MCPHS University and Subsidiary

Transcription

1 Consolidated Financial Statements, Supplemental Information and Reports Required for Audits in Accordance with Government Auditing Standards and the Uniform Guidance MCPHS University and Subsidiary June 30, 2016 and 2015

2 Consolidated Financial Statements, Supplemental Information and Reports Required for Audits in Accordance with Government Auditing Standards and the Uniform Guidance Table of Contents Consolidated Financial Statements: Independent Auditors Report 1 2 Consolidated Statements of Financial Position 3 Consolidated Statements of Activities 4 Consolidated Statements of Cash Flows 5 Notes to Consolidated Financial Statements 6 22 Supplemental Information: Schedule of Expenditures of Federal Awards 23 Notes to Schedule of Expenditures of Federal Awards 24 Report Under Government Auditing Standards: Independent Auditors 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 Reporting Under the Uniform Guidance: Independent Auditors Report on Compliance For Each Major Federal Program and Report on Internal Control Over Compliance Required by the Uniform Guidance Schedule of Findings and Questioned Costs Summary Schedule of Prior Audit Findings 32

3 Independent Auditors Report The Board of Trustees MCPHS University and Subsidiary Boston, Massachusetts Report on the Consolidated Financial Statements We have audited the accompanying consolidated financial statements of MCPHS University and Subsidiary (the University ), which comprise the consolidated statements of financial position as of June 30, 2016 and 2015, and the related consolidated statements of activities, and cash flows for the years then ended, and the related notes to the consolidated financial statements. Management s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated 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 consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits 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 consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. 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 consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

4 Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of MCPHS University and Subsidiary as of June 30, 2016 and 2015, and the consolidated changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Supplemental Information Our audits were conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The accompanying Schedule of Expenditures of Federal Awards, as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance ) is presented for purposes of additional analysis and is not a required part of the consolidated 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 consolidated financial statements. The information has been subjected to the auditing procedures applied in the audits of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated 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 consolidated 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 15, 2016 on our consideration of the University 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 s internal control over financial reporting and compliance. September 15, 2016 Boston, Massachusetts

5 Consolidated Statements of Financial Position Assets June 30, Cash and cash equivalents $ 41,799,874 $ 50,229,432 Contributions receivable 164, ,375 Student loans receivable 9,450,027 9,523,832 Other receivables 11,307,028 11,640,463 Prepaid expenses and other assets 4,394,858 3,707,785 Deposits with bond trustees 5,001,753 4,981,351 Funds held in trust 1,554,642 1,724,725 Investments 663,342, ,157,797 Property and equipment, net 211,082, ,587,722 Total assets $ 948,098,201 $ 872,870,482 Liabilities and Net Assets Accounts payable and accrued liabilities $ 16,042,420 $ 13,627,384 Deferred revenues 18,277,295 16,474,611 Bonds and other obligations payable 96,764, ,470,332 Advances from federal government for student loans 8,149,951 8,051,537 Total liabilities 139,233, ,623,864 Net assets: Unrestricted 780,676, ,905,857 Temporarily restricted: Appreciation on permanently restricted assets 8,377,920 9,797,452 Other funds 972,280 1,068,863 Total temporarily restricted 9,350,200 10,866,315 Permanently restricted: Endowment funds 17,901,898 17,477,115 Other funds 936, ,331 Total permanently restricted 18,837,964 18,474,446 Total net assets 808,864, ,246,618 Total liabilities and net assets $ 948,098,201 $ 872,870,482 The accompanying notes are an integral part of these consolidated financial statements. 3

6 Consolidated Statements of Activities Years Ended June 30, Changes in unrestricted net assets: Operating: Revenues and other support: Tuition and fees $ 253,738,107 $ 242,279,371 Less: Scholarship aid to students (29,176,079) (25,456,583) Net tuition and fees 224,562, ,822,788 Auxiliary enterprises 15,151,290 15,239,374 Contributions 581, ,112 Contracts and other exchange transactions 5,650,886 4,702,812 Other income 4,028,947 2,824,476 Net assets released from restrictions 435, ,736 Total revenues and other support 250,410, ,682,298 Expenses: Instruction 79,972,697 73,668,839 Academic support 17,239,109 15,270,025 Student services 20,006,448 17,355,986 Institutional support 22,793,543 21,265,914 Auxiliary enterprises 12,653,135 12,801,818 Total expenses 152,664, ,362,582 Increase in unrestricted net assets from operating activities 97,745, ,319,716 Non-operating: Investment return (loss) (17,959,568) 2,532,561 Loss on bond refinancing - (5,284,086) Contributions 22, ,099 Other (1,038,045) (457,922) Decrease in unrestricted net assets from non-operating activities (18,974,703) (2,826,348) Increase in unrestricted net assets 78,770,407 97,493,368 Changes in temporarily restricted net assets: Contributions 204, ,785 Investment return (1,191,622) (228,994) Change in value of funds held in trust (93,167) (89,037) Net assets released from restrictions (435,574) (388,736) Decrease in temporarily restricted net assets (1,516,115) (457,982) Changes in permanently restricted net assets: Contributions 347,380 1,114,910 Change in value of funds held in trust (54,845) (33,625) Investment return 70,983 79,208 Increase in permanently restricted net assets 363,518 1,160,493 Increase in net assets 77,617,810 98,195,879 Net assets at beginning of year 731,246, ,050,739 Net assets at end of year $ 808,864,428 $ 731,246,618 The accompanying notes are an integral part of these consolidated financial statements. 4

7 Consolidated Statements of Cash Flows Years Ended June 30, Cash flows from operating activities: Change in net assets $ 77,617,810 $ 98,195,879 Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation and amortization 12,558,763 12,816,398 Contributions restricted for capital investment (523,380) (1,454,410) Contributions of marketable securities (73,266) (18,044) Contributions of equipment - (114,167) Net realized and unrealized loss on investments 29,680,348 7,149,935 Loss on retirement of indebtedness - 5,284,086 (Increase) decrease in assets: Funds held in trust 170, ,306 Contributions receivable 152, ,225 Other receivables (2,090,565) (1,588,051) Prepaid expenses and other assets (687,073) (213,993) Increase (decrease) in liabilities: Accounts payable and accrued liabilities 367, ,323 Deferred revenues 1,802,684 2,633,581 Net cash provided by operating activities 118,975, ,591,068 Cash flows from investing activities: Proceeds from sales of investments 40,386, ,918,123 Purchases of investments (155,177,757) (222,373,900) Purchases of property and equipment (9,498,836) (4,820,368) Contributions restricted for capital investment 176, ,500 Disbursements of loans to students (1,032,475) (671,833) Repayment of student loans 1,106, ,503 Net cash used for investing activities (124,040,590) (116,669,975) Cash flows from financing activities: Proceeds from sale of bonds, net of issuance costs - 47,852,431 Early retirement of indebtedness - (52,236,579) (Increase) decrease in deposits with bond trustees (20,402) 3,696,834 Repayment of principal on indebtedness (3,790,000) (3,070,000) Cash collected on endowment gifts 347,380 1,114,910 Increase in government advances for student loans 98,414 91,824 Net cash used for financing activities (3,364,608) (2,550,580) Net (decrease) increase in cash and cash equivalents (8,429,558) 4,370,513 Cash and cash equivalents at beginning of year 50,229,432 45,858,919 Cash and cash equivalents at end of year $ 41,799,874 $ 50,229,432 The accompanying notes are an integral part of these consolidated financial statements. 5

8 Notes to Consolidated Financial Statements Note 1 - Organization Founded in 1823, MCPHS University (the University ) is a private, co-educational institution of higher education accredited by the New England Association of Schools and Colleges enrolling approximately 7,000 students in professional, undergraduate and graduate degree programs in pharmacy and health sciences. The University has four distinct physical campuses: Boston, Massachusetts; Newton, Massachusetts; Worcester, Massachusetts and Manchester, New Hampshire. The University also offers online degree programs. The University draws its student population from throughout the United States as well as from 57 foreign countries. On June 2, 2015, the University acquired New England School of Acupuncture ( NESA ) by becoming the sole member of the NESA corporation, a school exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code. NESA, founded in 1975, is the first school of acupuncture in the United States and offers degrees in acupuncture and oriental medicine. NESA is located in Newton, Massachusetts. Upon acquisition, the University recognized non-operating contribution revenues of $411,101 attributable to the net assets of NESA, which are reported in the consolidated statement of activities for the year ended June 30, On March 31, 2016, NESA was formally merged with the University, with the University being the sole surviving entity. The University participates in student financial aid programs sponsored by the United States Department of Education, the Commonwealth of Massachusetts, and other states within the United States of America. These programs facilitate the payment of tuition and other expenses for students. Note 2 - Summary of Significant Accounting Policies Basis of Presentation The consolidated financial statements of the University have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America. The University prepares its financial statements in accordance with financial reporting required for not-for-profit organizations. Under those standards, resources are classified for accounting and reporting purposes into three net asset categories according to externally imposed restrictions. The standards also require that unconditional promises to give (pledges) be recorded as receivables and revenues for each net asset category in accordance with donor-imposed restrictions. Accordingly, net assets of the University are classified and reported as follows: Unrestricted: net assets not subject to donor stipulation or other legal restriction, which may be designated for specific purposes by management or the Board of Trustees. Temporarily restricted: net assets whose use is limited by law or subject to donor-imposed stipulations that may or will be met either by actions of the University or the passage of time. Permanently restricted: net assets subject to donor-imposed stipulations that they be maintained permanently by the University. Generally, the donors of these assets permit the University to use all or part of the income earned on related investments for general or specific purposes. 6

9 Notes to Consolidated Financial Statements Note 2 - Summary of Significant Accounting Policies (Continued) Basis of Presentation (Continued) All contributions are considered to be available for unrestricted use unless specifically restricted by the donor. Contributions received that are designated for future periods or restricted by the donor for specific purposes are reported as temporarily or permanently restricted, increasing those net asset classes. When a qualifying expenditure occurs or a time restriction expires, temporarily restricted net assets are recognized in unrestricted net assets as net assets released from restrictions in the consolidated statements of activities. Cash and Cash Equivalents Cash equivalents consist of short-term, highly liquid investments which are readily convertible into cash. Cash restricted for grants and loans is included in cash and cash equivalents in the consolidated statements of financial position and amounted to $1,376,154 and $1,463,622 for the years ended June 30, 2016 and 2015, respectively. Cash and cash equivalents held by investment managers are considered part of investments given that such funds are subject to near term reinvestment and other restrictions imposed by managers. The University maintains cash in various investment and banking institutions, which periodically may exceed federally insured limits. The University has not experienced losses associated with these deposits. Funds Held in Trust Funds held in trust represent resources administered by the University or by outside trustees, with the University deriving income or a residual interest from the assets of such funds. Funds held in trust are recognized at the fair market value when the University is notified of their existence subject to changes in estimates in future periods. Fair market value is determined in accordance with fair value policies described in Note 6. Funds are classified as either temporarily or permanently restricted contributions and net assets depending on donor-imposed stipulations. Investments Investments are carried at fair market value in accordance with fair value policies described in Note 6. 7

10 Notes to Consolidated Financial Statements Note 2 - Summary of Significant Accounting Policies (Continued) Property and Equipment Property and equipment are carried at acquisition cost, net of accumulated depreciation. Maintenance and repairs are expensed as incurred, and improvements are capitalized. For assets placed in service, depreciation is computed using the straight-line method over the estimated useful lives of the assets, which are as follows: Buildings Furniture, equipment and vehicles Software and computer equipment 30 years 7 years 3 years Tuition, Fees and Auxiliary Enterprises Tuition, fees and auxiliary enterprise revenues are recognized when services are delivered. Summer session revenues are allocated to earned and deferred revenue based on the percentage of completion of related classes. Deposits with Bond Trustees Deposits with bond trustees are carried at fair market value in accordance with fair value policies described in Note 6. Operations The consolidated statements of activities reports changes in unrestricted net assets from operating and nonoperating activities. Unrestricted operating revenues consist of those items attributable to the University s primary mission of providing education. Investment returns, certain contributions and other amounts not directly related to the University s educational activities are classified as non-operating. The University reports operating expenses by their functional classification. Accordingly, depreciation, interest and operating and maintenance expenses have been allocated to functional classifications based on building square footage. Fundraising Expenses Fundraising expenses are reported as institutional support in the consolidated statements of activities and were $895,316 and $1,106,015 for the years ended June 30, 2016 and 2015, respectively. Income Tax Status The University is recognized as an organization exempt from Federal income tax under Section 501(c)(3) of the Internal Revenue Code. Certain activities of exempt organizations may be subject to Federal and state taxation as unrelated business income. No provision for income taxes has been made in these consolidated financial statements. 8

11 Notes to Consolidated Financial Statements Note 2 - Summary of Significant Accounting Policies (Continued) Income Tax Status (Continued) The University accounts for uncertain tax positions based on the likelihood of positions being sustained on their technical merits while under scrutiny by the applicable taxing authority. If tax positions are deemed to carry significant uncertainty, unrecognized tax liabilities are estimated for disclosure based on a cumulative probability assessment that aggregates the estimated liability for all uncertain tax positions. The University has identified its tax status as an exempt organization and determination of business income as related or unrelated to its exempt purposes as its only significant tax positions. The University has determined there are no uncertain tax positions requiring disclosure. The University is not currently under examination by any taxing jurisdiction. The University s Federal information returns are generally open to examination for three years following the date filed. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates include allowances for various receivables and loans, estimated useful lives of property and equipment, valuation of certain investments and funds held in trust, and the validity and completeness of satisfaction of donor restrictions. Actual results could differ from estimates. Reclassifications Certain reclassifications have been made to the prior year financial statements in order to conform with the current year presentation. During 2016, the University retrospectively adopted Financial Accounting Standards Board Accounting Standards Update No , Fair Value Measurements (Topic 820) Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent), and investments measured at NAV are now presented in a separate column in the related footnote disclosure for 2016 and Subsequent Events For purposes of determining the effects of subsequent events on these financial statements, management has evaluated events through September 15, 2016, the date these financial statements were issued. 9

12 Notes to Consolidated Financial Statements Note 3 - Other Receivables At June 30, other receivables consisted of the following: Student and other accounts receivable $ 6,677,109 $ 5,831,159 Allowance for doubtful student accounts (1,032,296) (708,763) Net student and other accounts receivable 5,644,813 5,122,396 Long-term lease receivable 5,662,215 6,518,067 $ 11,307,028 $ 11,640,463 Note 4 - Student Loans Receivable The University makes uncollateralized loans to students based on financial need. The Health Professions Student Loans (HPSL) and the Perkins Loans are campus based programs that are subject to Federal eligibility requirements. The programs were funded over the years with Federal funds along with a modest match from the University. As loans are repaid, funds collected are re-loaned to other students. The advances of Federal funds are ultimately refundable should the program cease or should the University elect to no longer participate in the program, and accordingly, such advances (subject to certain adjustments) are classified as liabilities in the consolidated statements of financial position. The University utilizes the services of a third party for billing, collection, and other requirements associated with these programs. At June 30, student loans receivable consisted of the following: Health Professions Student Loans ("HPSL") $ 5,668,357 $ 5,678,033 Perkins Loans 3,751,670 3,688,450 Institutional Loans 40, ,086 9,460,864 9,774,569 Less: allowance for doubtful accounts (10,837) (250,737) Student loans receivable, net $ 9,450,027 $ 9,523,832 At June 30, 2016, the following amounts were past due under student loan programs: 1-59 Days Past Due Days Past Due 90+ Days Past Due Total Past Due $ 159,518 $ 31,790 $ 636,357 $ 827,665 10

13 Notes to Consolidated Financial Statements Note 4 - Student Loans Receivable (Continued) Amounts due under the Perkins and HPSL programs are guaranteed by the government and, therefore, no reserves are placed on any past due balances under these programs. If amounts under these programs are ultimately deemed uncollectible, such loans are turned over to the Federal government, which results in a reduction in advances from the Federal government. Allowances for doubtful accounts for the Institutional loans are established based on collection experience and current economic factors which, in management s judgment, could influence the ability of loan recipients to repay their loans. Institutional loan balances are written off only when they are deemed to be permanently uncollectible. Note 5 - Prepaid Expenses and Other Assets Prepaid expenses and other assets consisted of the following at June 30: Prepaid expenses $ 1,754,531 $ 1,218,501 Security deposit - lease 593, ,951 Life insurance cash surrender value 2,047,322 1,896,333 $ 4,394,858 $ 3,707,785 Life insurance is maintained on certain key employees for the benefit of the University in the event of an untimely death of any such individual. Note 6 - Investments and Fair Value of Financial Instruments Investments by net asset class consisted of the following at June 30: Unrestricted net assets $ 637,062,456 $ 550,883,230 Temporarily restricted net assets 8,377,920 9,797,452 Permanently restricted net assets 17,901,898 17,477,115 $ 663,342,274 $ 578,157,797 11

14 Notes to Consolidated Financial Statements Note 6 - Investments and Fair Value of Financial Instruments (Continued) For the years ended June 30, total investment return is summarized as follows: Investment income: From investments $ 10,461,365 $ 9,363,898 From deposits with trustees and other 138, ,812 10,600,141 9,532,710 Net realized and unrealized losses on investments (29,680,348) (7,149,935) Total investment (loss) return $ (19,080,207) $ 2,382,775 Custodial and investment management fees expense was $1,143,409 and $755,058 for the years ended June 30, 2016 and 2015, respectively, and is reported as a reduction of investment income above. The University follows fair value standards for accounting for certain items on a recurring and non-recurring basis. The standard defines fair market value as the price the University would receive upon selling an asset, or pay in transferring a liability in an orderly transaction with a market participant in the principal or most advantageous market. The standards also permit for the presentation of certain investments at the Net Asset Value (NAV) as a practical expedient to determining fair value. The standard establishes a three-tiered hierarchy that prioritizes the inputs used to measure fair value but for items carried at NAV which are separately presented. The hierarchy gives the highest priority to unadjusted prices in active markets (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Assets and liabilities with actively quoted prices generally have a high degree of observable pricing inputs, whereas increased judgment and estimation is required in measuring fair market value of assets and liabilities lacking active market quotations. The University classifies assets and liabilities measured on a recurring basis into Level 1 (valued using quoted prices from active markets for identical assets), Level 2 (not traded on an active market for which observable market inputs are readily available) and Level 3 (valued based on significant unobservable inputs). 12

15 Notes to Consolidated Financial Statements Note 6 - Investments and Fair Value of Financial Instruments (Continued) Deposits with Bond Trustees: Deposits with bond trustees consist of cash and money market funds valued at quoted prices in active markets and are classified as Level 1 assets. Funds Held in Trust: Funds held in trust are classified as Level 3 because the University s share in these agreements does not have an active market. The University estimates the recurring fair value based on the University s share of the underlying investment portfolio that consists of actively traded equities, bonds and money market funds. Contributions Receivable: Contributions receivable are measured on a non-recurring basis, and are considered Level 3 assets because their fair value is determined using an income approach. Their valuation is determined based on the expected timing of contribution receipts at the date of the initial pledge and a fair value discount rate. The University s financial assets accounted for at fair value on a recurring basis as of June 30 are presented in the tables below. Financial assets and liabilities measured on a non-recurring basis, such as contributions receivable and gift annuity obligations, are excluded from these tables. June 30, 2016 Quoted Prices Limited Investments in Active Market Total Fair Measured Markets Activity Value at NAV (Level 1) (Level 3) Investments: Short-term investments $ 61,019,836 $ - $ 61,019,836 $ - Fixed income 50,795,140 7,290,291 43,504,849 - Domestic equity 120,155, ,155,366 - International equity 111,004,462 34,911,674 76,092,788 - Real estate 33,803,886 10,498,933 23,304,953 - Asset allocation 150,388, ,388, Inflation protection 26,839,532 26,839, Alternatives 109,335, ,335, Total investments 663,342, ,264, ,077,792 - Deposits with bond trustees 5,001,753-5,001,753 - Funds held in trust 1,554, ,554,642 Total $ 669,898,669 $ 339,264,482 $ 329,079,545 $ 1,554,642 13

16 Notes to Consolidated Financial Statements Note 6 - Investments and Fair Value of Financial Instruments (Continued) June 30, 2015 Quoted Prices Limited Investments in Active Market Total Fair Measured Markets Activity Value at NAV (Level 1) (Level 3) Investments: Short-term investments $ 7,992,911 $ - $ 7,992,911 $ - Fixed income 46,494,106 4,927,225 41,566,881 - Domestic equity 120,989, ,989,918 - International equity 107,575,239 38,393,308 69,181,931 - Real estate 23,035,027 6,696,116 16,338,911 - Asset allocation 164,217, ,217, Inflation protection 23,131,310 23,131, Alternatives 84,721,839 84,721, Total investments 578,157, ,087, ,070,552 - Deposits with bond trustees 4,981,351-4,981,351 - Funds held in trust 1,724, ,724,725 Total $ 584,863,873 $ 322,087,245 $ 261,051,903 $ 1,724,725 The following table presents activity for fiscal years ended June 30 for the University s Level 3 assets: Funds Held in Trust Balance at July 1, 2014 $ 1,860,031 Net loss (135,306) Balance at June 30, ,724,725 Net loss (170,083) Balance at June 30, 2016 $ 1,554,642 There were no transfers between levels during the years ended June 30, 2016 and In addition, management has no plans to redeem investments at other than the NAV per share at year end. Of the NAV investments, $300,156,036 allow for a redemption within 90 days notice, while $39,108,446 require longer notice or are illiquid. Total unfunded commitments under investment agreements amounted to $8,582,421 at June 30,

17 Notes to Consolidated Financial Statements Note 7 - Endowment The University s endowment is held in the investment portfolio (see Note 6) and consists of approximately 200 individually named funds which are invested and administered in accordance with donor stipulation or board designation. The University has interpreted the Massachusetts Uniform Prudent Management of Institutional Funds Act (UPMIFA) as requiring the preservation of the historic dollar value of the original gift as of the gift date of donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the University classifies as permanently restricted net assets: (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment, and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The accumulated unspent gains associated with donor-restricted endowment funds are classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the University in a manner consistent with the standard of prudence prescribed by UPMIFA. Unrestricted endowments consist of board-designated funds. In accordance with UPMIFA, the University considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds and unspent gains, as applicable: The duration and preservation of the fund The purposes of the University and the donor-restricted endowment fund General economic conditions The possible effects of inflation and deflation The expected total return from income and the appreciation of investments Other resources of the University The investment policies of the University No appropriations of net capital appreciation were made during the years ended June 30, 2016 and Investment income released to operations consisted of interest and dividend earnings designated for scholarship expenditure or the general purposes of the University. 15

18 Notes to Consolidated Financial Statements Note 7 - Endowment (Continued) The University s investments are managed in accordance with sound practices emphasizing long-term fundamentals to achieve long-term rates of return exceeding inflation. Investments are diversified to reduce volatility and risk associated with concentrated positions, and returns sought are those comparing favorably to other endowments, foundations and appropriate benchmarks. Portfolio volatility is intended to approximate the weighted composite of market indices correlating with the policy target portfolio, periodically adjusted for market conditions. To satisfy investing objectives, the University relies on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends). A diversified target asset allocation places emphasis on equities, fixed income, real estate and managers employing multi-asset and absolute return strategies. Changes in endowment net assets were as follows for the years ended June 30: Temporarily Permanently Unrestricted Restricted Restricted Total Net assets at July 1, 2014 $ 7,897,247 $ 10,216,381 $ 16,283,252 $ 34,396,880 Investment income 138, ,499 78, ,684 Investment loss (121,405) (423,727) - (545,132) Total investment return 16,827 (20,228) 78,953 75,552 Contributions - - 1,114,910 1,114,910 Transferred to operations (159,604) (398,701) - (558,305) Net assets at June 30, ,754,470 9,797,452 17,477,115 35,029,037 Investment income 137, ,451 77, ,135 Investment loss (404,482) (1,419,720) - (1,824,202) Total investment return (267,201) (1,015,269) 77,403 (1,205,067) Contributions , ,430 Transferred from (to) operations 938,934 (404,263) - 534,671 Net assets at June 30, 2016 $ 8,426,253 $ 8,377,920 $ 17,901,898 $ 34,706,071 Unrestricted (board-designated) endowments are presented in the consolidated statements of financial position as funds held for long-term investment. 16

19 Notes to Consolidated Financial Statements Note 7 - Endowment (Continued) Restricted funds are held as follows: 2016 Temporarily Permanently Restricted Restricted Total Scholarships $ 2,750,542 $ 7,324,482 $ 10,075,024 General purposes 5,627,378 10,577,416 16,204,794 8,377,920 17,901,898 26,279,818 Other funds 972, ,066 1,908,346 Total restricted funds $ 9,350,200 $ 18,837,964 $ 28,188, Temporarily Permanently Restricted Restricted Total Scholarships $ 3,064,527 $ 6,952,690 $ 10,017,217 General purposes 6,732,925 10,524,425 17,257,350 9,797,452 17,477,115 27,274,567 Other funds 1,068, ,331 2,066,194 Total restricted funds $ 10,866,315 $ 18,474,446 $ 29,340,761 Note 8 - Employee Benefit Plans Eligible faculty and staff of the University are participants in a defined contribution retirement plan offering investment choices through Fidelity Investments, the Teachers Insurance and Annuity Association and College Retirement Equities Fund (TIAA-CREF). The University contributes 10% of eligible compensation to this plan for the benefit of participants each plan year. Total contributions for the years ended June 30, 2016 and 2015 amounted to $4,910,170 and $4,689,796, respectively. The University also offers tax-deferred retirement plans regulated by the Internal Revenue Code Sections 403(b) and 457(b) which allow employees to contribute pre-tax compensation deferrals to these plans, subject to annual statutory limitations. 17

20 Notes to Consolidated Financial Statements Note 9 - Property and Equipment Property and equipment consisted of the following at June 30: Used in University operations: Land and buildings $ 247,495,220 $ 242,054,820 Furniture and equipment 27,377,078 26,237,497 Construction in Progress 8,601, ,015 Total used in operations 283,473, ,890,332 Less: Accumulated depreciation (100,004,306) (88,223,320) Net used in operations 183,469, ,667,012 Research space leased to hospital 38,558,663 38,558,663 Other rental properties 17,046,252 20,201,421 Less: Accumulated depreciation (27,991,412) (26,839,374) Net rental properties 27,613,503 31,920,710 Property and equipment, net $ 211,082,820 $ 212,587,722 Depreciation expense was as follows: Used in University operations $ 11,344,367 $ 11,132,270 Rental properties 1,652,165 2,072,150 Total depreciation $ 12,996,532 $ 13,204,420 18

21 Notes to Consolidated Financial Statements Note 10 - Bonds and Other Obligations Payable Bonds Payable: Massachusetts Development Finance Agency Revenue Bonds, 2013 Series F. $ million are due under annual serial maturities from 2016 to $5.895 million term bonds are due July 1, 2032 and July 1, Serial bonds bear interest from 3% to 5% and term bonds bear interest at 4%. Massachusetts Development Finance Agency Revenue Bonds, 2013 Series G. $7.395 million are due under annual serial maturities from 2016 to $6.315 million term bonds are due July 1, 2027 and July 1, Serial bonds bear interest from 1.474% to 3.74% and term bonds bear interest at 4% and 4.524%. Massachusetts Development Finance Agency Revenue Bonds, 2015 Series H. $ million are due under annual serial maturities from 2016 to $6.235 million term bonds are due July 1, 2035 and July 1, Serial bonds bear interest from 3% to 5% and term bonds bear interest at 3.5% and 5%. Massachusetts Development Finance Agency Revenue Bonds, 2015 Series I. $ million are due under annual serial maturities from 2016 to $ million term bonds are due July 1, 2029 and July 1, Serial bonds bear interest from 0.758% to 3.357% and term bonds bear interest at 3.907% and 4.305%. June 30, $ 21,725,000 $ 22,745,000 13,710,000 14,455,000 20,080,000 20,840,000 24,460,000 25,725,000 Notes Payable: Commercial paper due July 25, 2016, discounted at 0.55% 14,488,000 16,912,000 Total outstanding debt 94,463, ,677,000 Net unamortized premiums, discounts and issue costs 2,301,107 2,793,332 Bonds and other obligations payable $ 96,764,107 $ 103,470,332 19

22 Notes to Consolidated Financial Statements Note 10 - Bonds and Other Obligations Payable (Continued) Bond issue costs and premiums are amortized on a straight-line basis through the underlying bond maturity dates. Bonds include a pledge of substantially all gross receipts. Certain of the above agreements contain covenants both financial and otherwise. In 2015, certain bonds were refinanced which resulted in a loss of $5.28 million. In 1994, the University granted its lenders a mortgage under a commercial paper loan agreement which facilitated construction of lab space leased to Brigham and Women s Hospital (the Hospital ). Commercial paper outstanding at June 30, 2016 amounted to $ million. The University has a liquidity facility which serves as collateral to the commercial paper. The liquidity facility was amended during the year ended June 30, 2016 to decrease the line from $25,024,000 to $15,120,000 to approximate the commercial loan outstanding balance. There was no outstanding balance on the liquidity facility as of June 30, 2016 or The liquidity facility has a termination date of July 1, Under the terms of the lease, the University may refinance the commercial paper on a taxable or tax-exempt basis provided certain conditions are met. Under the refinancing provision, the Hospital agrees to use reasonable efforts to assist the University in obtaining substitute financing. If such refinancing becomes available, the Hospital agrees such refinancing would be amortized over a period of 20 years from the rent commencement date and that the lease would be amended accordingly. Under the terms of the lease, rent payments will provide for reductions in commercial paper outstanding in accordance with the following schedule for the years ended June 30, as follows: $2,528,000; $2,528,000; $2,944,000; $2,944,000; $3,354,000 and years thereafter - $190,000. All outstanding commercial paper at June 30, 2016 amounting to $14,488,000 was due July 25, 2016 and was issued at a discount of 0.55%. The aggregate amount of maturities for all commercial paper and bonds payable and the aggregate amount of sinking funds requirements for servicing interest and principal on the University s revenue bonds for the years ended June 30 is as follows: Years Ending June 30, Commercial Paper and Bonds Payable Sinking Funds Requirements 2017 $ 17,948,000 $ 6,473, ,535,000 6,468, ,635,000 6,468, ,750,000 6,467, ,875,000 6,464,000 Thereafter 61,720,000 80,493,000 $ 94,463,000 $ 112,833,000 20

23 Notes to Consolidated Financial Statements Note 11 - Lease with Brigham and Women s Hospital The University rents research facilities abutting the Boston campus to the Hospital under a long-term lease arrangement. Rent is payable by the Hospital for a period of 25 years from the rent commencement date of October 1, Under the lease, the Hospital is responsible for servicing the University s commercial paper indebtedness. Annual rents consist of interest payments and required principal reductions in commercial paper outstanding, and vary depending on the repayment schedule and market interest rates for the short-term paper. The long-term lease will fully discharge the University s commercial paper indebtedness incurred to construct the leased premises. Rent revenue under the lease is recognized on a straight-line basis over the 25-year rental period. Rent is accrued annually and recorded in a long-term lease receivable account, which is reported with other receivables in the consolidated statements of financial position. Commercial paper principal reductions funded by the Hospital are posted to the long-term lease receivable, reducing its balance. Rental income from the arrangement is reported net of interest and depreciation expense in non-operating other in the consolidated statements of activities. The Hospital may exercise three successive 5-year options at a rental rate that relates to market. Under the terms of the lease, the Hospital has the right to use the premises for medical research and other lawful purposes subject to certain restrictions relating to the safety and welfare of the University s students and employees. The Hospital is obligated for its allocable share of repairs and maintenance costs of the facility. The Hospital further covenants that a security deposit of $250,000 will be maintained and that earnings will be reinvested until the end of the lease. Such deposit is currently included as other assets in the consolidated statements of financial position with a market value at June 30, 2016 of $593,005. Note 12 - Lease Commitments The University has non-cancelable operating leases for dining, residence hall and academic space, leases which expire at various dates through June 30, Lease expense is recognized on a straight-line basis over the respective lease terms. Total rent expense under these leases was $4,309,990 and $3,456,000 for the years ended June 30, 2016 and 2015, respectively. Minimum annual rental commitments under these agreements are as follows for the years ended June 30: Years Ending June 30, 2017 $ 4,008, ,005, ,704, ,811, ,003,925 Thereafter 44,602,864 $ 72,137,851 21

24 Notes to Consolidated Financial Statements Note 13 - Net Assets Released from Restrictions Net assets released from temporary donor restrictions by incurring expenses that satisfy the restricted purposes or by occurrence of events specified by the donors were as follows for the years ended June 30. Amounts released from restriction were reclassified to net assets available for operations For scholarships $ 435,574 $ 388,736 Note 14 - Supplemental Cash Flows Information Non-cash Transactions Commercial paper maturing and redeemed under the terms of the lease agreement described in Note 11 amounted to $2,424,000 and $2,112,000 for the years ended June 30, 2016 and 2015, respectively. Cash Paid for Interest Cash paid for interest was $2,690,410 and $3,762,588 for the years ended June 30, 2016 and 2015, respectively. 22

25 Supplemental Information

26 Schedule of Expenditures of Federal Awards Year Ended June 30, 2016 Federal Grantor/Pass-Through Grantor/ Program or Cluster Title Federal CFDA Number Pass-Through Entity Identifying Number Passed Through to Subrecipients Federal Expenditures Research and Development Cluster: Department of Defense Direct Program: Military Medical Research Grants $ 24,566 $ 278,623 Department of Health and Human Services: Centers for Disease Control and Prevention Pass-Through Program from: Association for Prevention Teaching and Research Centers for Disease Control and Prevention Investigations and Technical Assistance IPE-03-3,573 National Science Foundation Direct Programs: Engineering Grants ,752 Total Research and Development Cluster 24, ,948 Student Financial Assistance Programs Cluster: Department of Education Direct Programs: Federal Pell Grant Program ,210,207 Federal Supplemental Educational Opportunity Grants ,074 Federal Direct Student Loan Program ,330,610 Federal Work Study Program ,262 Federal Perkins Loan Program Loans outstanding at the beginning of the year - 3,610,060 Loans made during the year - 543,173 Total Federal Perkins Loan Program - 4,153,233 Total Department of Education - 145,371,386 Department of Health and Human Services: Health Professions Student Loan Program Loans outstanding at the beginning of the year - 5,626,384 Loans made during the year - 489,302 Total Health Professions Student Loan Program - 6,115,686 Total Student Financial Assistance Programs Cluster - 151,487,072 Other Programs: Department of Health and Human Services: Administration for Community Living Pass-Through Programs from: Central Massachusetts Agency on Aging - Special Programs for the Aging - Title III, Part D Disease Prevention and Health Promotion Services ,591 Somerville-Cambridge Elder Services - Special Programs for the Aging - Title III, Part D Disease Prevention and Health Promotion Services ,268 City of Boston - Special Programs for the Aging - Title III, Part D Disease Prevention and Health Promotion Services ,159 Total Department of Health and Human Services - Other Programs - 25,018 Total Expenditures of Federal Awards $ 24,566 $ 151,815,038 See Independent Auditors' Report and accompanying notes to Schedule of Expenditures of Federal Awards. 23

27 Notes to Schedule of Expenditures of Federal Awards Year Ended June 30, 3016 Note 1 - Basis of Presentation The accompanying Schedule of Expenditures of Federal Awards (the Schedule ) includes the federal award activity of MCPHS University (the University ) under programs of the Federal government for the year ended June 30, The information in this Schedule is presented in accordance with the requirements of Title 2 U.S Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance ). Because the Schedule presents only a selected portion of the operations of the University, it is not intended to and does not present the consolidated financial position, changes in net assets or cash flows of the University. The University includes loans granted under the Federal Direct Student Loans Program and other Federal campus based loan programs as expenditures of Federal awards. Note 2 - Summary of Significant Accounting Policies Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following, as applicable, either the cost principles in OMB Circular A-21, Cost Principles for Education Institutions, or the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Indirect costs allocated to federal awards for the year ended June 30, 2016 were based on predetermined fixed rates where applicable, and accordingly, the University has elected not to use the 10-percent de minimus indirect cost rate under the Uniform Guidance. Note 3 - Federal Student Loan Programs The federal student loan programs listed subsequently are administered directly by the University and balances and transactions relating to these programs are included in the University s basic consolidated financial statements. Loans outstanding at the beginning of the year and loans made during the year are included in the federal expenditures presented in the Schedule. The balance of loans outstanding at June 30, 2016 consists of: Federal CFDA Amount Cluster/Program Title Number Outstanding Federal Perkins Loan Program $ 3,751,670 Health Professions Student Loans ,668,357 See Independent Auditors Report. 24

28 Reporting Under Government Auditing Standards

29 Independent Auditors 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 The Board of Trustees MCPHS University and Subsidiary Boston, Massachusetts We have audited, in accordance with the 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, the consolidated financial statements of MCPHS University and Subsidiary (the University ), which comprise the consolidated statement of financial position as of June 30, 2016, and the related consolidated statements of activities and cash flows for the year then ended, and the related notes to the consolidated financial statements, and have issued our report thereon dated September 15, Internal Control Over Financial Reporting In planning and performing our audit of the consolidated financial statements, we considered the University s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the consolidated financial statements, but not for the purpose of expressing an opinion on the effectiveness of the University s internal control. Accordingly, we do not express an opinion on the effectiveness of the University s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 25

30 Compliance and Other Matters As part of obtaining reasonable assurance about whether the University s consolidated financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the University s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the University s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. September 15, 2016 Boston, Massachusetts 26

31 Reporting Under the Uniform Guidance

32 Independent Auditors Report on Compliance For Each Major Federal Program and Report on Internal Control Over Compliance Required by the Uniform Guidance The Board of Trustees MCPHS University and Subsidiary Boston, Massachusetts Report on Compliance for Each Major Federal Program We have audited MCPHS University and Subsidiary s (the University ) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on the University s major federal program for the year ended June 30, 2016 except the requirements discussed in the second paragraph of this report. The University s major federal program is identified in the summary of auditors results section of the accompanying schedule of findings and questioned costs. We did not audit the University s compliance with the billing and certain of the collections and due diligence compliance requirements specified by the Federal Perkins Loans Program ( Perkins Loans ) and the Health Professions Student Loan Program ( Health Professions Loans ). Those requirements govern functions performed by Educational Computer Systems, Inc. (d/b/a Heartland ECSI) ( ECSI ). Since we did not apply auditing procedures to satisfy ourselves as to compliance with those requirements, the scope of work was not sufficient to enable us to express, and we do not express, an opinion on compliance with those requirements. ECSI s compliance with the requirements governing the functions that it performs for the University was examined by other accountants in accordance with the U.S. Department of Education s Audit Guide, Audits of Federal Student Financial Assistance Programs at Participating Institutions and Institution Servicers. Our report does not include the results of the other accountants examination of ECSI. Management s Responsibility Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditors Responsibility Our responsibility is to express an opinion on compliance for the University s major federal program based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance ). Those 27

33 Auditors Responsibility (Continued) standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the University s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for the major federal program. However, our audit does not provide a legal determination of the University s compliance. Opinion on Each Major Federal Program In our opinion, the University complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on its major federal program for the year ended June 30, Report on Internal Control Over Compliance Management of the University is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the University s internal control over compliance with the types of requirements that could have a direct and material effect on the major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for the major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the University s internal control over compliance. Requirements governing billing and certain of the collections and due diligence compliance requirements specified by the Perkins Loans and Health Professions Loans are performed by ECSI. Internal control over compliance related to such functions was reported on by other accountants in accordance with the U.S. Department of Education s Audit Guide, Audits of Federal Student Financial Assistance Programs at Participating Institutions and Institution Servicers. Our report does not include the results of the other accountants testing of ECSI s internal control over compliance related to such functions. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. 28

34 Report on Internal Control Over Compliance (Continued) Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. September 15, 2016 Boston, Massachusetts 29

35 Schedule of Findings and Questioned Costs Year Ended June 30, 3016 Section 1 Summary of Auditors Results Financial Statements 1. Type of report the auditor issued on whether the financial statements audited were prepared in accordance with GAAP: Unmodified 2. Internal control over financial reporting: a. Material weaknesses identified? No b. Significant deficiencies identified? None Reported 3. Noncompliance material to the financial statements noted? No Federal Awards 1. Internal control over major federal programs: a. Material weaknesses identified? No b. Significant deficiencies identified? None Reported 2. Type of auditors report issued on compliance for major federal programs: 3. Any audit findings disclosed that are required to be reported in accordance with 2 CFR (a)? Unmodified No 4. Identification of major federal programs: CFDA Number Cluster Program* Name of Federal Program or Cluster Student Financial Assistance Programs Cluster 5. Dollar threshold used to distinguish between Type A and Type B programs: $750, Auditee qualified as a low-risk auditee? Yes * See Schedule of Expenditures of Federal Awards for a complete listing of the student financial assistance program cluster and their related CFDA numbers. 30

36 Schedule of Findings and Questioned Costs Year Ended June 30, 3016 Section 2 Financial Statement Findings None noted. Section 3 Federal Award Findings and Questioned Costs None noted. 31

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