UNIVERSITY OF NORTH CAROLINA AT WILMINGTON INTERCOLLEGIATE ATHLETICS PROGRAM

UNIVERSITY OF NORTH CAROLINA AT WILMINGTON INTERCOLLEGIATE ATHLETICS PROGRAM INDEPENDENT ACCOUNTANTS REPORT ON THE APPLICATION OF AGREED-UPON PROCEDURES FOR THE YEAR ENDED JUNE 30, 2015

UNIVERSITY OF NORTH CAROLINA AT WILMINGTON INTERCOLLEGIATE ATHLETICS PROGRAM TABLE OF CONTENTS JUNE 30, 2015 Page(s) Independent Accountants Report on the Application of Agreed-Upon Procedures 1 13 Exhibits Exhibit I Statement of Revenues and Expenses 14 Exhibit II Notes to Statement of Revenues and Expenses 15 Supplement to Statement of Revenues and Expenses Variation Analysis of the Total Revenues and Expenses to Prior Period Amounts and Budget Estimates 16

INDEPENDENT ACCOUNTANTS REPORT ON THE APPLICATION OF AGREED-UPON PROCEDURES Dr. Jose Sartarelli, Chancellor, University of North Carolina at Wilmington: We have performed the procedures enumerated below, which were agreed to by the Chancellor of the University of North Carolina at Wilmington (the University), solely to assist the University in evaluating whether the accompanying statement of revenues and expenses (Exhibit I) of the University of North Carolina at Wilmington Intercollegiate Athletics Program (the Program) is in compliance with the National Collegiate Athletic Program (NCAA) Bylaw 3.2.4.15 for the year ended June 30, 2015. The University s management is responsible for the statement of revenues and expenses (the Statement) and the statement s compliance with those 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 those parties specified in this 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 purpose. Exceptions totaling the lesser of $25,000 or 10% of the line item total to which an agreed-upon procedure has been applied to, other than exceptions related to internal control procedures of the Program, for which there are no thresholds, have been reported. The procedures that we performed and our findings are as follows: Agreed-Upon Procedures Related to the Statement of Revenues and Expenses Procedure All Revenue Categories 1. Compare and agree each operating revenue category reported in the statement during the reporting period to supporting schedules provided by the Program. If a specific reporting category is less than 0.5% of the total revenues, no procedures are required for that specific category. 2. Compare and agree a sample of operating revenue receipts obtained from the above operating revenue supporting schedules to adequate supporting documentation. 3. Compare each major revenue account over 10% of the total revenues to prior period amounts and budget estimates. Obtain and document an understanding of any variations over the lesser of $1M or 10%. Report the analysis as a supplement to the final Agreed-Upon procedures report. No exceptions noted and amounts and explanations for variations from the prior period are included in the supplement on page 16. - 1 -

Ticket Sales 1. Compare tickets sold during the reporting period, complimentary tickets provided during the reporting period and unsold tickets to the related revenue reported by the Program in the statement and the related attendance figures and recalculate totals. Student Fees 1. Compare and agree student fees reported by the Program in the statement for the reporting to student enrollments during the same reporting period and recalculate totals. 2. Obtain and document an understanding of Program s methodology for allocating student fees to intercollegiate athletics programs. 3. 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 reports and student fee totals. We were able to reconcile student fees reported by the Program to student enrollment data provided by the University within approximately $98,000 or 1.07%. We noted that regular differences occur primarily due to refunds of athletic fees for dropped classes where the timing of such refunds may fall in a different fiscal year. An understanding of the institution s methodology was gained, and we noted that the allocation was in accordance with the University s methodology. Direct State or Other Governmental Support 1. Compare direct state or other governmental support recorded by the Program during the reporting period with state appropriations, institutional authorizations and/or other corroborative supporting documentation and recalculate totals. As there was no direct state or other governmental support for the year ended June 30, 2015, procedure was not performed. Direct Institutional Support 1. Compare the direct institutional support recorded by the Program during the reporting period with the institutional supporting budget transfers documentation and other corroborative supporting documentation and recalculate totals. - 2 -

Less Transfers to Institution 1. Compare the transfers back to the Institution with permanent transfers back to the Institution from the athletics department and recalculate totals. As there were no transfers to institution for the year ended June 30, 2015, Indirect Institutional Support 1. Compare the indirect institutional support recorded by the Program during the reporting period with expense payments, cost allocation detail and other corroborative supporting documentation and recalculate totals. As there was no indirect institutional support for the year ended June 30, 2015, Guarantees 1. Select a sample of settlement reports for away games during the reporting period and agree each selection to the Program s general ledger and/or the statement and recalculate totals. 2. Select a sample of contractual agreements pertaining to revenues derived from guaranteed contests during the reporting period and compare and agree each selection to the Program s general ledger and/or the statement and recalculate totals. Contributions 1. Any contributions of moneys, goods or services received directly by an intercollegiate athletics program from any affiliated or outside organization, agency or group of individuals (two or more) not included above (e.g., contributions by corporate sponsors) that constitutes 10 percent or more in aggregate for the reporting year of all contributions received for intercollegiate athletics during the reporting periods shall obtain and review supporting documentation for each contribution and recalculate totals. In-Kind 1. Compare the in-kind recorded by the Program during the reporting period with a schedule of in-kind donations and recalculate totals. Compensation and Benefits Provided by a Third-Party 1. Obtain the summary of revenues from affiliated and outside organizations (the "Summary") as of the end of the reporting period from the Program and select a sample of funds from the Summary and compare and agree each selection to supporting documentation, the Program's general ledger and/or the Summary and recalculate totals. As there were no third party support for the year ended June 30, 2015, this - 3 -

2. If the third party was audited by independent auditors, obtain the related independent auditors' report. As there were no third party support for the year ended June 30, 2015, this Media Rights 1. Obtain and inspect agreements to understand the institution's total media (broadcast, television, radio) rights received by the Program or through their conference offices as reported in the statement. 2. Compare and agree the media right revenues to a summary statement of all media rights identified, if applicable, and the Program s general ledger and recalculate totals. Ledger totals may be different for total conference distributions if media rights are not broken out separately. As there were no media rights revenue for the year ended June 30, 2015, this procedure was not performed. As there were no media rights revenue for the year ended June 30, 2015, this procedure was not performed. NCAA Distributions 1. Compare the amounts recorded in the revenue and expense reporting to general ledger detail for NCAA distributions and other corroborative supporting documents and recalculate totals. Conference Distributions 1. Obtain and inspect agreements related to the Program's conference distributions and participation in revenues from tournaments during the reporting period to gain an understanding of the relevant terms and conditions. 2. Compare and agree the related revenues to the Program's general ledger, and/or the statement and recalculate totals. Agreements were obtained and an understanding of the relevant terms and conditions was gained. Program Sales, Concessions, Novelty Sales and Parking 1. Compare the amount recorded in the revenue reporting category to a general ledger detail of program sales, concessions, novelty sales and parking as well as any other corroborative supporting documents and recalculate totals. As there were no program sales, concessions, novelty sales and parking revenue for the year ended June 30, 2015, this procedure was not performed. - 4 -

Royalties, Licensing, Advertisements and Sponsorships 1. Obtain and inspect agreements related to the Program's participation in revenues from royalties, licensing, advertisements and sponsorships during the reporting period to gain an understanding of the relevant terms and conditions. 2. Compare and agree the related revenues to the Program's general ledger, and/or the statement and recalculate totals. Agreements were obtained and an understanding of the relevant terms and conditions was gained. Sports Camp Revenues 1. Inspect sports camp contract(s) between the institution and person(s) conducting institutional sports-camps or clinics during the reporting period to obtain an understanding of the Program's methodology for recording revenues from sports camps. 2. 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 the Program's general ledger, and/or the statement and recalculate totals. As the sports camp revenues for the year ended June 30, 2015 were below 0.5% of total revenue, this procedure was not performed. As the sports camp revenues for the year ended June 30, 2015 were below 0.5% of total revenue, this procedure was not performed. Athletics Restricted Endowment and Investment Income 1. Obtain and inspect endowment agreements (if any) to gain an understanding of the relevant terms and conditions. 2. Compare and agree the classification and use of endowment and investment income reported in the statement during the reporting period to the uses of income deferred within the related endowment agreement and recalculate totals. Other 1. Perform minimum agreed-upon procedures referenced for all revenue categories and recalculate totals. No exceptions noted and amounts and explanations for variations from the prior period and the budget are reasonable. All Expense Categories 1. Compare and agree each expense category reported in the statement during the reporting period to supporting schedules provided by the institution. If a specific reporting category is less than 0.5% of the total expenses, no procedures are required for that specific category. - 5 -

2. Compare and agree a sample of expenses obtained from the above operating expense supporting schedules to adequate supporting documentation. 3. Compare each major expense account over 10% of the total expenses to prior period amounts and budget estimates. Obtain and document an understanding of any variations over the lesser of $1M or 10%. Report the analysis as a supplement to the final Agreed-Upon procedures report. No exceptions noted and amounts and explanations for variations from the prior period are included in the supplement on page 16. Athletic Student Aid 1. Select a sample of students (no less than 10% of the total student-athletes for institutions who have used NCAA's Compliance Assistant (CA) software to prepare athletic aid detail and no less than 20% of total student-athletes for institutions who have not) from the listing of institutional student aid recipients during the reporting period. 2. Obtain individual student account detail for each selection and compare total aid allocated from the related aid award letter to the student's account. 3. Perform a check of each student selected to ensure their information was reported accurately in either the NCAA s CA software or entered directly into the NCAA Membership Financial Reporting System using the following criteria: a) The equivalency value for each student-athlete in all sports, including head-count sports, need to be converted to a full-time equivalency value. The full-time equivalency value is calculated using the athletic grant amount reported on the squad list as the numerator and the full grant amount which is the total cost for tuition, fees, books, room and board for an academic year as the denominator. If using the NCAA Compliance Assistant software, this equivalency value should already be calculated for you on that squad list labeled Rev. Dist. Equivalent Award. b) If an athlete participates in more than one sport, the Rev. Dist. Equivalent Award can only be included in one sport. NCAA Compliance Assistant software will place an asterisk by the student athlete within the sport that is not countable towards grants-in-aid revenue distribution. A sample of forty-two student aid recipients was selected. - 6 -

c) All equivalency calculations should be rounded to two decimal places. The NCAA Compliance Assistant software and the on-line summary form will automatically round to two decimal places. The full grant amount should be the full cost of tuition for an academic year, not semester. d) If a sport is discontinued and the grant(s) are still being honored by the institution, the grant(s) may be included in the total. e) Student-athletes receiving athletic aid who have exhausted their athletics eligibility or are inactive due to medical reasons should be included in the grants-in-aid calculation, marked properly on the squad list and on the Grants-in-Aid submission form. f) Only athletic grants awarded in sports in which the NCAA conducts championship competitions, emerging sports for women and football should be included in the calculations. As there were no discontinued sports for the year ended June 30, 2015, this 4. Recalculate totals for each sport and overall. Guarantees 1. Obtain and inspect visiting institution's away-game settlement reports received by the institution during the reporting period and agree related expenses to the Program s general ledger and/or the statement and recalculate totals. 2. Obtain and inspect contractual agreements pertaining to expenses recorded by the Program from guaranteed contests during the reporting period. Compare and agree related amounts expensed by the institution during to the Program s general ledger and/or the statement and recalculate totals. Contractual agreements were obtained and inspected. Coaching Salaries, Benefits, and Bonuses Paid by the University and Related Entities 1. Obtain and inspect a listing of coaches employed by the Program and related entities during the reporting period. Select a sample of coaches' contracts that must include football, and men's and women's basketball from the listing. 2. Compare and agree the financial terms and conditions of each selection to the related coaching salaries, benefits, and bonuses recorded by the Program and related entities in the statement during the reporting period. A listing of all coaches employed by the Program was obtained. A sample of seven coaches was selected, including the men s and women s basketball head coach. - 7 -

3. Obtain and inspect payroll summary registers for the reporting year for each selection. Compare and agree payroll summary registers from the reporting period to the related coaching salaries, benefits and bonuses paid by the Program and related entities expense recorded by the Program in the statement during the reporting period. 4. 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 1. Obtain and inspect a listing of coaches employed by third parties during the reporting period. Select a sample of coaches' contracts that must include football, and men's and women's basketball from the listing. 2. Compare and agree the financial terms and conditions of each selection to the related coaching other compensation and benefits paid by a third party and recorded by the Program in the statement during the reporting period. 3. 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 the institution in the statement during the reporting period and recalculate totals. As there were no third party benefits or other compensation expenses for the year ended June 30, 2015, As there were no third party benefits or other compensation expenses for the year ended June 30, 2015, As there were no third party benefits or other compensation expenses for the year ended June 30, 2015, Support Staff/Administrative Salaries, Benefits and Bonuses Paid by the University and Related Entities 1. Select a sample of support staff/administrative personnel employed by the Program and related entities during the reporting period. 2. Obtain and inspect reporting period summary payroll register for each selection. Compare and agree related summary payroll register to the related support staff administrative salaries, benefits and bonuses paid by the Program and related entities expense recorded by the Program in the statement during the reporting period and recalculate totals. A sample of five support staff/administrative personnel was selected. Support Staff/Administrative Other Compensation and Benefits Paid by a Third-Party 1. Select a sample of support staff/administrative personnel employed by the third parties during the reporting period. As there were no third party benefits or other compensation expenses for the year ended June 30, 2015, - 8 -

2. Obtain and inspect reporting 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 the Program in the statement during the reporting period and recalculate totals. As there were no third party benefits or other compensation expenses for the year ended June 30, 2015, Severance Payments 1. Select a sample of employees receiving severance payments by the institution during the reporting period and agree each severance payment to the related termination letter or employment contract and recalculate totals. A sample of employees receiving severance payments was selected. Recruiting 1. Obtain and document an understanding of the Program's recruiting expense policies. 2. Compare and agree to existing institutional- and NCAA-related policies. 3. Obtain general ledger detail and compare to the total expenses reported and recalculate totals. We obtained and documented an understanding of the Program s recruiting expense policies. No exceptions noted and policies are consistent with institutional and NCAA-related policies. Team Travel 1. Obtain and document an understanding of the Program's team travel policies. 2. Compare and agree to existing institutional- and NCAA-related policies. 3. Obtain general ledger detail and compare to the total expenses reported and recalculate totals. We obtained and documented an understanding of the Program s team travel policies. No exceptions noted and policies are consistent with institutional and NCAA-related policies. Equipment, Uniforms and Supplies 1. 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 1. 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. - 9 -

Fund Raising, Marketing and Promotion 1. 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. Sports Camp Expenses 1. 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. As there were no sports camp expenses for the year ended June 30, 2015, Spirit Groups 1. 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. Athletic Facility Debt Service, Leases and Rental Fees 1. 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). 2. Compare amounts recorded to amounts listed in the general ledger detail and recalculate totals. As there were no athletic facility debt service, leases and rental expenses for the year ended June 30, 2015, As there were no athletic facility debt service, leases and rental expenses for the year ended June 30, 2015, Direct Overhead and Administrative Expenses 1. 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. Indirect Institutional Support 1. Compare the indirect institutional support recorded by the institution during the reporting period with expense payments, cost allocation detail and other corroborative supporting documentation and recalculate totals. As there was no indirect institutional support for the year ended June 30, 2015, Medical Expenses and Medical Insurance 1. 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. - 10 -

Memberships and Dues 1. 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 1. 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. ADDITIONAL MINIMUM AGREED-UPON PROCEDURES In order for NCAA to place reliance on the financial reporting for NCAA distributions purposes, the following procedure will be performed: Compare and agree the sports sponsored reported in the NCAA Membership Financial Reporting System to the squad lists of the institution. The NCAA Membership Financial Reporting System populates the sports from the NCAA Membership Database as they are reported by 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 report. Procedure Agreed-Upon Procedures Related to Affiliated and Outside Organizations 1. The Program shall identify all intercollegiate athletics-related affiliated and outside organizations and obtain those organizations statements for the reporting period. Once the Program has made these statements available, the independent accountant shall agree the amounts reported in the statement to the organization s general ledger or, alternatively, confirm revenues and expenses directly with a responsible official of the organization. In addition, the Program shall prepare a summary of revenues and expenses for or on behalf of intercollegiate athletics programs affiliated and outside organizations to be included with the agreed-upon procedures report. - 11 -

The Program identified the UNCW Student Aid Association, Inc. (the Association) as the only outside organization making expenditures for, or on behalf of the Program or its employees. The University and the Association serves as the official legal conduits for the acceptance, investment, and distribution of private gifts in support of the activities and programs of the Program. Expenditures for, or on behalf of the Program or its employees are made directly from the University and the Association. We obtained the statement of activities of the University athletic endowments and the Association accounts held for the Program for the year ended June 30, 2015, which represents revenues and expenditures on behalf of the Program. This information was obtained by direct confirmation with the University and the Association. The following is a summary of the statement of activities for the year: University of North Carolina at Wilmington* UNCW Student Aid Association, Inc. Endowment net position, beginning of year Changes in beginning net position $ 6,830,243 $ 800,070 (55,581) - Increases in net position 747,908 1,694,875 Decreases in net position (474,420) (1,451,213) Change in net position 217,907 243,662 Endowment net position, end of year $ 7,048,150 $ 1,043,732 * These figures represent the portion of endowment net assets held by The University of North Carolina at Wilmington designated to benefit the area of Athletics. Procedure 1. The independent accountant shall obtain and review the audited financial statements of the organization and any additional reports regarding internal control matters if the organization is audited independent of the agreed-upon procedures required by NCAA legislation. The Program s independent accountant shall also inquire of institutional and outside organization management as to corrective action taken in response to comments concerning internal control structure (if any). We obtained and read the audited financial statements of the Association for the year ended June 30, 2015, and the related management letters. The results of this procedure disclosed that the independent auditors expressed an unmodified opinion on the financial statements of the Association. The independent auditors noted no material weaknesses in the Association s internal control. 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 statement of revenues and expenses (Exhibit I) of the University and the accompanying notes to the statement of revenues and expenses (Exhibit II). 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. - 12 -

This report is intended solely for the information and use of the management of the University, the Program, the University of North Carolina at Wilmington Board of Trustees, the University of North Carolina Board of Governors, and the National Collegiate Athletic Association, and is not intended to be and should not be used by anyone other than these specified parties. Gainesville, Florida January 8, 2016-13 -

UNIVERSITY OF NORTH CAROLINA AT WILMINGTON INTERCOLLEGIATE ATHLETICS PROGRAM STATEMENT OF REVENUES AND EXPENSES FOR THE YEAR ENDED JUNE 30, 2015 (UNAUDITED - SEE ACCOMPANYING INDEPENDENT ACCOUNTANTS' REPORT ON THE APPLICATION OF AGREED-UPON PROCEDURES) Exhibit I Men's Women's Other Nonprogram Basketball Basketball Sports Specific Total Revenues 1 Ticket sales $ 253,608 $ 9,273 $ 84,018 $ 155,273 $ 502,172 2 Direct state or other government support - - - - - 3 Student fees - - - 9,100,619 9,100,619 4 Direct institutional support 291,784 - - 852,194 1,143,978 5 Transfers to institution - - - - - 6 Indirect institutional support - - - - - 7 Guarantees 360,000-10,000-370,000 8 Contributions 105,731-339,076 847,865 1,292,672 9 In-kind 36,726 19,378 40,989 30,950 128,043 10 Compensation and benefits provided by a third-party - - - - - 11 Media rights - - - - - 12 NCAA distributions - - - 352,728 352,728 13 Conference distributions - - - 229,000 229,000 14 Program, novelty, parking and concession sales - - - - - 15 Royalties, licensing, advertisement and sponsorships - - - 390,979 390,979 16 Sports camp revenues - - 5,910 42,119 48,029 17 Athletics restricted endowment and investments income 31,912 83,958 116,586 34,000 266,456 18 Other operating revenue 20,000-61,225 86,638 167,863 19 Total operating revenues 1,099,761 112,609 657,804 12,122,365 13,992,539 Expenses 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 Athletics student aid 358,171 444,111 1,853,292 40,758 2,696,332 Guarantees 5,000 2,000 3,000-10,000 Coaching salaries, benefits and bonuses paid by the university and related entities 790,839 399,807 1,298,054-2,488,700 Coaching other compensation and benefits paid by a third-party - - - - - Support staff and administrative salaries, benefits and bonuses paid by the university and related entities 150,385 88,114 22,483 2,963,157 3,224,139 Support staff and administrative other compensation paid by a third-party - - - - - Severance payments (83,612) - - - (83,612) Recruiting 84,045 54,694 80,065-218,804 Team travel 297,963 182,664 691,639 24 1,172,290 Sports equipment, uniforms and supplies 47,583 45,276 285,151 54,331 432,341 Game expenses 76,919 85,979 152,925 191,008 506,831 Fund raising, marketing and promotion - - 275 80,840 81,115 Sports camp expenses - - - - - Spirit groups - - - 30,798 30,798 Athletic facilities debt service, leases and rental fees - - - - - Direct overhead and administrative expenses 91,304 62,311 81,156 1,217,735 1,452,506 Indirect institutional support - - - - - Medical expenses and medical insurance - - - 77,955 77,955 Memberships and dues 670 800 9,622 69,104 80,196 Other operating expenses - - 10,200 121,580 131,780 Total operating expenses 1,819,267 1,365,756 4,487,862 4,847,290 12,520,175 41 Transfers to institution - - - - - Excess (deficiency) of revenues over (under) expenses $ (719,506) $ (1,253,147) $ (3,830,058) $ 7,275,075 $ 1,472,364 42 43 44 45 46 Conference realignment expenses $ - Total athletics related debt $ - Total institutional debt $ 232,093,899 Value of athletics dedicated endowments $ 7,048,150 Value of institutional endowments $ 95,890,645-14 -

Exhibit II UNIVERSITY OF NORTH CAROLINA AT WILMINGTON INTERCOLLEGIATE ATHLETICS PROGRAM NOTES TO STATEMENT OF REVENUES AND EXPENSES FOR THE YEAR ENDED JUNE 30, 2015 (UNAUDITED SEE ACCOMPANYING INDEPENDENT ACCOUNTANTS REPORT ON THE APPLICATION OF AGREED-UPON PROCEDURES) (1) Basis of Accounting: The statement of revenues and expenses of the University of North Carolina at Wilmington Intercollegiate Athletics Program (the Program) has been prepared using the accrual basis of accounting except whereas noted below. Under this method, revenues are recorded when earned and expenses are recognized when they are incurred. The statement of revenues and expenses includes adjustments to a liability for compensated absences. Employees earn the right to be compensated during absences for annual leave (i.e. personal leave) and sick leave pursuant to 126-8, North Carolina General Statutes. The Program has recorded an accrual for the liability associated with the employee s right to receive compensation for future absences in preparing the statement of revenues and expenses. (2) Capital Assets: Capital asset purchases of the Program are recorded as expenditures when incurred, as capital assets are recorded in the property funds of the University, and are not recorded as assets in the Program s accounting records. As such, no depreciation expense is recorded in the Program s accounting records. (3) Contributions: The University and the Association serve as the official legal conduit for the acceptance, investment, and distribution of private gifts in support of the activities and programs of the Program. Contributions of $1,143,978 were recognized from the University and the Association for the year ended June 30, 2015, and have been included in the accompanying statement of revenues and expenses. Contributions received from the University and the Association were the only contributions exceeding 10% of total contributions, as reported in the statement of revenues and expenses, for the year ended June 30, 2015. (4) Surplus/Deficit Allocations: The Program is allowed to carry forward all available funds at the end of each fiscal year to the next fiscal year. Deficits are funded by the Program to the extent there are sufficient net assets available. - 15 -

SUPPLEMENT TO STATEMENT OF REVENUES AND EXPENSES VARIATION ANALYSIS OF THE TOTAL REVENUES AND EXPENSES TO PRIOR PERIOD AMOUNTS AND BUDGET ESTIMATES FOR THE YEAR ENDED JUNE 30, 2015 (UNAUDITED - SEE ACCOMPANYING INDEPENDENT ACCOUNTANTS' REPORT ON APPLYING AGREED-UPON PROCEDURES) Revenues 2015 2014 $ Variance % Variance Variation Explanation 3 Student Fees $ 9,100,619 $ 7,637,608 $ 1,463,011 19.16% Net increase is due to university approved increase to athletic student fees in FY15. Expenses 24 Support staff and administrative salaries, benefits and bonuses paid by the university and related entities $ 3,224,139 $ 2,495,228 $ 728,911 29.21% Net increase is due to a change in the classification of the Men's Basketball Director of Basketball Operations salary. Additionally, administrative employees received salary increases to adjust salaries to market value. 35 Direct overhead and administrative expenses $ 1,501,597 $ 580,090 $ 921,507 158.86% Net increase is due several factors, including facility improvements, Harlem Globetrotter event, and additional software expenses. Additonally, due to the changes in NCAA agreed upon procedures, some additional expenses are now being included that were previously recorded in Line 39, Other Operating Expenses. - 16 -