE that are not required to be recorded in athletic cost centers, such as gifts-in-kind. The NCAA requires that these items be reported on the SRE to jitlly reflect the operations of the Athletics Department. As a result of the procedures pe1formed, we identified two material adjustments that were made to the SRE. One resulted in an overstatement of Direct Institutional Support. The other was a misclassification that had a material impact on two SRE categories (Direct Overhead & Administrative Expenses and Other Operating Expenses) but had no net effect to the bottom line of the SRE. Management agreed and recorded the adjustments in the SRE located in Appendix A of this report. The specific adjustments ident(fied and recorded are described for the affected SRE revenue and expense categories in the results below. 1 The NCAA requires this agreed-upon procedures engagement to be conducted by an independent accountant. For purposes of this engagement, the NCAA considers the UT System Audit Office to be independent. -1-

4 Perform the following procedures for all revenue and expense categ01ies applicable to the SRE: Compare and agree each operating revenue and expense category reported on the SRE during the reporting period to supporting schedules provided by the institution. If a specific reporting category is less than 0.5 percent of the total revenues, no procedures are required for that specific category. Compare and agree a sample of operating revenue receipts and operating expenses obtained from the above supporting schedules to adequate suppo1iing documentation. Compare each major revenue and expense account over 10 percent of the total revenues/expenses to prior period amounts and budget estimates. Obtain and document an understanding of any significant variations over the lesser of$ I million or I 0 percent. Rep01t the analysis as a supplement to the final Agreed-Upon procedures repo1i. These procedures were performed for the revenue and expense categories listed belm,v, except for those less than 0.5 percent of the total revenues or total expenses, as stated in the procedure above. If applicable, any material exceptions are noted below under the specific procedures below. The results of the prior period and budget estimate comparisons are included in Appendix E mul F. Identify and document aspects of UTSA's internal control structure that are unique to Athletics. Test specific elements of the control environment and accounting systems that (1) are unique to Athletics and (2) have not been addressed in connection with the audit of the institution's financial statements. Identify all intercollegiate athletics related affiliated and outside organizations and obtained those organizations' financial statements for the reporting period. See Appendix D, Note 4. Agreed-Upon Procedures Related to Revenues Ticket Sales 1. Compare tickets sold during the reporting period, complimentary tickets provided during the reporting p_eriod, and unsold tickets to the related revenue reported by UTSA on the SRE and the related attendance figures and recalculate totals. Student Fees 2. Compare and agree student fees repo1ied by UTSA on the SRE for the rep01iing period to student enrollments during the same reporting period and recalculate totals. 3. Obtain and document an understanding ofutsa's methodology for allocating student fees to intercollegiate athletics programs. 4. If the athletics department is reporting that an allocation of student fees should be countable as generated revenue, recalculate the totals of their methodology for supporting that they are able to count each sport. Tie the calculation to supporting documents such as seat manifests, ticket sales repo1is and student fee totals. -2-

5 No material exceptions were noted as a result ofprocedures 2 and 3. Athletics does not report that an allocation o.fstudent fees be counted as generated revenue; consequently, procedure 4 above was not applicable. Direct State or Other Governmental Support 5. Compare direct state or other govenm1ental support recorded by UTSA during the reporting period with state appropriations, institutional authorizations, and/or other corroborative suppo1ting documentation and recalculate totals. Procedure was not applicable. Athletics did not get direct state or other governmental support. Direct Institutional Support 6. Compare the direct institutional support recorded by UTSA during the repo1ting period with institutional supporting budget transfers, documentation, and other corroborative supporting documentation and recalculate totals. From the procedures pe1formed, we determined thatfimds used to support administrative and football programs were inadvertently recorded twice, resulting in an overstatement of $ 1,124, The error was corrected in the final SRE that appears in Appendix A of this report. Transfers Back to Institution 7. Compare the transfers back to institution with permanent transfers back to institution from the athletics deparhnent and recalculate totals. Procedure was not applicable. Athletics did not have any transfers back to the institution. Indirect Institutional Support 8. Compare the indirect institutional supp01t recorded by UTSA during the repmting period with expense payments, cost allocation detail, and other corroborative supporting documentation and recalculate totals. Guarantees 9. Select a sample of settlement repmts for away games during the reporting pe1iod and agree each selection to UTSA's general ledger and/or the SRE and recalculate totals. 10. Select a sample of contractual agreements pertaining to revenues derived from guaranteed contests during the repmting period. Compare and agree each selection to UTSA's general ledger and/or the SRE and recalculate totals. Contributions 11. Obtain and review supporting docmnentation for any contributions of moneys, goods, or services received directly by the intercollegiate athletics program from any affiliated or outside -3-

6 organization that constituted 10 percent or more of all contributions received for intercollegiate athletics during the reporting period and recalculate totals. In-Kind 12. Compare the in-kind recorded by UTSA during the repo1iing period with a schedule of in-kind donations and recalculate totals. No niaterial exceptions were noted as a result of this procedure. Compensation and Benefits Provided by a Third-Party 13. Obtain the summary ofrevenues from affiliated and outside organizations (Summary) as of the end of the rep01iing period from UTSA. Select a sample of funds from the Summary and compare and agree each selection to suppo1iing documentation, UTSA's general ledger and/or the Summary and recalculate totals. 14. If the third party was audited by independent auditors, obtain the related repo1i. Media Rights 15. Obtain and inspect agreements to understand the total media (broadcast, television, radio) rights received by UTSA or through their conference offices as reported on the SRE. l 6. Compare and agree the media right revenues to a summary statement of all media rights identified, if applicable, and UTSA 's general ledger and recalculate totals. NCAA Distributions 17. Compare the amounts recorded in the revenue and expense reporting to UTSA's general ledger detail for NCAA di stributions and other corroborative supporting documents and recalculate totals. Conference Distributions 18. Obtain and inspect agreements related to UTSA's conference distributions and pa1iicipation in revenues from tournaments during the reporting period to gain an understanding of the relevant terms and conditions. 19. Compare and agree the related revenues to UTSA's general ledger and/or the SRE and recalculate totals. -4-

7 Program Sales, Concessions, Novelty Sales, and Parking 20. Compare the amount recorded in the revenue reporting category to UTSA's general ledger detail of program sales, concessions, novelty sales, and parking as well as any other corroborative suppmting documents and recalculate totals. Royalties, Licensing, Advertisements, and Sponsorships 21. Obtain and inspect agreements related to UTSA's participation in revenues from royalties, licensing, advertisements, and sponsorships during the reporting period to gain an understanding of the relevant terms and conditions. 22. Compare and agree the related revenues to UTSA's general ledger and/or the SRE and recalculate totals. Sports Camp Revenues 23. Inspect sports-camp contracts between UTSA and persons conducting institutional sports-camps or clinics during the repmting period to obtain an understanding of the UTSA's methodology for recording revenues from sports-camps. 24. Obtain schedules of camp participants and select a sample of individual camp participant cash receipts from the schedule of sports-camp participants and agree each selection to UTSA 's general ledger and/or the SRE and recalculate totals. No material exceptions were noted as a result of these procedures. Athletics Restricted Endowment and Investment Income 25. Obtain and inspect endowment agreements to gain an understanding of the relevant terms and conditions. 26. Compare and agree the classification and use of endowments and investment income repo1ted on the SRE during the reporting period to the uses of income defined within the related endowment agreement and recalculate totals. No material exceptions were noted as a result o.f'these procedures. Other Operating Revenue 27. Perform minimum agreed-upon procedures referenced for all revenue categories (see page 1) and recalculate totals. Agreed-Upon Procedures Related to Expenses Athletic Student Aid 28. Select a sample of students from the listing of institutional student aid recipients during the repmting period. -5-

8 29. Obtain individual student-account detail for each selection and compare the total aid allocated from the related aid award letter to the student's account. 30. Perform a check of each student selected to ensure their information was rep01ted accurately in the NCAA Membership Financial Reporting System. 31. Recalculate totals for each sport and overall. Guarantees 32. Obtain and inspect visiting institution's away game settlement reports received by UTSA during the reporting period and agree related expenses to UTSA's general ledger and/or the SRE and recalculate totals. 33. Obtain and inspect contractual agreements pe1iaining to expenses recorded by UTSA from guaranteed contests during the reporting period. Compare and agree related amounts expensed by the institution during the rep01ting period to UTSA's general ledger and/or the SRE and recalculate totals. Coaching Salaries, Benefits, and Bonuses Paid by the University and Related Entities 34. Obtain and inspect a listing of coaches employed by UTSA and related entities during the repo1iing period. Select a sample of coaches' contracts, including football and men's and women's basketball from the listing. 35. Compare and agree the financial terms and conditions of each selection to the related coaching salaries, benefits, and bonuses recorded by UTSA and related entities on the SRE during the reporting period. 36. Obtain and inspect payroll summary registers for the reporting year for each selection. Compare and agree payroll smm1rnry registers from the reporting period to the related coaching salaries, benefits, and bonuses paid by UTSA and related entities expense recorded by UTSA on the SRE during the reporting period. 37. Compare and agree the totals recorded to any employment contracts executed for the sample selected and recalculate totals. Coaching Other Compensation and Benefits Paid by a Third-Party 38. Obtain and inspect a listing of coaches paid by third patties during the reporting period. Select a sample of coaches' contracts, including football and men's and women's basketball from the listing. 39. Compare and agree the financial terms and conditions of each selection to the related coaching other compensation and benefits paid by a third-patty and recorded by UTSA on the SRE during the reporting period. 40. Obtain and inspect reporting period payroll summary registers for each selection. Compare and agree related payroll summary register to the coaching other compensation and benefits paid by a third-party expenses recorded by UTSA on the SRE during the reporting period and recalculate totals. -6-

9 Procedures were not applicable. Coaches did not receive compensation or benefits paid by third parties. Support Staff/Administrative Salaries, Benefits, and Bonuses Paid by the University and Related Entities 41. Select a sample of support staff/administrative personnel employed by UTSA and related entities during the reporting period. 42. Obtain and inspect repo1ting period summary payroll register for each selection. Compare and agree related payroll summary registers to the related support staff/administrative salaries, benefits, and bonuses paid by UTSA and related entities expense recorded by UTSA on the SRE during the repotting period and recalculate totals. Support Staff/Administrative Other Compensation and Benefits Paid by a Third-Party 43. Select a sample of support staff/administrative persotmel employed by third pa1ties during the reporting period. 44. Obtain and inspect repmting period payroll summary registers for each selection. Compare and agree related payroll summary registers to the related support staff/administrative other compensation and benefits expense recorded by UTSA on the SRE during the reporting period and recalculate totals. Severance Payments 45. Select a sample of employees receiving severance payments by UTSA during the reporting period and agree each severance payment to the related termination letter or employment contract and recalculate totals. No material exceptions were noted as a result o.f this procedure. Recruiting 46. Obtain and document an understanding ofutsa's recruiting expense policies. 47. Compare and agree to existing institutional- and NCAA-related policies. 48. Obtain general ledger detail and compare to the total expenses reported and recalculate totals. Team Travel 49. Obtain and document an understanding of UTSA's team travel policies. 50. Compare and agree to existing institutional- and NCAA-related policies. 51. Obtain general ledger detail and compare to the total expenses repmted and recalculate totals. -7-

10 Equipment, Uniforms, and Supplies 52. Obtain general ledger detail and compare to the total expenses reported. Select a sample of transactions to validate existence of transaction and accuracy of recording and recalculate totals. Game Expenses 53. Obtain general ledger detail and compare to the total expenses reported. Select a sample of transactions to validate existence of transaction and accuracy of recording and recalculate totals. Fund Raising, Marketing, and Promotion 54. Obtain general ledger detail and compare to the total expenses rep01ted. Select a sample of transactions to validate existence of transaction and accuracy of recording and recalculate totals. Sports Camps Expenses 55. Obtain general ledger detail and compare to the total expenses reported. Select a sample of transactions to validate existence of transaction and accuracy of recording and recalculate totals. No material exceptions were noted as a result of this procedure. Spirit Groups 56. Obtain general ledger detail and compare to the total expenses repo1ted. Select a sample of transactions to validate existence of transaction and accuracy of recording and recalculate totals. Athletic Facility Debt Service, Leases and Rental Fees 57. Obtain a listing of debt service schedules, lease payments, and rental fees for athletics facilities for the reporting year. Compare a sample of facility payments including the top two highest facility payments to additional supporting documentation (e.g., debt financing agreements, leases, rental agreements). 58. Compare amounts recorded to amounts listed in the general ledger detail and recalculate totals. Direct Overhead and Administrative Expenses 59. Obtain general ledger detail and compare to the total expenses rep01ted. Select a sample of transactions to validate existence of transaction and accuracy ofrecording and recalculate totals. Due to the changes in NCAA reporting guidance, many expenses that were previously classified as Other Operating Expenses are now to be class(fied as Direct Overhead and Administrative Expenses. From the procedures performed, we identified misclassified amounts that resulted in -8-

11 a $449, overstatement for Other Operating Expenses and a $414, understatement for Direct Overhead and Administrative Expenses and a combined $34, understatement for various other SRE categories. Athletics reclassified the appropriate amounts on the final SRE in Appendix A. Also, see procedure #63 under Other Operating Expenses below. Indirect Institutional Support 60. Test with revenue section - Indirect Institutional Support (see procedure #8 on page 3). No niaterial exceptions were noted as a result of this procedure. Medical Expenses and Medical Insurance 61. Obtain general ledger detail and compare to the total expenses reported. Select a sample of transactions to validate existence of transaction and accuracy ofrecording and recalculate totals. Memberships and Dues 62. Obtain general ledger detail and compare to the total expenses reported. Select a sample of transactions to validate existence of transaction and accuracy of recording and recalculate totals. Other Operating Expenses and Transfers to Institution 63. Obtain general ledger detail and compare to the total expenses reported. Select a sample of transactions to validate existence of transaction and accuracy ofrecording and recalculate totals. Due to the changes in NCAA reporting guidance for FY 2016, 111.any expenses that were previously class~fied as Other Operating Expenses are now classified as Direct Overhead and Administrative Expenses. From the procedures pe1formed, we identified misclassified expenses that resulted in an overstatement of$449,643.00for Other Operating Expenses. Athletics correctedjinal SRE in Appendix A by reclassifying $414, to Direct Overhead and Administrative Expenses and $34, to various other SRE categories. Also, see procedure #59 under Direct Overhead and Administrative Expenses above. Additional Minimum Agreed-Upon Procedures Bowl Revenues A. Obtain and inspect agreements related to UTSA's revenues from post-season bowl pmiicipation during the reporting period to gain an understanding of the relevant terms and conditions. B. Compare and agree the related revenues to UTSA's general ledger, and/or the SRE and recalculate totals. Procedures were not applicable. Athletics did not have any bowl revenues/or the reporting period. -9-

12 Student-Athletic Meals (non-travel) C. Obtain general ledger detail and compare to the total expenses reported. Select a sample of transactions to validate existence of transaction and accuracy ofrecording and recalculate totals. Bowl Expenses D. Obtain general ledger detail and compare to the total expenses rep01ied. Select a sample of transactions to validate existence of transaction and accuracy of recording and recalculate totals. Procedures were not applicable. Athletics did not have any bowl expenses for the reporting period. NCAA Financial Repo1 ting System Compare and agree the spo1is sponsored repo1ied in the NCAA Membership Financial Reporting System to the squad lists of the institution. If there is a discrepancy in the sports sponsored between the NCAA Membership Financial Reporting System and the squad lists, inquire about the discrepancy and report the justification in the AUP repo1i. Obtain UTSA's Sports Sponsorship and Demographics Forms Repo1i for the reporting year. Validate that the countable sports repo1ied by UTSA meet the minimum requirements set forth by Bylaw for the number of contests and the number of participants in each contest that is counted toward meeting the minimum-contest requirement. Once countable sports have been confirmed, ensure that UTSA has properly rep01ied these sp01is as countable for revenue distribution purposes within the NCAA Membership Financial Repo1iing System. We were not engaged to and did not conduct an examination, the objective of which would be the expression of an opinion on the compliance of the accompanying SRE of Athletics. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. This report relates only to the procedures specified above and does not extend to UTSA's financial statements. This rep01i is intended solely for the information and use of UTSA management and is not intended to be and should not be used by anyone other than those specified parties. However, this rep01i is a matter of public record and its distribution is not limited. J. Michael Peppers, CPA, CIA, QIAL, CRMA Chief Audit Executive ski, CPA, CIA Director of Audits -10-

13 APPENDIX A THE UNIVERSITY OF TEXAS AT SAN Al.~TONIO INTERCOLLEGIATE ATHLETICS PROGRAM STATEMENT OF REVENUES AND EXPENSES FOR THE FISCAL YEAR ENDED AUGUST 31, 2016 Opt rating Revenues Ticket Sales Direct Stote and Other Gov't Support Student Fees Direct Institutional Support Less - Transfers to Institution lndirect Institutional Support Indirect Institutional Support - Debt Guarantees Revenue Cootrt'butions In-Kind Conmbutions 3rd Party Compensation & Beneftts Media Rights NCAA Distnbutions Conference DistnOutions Prosram Sales. Coocessions. & Parking Royalties. Advertisements. & SponsO<Sb1>s Spans Camp Revenues Restricted Endowment & Investment Income Other Operating Revenues Sowl Revenues Total OpeT3ting Revenues Football Men's Basketball \Vomcn's Bas ketball Baseball I I Men's Golf Women's Golf 4I.n \Vo men's Soccer I 12, SoRball Me n's Tennis \\'omen's Tennis Volleyball Track Non-Program Specific Total Operating Expenses Athletics Student Aid Gu::ir:mtees Expense Coaching Salaries & Benefits 3rd Party Coaching Salaries & Benefits Support Stoff/Administrative Salaries & 3rd Party Support Stoff Salaries & Benefits Severance Pa)1llents Recruiting Team Travel Equipment. Unifonns. & Supplies Game Expenses Fundraising. Marketing. & Promotion Sports Camp Expenses Spirit Groups Ath. Fae. Debt Service. Leases. & Rental Fees Direct Overhead aod Administrative Expenses Indirect Institutional Support Medical Expenses & Insurance Memberships & Dues Student-Athletic Meals (non-travel) Other Expcoses Bowl Expenses Total Ope roting Expenses T.> S n , , l (9.00) , , S n S Excess (Detic iency) of Revenues Over (Under) Expenses l.244, ( ) ( ) ( ) ( ) ( ) ( ) (6 I 5,199.29) ( ) ( ) ( ) (I.553.o43.95)

14 APPENDIXB FINDINGS AND RECOMMENDATIONS There were no reportable findings and reconunendations identified as a result of the agreed-upon procedures performed. -12-

15 APPENDIXC FOLLOW-UP ON THE PRIOR YEAR'S RECOMMENDATION The following are our engagement findings from fiscal year 2015 and related follow-up. Finding Preparation of the SRE From the agreed-upon procedures performed, we identified nine material eitors. Tlu ee were misclassification errors which did not affect the net revenues or net expenses. The remaining six errors led to both over and understatement of revenue and expense categories. Adjustments to correct the errors were made to the final SRE that appears Appendix A of this repo1i. Factors contributing to the observed errors include the following and, in many instances, reflect conditions that existed during the FY 2014 agreed-upon-procedures engagement: Preparation of the SRE continues to be a manual, time consuming process and responsibility for preparation of UTSA 's SRE has changed three times over the last two years. Multiple accounts and cost centers map to multiple SRE line items which significantly increases the time to create the SRE. For the FY 2014 SRE became the responsibility of the Assistant Athletic Director for Business Operations, who had no prior experience in preparing an SRE. For FY 2015, preparation of the SRE became the responsibility of the athletic depa1i ment's f01mer chief financial officer, who left campus at the end of November Consequently, the responsibility fell back to the Assistant Athletic Director for Business Operations for the FY 2015 SRE. Changes made by the NCAA to the Agreed-Upon Procedures Revenue and Expense categories also increased the likelihood that certain line items might Recommendation & Management's Response Recommendation: Consistent with our recommendation from the FY Report on UTSA's Application of Agreed-Upon Procedures, the Athletics Department, in coordination with other UTSA departments such as Student Affairs, Business Affairs, and the PeopleSoft Sustai1m1ent Center should work together to develop a streamlined approach to creating the Statement of Revenues and Expenses (SRE) to include the following actions: Develop (PeopleSoft) reports that pull all Athletics transactions, transfers, Athletic student fees, and Athletics endowments and scholarship information. Review and modify standard accounts and cost centers to ensure appropriate mapping of transactions to each SRE line item. Develop written procedures and checklists to document the steps for creating the SRE. Create the SRE quarterly or at mid-year to ensme transactions are processed correctly. Cross train staff on the SRE process. Management Response: UTSA Athletics agrees with the recommendations outlined above. The former Sr. Associate Athletics Director for Business began implementation of certain. recommendations. These included a PeopleSofl revenue and expense query specific to NCAA reporting, additional cost centers and account codes to improve mapping of transactions, a service agreement with software provider, Jumpforward (Elevation), to provide financial reporting support to EADA and NCAA specifications, and involvement of additional Athletics' staff members in the development of the SRE. -13-

16 Findinf! be materially misstated for all member institutions. Documented procedures/processes for creating the SRE and cross-training do not exist. The SRE is not created quarterly or at mid-year for Athletics personnel to review and ensure transactions are being processed conectly or to measure the financial activity of each sport. Recommendation & Management's Response Athletics will continue to work with the appropriate departments to improve reports for a streamlined approach and continue to develop written procedures to encompass all procedures neededfor the report. Anticipated I111ple111e11tatio11 Date: August 31, 2016 Follow-Up Status: I111ple111e11ted Athletics Business Operations continues to improve the account coding in mapping unique codes to specific categories listed in the AUP. For FY 2017, Athletics has implemented the new cost centers unique to scholarships and cost of attendance. For FY 2016, the PeopleSoft NCAA Query and Payroll Distribution Rep01is were used to generate the SRE. Elevation reporting was used to test its validity with the present SRE Rep01i. Elevation is still being moved forward as the reporting tool for the Athletics Department. For future rep01iing periods, we will use the report-building functionality within Elevation to generate a "mid-year" SRE. This report will be reviewed by Athletics staff to ensure the mapping within Elevation is fimctioning properly and that account/cost center combinations are filling the SRE report correctly. The Senior Associate Athletics Director for Business & Finance has been working to update the external mapping within Elevation while the Assistant Athletic Director for Business Operations has updated the monthly undefined transactions for internal mapping. Athletics' plans to use Elevation to provide draft repo1is for the FY 2017 EADA and SRE Repo1is. These draft reports will require limited manual intervention in order to complete the SRE. Once Elevation has reached initial operating capability, the Athletics Depa1iment will create written procedures to document the steps for creating the SRE. These written procedures will be updated on an ammal basis by Business Operations staff. Along with the reporting tools for preparation and validation of the SRE, Elevation will allow coaches and staff to review cost center budgets and budget balances. Plans are to introduce this to coaches and staff in January It will also help in the reconciliation process. -14-

17 APPENDIXD NOTES TO THE STATEMENT OF REVENUES AND EXPENSES NOTE 1 - Summary of Significant Accounting Policies Fiscal Year-The University of Texas at San Antonio's (UTSA) fiscal year is the pe1iod beginning each September 1st and ending each August 31st of the subsequent calendar year. Principles of Preparation - The statement of revenues and expenses (SRE) is prepared in accordance with the NCAA financial reporting guidelines. Information used in the SRE's preparation is obtained primarily from subsidiary ledger information recorded in UTSA's financial accounting system. Other information, such as amounts estimated for non-cash trade-out agreements and gifts-in-kind, is obtained from records maintained by the Athletics Department and the Office of Accounting. Direct and Indirect Institutional Support - Direct Institutional Suppo1t is composed of amounts for institutional transfers to fund or support Athletics in the budgeting process and work-study paid by the institution. Indirect Insti tutional Support line item is composed of amounts expended by other institutional deparhnents in support of Athletics. NOTE 2 - Student Fees For the Fall of2015 and the Spring and Sununer of 2016 semesters, the Athletics Depmtment received $12, 159, in student fees, which is based upon a student athletic fee of $20.00 per semester credit hour emolled, with a maximum fee cap of $ (12 hours) per student per semester. NOTE 3 - Contributions Constituting More than Ten Percent of All Contributions Revenue from contributions was $2, 198, for FY The Athletics Department received no contributions for operating activities that were greater ten percent of all contributions combined. NOTE 4 - Affiliated and Outside Organizations Affiliated and outside organizations includes entities that have a primary purpose which benefits UTSA's Athletic Department and are not under UTSA's accounting control. The Roadrunner Foundation is an exempt charitable non-profit corporation, as defined under Internal Revenue Code section 501 (c)(3), whose purpose is to support programs and activities ofutsa athletics. A governing board of the Foundation approves requests for assistance from UTSA Athletics and makes such disbursements as funding allows. NOTE 5 - Capital Assets UTSA manages the accountability and responsibility for state property according to the provisions of state law and the Board of Regents' Rules and Regulations. Athletics acquires, depreciates, and disposes assets in accordance with UTSA institutional policy as follows: Acquisition - Athletics acquires capital assets through the normal process at the institution. All purchases are centralized and are to be made using the method that provides the best value to UTSA. Competitive bidding is required for all assets above $5,000.00, which is the capitalization threshold. Depreciation - Depreciation is allocated to Athletics based on the assets, or portions of realassets, under the control of Athletics. Depreciation is calculated on a sh aight-line basis. -15-

18 Disposal - Disposal of capital assets must be done in accordance with State of Texas law and institutional policy. NOTE 6 - Future Debt Repayment Schedule UTSA receives proceeds from bonds issued and held by UT System to support capital projects of UT System and its institutions. All bonds issued by the UT System are defined as revenue bonds. As such, the revenues of all UT System institutions, including UTSA, are pledged for repayment of the bonds. No amount of indebtedness related to these bonds has been recorded on UTSA's financial statements. As of August 31, 2016, UTSA had no Athletics outstanding debt-related revenue bonds issued by UT System. UTSA also receives proceeds from commercial paper issued and held by UT System to support capital equipment financing. The revenues of all UT System institutions, including UTSA, are pledged for repayment of the commercial paper. No amount of indebtedness related to the commercial paper has been recorded on UTSA's financial statements. As of August 31, 2016, UTSA (through UT System) had outstanding commercial paper related to Athletics totaling $2,337, Debt service requirements to maturity for this outstanding debt are summarized as follows: Fiscal Year Principal Interest* Total 2017 $ 244, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , Total Requirements $ 2,337, , ,665, * Interest on commercial paper is variable. Interest rate is based on forecast rates and is assumed to be 1.50% in FYI 7, 2.25% in FYI 8, 3.00% in FY19, 3.50% in FY20, 4.00% in FY21, and 4.25% in FY22 and beyond. -16-

19 NOTE 7 - Other Reporting Items Description Amount Excess Transfers to Institution Not Applicable Conference Realignment Expenses Not Applicable Total Athletics Related Debt $2,337, Total Institutional Debt $316,520, Value of Athletics Dedicated Endowments $901, Value of Institutional Endowments $133,899, Total Athletics Related Capital Expenditures $185,

20 APPENDIXE BUDGET TO ACTUAL VARIAN CE ANALYSIS OF MAJOR REVENUE AND EXPENSE ACCOUNTS Mnjor SRE Revenue Categories Actual Total llutlgcl Total V11rim1ct Perce nt Vminncc Tickcl Sales $2,121, $2,2 17, $ (95,347.79) -4.3% Variance is less limn 10%. S1ude11t fees 12, 159, ,219, (59,267.00) -0.5% Variance is less than 10%. Direct lnstilulional Support 3,093, ,515, ,577, % Guarantees 1,505, ,456, , % Variance is less than 10%. Explnnation for Variance Variance is due lo addilional budge! transfers for adminislration and football to help cover operating expenses. Reduction in reslrictcd giving contributions and ccrlain Contributions 2,198, ,466, (267,701.00) -10.9"/o scholarship contributions. Media Righls 1,058, , , % Distributions were greater than expected budgeted amount. Variance primarily due lo increase in grants-in-aid revenue NCAA Distributions 1,279, , , % distribution from the NCAA. Royalties, Licensing, Advertisements a1ki Sponsorships M11jor SRE Expe nse Categories Actual Total Budget Totnl Variance Increase caused by reclassirlcation of trademark and vending 2,052, ,602, , % revenues into thi~ category aner budget amounts were determined. Percent Variance Athletic Student Aid $5,243, $ 5,460, $ (2 17,568.00) -4.0% Variance is less than 10%. Expla11ntlo11 fo r Variance Coaching Salaries, Bene fits and Bonuses Paid by the University and Related Entities 4,733, ,682, , % Variance is less limn 10%. Support StaIT/Administrative Salaries, Benefits and Bonuses Paid by the University and 4,119, ,936, , % Va r~1 nce is less than 10"/o. Related Entities Team Travel 2,585, ,733, (147,990.14) -5.4% Variance is less than 10%. Variance due lo increased cost of air transportation and Game Expenses 1,918, ,466, , % number of trips requiring air travel. Additirnially, there was an increase in Ahunodome game-day expenses. Direct Overhead and Administrative Expenses 1,850, ,342, , % Other 0 1>erating Expenses 1, ,991, (683,795.00) -34.3% Variance caused by NCAA line item classification changes from prior year. Variance caused by NCAA line item classification changes from prior year. Note: Major revenue and expense categories were limited to those greater than $1 million. for differences greater than the lesser of +/-$1 million or +/-10 percent, we obtained explana tions from Athletics for the variances. All explanations provided appeared reasonable. -18-

21 Independent Auditor's Repo1 t on the Application of Agreed-Upon Procedures For the Fiscal Year Ended August 31, APPENDIXF FY 2015 TO FY 2016 VARIANCE ANALYSIS OF MAJOR REVENUE AND EXPENSE ACCOUNTS MnjorSRE Reve nue Categories FY l 6 FYI S Vnrinncc Perce nt Vnriance Ticke1 Sales $2,121, $2,155, $ (33, ) - 1.6% Variance is less 1han 10"/o. Student Fees I 2, 159, ,032, , % Variance is less clian 10"/o. Ex 1lanalion for Varinncc Variance is due 10 addilional budget 1ransfers for Direcl lns1itu1ional Support 3,093, ,522, ,570, % adminis1ra1ion and foolball lo help cover operaling expenses. Guaranlees 1,505, , , % Conlribulions 2, 198, ,044, (846,092.25) -27.8% Media Righls 1,058, ,185, (127,132.00) -10.7% Guarancee revenue increased primarily due 10 fool ball away games al Arizona and Oklahoma Scace. Reduclion in reslric1ed giving conlribulions and cerlain schol1rship conlribulions. NCAA Distributions 1,279, ,301, (21,917.00) -1.7% Variance is less Chan 10%. Royallies, Licensing, Advcrli~cme nts and Sponsorships Major SRE Expense Categories F\'1 6 F\'1 5 Variance Variance due lo C-USA distribution including non-saturday football game supplement, in FY 15. The Learficld agreemenl changed from a pcrccn1age of 2,052, ,835, (782, ) sponsorship lo an agreed-upon or fla1 amoun1 pay-jble lo -27.6% All1lelics, which cliangcd revenue reporl ing and caused a decrease for FY 16. Perce nt Variance A1hlccic Sluden1 Aid $ 5,243, $5,088, $ 154, % Var~1nce is less Chan I O"lo. Coaching Salaries, Benefils and Bonuses Paid by 1he Universily and Rcla1cd Enlilies Explanation fo r Variance Increase in sak1ry and benefils for foocba ll and men's 4,733, ,244, , % baskccball coaching staff. Suppor1 Sla ff/adminis1ra1ive Salaries, 13cncfi1s and Bonuses Paid by lhc Universily and 4,119, ,887, , "/o Variance is less 1lian 10%. Rclaled Enlilies Team Travel 2,585, ,371, , % Variance is less 1han 10%. Variance due lo increased cos1 of air lransporlation and Game Expenses 1,918, ,269, , % number of!rips requiring air lrnvel. Acklilionally, 1here was an increase in Alamodome game-day expenses. Dirccl Overhead and Adminis1ralivc Expenses 1,850, ,409, (558,848.00) -23.2% Ocher Operaling Expenses 1,307, ,109, , % Variance caused by NCAA line ilem classificacion changes from prior year. Vaiiancc caused by NCAA line ilem classificalion changes from prior year. Note: M;tjor revenue and cxpc 1~~c ca1egories were limilecl 10 those!,'!'caler 11mn $ I million. l'or differences grealer Chan!he lesser of +/-$1 million or +/-10 pcrccnl, we oblaincd cxplana1ions from A Ihle lies for lhc variances. All explanalions provided appeared reasonable. -19-