Augusta University annual financial report for fiscal year ended 2018 June 30.

AUGUSTA UNIVERSITY
AUGUSTA, GEORGIA
REPORT ON AUDIT FOR FISCAL YEAR ENDED JUNE 30, 2018

-TABLE OF CONTENTS-
AUDIT SUMMARY INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS CURRENT YEAR FINDINGS AND QUESTIONED COST
FEDERAL INTERNAL CONTROL AND COMPLIANCE FINDINGS MANAGEMENT'S CORRECTIVE ACTION FOR CURRENT YEAR FINDINGS
SCHEDULE OF MANAGEMENT'S CORRECTIVE ACTION UNIVERSITY OFFICIALS

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AUDIT SUMMARY
We have audited the basic financial statements of Augusta University (University) as of and for the year ended June 30, 2018, and issued our report thereon, dated January 18, 2019. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our Independent Auditor's Report, included in the University's Consolidated Annual Financial Report, is available on the Georgia Department of Audits and Accounts' website at http://www.audits.ga.gov/ and at the University's website at https://www.augusta.edu/. Our audit of the University found:
the financial statements are presented fairly, in all material respects;
no internal control over financial reporting findings requiring management's attention;
one federal internal control and compliance finding that requires management's attention; however we do not consider it to be a material weakness;
no instances of noncompliance or other matters required to be reported under Government Auditing Standards

Summary of Opinions

Opinion Unit Business-Type Activities Aggregate Discretely Presented Component Units Aggregate Remaining Fund

Type of Opinion Unmodified Unmodified (Audited by Other Auditors) Unmodified

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GREG S. GRIFFIN
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400

INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS

The Honorable Brian P. Kemp, Governor of Georgia Members of the General Assemblyof the State of Georgia Members of the Board of Regents of the University System of Georgia
and Dr. Brooks Keel, President Augusta University
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 financial statements of the business-type activities, the aggregate discretely presented component units, and the aggregate remaining fund information of Augusta University (University), as of and for the year ended June 30, 2018, and the related notes to the financial statements, which collectively comprise the University's basic financial statements, and have issued our report thereon dated January 18. 2019. Our report includes a reference to other auditors who audited the financial statements of AU Health System Inc., Augusta University Foundation, Inc., Augusta University Research Institute, Inc., Georgia Health Sciences Foundation, Inc., and Medical College of Georgia Foundation, Inc., as described in our report on the University's financial statements. This report does not include the results of the other auditors' testing of internal control over financial reporting or compliance and other matters that are reported on separately by those auditors. The financial statements of Georgia Health Sciences Foundation, Inc. were not audited in accordance with Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit of the 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 opinions on the 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 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.
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Compliance and Other Matters
As part of obtaining reasonable assurance about whether the University's 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.
Respectfully submitted,

January 18, 2019

Greg S. Griffin State Auditor

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CURRENT YEAR FINDINGS AND QUESTIONED COST Federal Internal Control and Compliance Findings

FA-2018-001 Improve Controls over Cash Management

Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Number: Questioned Costs:

Cash Management Significant Deficiency Nonmaterial Noncompliance U. S. Department of Education None 84.268 Federal Direct Student Loans P268K181311 (Year: 2018) None Identified

Description: The Institution maintained excessive cash balances related to the Federal Direct Student Loans program.

Criteria: Provisions included in 34 CFR 668.163 and 668.166 provide requirements for maintaining and accounting for funds and excess cash, respectively. Specifically, provisions included in 34 CFR 668.166(a) state, "The Secretary considers excess cash to be any amount of Title IV, HEA program funds, other than Federal Perkins Loan Program funds, that an institution does not disburse to students or parents by the end of the third business day following the date the institution received those funds from the Secretary."

The Institution has cash management procedures in place that require the drawdown of funds after disbursements and refunds are posted within the student information system.

Condition: Upon review of cash drawdowns and disbursements related to the Federal Direct Student Loans program, excessive cash balances were noted for up to 12 days in the fiscal year.

Cause: In discussing this deficiency with management, the Institution's standard cash management procedures were not followed at the beginning of the Spring 2018 term. Due to the large dollar amount of expected disbursements at the beginning of the term, the Institution requested funds based upon an estimate instead of actual disbursement and refund activity. The estimate did not consider adjustments on student accounts which resulted in more funds being requested than needed. The Institution returned the excess funds but did not complete the return by the third business day allowed by Federal regulations.

Effect or Potential Effect: The Institution was not in compliance with Federal regulations concerning the disbursement of Federal Direct Student Loan funds and excess cash. In addition, the Institution could potentially accrue a federal interest liability that would be owed to the Federal government.

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Recommendation: The Institution should follow established procedures to ensure that Federal Direct Student Loan funds are disbursed within three business days of the receipt of such funds. The Institution should only request Federal Direct Student Loan funds when the amounts are immediately needed to disburse funds to students or parents. Additionally, the Institution should develop and implement a monitoring process to ensure that controls are followed appropriately. The Institution should also contact the U.S. Department of Education regarding resolution of this finding. Views of Responsible Officials: We concur with this finding.
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UNIVERSITY SYSTEM OF GEORGIA

Board of Regents of the University System of Georgia

C. Dean Alford Chris Cummiskey W. Allen Gudenrath Erin Hames Brbara Rivera Holmes C. Thomas Hopkins, Jr., MD James M. Hull Donald M. Leebern, Jr. Laura Marsh Neil L. Pruitt, Jr.

Sarah-Elizabeth Reed Sachin Shailendra E. Scott Smith Kessel D. Stelling, Jr. Ben J. Tarbutton, III Richard L. Tucker Thomas Rogers Wade Don L. Waters Philip A. Wilheit, Sr.

University Officials

Dr. Brooks Keel, President Mr. Anthony E. Wagner, Executive Vice President, Administration and Finance Mr. Lee Fruitticher, Vice President for Finance

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