{"response":{"docs":[{"id":"dlg_ggpd_1176350451-2024-12-18","title":"Augusta University annual financial report, fiscal year 2024","collection_id":"dlg_ggpd","collection_title":"Georgia Government Publications","dcterms_contributor":["Georgia. Department of Audits and Accounts, issuing body."],"dcterms_spatial":["United States, Georgia, 32.75042, -83.50018"],"dcterms_creator":null,"dc_date":["2024-12-18"],"dcterms_description":["Began with: Fiscal year ended June 30, 2016, issued 2017?; ceased with fiscal year 2021?","In Georgia Government Publications database, for fiscal year ending June 30, 2017-, a briefer report on the audit called: Augusta University, Augusta, Georgia, report on audit for fiscal year ended ... or: Report on audit ... Augusta University, Augusta, Georgia is classed with this title.","In Georgia Government Publications database, briefer report on audit only appears for fiscal year ended June 30, 2018-","Augusta University named prominently on some issues, but Georgia. Department of Audits and Accounts appears to be responsible for creating and issuing the serial.","Fiscal year ended June 30, 2016 (received via FTP on January 31, 2018 from Georgia Department of Audits and Accounts); title from PDF cover (Georgia Government Publications database, viewed July 21, 2020).","Fiscal year 2023 (Georgia Government Publications database, viewed January 9, 2025)."],"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":["Atlanta, Georgia : Department of Audits and Accounts, [2017?]-"],"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/InC/1.0/"],"dcterms_is_part_of":null,"dcterms_subject":["Augusta University--Appropriations and expenditures--Periodicals.","Augusta University","Education, Higher--Georgia--Auditing--Periodicals.","Education, Higher--Georgia--Finance--Statistics--Periodicals.","Education--Auditing","Expenditures, Public","Georgia","Georgia Government Documents--Serial"],"dcterms_title":["Augusta University annual financial report, fiscal year 2024"],"dcterms_type":["Text"],"dcterms_provenance":["University of Georgia. Map and Government Information Library"],"edm_is_shown_by":["https://dlg.galileo.usg.edu/do:dlg_ggpd_1176350451-2024-12-18"],"edm_is_shown_at":["https://dlg.galileo.usg.edu/id:dlg_ggpd_1176350451-2024-12-18"],"dcterms_temporal":null,"dcterms_rights_holder":null,"dcterms_bibliographic_citation":null,"dlg_local_right":null,"dcterms_medium":["state government records"],"dcterms_extent":null,"dlg_subject_personal":null,"iiif_manifest_url_ss":null,"dcterms_subject_fast":null,"fulltext":"REPORT ON AUDIT  FISCAL YEAR 2024 \nAugusta University \nAugusta, Georgia \nA Member Institution of the University System of Georgia \nGreg S. Griffin | State Auditor \n \n Table of Contents \nAudit Summary............................................................................................................................................................1 \nIndependent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ............................................................................................................................ 2 \nSchedule of Findings and Questioned Costs .......................................................................................................4 \nManagement's Corrective Action for Current Year Findings ......................................................................... 10 \nAugusta University Officials................................................................................................................................... 14 \n \n Audit Summary \nWe have audited the basic financial statements of the Augusta University (University), a unit of the University System of Georgia, which is an organizational unit of the State of Georgia, as of and for the year ended June 30, 2024, and issued our report thereon, dated December 18, 2024. We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) 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 Annual Financial Report, is available on the Georgia Department of Audits and Accounts' website at www.audits.ga.gov and on the University's website at www.augusta.edu. \n \nAs part of our single audit of the State of Georgia (State) for the fiscal year ended June 30, 2024, we performed audit procedures at the University that we considered necessary to enable us to express our opinions and issue our reports for the statewide single audit in accordance with GAAS, Government Auditing Standards, and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Our Report on Compliance for Each Major Federal Program, Report on Internal Control Over Compliance and Report on Schedule of Expenditures of Federal Awards required by the Uniform Guidance are included in the State's Single Audit Report. \n \nOur audit found deficiencies in internal control over compliance and/or instances of noncompliance or other matters applicable to the University, as described in the accompanying Schedule of Findings and Questioned Costs under the heading Federal Award Findings and Questioned Costs. The findings identified in our audit are reported in the State's Single Audit Report in accordance with Title 2 CFR 200.516(a). \n \nOur audit of the University found: \n \n the financial statements are presented fairly, in all material respects;  no internal control over financial reporting findings that require management's attention;  no instances of noncompliance or other matters that are required to be reported under \nGovernment Auditing Standards;  federal award findings that require management's attention, as described in the accompanying \nSchedule of Findings and Questioned Costs under the heading Federal Award Findings. \n \nSummary of Opinions \n \nOpinion Unit \n \nType of Opinion \n \nBusiness-Type Activities \n \nUnmodified \n \nAggregate Discretely Presented Component Units Unmodified \n \nFiduciary Activities \n \nUnmodified \n \n(Audited by Other Auditors) \n \n- 1 - \n \n Greg S. Griffin State Auditor \nINDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS \nThe Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the Board of Regents of the University System of Georgia \nand Dr. Russell Keen, President Augusta University \nWe have audited the financial statements of the business-type activities, aggregate discretely presented component units, and fiduciary activities of the Augusta University (University), a unit of the University System of Georgia, which is an organizational unit of the State of Georgia, as of and for the year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the University's basic financial statements, and have issued our report thereon dated December 18, 2024. We conducted our audit in accordance with the auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. \nOur report includes a reference to other auditors who audited the financial statements of the aggregate discretely presented component units, as described in our report on the University's basic financial statements. Those financial statements were audited in accordance with GAAS but not in accordance with Government Auditing Standards, except for the Augusta University Foundation, Inc. and Augusta University Research Institute, Inc. Accordingly, this report does not include reporting on internal control over financial reporting or compliance and other matters associated with those component units nor does it 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 for the component units specified above. \nReport on Internal Control Over Financial Reporting \nIn planning and performing our audit of the financial statements, we considered the University's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the basic 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. \nA 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 \n270 Washington Street, SW, Suite 4-101 Atlanta, Georgia 30334 | Phone (404) 656-2180 \n \n material misstatement of the University'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 or significant deficiencies may exist that were not identified. \nReport on Compliance and Other Matters \nAs 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 financial statements. 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. \nPurpose of this Report \nThe 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, \nGreg S. Griffin State Auditor \nDecember 18, 2024 \n- 3 - \n \n Schedule of Findings and Questioned Costs \n- 4 - \n \n AUGUSTA UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \nYEAR ENDED JUNE 30, 2024 \n \nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \n \nFA 2024-001 Improve Controls over Federal Direct Student Loan Reconciliations \n \nCompliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: AL Number and Title: Federal Award Number: Questioned Costs: \n \nCash Management Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education None 84.268  Federal Direct Student Loans P268K241311 (Year: 2024) None Identified \n \nDescription: Augusta University did not perform required monthly reconciliations for the Federal Direct Student \nLoans program appropriately. \n \nBackground Information: Under the Federal Direct Student Loan program, Augusta University (University) makes Direct \nSubsidized Loans and Direct Unsubsidized Loans to eligible students, and Direct PLUS Loans to eligible graduate or professional students or to eligible parents of eligible dependent undergraduate students, to \npay for the cost of attendance. The student's Individual Student Information Record (ISIR), along with other information, is used by the University to originate the student's Direct Loan. \n \nDuring the current fiscal year, the University originated and disbursed $104,537,405 in Federal Direct Student Loans to 4,990 students. \n \nCriteria: As a recipient of federal awards, the University is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303  Internal Controls. \n \nProvisions included in Title 34 CFR Section 685.300(b) state that upon entering into a written program participation agreement associated with Federal Direct Student Loans \"the school must promise to comply with the [Higher Education] Act [of 1965] and applicable regulations and must agree to ... on a monthly basis, reconcile institutional records with Direct Loan funds received from the Secretary and Direct Loan disbursement records submitted to and accepted by the Secretary.\" \n \nCondition: A sample of four periodic Federal Direct Student Loan program reconciliations was randomly selected for testing using a non-statistical sampling method. The reconciliations were reviewed to ensure that the School Account Statement (SAS) data files provided by the U.S. Department of Education's \n- 5 - \n \n AUGUSTA UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \nYEAR ENDED JUNE 30, 2024 \nCommon Origination and Disbursement (COD) system were reconciled appropriately to the student information system and the University's financial records and that variances were resolved in a timely manner. While reconciliations of the Direct Loans disbursed per the student information system and the University's financial records and reconciliations of the cash drawdowns per the COD system and the University's financial records were performed throughout the year, testing revealed that reconciliations of the SAS data files by student were not performed for the months tested. Cause: In discussing these deficiencies with management, they stated that the failure to perform the necessary reconciliations at the student level was due to staffing changes and a lack of continuity in the Student Financial Aid Department. Effect or Potential Effect: The University is not in compliance with their program participation agreement or federal regulations concerning Federal Direct Student Loans. In addition, omissions and errors in information submitted to the COD system or within the student information system may not be identified and corrected in a timely manner. Furthermore, if all SAS data is not reconciled appropriately, the University cannot close out the Direct Loan account in the COD system at the end of the award year. Recommendation: The University should establish procedures and assign responsibility for the monthly and yearly reconciliation of the Federal Direct Student Loan program activity to ensure that the guidelines contained in the Direct Loan School Guide and Federal Student Aid Handbook are followed. The University's Financial Aid and Business Offices should maintain their internal records in such a way that they can prepare the monthly reconciliations accurately and timely. Additionally, management should develop and implement a monitoring process to ensure that controls are operating properly. Views of Responsible Officials: We concur with this finding. \n- 6 - \n \n AUGUSTA UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \nYEAR ENDED JUNE 30, 2024 \n \nFA 2024-002 Strengthen Controls over Unofficial Withdrawals \n \nCompliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: AL Numbers and Titles: \nFederal Award Numbers: \nQuestioned Costs: \n \nSpecial Tests and Provisions Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education None 84.007  Federal Supplemental Educational Opportunity Grants 84.063  Federal Pell Grant Program 84.268  Federal Direct Student Loans 84.379  Teacher Education Assistance for College and Higher Education Grants (TEACH Grants) 84.408  Postsecondary Education Scholarships for Veteran's Dependents P007A231020 (Year: 2024), P063P231311 (Year: 2024), P268K241311 (Year: 2024), P379T241311 (Year: 2024), P408A231311 (Year: 2024) $2,189 \n \nDescription: Augusta University did not properly identify and return unearned Title IV funds for students who \nunofficially withdrew from classes. \n \nBackground Information: Student financial assistance, or Title IV, funds are awarded by Augusta University (University) to a student under the assumption that the student will attend school for the entire period for which the assistance is awarded. When a student withdraws, the student may no longer be eligible for the full amount of Title IV funds that the student was originally scheduled to receive. If a recipient of Title IV grant or loan funds withdraws from a school after beginning attendance, the school must perform a Return of Title IV (R2T4) calculation to determine the amount of Title IV assistance earned by the student. Up through the 60% point in each period of enrollment, a pro rata schedule is used to determine the amount of Title IV funds the student has earned at the time of withdrawal. After the 60% point in the period of enrollment, a student is considered to have earned 100% of the Title IV funds the student was scheduled to receive during the period. \n \nAn unofficial withdrawal is one in which the University has not received notice from the student that the student has ceased or will cease attending the school. Schools must have a procedure in place to determine when a student who began attendance and received or could have received an initial disbursement of Title IV funds officially withdrew. For these unofficial withdrawals, the University must also determine a withdrawal date, which may be the midpoint of the period of enrollment or the last date of an academically related activity in which the student participated. \n \n- 7 - \n \n AUGUSTA UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \nYEAR ENDED JUNE 30, 2024 \nCriteria: As a recipient of federal awards, the University is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303  Internal Controls. \nProvisions included in Title 34 CFR Section 668.22 provide requirements over the treatment of Title IV funds when a student withdraws. The University is required to determine the amount of Title IV funds that the student earned as of the student's withdrawal date when a recipient of Title IV funds withdraws from the University during a payment period or period of enrollment in which the recipient began attendance. A refund must be returned to Title IV programs when the total amount of the Title IV grant or loan assistance, or both, that the student earned is less than the amount of the Title IV grant and/or loan assistance that was disbursed to the student as of the withdrawal date. \nAdditionally, provisions included in Title 34 CFR Section 668.22(j) address the timeframe for the return of title IV funds and state \"(1) An institution must return the amount of title IV funds for which it is responsible... as soon as possible but no later than 45 days after the date of the institution's determination that the student withdrew... (2) For an institution that is not required to take attendance, an institution must determine the withdrawal date for a student who withdraws without providing notification to the institution no later than 30 days after the end of the earlier of the  (i) Payment period or period of enrollment... (ii) Academic year in which the student withdrew; or (iii) Educational program from which the student withdrew.\" \nCondition: A sample of ten students from a population of 100 students who received student financial assistance (SFA) for the Fall 2023 and Spring 2024 semesters and withdrew from the University but for whom no R2T4 calculation was performed was randomly selected for testing using a non-statistical sampling method. Attendance and withdrawal records were reviewed to determine if a refund should have been calculated for these students. Our examination revealed that R2T4 calculations were not performed appropriately for one student who unofficially withdrew during the Fall 2023 semester and one student who unofficially withdrew during the Spring 2024 semester. These students should have been required to return a total of $2,189 to various SFA programs. \nQuestioned Costs: Upon testing a sample of $54,216 in financial aid disbursements to students who withdrew from the University but for whom no R2T4 was performed, known questioned costs of $2,189 were identified for omitted R2T4 calculations. Using the total population amount of $622,973, we project the likely questioned costs to be approximately $25,155. The following assistance listing numbers were affected by the known and likely questioned costs: 84.063 and 84.268. \nCause: In discussing these deficiencies with management, they stated that misclassification of the withdrawal types occurred due to inadequate training for processing both official and unofficial withdrawals. \n- 8 - \n \n AUGUSTA UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \nYEAR ENDED JUNE 30, 2024 \nEffect or Potential Effect: The University is not in compliance with the federal regulations concerning performing R2T4 procedures. This deficiency may expose the University to unnecessary financial strains and shortages. Unearned Title IV funds must be returned to the U.S. Department of Education (ED). Though the University collection efforts could be unsuccessful as the students may no longer attend the University and/or fail to repay the funds. Additionally, failing to identify withdrawn students, not performing R2T4 calculations, and/or not returning unearned Title IV funds to ED in a timely manner may result in adverse actions and impact the University's participation in Title IV programs. Recommendation: The University should follow established policies and procedures to ensure that students who unofficially withdrew and received Title IV funds are identified and the required R2T4 calculations are performed. Management should also develop and implement a monitoring process to ensure that controls are operating properly. The University should contact ED regarding resolution of the finding, as well. View of Responsible Officials: We concur with this finding. \n- 9 - \n \n Management's Corrective Action for Current Year Findings \n- 10 - \n \n December 16,2024 \n \nCORRECTIVE ACTION PLANS - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \n \nFA 2024-001 Improve Controls over Federal Direct Student Loan Reconciliations \n \nCompliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: AL Number and Title: Federal Award Number: Questioned Costs: \n \nCash Management Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education None 84.268 - Federal Direct Student Loans P268K241311 (Year: 2024) None Identified \n \nDescription: Augusta University did not perform required monthly reconciliations for the Federal Direct Student Loans program appropriately. \nCorrective Action Plans: The monthly student reconciliations for the Direct Loan programs, including the SS A files, have resumed starting with the October 2024 SAS file. These reconciliations will continue on a monthly basis by the financial aid office, as required, and will be conducted without interruption. The reconciliation process will be closely monitored, reviewed, and approved monthly by management to ensure ongoing compliance. The loan processing team has been trained on the SAS file import process and direct loan reconciliation. They have also been provided with the necessary system resources to identify variances between COD and Banner at the student level. Additionally, the direct loan reconciliation process documentation will undergo continuous review and monitoring by the loan processing team, with oversight from the Director of Student Financial Aid and Scholarships, to ensure accuracy and adherence to established policies with each new academic year. The loan processing team will have annual refresher training at the beginning of each academic year. Confirmation of employees, date of training, and current training process will be documented. Estimated Completion Date: January 1, 2025 Contact Person: Kyle Parsons, Director of Student Financial Aid Telephone: 706-667-4199 Email: kyparsons@augusta.edu \n \n CORRECTIVE ACTION PLANS - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \n \nFA 2024-002 Strengthen Controls over Unofficial Withdrawals \n \nCompliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: AL Numbers and Titles: \nFederal Award Numbers: \nQuestioned Costs: \n \nSpecial Tests and Provisions Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education None 84.007 - Federal Supplemental Educational Opportunity Grants 84.063 - Federal Pell Grant Program 84.268 - Federal Direct Student Loans 84.379 - Teacher Education Assistance for College and Higher Education Grants {TEACH Grants) 84.408 - Postsecondary Education Scholarships for Veteran's Dependents P007A231020 {Year: 2024), P063P231311 {Year: 2024), P268K241311 {Year: 2024), P379T241311 {Year: 2024), P408A231311 {Year: 2024) $2,189 \n \nDescription: Augusta University did not properly identify and return unearned Title IV funds for students who unofficially withdrew from classes. \n \nCorrective Action Plans: To prevent future errors, staff will undergo training to ensure accurate processing of withdrawals that occur after the term has ended. Both official and unofficial withdrawals will be evaluated based on the student's last date of attendance when thewithdrawal date is after the end of term. \nWhile the Financial Aid Office (FAO) staff have adhered to the current withdrawal procedures, we recognize the need for an update to address instances when the date a student initiates the official withdrawal process is earlier than when the withdrawal is completed. To address this, we will adopt the datethestudent begins the withdrawal process as theofficial withdrawal date, ifthis dateprecedes the completion of the withdrawal form. Additionally, we will implement automated and electronic system controls to ensurewithdrawals are processed accurately and within the required timelines by monitoring the full withdrawal cycle. Thewithdrawal policy and administrative procedures documentation will be updated to reflect these changes. Staff will have annual refresher training at the beginning of each academic year. Confirmation of employees, date of training, and training process will be documented. \n \n CORRECTIVE ACTION PLANS - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS \nEstimated Completion Date: August 1, 2025 Contact Person: Kyle Parsons, Director of Student Financial Aid Telephone: 706-667-4199 Email: kyparsons@augusta.edu \nSignature: Title: \n \n Augusta University \n \nBoard of Regents of the University System of Georgia \n \nTom Bradbury David B. Dove Richard \"Tim\" Evans W. Allen Gudenrath Erin Hames Brbara Rivera Holmes Samuel D. Holmes James M. Hull Cade Joiner Patrick C. Jones \n \nC. Everett Kennedy III Lowery Houston May Dan Murphy Neil L. Pruitt Jr. Harold Reynolds Deep J. Shah T. Dallas Smith Mat Swift James K. Syfan III \n \nAugusta University Officials \nDr. Russell Keen, President Ms. Yvonne Turner, Executive Vice President for Finance, Chief Business Officer Corrina Warner, Vice President for Finance Janice Chancey, Assistant Controller, Financial Accounting \n \n- 14 - \n \n "},{"id":"dlg_ggpd_1176350451-2023-12-19","title":"Augusta University annual financial report, fiscal year 2023.","collection_id":"dlg_ggpd","collection_title":"Georgia Government Publications","dcterms_contributor":["Georgia. Department of Audits and Accounts, issuing body."],"dcterms_spatial":["United States, Georgia, 32.75042, -83.50018"],"dcterms_creator":null,"dc_date":["2023-12-19"],"dcterms_description":["Began with: Fiscal year ended June 30, 2016, issued 2017?; ceased with fiscal year 2021?","In Georgia Government Publications database, for fiscal year ending June 30, 2017-, a briefer report on the audit called: Augusta University, Augusta, Georgia, report on audit for fiscal year ended ... or: Report on audit ... Augusta University, Augusta, Georgia is classed with this title.","In Georgia Government Publications database, briefer report on audit only appears for fiscal year ended June 30, 2018-","Augusta University named prominently on some issues, but Georgia. Department of Audits and Accounts appears to be responsible for creating and issuing the serial.","Fiscal year ended June 30, 2016 (received via FTP on January 31, 2018 from Georgia Department of Audits and Accounts); title from PDF cover (Georgia Government Publications database, viewed July 21, 2020).","Fiscal year 2023 (Georgia Government Publications database, viewed January 9, 2025)."],"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":["Atlanta, Georgia : Department of Audits and Accounts, [2017?]-"],"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/InC/1.0/"],"dcterms_is_part_of":null,"dcterms_subject":["Augusta University--Appropriations and expenditures--Periodicals.","Augusta University","Education, Higher--Georgia--Auditing--Periodicals.","Education, Higher--Georgia--Finance--Statistics--Periodicals.","Education--Auditing","Expenditures, Public","Georgia","Georgia Government Documents--Serial"],"dcterms_title":["Augusta University annual financial report, fiscal year 2023."],"dcterms_type":["Text"],"dcterms_provenance":["University of Georgia. Map and Government Information Library"],"edm_is_shown_by":["https://dlg.galileo.usg.edu/do:dlg_ggpd_1176350451-2023-12-19"],"edm_is_shown_at":["https://dlg.galileo.usg.edu/id:dlg_ggpd_1176350451-2023-12-19"],"dcterms_temporal":null,"dcterms_rights_holder":null,"dcterms_bibliographic_citation":null,"dlg_local_right":null,"dcterms_medium":["state government records"],"dcterms_extent":null,"dlg_subject_personal":null,"iiif_manifest_url_ss":null,"dcterms_subject_fast":null,"fulltext":"REPORT ON AUDIT  FISCAL YEAR 2023 \nAugusta University \nAugusta, Georgia \nA Member Institution of the University System of Georgia \nGreg S. Griffin | State Auditor \n \n Table of Contents \nAudit Summary..........................................................................................................................................................................................................1 \nIndependent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ................................................................................................................................................................ 2 \nAugusta University Officials........................................................................................................................................................................... 4 \n \n Audit Summary \n \nWe have audited the basic financial statements of the Augusta University (University), a unit of the University System of Georgia, which is an organizational unit of the State of Georgia, as of and for the year ended June 30, 2023, and issued our report thereon, dated December 19, 2023. We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) 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 Annual Financial Report, is available on the Georgia Department of Audits and Accounts' website at www.audits.ga.gov and on the University's website at www.augusta.edu. \n \nOur audit of the University found: \n \n the financial statements are presented fairly, in all material respects;  no internal control over financial reporting findings that require management's attention;  no instances of noncompliance or other matters that are required to be reported under \nGovernment Auditing Standards. \n \nSummary of Opinions \n \nOpinion Unit Business-Type Activities Aggregate Discretely Presented Component Units Fiduciary Activities \n \nType of Opinion Unmodified Unmodified Unmodified \n \n(Audited by Other Auditors) \n \n1 \n \n Greg S. Griffin State Auditor \nINDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS \nThe Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the Board of Regents of the University System of Georgia \nand Dr. Brooks Keel, President Augusta University \nWe have audited the financial statements of the business-type activities, aggregate discretely presented component units, and fiduciary activities of the Augusta University (University), a unit of the University System of Georgia, which is an organizational unit of the State of Georgia, as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the University's basic financial statements, and have issued our report thereon dated December 19, 2023. We conducted our audit in accordance with the auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. \nOur report includes a reference to other auditors who audited the financial statements of the aggregate discretely presented component units, as described in our report on the University's basic financial statements. Those financial statements were audited in accordance with GAAS but not in accordance with Government Auditing Standards, except for the Augusta University Foundation, Inc., Augusta University Research Institute, Inc., and AU Health Systems, Inc. Accordingly, this report does not include reporting on internal control over financial reporting or compliance and other matters associated with those component units nor does it 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 for the component units specified above. \nReport on Internal Control Over Financial Reporting \nIn planning and performing our audit of the financial statements, we considered the University's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the basic 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. \nA 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 \n270 Washington Street, SW, Suite 4-101 Atlanta, Georgia 30334 | Phone (404) 656-2180 \n \n material misstatement of the University'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 or significant deficiencies may exist that were not identified. \nReport on Compliance and Other Matters \nAs 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 financial statements. 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. \nPurpose of this Report \nThe 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, \nGreg S. Griffin State Auditor \nDecember 19, 2023 \n3 \n \n Augusta University \n \nBoard of Regents of the University System of Georgia \n \nDoug Aldridge Tom Bradbury Richard \"Tim\" Evans W. Allen Gudenrath Erin Hames Brbara Rivera Holmes Samuel D. Holmes C. Thomas Hopkins, Jr., MD James M. Hull Cade Joiner \n \nPatrick Jones C. Everett Kennedy, III Sarah-Elizabeth Langford Lowery Houston May Jose R. Perez Neil L. Pruitt, Jr. Harold Reynolds T. Dallas Smith Jim K. Syfan, III \n \nAugusta University Officials \nDr. Brooks Keel, President Yvonne Turner, Executive Vice President for Finance, Chief Business Officer Corrina Warner, Vice President for Finance Janice Chancey, Assistant Controller, Financial Accounting \n \n4 \n \n "},{"id":"dlg_ggpd_1176350451-2022-12-19","title":"Augusta University annual financial report, fiscal year 2022","collection_id":"dlg_ggpd","collection_title":"Georgia Government Publications","dcterms_contributor":["Georgia. Department of Audits and Accounts, issuing body."],"dcterms_spatial":["United States, Georgia, 32.75042, -83.50018"],"dcterms_creator":null,"dc_date":["2022-12-19"],"dcterms_description":["Began with: Fiscal year ended June 30, 2016, issued 2017?; ceased with fiscal year 2021?","In Georgia Government Publications database, for fiscal year ending June 30, 2017-, a briefer report on the audit called: Augusta University, Augusta, Georgia, report on audit for fiscal year ended ... or: Report on audit ... Augusta University, Augusta, Georgia is classed with this title.","In Georgia Government Publications database, briefer report on audit only appears for fiscal year ended June 30, 2018-","Augusta University named prominently on some issues, but Georgia. Department of Audits and Accounts appears to be responsible for creating and issuing the serial.","Fiscal year ended June 30, 2016 (received via FTP on January 31, 2018 from Georgia Department of Audits and Accounts); title from PDF cover (Georgia Government Publications database, viewed July 21, 2020).","Fiscal year 2023 (Georgia Government Publications database, viewed January 9, 2025)."],"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":["Atlanta, Georgia : Department of Audits and Accounts, [2017?]-"],"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/InC/1.0/"],"dcterms_is_part_of":null,"dcterms_subject":["Augusta University--Appropriations and expenditures--Periodicals.","Augusta University","Education, Higher--Georgia--Auditing--Periodicals.","Education, Higher--Georgia--Finance--Statistics--Periodicals.","Education--Auditing","Expenditures, Public","Georgia","Georgia Government Documents--Serial"],"dcterms_title":["Augusta University annual financial report, fiscal year 2022"],"dcterms_type":["Text"],"dcterms_provenance":["University of Georgia. Map and Government Information Library"],"edm_is_shown_by":["https://dlg.galileo.usg.edu/do:dlg_ggpd_1176350451-2022-12-19"],"edm_is_shown_at":["https://dlg.galileo.usg.edu/id:dlg_ggpd_1176350451-2022-12-19"],"dcterms_temporal":null,"dcterms_rights_holder":null,"dcterms_bibliographic_citation":null,"dlg_local_right":null,"dcterms_medium":["state government records"],"dcterms_extent":null,"dlg_subject_personal":null,"iiif_manifest_url_ss":null,"dcterms_subject_fast":null,"fulltext":"REPORT ON AUDIT  FISCAL YEAR 2022 \nAugusta University \nAugusta, Georgia \nA Member Institution of the University System of Georgia \nGreg S. Griffin | State Auditor \n \n Table of Contents \nAudit Summary ...........................................................................................................................................................................................................1 \nIndependent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards.............................................................................................................2 Augusta University Officials.........................................................................................................................................................................4 \n \n Audit Summary \n \nWe have audited the basic financial statements of the Augusta University (University), a unit of the University System of Georgia, which is an organizational unit of the State of Georgia, as of and for the year ended June 30, 2022, and issued our report thereon, dated December 19, 2022. We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) 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 Annual Financial Report, is available on the Georgia Department of Audits and Accounts' website at www.audits.ga.gov and on the University's website at www.augusta.edu. \n \nOur audit of the University found: \n \n the financial statements are presented fairly, in all material respects;  no internal control over financial reporting findings that require management's attention;  no instances of noncompliance or other matters that are required to be reported under \nGovernment Auditing Standards. \n \nSummary of Opinions \n \nOpinion Unit \n \nType of Opinion \n \nBusiness-Type Activities \n \nUnmodified \n \nAggregate Discretely Presented Component Units Unmodified \n \nFiduciary Activities \n \nUnmodified \n \n(Audited by Other Auditors) \n \n1 \n \n Greg S. Griffin State Auditor \nINDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN \nACCORDANCE WITH GOVERNMENT AUDITING STANDARDS \nThe Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the Board of Regents of the University System of Georgia \nand Dr. Brooks Keel, President Augusta University \nWe have audited the financial statements of the business-type activities, aggregate discretely presented component units, and fiduciary activities of the Augusta University (University), a unit of the University System of Georgia, which is an organizational unit of the State of Georgia, as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise the University's basic financial statements, and have issued our report thereon dated December 19, 2022. We conducted our audit in accordance with the auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. \nOur report includes a reference to other auditors who audited the financial statements of the aggregate discretely presented component units, as described in our report on the University's basic financial statements. Those financial statements were audited in accordance with GAAS but not in accordance with Government Auditing Standards, except for the Augusta University Foundation, Inc., Augusta University Research Institute, Inc., and AU Health Systems, Inc. Accordingly, this report does not include reporting on internal control over financial reporting or compliance and other matters associated with those component units nor does it 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 for the component units specified above. \nReport on Internal Control Over Financial Reporting \nIn planning and performing our audit of the financial statements, we considered the University's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the basic 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. \nA 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 \n270 Washington Street, SW, Suite 4-101 Atlanta, Georgia 30334 | Phone (404) 656-2180 \n \n combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the University'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. \nOur 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 or significant deficiencies may exist that were not identified. \nReport on Compliance and Other Matters \nAs 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 financial statements. 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. \nPurpose of this Report \nThe 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. \nRespectfully submitted, \nGreg S. Griffin State Auditor \nDecember 19, 2022 \n \n Augusta University \n \nBoard of Regents of the University System of Georgia \n \nDoug Aldridge Tom Bradbury Richard \"Tim\" Evans W. Allen Gudenrath Erin Hames Brbara Rivera Holmes Samuel D. Holmes C. Thomas Hopkins, Jr., MD James M. Hull Cade Joiner \n \nPatrick C. Jones C. Everett Kennedy, III Sarah-Elizabeth Langford Lowery Houston May Jose R. Perez Neil L. Pruitt, Jr. Harold Reynolds T. Dallas Smith Jim Syfan \n \nAugusta University Officials \nDr. Brooks Keel, President Ms. Yvonne Turner, Executive Vice President for Finance, Chief Business Officer \n \n4 \n \n "},{"id":"dlg_ggpd_1176350451-2020-12-21","title":"Augusta University annual financial report for fiscal year ended 2020 June 30.","collection_id":"dlg_ggpd","collection_title":"Georgia Government Publications","dcterms_contributor":["Georgia. Department of Audits and Accounts, issuing body."],"dcterms_spatial":["United States, Georgia, 32.75042, -83.50018"],"dcterms_creator":null,"dc_date":["2020-12-21"],"dcterms_description":["Began with: Fiscal year ended June 30, 2016, issued 2017?; ceased with fiscal year 2021?","In Georgia Government Publications database, for fiscal year ending June 30, 2017-, a briefer report on the audit called: Augusta University, Augusta, Georgia, report on audit for fiscal year ended ... or: Report on audit ... Augusta University, Augusta, Georgia is classed with this title.","In Georgia Government Publications database, briefer report on audit only appears for fiscal year ended June 30, 2018-","Augusta University named prominently on some issues, but Georgia. Department of Audits and Accounts appears to be responsible for creating and issuing the serial.","Fiscal year ended June 30, 2016 (received via FTP on January 31, 2018 from Georgia Department of Audits and Accounts); title from PDF cover (Georgia Government Publications database, viewed July 21, 2020).","Fiscal year 2023 (Georgia Government Publications database, viewed January 9, 2025)."],"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":["Atlanta, Georgia : Department of Audits and Accounts, [2017?]-"],"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/InC/1.0/"],"dcterms_is_part_of":null,"dcterms_subject":["Augusta University--Appropriations and expenditures--Periodicals.","Augusta University","Education, Higher--Georgia--Auditing--Periodicals.","Education, Higher--Georgia--Finance--Statistics--Periodicals.","Education--Auditing","Expenditures, Public","Georgia","Georgia Government Documents--Serial"],"dcterms_title":["Augusta University annual financial report for fiscal year ended 2020 June 30."],"dcterms_type":["Text"],"dcterms_provenance":["University of Georgia. Map and Government Information Library"],"edm_is_shown_by":["https://dlg.galileo.usg.edu/do:dlg_ggpd_1176350451-2020-12-21"],"edm_is_shown_at":["https://dlg.galileo.usg.edu/id:dlg_ggpd_1176350451-2020-12-21"],"dcterms_temporal":null,"dcterms_rights_holder":null,"dcterms_bibliographic_citation":null,"dlg_local_right":null,"dcterms_medium":["state government records"],"dcterms_extent":null,"dlg_subject_personal":null,"iiif_manifest_url_ss":null,"dcterms_subject_fast":null,"fulltext":"AUGUSTA UNIVERSITY \nAUGUSTA, GEORGIA \nREPORT ON AUDIT FOR FISCAL YEAR ENDED JUNE 30, 2020 \nA Member Institution of the University System of Georgia \n \n -TABLE OF CONTENTS- \nAUDIT SUMMARY INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS UNIVERSITY OFFICIALS \n \nPages 1 \n2 - 3 4 \n \n AUDIT SUMMARY \n \nWe have audited the basic financial statements of Augusta University (University) as of and for the year ended June 30, 2020, and issued our report thereon, dated December 21, 2020. 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 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. \nOur audit of the University found: \n the financial statements are presented fairly, in all material respects; \n no internal control findings requiring management's attention; \n no instances of noncompliance or other matters required to be reported under Government Auditing Standards. \n \nSummary of Opinions \n \nOpinion Unit Business-Type Activities Aggregate Discretely Presented Component Units Aggregate Remaining Fund \n \nType of Opinion \n \nUnmodified \n \nUnmodified \n \n(Audited by Other Auditors) \n \nUnmodified \n \n- 1 - \n \n Greg S. Griffin \nSTATE AUDITOR \n(404) 656-2174 \n \nDEPARTMENT OF AUDITS AND ACCOUNTS \n270 Washington Street, S.W., Suite 4-101 Atlanta, Georgia 30334-8400 \n \nINDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING \nAND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS \n \nThe Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the Board of Regents of the University System of Georgia \nand Dr. Brooks Keel, President Augusta University \nWe have audited the financial statements of the business-type activities, aggregate discretely presented component units, and aggregate remaining fund information of the Augusta University (University) as of and for the year ended June 30, 2020, and the related notes to the financial statements, which collectively comprise the University's basic financial statements, and have issued our report thereon dated December 21, 2020. Our report includes a reference to other auditors who audited the financial statements of the discretely presented component units, as described in our report on the University's financial statements. 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. However, the financial statements of Georgia Health Sciences Foundation Inc. and Medical College of Georgia Foundation, Inc., were not audited in accordance with Government Auditing Standards, and accordingly, this report does not include reporting on internal control over financial reporting or instances of reportable noncompliance that are reported on separately by those auditors. \nInternal Control Over Financial Reporting \nIn planning and performing our audit of the financial statements, we considered the University's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the basic 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. \nA 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 University'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. \n \n- 2 - \n \n 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. \nCompliance and Other Matters \nAs 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 financial statements. 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. \nPurpose of this Report \nThe 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. \nRespectfully submitted, \n \nDecember 21, 2020 \n \nGreg S. Griffin State Auditor \n \n- 3 - \n \n AUGUSTA UNIVERSITY \nBoard of Regents of the University System of Georgia \n \nW. Allen Gudenrath Erin Hames Brbara Rivera Holmes Samuel D. Holmes C. Thomas Hopkins, Jr., MD James M. Hull Cade Joiner C. Everett Kennedy, III Rachel B. Little Lowery Houston May \n \nJose R. Perez Neil L. Pruitt, Jr. Sarah-Elizabeth Langford Reed Harold Reynolds Sachin Shailendra T. Dallas Smith Kessel D. Stelling, Jr. Don L. Waters Philip A. Wilheit, Sr. \n \nUniversity Officials \n \nDr. Brooks Keel, President Ms. Yvonne Turner, Executive Vice President for Finance, Chief Business Officer \n \n- 4 - \n \n "},{"id":"dlg_ggpd_1176350451-2019-12-23","title":"Augusta University annual financial report for fiscal year ended 2019 June 30.","collection_id":"dlg_ggpd","collection_title":"Georgia Government Publications","dcterms_contributor":["Georgia. Department of Audits and Accounts, issuing body."],"dcterms_spatial":["United States, Georgia, 32.75042, -83.50018"],"dcterms_creator":null,"dc_date":["2019-12-23"],"dcterms_description":["Began with: Fiscal year ended June 30, 2016, issued 2017?; ceased with fiscal year 2021?","In Georgia Government Publications database, for fiscal year ending June 30, 2017-, a briefer report on the audit called: Augusta University, Augusta, Georgia, report on audit for fiscal year ended ... or: Report on audit ... Augusta University, Augusta, Georgia is classed with this title.","In Georgia Government Publications database, briefer report on audit only appears for fiscal year ended June 30, 2018-","Augusta University named prominently on some issues, but Georgia. Department of Audits and Accounts appears to be responsible for creating and issuing the serial.","Fiscal year ended June 30, 2016 (received via FTP on January 31, 2018 from Georgia Department of Audits and Accounts); title from PDF cover (Georgia Government Publications database, viewed July 21, 2020).","Fiscal year 2023 (Georgia Government Publications database, viewed January 9, 2025)."],"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":["Atlanta, Georgia : Department of Audits and Accounts, [2017?]-"],"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/InC/1.0/"],"dcterms_is_part_of":null,"dcterms_subject":["Augusta University--Appropriations and expenditures--Periodicals.","Augusta University","Education, Higher--Georgia--Auditing--Periodicals.","Education, Higher--Georgia--Finance--Statistics--Periodicals.","Education--Auditing","Expenditures, Public","Georgia","Georgia Government Documents--Serial"],"dcterms_title":["Augusta University annual financial report for fiscal year ended 2019 June 30."],"dcterms_type":["Text"],"dcterms_provenance":["University of Georgia. Map and Government Information Library"],"edm_is_shown_by":["https://dlg.galileo.usg.edu/do:dlg_ggpd_1176350451-2019-12-23"],"edm_is_shown_at":["https://dlg.galileo.usg.edu/id:dlg_ggpd_1176350451-2019-12-23"],"dcterms_temporal":null,"dcterms_rights_holder":null,"dcterms_bibliographic_citation":null,"dlg_local_right":null,"dcterms_medium":["state government records"],"dcterms_extent":null,"dlg_subject_personal":null,"iiif_manifest_url_ss":null,"dcterms_subject_fast":null,"fulltext":"AUGUSTA UNIVERSITY \nAUGUSTA, GEORGIA \nREPORT ON AUDIT FOR FISCAL YEAR ENDED JUNE 30, 2019 \nA Member Institution of the University System of Georgia \n \n -TABLE OF CONTENTS- \nAUDIT SUMMARY INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COST UNIVERSITY OFFICIALS \n \nPages 1 \n2-3 4 5 \n \n AUDIT SUMMARY \n \nWe have audited the basic financial statements of Augusta University (University) as of and for the year ended June 30, 2019, and issued our report thereon, dated December 23, 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 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. \nOur audit of the University found: \n the financial statements are presented fairly, in all material respects; \n no internal control findings requiring management's attention; \n no instances of noncompliance or other matters required to be reported under Government Auditing Standards. \n deficiencies identified in the prior year audit report were addressed. \n \nSummary of Opinions \n \nOpinion Unit Business-Type Activities Aggregate Discretely Presented Component Units Aggregate Remaining Fund \n \nType of Opinion \n \nUnmodified \n \nUnmodified \n \n(Audited by Other Auditors) \n \nUnmodified \n \n- 1 - \n \n Greg S. Griffin \nSTATE AUDITOR \n(404) 656-2174 \n \nDEPARTMENT OF AUDITS AND ACCOUNTS \n270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 \n \nREPORT 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 \n \nIndependent Auditor's Report \n \nThe Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the Board of Regents of the University System of Georgia \nand Dr. Brooks Keel, President Augusta University \nWe have audited the financial statements of the business-type activities, aggregate discretely presented component units, and aggregate remaining fund information of Augusta University (University) as of and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the University's basic financial statements and have issued our report thereon dated December 23, 2019. Our report includes a reference to other auditors who audited the financial statements of the aggregate discretely presented component units, as described in our report on the University's financial statements. 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. However, the financial statements of Georgia Health Sciences Foundation, Inc. and Medical College of Georgia Foundation, Inc. were not audited in accordance with Government Auditing Standards, and accordingly, this report does not include reporting on internal control over financial reporting or instances of reportable noncompliance associated with Georgia Health Sciences Foundation, Inc. and Medical College of Georgia Foundation, Inc. \nInternal Control Over Financial Reporting \nIn 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. \nA 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 University'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. \nOur 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. \n- 2 - \n \n Compliance and Other Matters \nAs 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. \nPurpose of this Report \nThe 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. \nRespectfully submitted, \n \nDecember 23, 2019 \n \nGreg S. Griffin State Auditor \n \n- 3 - \n \n SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COST \nFinancial Internal Control and Compliance Findings \n \nFA-2018-001 \nInternal Control Impact: Compliance Impact: \nFinding Status: \nEntity Response: \n \nImprove Controls over Cash Management \nSignificant Deficiency Nonmaterial Noncompliance \nPreviously Reported Corrective Action Implemented \nN/A \n \n- 4 - \n \n AUGUSTA UNIVERSITY \n \nBoard of Regents of the University System of Georgia \n \nChris Cummiskey W. Allen Gudenrath Erin Hames Brbara Rivera Holmes Samuel D Holmes C. Thomas Hopkins, Jr., MD James M. Hull Rachel B. Little Laura Marsh Jose R. Perez \n \nNeil L. Pruitt, Jr. Sarah-Elizabeth Reed Sachin Shailendra E. Scott Smith Kessel D. Stelling, Jr. Ben J. Tarbutton, III Thomas Rogers Wade Don L. Waters Philip A. Wilheit, Sr. \n \nUniversity Officials \n \nDr. Brooks Keel, President \nYvonne Turner, Executive Vice President for Finance, Chief Business Officer \nLee Fruitticher, Vice President for Finance \n \n- 5 - \n \n "},{"id":"dlg_ggpd_1176350451-2019-01-18","title":"Augusta University annual financial report for fiscal year ended 2018 June 30.","collection_id":"dlg_ggpd","collection_title":"Georgia Government Publications","dcterms_contributor":["Georgia. Department of Audits and Accounts, issuing body."],"dcterms_spatial":["United States, Georgia, 32.75042, -83.50018"],"dcterms_creator":null,"dc_date":["2019-01-18"],"dcterms_description":["Began with: Fiscal year ended June 30, 2016, issued 2017?; ceased with fiscal year 2021?","In Georgia Government Publications database, for fiscal year ending June 30, 2017-, a briefer report on the audit called: Augusta University, Augusta, Georgia, report on audit for fiscal year ended ... or: Report on audit ... Augusta University, Augusta, Georgia is classed with this title.","In Georgia Government Publications database, briefer report on audit only appears for fiscal year ended June 30, 2018-","Augusta University named prominently on some issues, but Georgia. Department of Audits and Accounts appears to be responsible for creating and issuing the serial.","Fiscal year ended June 30, 2016 (received via FTP on January 31, 2018 from Georgia Department of Audits and Accounts); title from PDF cover (Georgia Government Publications database, viewed July 21, 2020).","Fiscal year 2023 (Georgia Government Publications database, viewed January 9, 2025)."],"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":["Atlanta, Georgia : Department of Audits and Accounts, [2017?]-"],"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/InC/1.0/"],"dcterms_is_part_of":null,"dcterms_subject":["Augusta University--Appropriations and expenditures--Periodicals.","Augusta University","Education, Higher--Georgia--Auditing--Periodicals.","Education, Higher--Georgia--Finance--Statistics--Periodicals.","Education--Auditing","Expenditures, Public","Georgia","Georgia Government Documents--Serial"],"dcterms_title":["Augusta University annual financial report for fiscal year ended 2018 June 30."],"dcterms_type":["Text"],"dcterms_provenance":["University of Georgia. Map and Government Information Library"],"edm_is_shown_by":["https://dlg.galileo.usg.edu/do:dlg_ggpd_1176350451-2019-01-18"],"edm_is_shown_at":["https://dlg.galileo.usg.edu/id:dlg_ggpd_1176350451-2019-01-18"],"dcterms_temporal":null,"dcterms_rights_holder":null,"dcterms_bibliographic_citation":null,"dlg_local_right":null,"dcterms_medium":["state government records"],"dcterms_extent":null,"dlg_subject_personal":null,"iiif_manifest_url_ss":null,"dcterms_subject_fast":null,"fulltext":"AUGUSTA UNIVERSITY \nAUGUSTA, GEORGIA \nREPORT ON AUDIT FOR FISCAL YEAR ENDED JUNE 30, 2018 \n \n -TABLE OF CONTENTS- \nAUDIT SUMMARY INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS CURRENT YEAR FINDINGS AND QUESTIONED COST \nFEDERAL INTERNAL CONTROL AND COMPLIANCE FINDINGS MANAGEMENT'S CORRECTIVE ACTION FOR CURRENT YEAR FINDINGS \nSCHEDULE OF MANAGEMENT'S CORRECTIVE ACTION UNIVERSITY OFFICIALS \n \nPages 1 \n2-3 4-5 \n6 7 \n \n AUDIT SUMMARY \nWe 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: \n the financial statements are presented fairly, in all material respects; \n no internal control over financial reporting findings requiring management's attention; \n one federal internal control and compliance finding that requires management's attention; however we do not consider it to be a material weakness; \n no instances of noncompliance or other matters required to be reported under Government Auditing Standards \n \nSummary of Opinions \n \nOpinion Unit Business-Type Activities Aggregate Discretely Presented Component Units Aggregate Remaining Fund \n \nType of Opinion Unmodified Unmodified (Audited by Other Auditors) Unmodified \n \n- 1 - \n \n GREG S. GRIFFIN \nSTATE AUDITOR \n(404) 656-2174 \n \nDEPARTMENT OF AUDITS AND ACCOUNTS \n270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 \n \nINDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS \n \nThe 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 \nand Dr. Brooks Keel, President Augusta University \nWe 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. \nInternal Control Over Financial Reporting \nIn 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. \nA 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. \nOur 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. \n- 2 - \n \n Compliance and Other Matters \nAs 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. \nPurpose of this Report \nThe 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. \nRespectfully submitted, \n \nJanuary 18, 2019 \n \nGreg S. Griffin State Auditor \n \n- 3 - \n \n CURRENT YEAR FINDINGS AND QUESTIONED COST Federal Internal Control and Compliance Findings \n \nFA-2018-001 Improve Controls over Cash Management \n \nCompliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Number: Questioned Costs: \n \nCash Management Significant Deficiency Nonmaterial Noncompliance U. S. Department of Education None 84.268 Federal Direct Student Loans P268K181311 (Year: 2018) None Identified \n \nDescription: The Institution maintained excessive cash balances related to the Federal Direct Student Loans program. \n \nCriteria: 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.\" \n \nThe Institution has cash management procedures in place that require the drawdown of funds after disbursements and refunds are posted within the student information system. \n \nCondition: 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. \n \nCause: 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. \n \nEffect 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. \n \n- 4 - \n \n 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. \n- 5 - \n \n - 6 - \n \n UNIVERSITY SYSTEM OF GEORGIA \n \nBoard of Regents of the University System of Georgia \n \nC. 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. \n \nSarah-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. \n \nUniversity Officials \n \nDr. Brooks Keel, President Mr. Anthony E. Wagner, Executive Vice President, Administration and Finance Mr. Lee Fruitticher, Vice President for Finance \n \n- 7 - \n \n "},{"id":"dlg_ggpd_s-ga-ba800-b-pr1-bm42-b2017-belec-p-btext","title":"Augusta University annual financial report, 2017 June 30","collection_id":"dlg_ggpd","collection_title":"Georgia Government Publications","dcterms_contributor":["Georgia. Department of Audits and Accounts, issuing body."],"dcterms_spatial":["United States, Georgia, 32.75042, -83.50018"],"dcterms_creator":["Georgia. Department of Audits and Accounts"],"dc_date":["2017-06-30"],"dcterms_description":["Began with: Fiscal year ended June 30, 2016, issued 2017?; ceased with fiscal year 2021?","In Georgia Government Publications database, for fiscal year ending June 30, 2017-, a briefer report on the audit called: Augusta University, Augusta, Georgia, report on audit for fiscal year ended ... or: Report on audit ... Augusta University, Augusta, Georgia is classed with this title.","In Georgia Government Publications database, briefer report on audit only appears for fiscal year ended June 30, 2018-","Augusta University named prominently on some issues, but Georgia. Department of Audits and Accounts appears to be responsible for creating and issuing the serial.","Fiscal year ended June 30, 2016 (received via FTP on January 31, 2018 from Georgia Department of Audits and Accounts); title from PDF cover (Georgia Government Publications database, viewed July 21, 2020).","Fiscal year 2023 (Georgia Government Publications database, viewed January 9, 2025)."],"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":["Atlanta, Ga. : Georgia. Department of Audits and Accounts"],"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/InC/1.0/"],"dcterms_is_part_of":null,"dcterms_subject":["Augusta University--Appropriations and expenditures--Periodicals.","Augusta University","Education, Higher--Georgia--Auditing--Periodicals.","Education, Higher--Georgia--Finance--Statistics--Periodicals.","Education--Auditing","Expenditures, Public","Georgia","Georgia Government Documents--Serial"],"dcterms_title":["Augusta University annual financial report, 2017 June 30"],"dcterms_type":["Text"],"dcterms_provenance":["University of Georgia. Map and Government Information Library"],"edm_is_shown_by":["https://dlg.galileo.usg.edu/do:dlg_ggpd_s-ga-ba800-b-pr1-bm42-b2017-belec-p-btext"],"edm_is_shown_at":["https://dlg.galileo.usg.edu/id:dlg_ggpd_s-ga-ba800-b-pr1-bm42-b2017-belec-p-btext"],"dcterms_temporal":null,"dcterms_rights_holder":null,"dcterms_bibliographic_citation":null,"dlg_local_right":null,"dcterms_medium":["reports"],"dcterms_extent":null,"dlg_subject_personal":null,"iiif_manifest_url_ss":null,"dcterms_subject_fast":null,"fulltext":"  AUGUSTA UNIVERSITY TABLE OF CONTENTS For the Fiscal Year Ended June 30, 2017 \r\nFinancial Section ............................................................................................................................................ Independent Auditor's Report ............................................................................................................ 5 Management's Discussion and Analysis ............................................................................................ 8 Financial Statements (GAAP Basis) .................................................................................................. Statement of Net Position ........................................................................................................... 22 Statement of Revenues, Expenses, and Changes in Net Position ............................................. 24 Statement of Cash Flows ............................................................................................................ 26 Statement of Fiduciary Net Position ............................................................................................ 28 Statement of Changes in Fiduciary Net Position ......................................................................... 29 Component Units ........................................................................................................................ Statement of Net Position ....................................................................................................... 30 Statement of Revenues, Expenses, and Changes in Net Position ......................................... 32 Notes to the Financial Statements .............................................................................................. 34 \r\nRequired Supplementary Information .......................................................................................................... Schedule of Contributions for Defined Benefit Pension Plan ............................................................. 66 Schedule of Proportionate Share of Net Pension Liability ................................................................. 67 Schedule of Employers' and Nonemployers' Net Pension Liability .................................................... 68 Schedule of Changes in Net Pension Liability ................................................................................... 69 Schedule of Investment Returns ....................................................................................................... 70 Notes to the Required Supplemental Information for Pension Plans ................................................. 71 \r\nSupplementary Information ........................................................................................................................... Balance Sheet (Non-GAAP Basis) .................................................................................................... 73 Summary Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) .............................. 74 Statement of Funds Available and Expenditures Compared to Budget (Non-GAAP Basis) .............. 75 Statement of Changes to Fund Balance by Program and Funding Source (Non-GAAP Basis) ........ 77 \r\n \r\n  GREG S. GRIFFIN \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 \r\nIndependent Auditor's Report \r\n \r\nThe Honorable Nathan Deal, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the Board of Regents of the University System of Georgia \r\nand Dr. Brooks Keel, President Augusta University \r\nReport on the Financial Statements \r\nWe have audited the accompanying financial statements of the business-type activities, the aggregate discretely presented component units, and the aggregate remaining fund information of Augusta University (University), a unit of the University System of Georgia, which is an organization unit of the State of Georgia as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the University's basic financial statements as listed in the table of contents. \r\nManagement's Responsibility for the Financial Statements \r\nManagement is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. \r\nAuditor's Responsibility \r\nOur responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the aggregate discretely presented component units. Those statements were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for the aggregate discretely presented component units, is based solely on the report of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. The other auditors audited the discretely presented component units' financial statements, except for Georgia Health Sciences Foundation, in accordance with Government Auditing Standards. \r\nAn audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the University's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the \r\n2017 Annual Financial Report 5 \r\n \r\n circumstances, but not for the purpose of expressing an opinion on the effectiveness of the University'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 financial statements. \r\nWe believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. \r\nOpinions \r\nIn our opinion, based on our audit and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities, the aggregate discretely presented component units, and the aggregate remaining fund information of the University as of June 30, 2017, and the respective changes in financial position and where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. \r\nEmphasis of Matter \r\nAs described in Note 1, the financial statements of the University are intended to present the financial position, the changes in financial position, and where applicable, cash flows of only those portions of the business-type activities and aggregate discretely presented component units of the State of Georgia that are attributable to the University's transactions. They do not purport to, and do not, present fairly the financial position of the State of Georgia as of June 30, 2017, the changes in its financial position, or, where applicable, its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. Our opinions are not modified with respect to this matter. \r\nAs described in Note 1 to the financial statements, in 2017, the University adopted new accounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 74, Financial Reporting for Postemployment Benefits Plans Other than Pension Plans, GASB Statement No. 77, Tax Abatement Disclosures, GASB Statement 78, Pensions Provided through Certain Multiple-Employer Defined Benefit Pension Plans, GASB Statement No. 80, Blending Requirements for Certain Component Units, and GASB Statement No. 82, Pension Issues. Our opinions are not modified with respect to these matters. \r\nAs described in Note 1 to the financial statements, in 2017, the beginning net position for the University's discretely presented component units was restated due to a change in the financial reporting entity. Our opinions are not modified with respect to this matter. \r\nOther Matters \r\nRequired Supplementary Information \r\nAccounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis, Schedule of Contributions to Defined Benefit Pension Plans, Schedule of Proportionate Share of the Net Pension Liability, Schedule of Employers' and Nonemployers' Net Pension Liability, Schedule of Changes in Net Pension Liability, Schedule of Investment Returns, and Notes to the Required Supplementary Information as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. \r\n6 Augusta University \r\n \r\n Supplementary and Other Information \r\nOur audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the University's basic financial statements. The introductory section and accompanying supplementary information as listed in the table of contents are presented for the purposes of additional analysis and are not required parts of the basic financial statements. \r\nThe accompanying supplementary information is management's responsibility and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, based on our audit and the procedures performed as described above, the supplementary information is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. \r\nThe introductory section has not been subjected to the auditing procedures applied in the audit of the basic financial statements and accordingly, we do not express an opinion or provide any assurance on it. \r\nOther Reporting Required by Government Auditing Standards \r\nIn accordance with Government Auditing Standards, we will issue our report 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 at a future date. The purpose of that report is solely 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 the effectiveness of the University's 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. \r\nRespectfully submitted, \r\n \r\nDecember 18, 2017 \r\n \r\nGreg S. Griffin State Auditor \r\n \r\n2017 Annual Financial Report 7 \r\n \r\n AUGUSTA UNIVERSITY Management's Discussion and Analysis \r\nIntroduction Founded in 1828 and located in Augusta, Richmond County, Georgia, Augusta University (the University) is a public, research university and medical center dedicated to training the next generation of innovators, leaders, and health care providers. Home to three campuses in Augusta and various satellite locations across Georgia, Augusta University is at the forefront of groundbreaking research focused on improving and enriching the human experience. The University is one of 28 institutions of higher education of the University System of Georgia. \r\nOffering undergraduate programs in the liberal arts and sciences, business and education, as well as a full range of graduate programs and hands-on clinical research opportunities, Augusta University is Georgia's innovation center for education and health care. The combination of nationally ranked business and nursing schools as well as the state's flagship public medical school and only dental school makes Augusta University a destination of choice for students of today and leaders of tomorrow. \r\nAugusta University's mission is to provide leadership and excellence in teaching, discovery, clinical care, and service as a student-centered comprehensive research university and academic health center with a wide range of programs from learning assistance through postdoctoral studies. \r\nAugusta University offers more than 140 degree programs in ten colleges and schools, including one of the nation's oldest medical schools, the Medical College of Georgia (MCG); the state's sole dental college; the nationally ranked James M. Hull College of Business; the Katherine Reese Pamplin School of Arts, Humanities, and Social Sciences; Education; Science and Mathematics; Allied Health Sciences; Graduate Studies; Nursing; and the School of Computer and Cyber Sciences. \r\nAugusta University's more than 8,500 students come from countries around the globe and nearly all of Georgia's 159 counties. Students are taught by some of the most prestigious scientists, clinicians, artists, and scholars in the nation. Over 1,000 full-time faculty members not only convey vital information, many also conduct extensive research. Augusta University has a strong commitment to medical research, building on a proud tradition that boasts such breakthroughs as fertility treatments and beta-blocking drugs for cardiac arrhythmias. Graduate and undergraduate students have opportunities to conduct and present research, and many participate in faculty-led research. \r\nResearch plays an important role in the University's mission of providing leadership and excellence in teaching, discovery, clinical care, and service. Augusta University's clinical and translational research programs focus on three key areas: cancer, cardiometabolic disease, and neurological disease. Augusta University researchers are also developing three emerging areas of research strength: regenerative and reparative medicine, personalized medicine and genomics, and public and preventive health. \r\nAugusta University's state-of-the-art research facilities help embody the vision of being a top-tier university that is a destination for education, health care, discovery, creativity, and innovation. The University has developed strong regional partnerships with the Charlie Norwood Veterans Affairs Medical Center, the Augusta Warrior Project, the Savannah River National Laboratory, and the Dwight D. Eisenhower Army Medical Center. This structure and partnership combined with Augusta University's collaborative environment and outstanding clinical resources place Augusta University at the leading edge of new scientific advancements targeting diseases that directly impact its patients. \r\nAugusta University fields teams in NCAA Division I men's and women's golf, and the men's team claimed back-to-back national championships in 2010 and 2011. In 11 other sports, the Jaguars compete in the Peach Belt Conference in Division II in basketball (AU men's basketball has had 9 NCAA Tournament appearances and 3 Elite Eights), baseball, cross country, softball, volleyball, tennis, and outdoor track and field. \r\n8 Augusta University \r\n \r\n Augusta University is committed to creating and sharing new knowledge as a university and to growing national and international stature in education, research, and health care. \r\nA brief historical comparison of student levels is shown by the comparison numbers that follow. \r\n \r\nFY 2017 FY 2016 FY 2015 \r\n \r\nSTUDENT HEADCOUNT \r\n8,532 \r\n8,333 \r\n8,530 \r\n \r\nSTUDENT FTE 7,931 7,749 7,901 \r\n \r\nOverview of the Financial Statements and Financial Analysis The University is pleased to present its financial statements for fiscal year 2017. The emphasis of discussions about these statements will be on current year data. There are three financial statements presented: the Statement of Net Position; the Statement of Revenues, Expenses, and Changes in Net Position; and the Statement of Cash Flows. This discussion and analysis of the Institution's financial statements provides an overview of its financial activities for the year. Comparative data is provided for fiscal year 2017 and fiscal year 2016. \r\nStatement of Net Position The Statement of Net Position is a financial condition snapshot as of June 30, 2017 and includes all assets, deferred outflows of resources, liabilities, and deferred inflows or resources, both current and noncurrent. The differences between current and noncurrent assets are discussed in the Notes to the Financial Statements. The Statement of Net Position is prepared under the accrual basis of accounting which requires revenue and asset recognition when the service is provided, and expense and liability recognition when goods or services are received despite when cash is actually exchanged. \r\nFrom the data presented, readers of the Statement of Net Position are able to determine the assets available to continue the operations of the University and how much the University owes vendors. The difference between assets,deferred outflows of resources, liabilities, and deferred inflows of resources (net position) is one indicator of the University's financial health. Increases or decreases in net position provide an indicator of the improvement or decline of the University's financial health when considered in conjunction with other non-financial conditions, such as facilities and enrollment. Net position is divided into three major categories. \r\nThe first category is net investment in capital assets. It provides the Institution's equity in property, plant, and equipment owned by the University. \r\nThe next category is restricted, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable, restricted resources is available only for investment purposes. Expendable, restricted resources are available for expenditure by the University, but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. \r\nThe final category is unrestricted. Unrestricted resources are available to the University for any lawful purpose. \r\n \r\n2017 Annual Financial Report 9 \r\n \r\n Statement of Net Position for the Years Ended June 30, 2017 and 2016, Condensed \r\n \r\nCONDENSED STATEMENT OF NET POSITION \r\nASSETS Current Assets Capital Assets, Net Other Assets TOTAL ASSETS \r\n \r\nIncrease/ June 30, 2017 June 30, 2016 (Decrease) % Change \r\n \r\n$ 107,353,853 $ 105,894,122 $ \r\n \r\n526,986,011 534,921,000 \r\n \r\n87,686,377 \r\n \r\n78,086,444 \r\n \r\n722,026,241 718,901,566 \r\n \r\n1,459,731 (7,934,989) 9,599,933 3,124,675 \r\n \r\n1.38 % (1.48)% 12.29 % 0.43 % \r\n \r\nDEFERRED OUTFLOWS \r\n \r\n94,788,212 \r\n \r\n37,714,705 57,073,507 151.33 % \r\n \r\nLIABILITIES Current Liabilities Noncurrent Liabilities TOTAL LIABILITIES \r\n \r\n96,602,397 475,435,433 572,037,830 \r\n \r\n111,401,169 405,488,965 516,890,134 \r\n \r\n(14,798,772) 69,946,468 55,147,696 \r\n \r\n(13.28)% 17.25 % 10.67 % \r\n \r\nDEFERRED INFLOWS \r\n \r\n14,044,713 \r\n \r\n28,307,989 (14,263,276) (50.39)% \r\n \r\nNET POSITION Net Investment in Capital Assets Restricted, Nonexpendable Restricted, Expendable Unrestricted (Deficit) TOTAL NET POSITION \r\n \r\n472,466,154 477,493,762 \r\n \r\n2,408,636 \r\n \r\n2,172,437 \r\n \r\n43,789,490 \r\n \r\n30,446,100 \r\n \r\n(287,932,370) (298,694,151) \r\n \r\n$ 230,731,910 $ 211,418,148 $ \r\n \r\n(5,027,608) 236,199 \r\n13,343,390 10,761,781 19,313,762 \r\n \r\n(1.05)% 10.87 % 43.83 % (3.60)% \r\n9.14 % \r\n \r\nTotal assets increased $3,124,675 which was due to an increase in current assets of $1,459,731, a decrease in net capital assets of $(7,934,989), and an increase in other assets of $9,599,933. The overall increase in unrestricted cash and investments was mostly driven by a transfer of excess cash to investments to take advantage of improved financial market conditions in fiscal year 2017 to maximize interest income. Accounts receivables increased due to the timing on collecting amounts due from sponsored grants and contracts, Georgia State Financing and Investment Commission, and affiliated organizations. \r\nTotal deferred outflows of resources increased by $57,073,507 which was primarily due to the University's proportionate share of the actuarially determined deferred loss on defined benefit pension plans administered by Teachers Retirement System of Georgia, Employees' Retirement System of Georgia, and the Early Retirement Plan. \r\nTotal liabilities increased $55,147,696 which was due to a decrease in current liabilities of $(14,798,772) and an increase in non-current liabilities of $69,946,468. Accounts payable increased $1,061,078, which was largely attributable to increased expenses in Georgia Correctional Health Care services. Compensated absences increased $1,274,942, which was related to an increase in salaries combined with a decrease in unused vacation leave. Funds held for others increased $1,080,808 mainly as a result of the mandatory housing meal plan for Elm and Oak Halls. Net pension liability increased $71,966,285 related to the University's proportionate share of the actuarially determined liability for defined benefit plans administered by Teachers Retirement System of Georgia, Employees' Retirement System of Georgia, and the Early Retirement Plan. \r\n \r\nThe combination of the change in total assets and deferred outflows of resources and the change in total liabilities and deferred inflows of resources yielded an increase in net position of $19,313,762. This change in net position is primarily in the category of Expendable Net Position, in the amount of $13,343,390, primarily due to the receipt of clinical reserve buildup. \r\nTotal deferred inflows of resources decreased by $(14,263,276) which was primarily due to the University's proportionate share of the actuarially determined deferred gain on defined benefit pension plans administered by Teachers Retirement System of Georgia, Employees' Retirement System of Georgia, and the Early Retirement Plan. \r\n \r\n10 Augusta University \r\n \r\n Statement of Revenues, Expenses, and Changes in Net Position Changes in total net position as presented on the Statement of Net Position are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Position. The purpose of the statement is to present the revenues received by the University, both operating and nonoperating, and the expenses paid by the University, operating and nonoperating, and any other revenues, expenses, gains and losses received or spent by the University. Generally, operating revenues are received for providing goods and services to the various customers and constituencies of the University. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the University. Nonoperating revenues are revenues received for which goods and services are not provided. For example, state appropriations are nonoperating because they are provided by the Legislature to the University without the Legislature directly receiving commensurate goods and services for those revenues. \r\nStatement of Revenues, Expenses, and Changes in Net Position for the Years Ended June 30, 2017 and 2016, Condensed \r\n \r\nCONDENSED STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION \r\nOperating Revenue Operating Expense Operating Income/Loss Net Nonoperating Revenues and Expenses Income (Loss) before Other Revenues, Expenses, Gains, or Losses \r\nOther Revenues, Expenses, Gains, Losses and Special Items \r\nChange in Net Position Net Position at Beginning of Year Net Position at End of Year \r\n \r\nIncrease/ June 30, 2017 June 30, 2016 (Decrease) \r\n \r\n$ 633,399,791 $ 584,805,340 $ 48,594,451 \r\n \r\n842,163,769 799,623,572 42,540,197 \r\n \r\n(208,763,978) (214,818,232) \r\n \r\n6,054,254 \r\n \r\n224,229,670 220,679,013 \r\n \r\n3,550,657 \r\n \r\n% Change \r\n8.31 % 5.32 % (2.82)% 1.61 % \r\n \r\n15,465,692 \r\n \r\n5,860,781 \r\n \r\n9,604,911 163.88 % \r\n \r\n3,848,070 \r\n \r\n8,478,364 \r\n \r\n19,313,762 14,339,145 \r\n \r\n211,418,148 197,079,003 \r\n \r\n$ 230,731,910 $ 211,418,148 $ \r\n \r\n(4,630,294) 4,974,617 14,339,145 19,313,762 \r\n \r\n-54.61 % 34.69 % \r\n7.28 % 9.14 % \r\n \r\nThe Statement of Revenues, Expenses and Changes in Net Position reflects a positive year, which is represented by an increase in net position at the end of the year. Some highlights of the information presented on this statement are as follows. \r\n \r\n2017 Annual Financial Report 11 \r\n \r\n Revenues For the years ended June 30, 2017 and June 30, 2016, revenues by source were as follows: \r\n \r\nREVENUES BY SOURCE Tuition and Fees Grants and Contracts Sales and Services Auxiliary Enterprises Other Operating Revenues Total Operating Revenues State Appropriations Grants and Contracts Gifts Investment Income Other Nonoperating Revenues Total Nonoperating Revenues State Capital Gifts and Grants Other Capital Gifts and Grants Total Capital Gifts and Grants Special Items Extraordinary Items Total Revenues \r\n \r\nIncrease/ June 30, 2017 June 30, 2016 (Decrease) % Change \r\n \r\n$ 88,406,111 $ 86,148,215 $ 2,257,896 \r\n \r\n2.62% \r\n \r\n515,680,946 470,062,674 45,618,272 \r\n \r\n9.70% \r\n \r\n9,401,577 \r\n \r\n10,167,422 \r\n \r\n(765,845) -7.53% \r\n \r\n19,297,461 \r\n \r\n17,473,339 \r\n \r\n1,824,122 \r\n \r\n10.44% \r\n \r\n613,696 \r\n \r\n953,690 \r\n \r\n(339,994) -35.65% \r\n \r\n633,399,791 584,805,340 48,594,451 \r\n \r\n8.31% \r\n \r\n199,132,523 195,068,634 \r\n \r\n4,063,889 \r\n \r\n2.08% \r\n \r\n13,337,028 \r\n \r\n13,626,484 \r\n \r\n(289,456) -2.12% \r\n \r\n12,274,245 \r\n \r\n13,982,821 \r\n \r\n(1,708,576) -12.22% \r\n \r\n1,970,804 \r\n \r\n570,075 \r\n \r\n1,400,729 245.71% \r\n \r\n(440,259) \r\n \r\n(571,795) \r\n \r\n131,536 -23.00% \r\n \r\n226,274,341 222,676,219 \r\n \r\n3,598,122 \r\n \r\n1.62% \r\n \r\n8,837,521 \r\n \r\n8,433,386 \r\n \r\n404,135 \r\n \r\n4.79% \r\n \r\n276,500 \r\n \r\n44,978 \r\n \r\n231,522 514.74% \r\n \r\n9,114,021 \r\n \r\n8,478,364 \r\n \r\n635,657 \r\n \r\n7.50% \r\n \r\n(5,265,951) \r\n \r\n-- \r\n \r\n(5,265,951) 100.00% \r\n \r\n-- \r\n \r\n-- \r\n \r\n-- \r\n \r\n0.00% \r\n \r\n$ 863,522,202 $ 815,959,923 $ 47,562,279 \r\n \r\n5.83% \r\n \r\nState appropriations increased $4.1 million (2.08%) in fiscal year 2017 including an increase in Special Funding Initiative and an allocation for institutional priorities including cyber security education and undergraduate enrollment initiatives. Operating grants and contracts revenue increased $45.6 million (9.70%) in fiscal year 2017 primarily as a result of increased Georgia Correctional Health Care revenue and receipt of clinical fee buildup. Tuition and fee revenues, net increased $2.3 million (2.62%) in fiscal 2017 when compared with fiscal year 2016 due to enrollment increases and tuition and fee increases across the USG institutions as approved by the Board of Regents of the University System of Georgia. \r\n \r\n12 Augusta University \r\n \r\n Revenue by source is depicted by the following chart: \r\n2017 Annual Financial Report 13 \r\n \r\n Revenue by major source for the years ended June 30, 2017 and June 30, 2016 is depicted by the following chart: \r\n \r\nExpenses For the years ended June 30, 2017 and June 30, 2016, expenses by functional classification were as follows: \r\n \r\nEXPENSES BY FUNCTIONAL CLASSIFICATION Instruction Research Public Service Academic Support Student Services Institutional Support Plant Operations and Maintenance Scholarships and Fellowships Auxiliary Enterprises Patient Care Total Operating Expenses Interest Expense Total Nonoperating Expenses Total Expenses \r\n \r\nIncrease/ June 30, 2017 June 30, 2016 (Decrease) % Change \r\n \r\n$ 160,289,518 $ 158,840,109 $ 1,449,409 \r\n \r\n0.91% \r\n \r\n47,073,943 \r\n \r\n46,651,886 \r\n \r\n422,057 \r\n \r\n0.90% \r\n \r\n43,686,981 \r\n \r\n43,779,261 \r\n \r\n(92,280) -0.21% \r\n \r\n57,701,780 \r\n \r\n57,002,258 \r\n \r\n699,522 \r\n \r\n1.23% \r\n \r\n8,190,813 \r\n \r\n7,549,692 \r\n \r\n641,121 \r\n \r\n8.49% \r\n \r\n90,963,143 \r\n \r\n79,236,910 \r\n \r\n11,726,233 \r\n \r\n14.80% \r\n \r\n50,437,124 \r\n \r\n42,821,068 \r\n \r\n7,616,056 \r\n \r\n17.79% \r\n \r\n7,677,181 \r\n \r\n7,475,123 \r\n \r\n202,058 \r\n \r\n2.70% \r\n \r\n17,482,914 \r\n \r\n15,521,733 \r\n \r\n1,961,181 \r\n \r\n12.64% \r\n \r\n358,660,372 340,745,532 17,914,840 \r\n \r\n5.26% \r\n \r\n842,163,769 799,623,572 42,540,197 \r\n \r\n5.32% \r\n \r\n2,044,671 \r\n \r\n1,997,206 \r\n \r\n47,465 \r\n \r\n2.38% \r\n \r\n2,044,671 \r\n \r\n1,997,206 \r\n \r\n47,465 \r\n \r\n2.38% \r\n \r\n$ 844,208,440 $ 801,620,778 $ 42,587,662 \r\n \r\n5.31% \r\n \r\n14 Augusta University \r\n \r\n Total operating expenses were $842.2 million in fiscal year 2017, an increase of $42.5 million (5.32%) when compared with fiscal year 2016. The functional classifications with the greatest increase include Institutional Support ($11.7 million), Plant Operations and Maintenance ($7.6 million), and Patient Care ($17.9 million). The functional classifications with the highest percent of change include Student Services (8.49%), Auxiliary Enterprises (12.64%), Institutional Support (14.80%), and Plant Operations and Maintenance (17.79%). As noted above, total expenses increased $42.6 million (5.31%) in fiscal year 2017 when compared with fiscal year 2016. The increases were substantially attributable to salaries and benefits ($20.5 million) and supplies and other services ($23.3 million). The following chart depicts the fiscal 2017 operating expenses by functional classification. \r\n2017 Annual Financial Report 15 \r\n \r\n Operating expenses by functional classification for the years ended June 30, 2017 and June 30, 2016 is depicted by the following chart: \r\n16 Augusta University \r\n \r\n The following chart depicts the fiscal 2017 operating expenses by natural classification. \r\n2017 Annual Financial Report 17 \r\n \r\n Operating expenses by natural classification for the years ended June 30, 2017 and June 30, 2016 is depicted by the following chart: \r\nStatement of Cash Flows The final statement presented by Augusta University is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the University during the year. Cash flow information can be used to evaluate the financial viability of the University's ability to meet financial obligations as they mature. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the University. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses and Changes in Net Position. \r\n18 Augusta University \r\n \r\n Cash Flows for the Years Ended June 30, 2017 and 2016, Condensed \r\n \r\nCONDENSED STATEMENT OF NET CASH FLOWS \r\nCash Provided (Used) by: \r\nOperating Activities \r\nNon-Capital Financing Activities \r\nCapital and Related Financing Activities \r\nInvesting Activities \r\nNET CHANGE IN CASH AND CASH EQUIVALENTS \r\nCash and Cash Equivalents, beginning of year (restated) CASH AND CASH EQUIVALENTS, END OF YEAR \r\n \r\nJune 30, 2017 \r\n \r\nJune 30, 2016 \r\n \r\n$ \r\n \r\n(204,801,851) $ \r\n \r\n(208,903,768) \r\n \r\n229,181,689 \r\n \r\n219,974,030 \r\n \r\n(21,388,416) \r\n \r\n(32,087,181) \r\n \r\n(7,825,066) \r\n \r\n4,753,588 \r\n \r\n(4,833,644) 17,892,544 \r\n \r\n(16,263,331) 34,155,875 \r\n \r\n$ \r\n \r\n13,058,900 $ \r\n \r\n17,892,544 \r\n \r\nCapital Assets Capital assets, net of accumulated depreciation, at June 30, 2017 and June 30, 2016 were as follows: \r\n \r\nCAPITAL ASSETS, net of accumulated \r\n \r\ndepreciation \r\n \r\nJune 30, 2017 June 30, 2016 \r\n \r\nIncrease (Decrease) \r\n \r\nLand \r\n \r\n$ 23,214,736 $ 28,365,902 $ (5,151,166) \r\n \r\nCapitalized Collections \r\n \r\n87,006 \r\n \r\n87,006 \r\n \r\n-- \r\n \r\nConstruction Work-in-Progress \r\n \r\n18,425,893 \r\n \r\n19,218,372 \r\n \r\n(792,479) \r\n \r\nInfrastructure \r\n \r\n4,641,544 \r\n \r\n4,270,083 \r\n \r\n371,461 \r\n \r\nBuilding and Building Improvements \r\n \r\n435,497,293 436,847,804 \r\n \r\n(1,350,511) \r\n \r\nFacilities and Other Improvements \r\n \r\n11,552,203 \r\n \r\n9,639,324 \r\n \r\n1,912,879 \r\n \r\nEquipment \r\n \r\n27,136,328 \r\n \r\n29,202,492 \r\n \r\n(2,066,164) \r\n \r\nLibrary Collections \r\n \r\n6,431,008 \r\n \r\n7,290,017 \r\n \r\n(859,009) \r\n \r\nCAPITAL ASSETS, net of accumulated \r\n \r\ndepreciation \r\n \r\n$ 526,986,011 $ 534,921,000 $ (7,934,989 ) \r\n \r\n% Change -18.16 % 0.00 % -4.12 % 8.70 % -0.31 % 19.84 % -7.08 % -11.78 % \r\n)% (1.48 )% \r\n \r\nUniversity managed capital projects for building and building improvements, site development, and equipment in fiscal year 2017 totaled $14,148,790 including the Allgood Hall Classroom Refresh and the Cyber Lab Renovation projects. In addition, completed building and building improvements, equipment, and research and development infrastructure totaling $3,387,578 were funded by Georgia State Financing and Investment Commission (GSFIC) and included $50,752 prepaid by the University. \r\nOther on-going projects funded by GSFIC included $4,912,820. Projected funding by GSFIC for fiscal year 2018 will be approximately the same. \r\nFor additional information concerning Capital Assets, see Notes 1, 6, 8, and 13 in the Notes to the Financial Statements. \r\nLong-Term Liabilities Augusta University had Long-Term Liabilities of $500,416,876 of which $24,981,443 was reflected as current liability at June 30, 2017. \r\nFor additional information concerning Long-Term Liabilities, see Note 8 in the Notes to the Financial Statements. \r\nThe Notes to the Financial Statements are an integral part of the basic financial statements and communicate information essential for fair presentation. For example, the notes convey information concerning significant accounting policies used to prepare the financial statements, detailed information on cash and investments, receivables, capital leases, compensated absences, retirement and other post employment benefits, capital assets, and a report of operating expenses by function. \r\n2017 Annual Financial Report 19 \r\n \r\n Economic Outlook Augusta University continued to manage resources prudently in fiscal year 2017 and remains committed to student affordability and strategic allocation of resources to our core mission of teaching, discovery, clinical care, and service. For the first time since consolidation, the University saw a modest increase in enrollment of 2.4% from Fall 2016 to Fall 2017. We anticipate another modest increase in enrollment during fiscal year 2018 which will result in additional tuition revenue. It should also be noted that the Board of Regents allocated $9.2 million in new recurring state appropriations for strategic priorities during the fiscal year 2018 budget process. \r\nOperating Revenue Highlights State appropriations increased from $195.1 million in fiscal year 2016 to $199.1 million in fiscal year 2017, an increase of 2.08%. This included $15.8 million in special funding initiative. In fiscal year 2017, Augusta University was allocated $1.5 million in new recurring funds for institutional priorities including cyber security education and undergraduate enrollment initiatives. State appropriations accounted for 23.06% of total revenue in fiscal year 2017. \r\nTuition and fee revenue increased from $86.1 million in fiscal year 2016 to $88.4 million in fiscal year 2017. This is a direct result of the increase in enrollment noted above. Tuition and fees accounted for 10.24% of total revenue for fiscal year 2017. \r\n \r\nDr. Brooks A. Keel, Ph.D., President Augusta University \r\n \r\nAnthony E. Wagner. Executive Vice President Augusta University \r\n \r\n20 Augusta University \r\n \r\n  AUGUSTA UNIVERSITY STATEMENT OF NET POSITION JUNE 30, 2017 \r\nASSETS Current Assets Cash and Cash Equivalents Short-term Investments Federal Financial Assistance Affiliated Organizations Component Units Primary Government Other Investment in Capital Leases - Primary Government Inventories Prepaid Items Total Current Assets \r\nNon-Current Assets Cash and Cash Equivalents Due From USO - Capital Liability Reserve Fund Pledges \u0026 Contributions Other Investments Notes Receivable, net Investment in Capital Leases - Primary Government Other Assets Investments (Externally Restricted) Capital Assets, net \r\nTotal Non-Current Assets TOTAL ASSETS \r\nDEFERRED OUTFLOWS OF RESOURCES Deferred Loss on Debt Refunding Deferred Loss on Defined Benefit Pension Plan \r\nTOTAL DEFERRED OUTFLOWS OF RESOURCES \r\n \r\nAugusta University \r\n \r\nComponent Units \r\n \r\n$ \r\n \r\n13,058,900 $ \r\n \r\n58,094,308 \r\n \r\n-- \r\n \r\n63,629,343 \r\n \r\n8,976,659 \r\n \r\n5,254,618 \r\n \r\n553,799 \r\n \r\n2,778,875 \r\n \r\n37,163,716 \r\n \r\n-- \r\n \r\n-- \r\n \r\n4,640,632 \r\n \r\n33,612,275 \r\n \r\n142,421,129 \r\n \r\n-- \r\n \r\n2,202,435 \r\n \r\n843,658 \r\n \r\n19,002,610 \r\n \r\n13,144,846 \r\n \r\n17,124,167 \r\n \r\n107,353,853 \r\n \r\n315,148,117 \r\n \r\n-- 197,730 \r\n-- -- 82,393,086 2,686,925 -- -- 2,408,636 526,986,011 614,672,388 722,026,241 \r\n \r\n4,378,955 -- \r\n2,990,181 235,806 \r\n241,837,177 201,290 \r\n48,801,402 9,881,763 \r\n149,677,449 275,919,811 733,923,834 1,049,071,951 \r\n \r\n2,808,243 \r\n \r\n-- \r\n \r\n91,979,969 \r\n \r\n-- \r\n \r\n$ \r\n \r\n94,788,212 $ \r\n \r\n-- \r\n \r\nThe notes to the financial statements are an integral part of this statement. 22 Augusta University \r\n \r\n AUGUSTA UNIVERSITY STATEMENT OF NET POSITION JUNE 30, 2017 \r\nLIABILITIES Current Liabilities Accounts Payable Salaries Payable Benefits Payable Contracts Payable Retainage Payable Due to Affiliated Organizations Due to Component Units Due to Primary Government Advances (Including Tuition and Fees) Deposits Held for Other Organizations Other Liabilities Notes and Loans Payable Lease Purchase Obligations - External Lease Purchase Obligations - Component Units Revenue Bonds \u0026 Notes Payable Liabilities Under Split Interest Agreements Compensated Absences Total Current Liabilities \r\nNon-Current Liabilities Other Liabilities Notes and Loans Payable Lease Purchase Obligations - External Lease Purchase Obligations - Component Units Revenue Bonds \u0026 Notes Payable Liabilities Under Split Interest Agreements Interest Rate Swap Compensated Absences Other Post Employment Benefits Obligation Net Pension Liability \r\nTotal Non-Current Liabilities TOTAL LIABILITIES \r\nDEFERRED INFLOWS OF RESOURCES Deferred Gain on Debt Refunding Deferred Gain on Defined Benefit Pension Plan \r\nTOTAL DEFERRED INFLOWS OF RESOURCES \r\nNET POSITION Net Investment in Capital Assets Restricted for: Nonexpendable Expendable Unrestricted (Deficit) \r\nTOTAL NET POSITION \r\nThe notes to the financial statements are an integral part of this statement. \r\n \r\nAugusta University \r\n \r\nComponent Units \r\n \r\n$ \r\n \r\n7,133,767 $ \r\n \r\n61,992,917 \r\n \r\n3,116,835 \r\n \r\n6,463,832 \r\n \r\n2,391,267 \r\n \r\n-- \r\n \r\n1,457,960 \r\n \r\n-- \r\n \r\n346,850 \r\n \r\n-- \r\n \r\n987,096 \r\n \r\n2,853,274 \r\n \r\n4,640,632 \r\n \r\n-- \r\n \r\n-- \r\n \r\n37,163,716 \r\n \r\n48,859,656 \r\n \r\n1,541,873 \r\n \r\n2,686,891 \r\n \r\n-- \r\n \r\n-- \r\n \r\n9,512,265 \r\n \r\n-- \r\n \r\n6,544,623 \r\n \r\n1,431,449 \r\n \r\n5,932,665 \r\n \r\n2,202,435 \r\n \r\n-- \r\n \r\n-- \r\n \r\n5,715,000 \r\n \r\n-- \r\n \r\n90,485 \r\n \r\n21,347,559 \r\n \r\n18,843,484 \r\n \r\n96,602,397 \r\n \r\n156,654,134 \r\n \r\n-- -- 3,090,915 48,801,402 -- -- -- 17,634,667 -- 405,908,449 475,435,433 572,037,830 \r\n \r\n10,785,836 37,413,500 24,048,493 \r\n-- 158,432,633 \r\n1,148,655 20,812,794 \r\n-- 11,531,792 \r\n-- 264,173,703 420,827,837 \r\n \r\n847,464 \r\n \r\n-- \r\n \r\n13,197,249 \r\n \r\n-- \r\n \r\n14,044,713 \r\n \r\n-- \r\n \r\n472,466,154 \r\n \r\n2,408,636 43,789,490 (287,932,370) \r\n \r\n$ \r\n \r\n230,731,910 $ \r\n \r\n88,592,846 \r\n149,023,449 109,632,810 280,995,009 \r\n-- 628,244,114 \r\n \r\n2017 Annual Financial Report 23 \r\n \r\n AUGUSTA UNIVERSITY STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION FOR FISCAL YEAR ENDED JUNE 30, 2017 \r\n \r\nOPERATING REVENUES Student Tuition and Fees (net) Grants and Contracts Federal State Other Sales and Services Rents and Royalties Auxiliary Enterprises Residence Halls Bookstore Food Services Parking/Transportation Health Services Intercollegiate Athletics Other Organizations Gifts and Contributions Endowment Income Other Operating Revenues \r\nTotal Operating Revenues \r\nOPERATING EXPENSES Faculty Salaries Staff Salaries Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation \r\nTotal Operating Expenses \r\nOperating Income (Loss) \r\n \r\nAugusta University \r\n \r\nComponent Units \r\n \r\n$ \r\n \r\n88,406,111 $ \r\n \r\n-- \r\n \r\n56,994,286 230,211,800 228,474,860 \r\n9,401,577 346,122 \r\n \r\n52,357,954 -- \r\n9,953,058 33,339,046 \r\n3,557,149 \r\n \r\n3,888,820 1,845,069 1,136,833 3,189,528 2,330,164 3,058,368 3,848,679 \r\n-- -- 267,574 \r\n \r\n-- -- 1,941,197 -- 753,080,486 -- -- 4,871,877 1,023,803 1,639,674 \r\n \r\n633,399,791 \r\n \r\n861,764,244 \r\n \r\n173,381,811 248,371,709 139,646,583 \r\n341,695 4,260,152 9,288,780 10,590,512 228,271,076 28,011,451 \r\n \r\n842,163,769 \r\n \r\n$ \r\n \r\n(208,763,978) $ \r\n \r\n-- 278,798,382 \r\n81,584,033 169,243,470 \r\n3,346,618 4,162,840 4,107,530 353,708,182 34,410,532 \r\n929,361,587 \r\n(67,597,343) \r\n \r\nThe notes to the financial statements are an integral part of this statement. 24 Augusta University \r\n \r\n AUGUSTA UNIVERSITY STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION JUNE 30, 2017 \r\n \r\nNONOPERATING REVENUES (EXPENSES) State Appropriations Grants and Contracts Federal State Other Gifts Investment Income Interest Expense Other Nonoperating Revenues (Expenses) \r\nNet Nonoperating Revenues \r\nIncome (Loss) Before Other Revenues, Expenses, Gains, or Losses \r\nCapital Grants and Gifts Federal State Other \r\nAdditions to Permanent and Term Endowments Special Item Extraordinary Item \r\nTotal Other Revenues, Expenses, Gains or Losses \r\nChange in Net Position \r\nNet Position, Beginning of Year, As Originally Reported Prior Year Adjustments Net Position, Beginning of Year, Restated \r\nNet Position-End of Year \r\n \r\nAugusta University \r\n \r\nComponent Units \r\n \r\n$ \r\n \r\n199,132,523 $ \r\n \r\n31,409,501 \r\n \r\n9,837,028 -- \r\n3,500,000 12,274,245 \r\n1,970,804 (2,044,671) \r\n(440,259) \r\n \r\n2,967,388 3,178,581 \r\n741 -- \r\n35,715,150 495,762 \r\n(25,086,864) \r\n \r\n224,229,670 \r\n \r\n48,680,259 \r\n \r\n15,465,692 \r\n \r\n(18,917,084) \r\n \r\n-- 8,837,521 \r\n276,500 -- \r\n(5,265,951) -- \r\n \r\n88,747 -- \r\n1,955,837 3,084,565 \r\n-- -- \r\n \r\n3,848,070 \r\n \r\n5,129,149 \r\n \r\n19,313,762 \r\n \r\n(13,787,935) \r\n \r\n211,418,148 -- \r\n211,418,148 \r\n \r\n576,130,168 65,901,881 \r\n642,032,049 \r\n \r\n$ \r\n \r\n230,731,910 $ \r\n \r\n628,244,114 \r\n \r\nThe notes to the financial statements are an integral part of this statement. \r\n \r\n2017 Annual Financial Report 25 \r\n \r\n AUGUSTA UNIVERSITY STATEMENT OF CASH FLOWS FOR FISCAL YEAR ENDED JUNE 30, 2017 \r\nCASH FLOWS FROM OPERATING ACTIVITIES Payments from Customers Grants and Contracts (Exchange) Payments to Suppliers Payments to Employees Payments for Scholarships and Fellowships Loans Issued to Students Collection of Loans from Students \r\nNet Cash Used by Operating Activities \r\nCASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES State Appropriations Agency Funds Transactions - Receipts Agency Funds Transactions - Disbursements Gifts and Grants Received for Other Than Capital Purposes \r\nNet Cash Flows Provided by Non-capital Financing Activities \r\nCASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capital Gifts and Grants Received Proceeds from Sale of Capital Assets Purchases of Capital Assets Principal Paid on Capital Debt and Leases Interest Paid on Capital Debt and Leases \r\nNet Cash Used by Capital and Related Financing Activities \r\nCASH FLOWS FROM INVESTING ACTIVITIES Proceeds from Sales and Maturities of Investments Investment Income Purchase of Investments \r\nNet Cash Used by Investing Activities \r\nNet Decrease in Cash and Cash Equivalents Cash and Cash Equivalents, Beginning of year \r\nCash and Cash Equivalents - End of Year \r\n \r\nAugusta University \r\n \r\n$ \r\n \r\n118,113,900 \r\n \r\n503,288,608 \r\n \r\n(397,630,340) \r\n \r\n(419,481,176) \r\n \r\n(9,288,780) \r\n \r\n(557,295) \r\n \r\n753,232 \r\n \r\n(204,801,851) \r\n \r\n199,132,523 139,393,386 (138,666,231) \r\n29,322,011 229,181,689 \r\n \r\n8,837,521 44,878 \r\n(24,861,842) (3,482,411) (1,926,562) \r\n(21,388,416) \r\n \r\n1,287,465 1,270,470 (10,383,001) (7,825,066) \r\n \r\n(4,833,644) 17,892,544 \r\n \r\n$ \r\n \r\n13,058,900 \r\n \r\nThe notes to the financial statements are an integral part of this statement. 26 Augusta University \r\n \r\n AUGUSTA UNIVERSITY STATEMENT OF CASH FLOWS JUNE 30, 2017 \r\nRECONCILIATION OF OPERATING LOSS TO NET CASH USED BY OPERATING ACTIVITIES: \r\nOperating Loss Net Cash Used by Operating Activities \r\nDepreciation Change in Assets and Liabilities: \r\nReceivables, net Inventories Prepaid Items Notes Receivable, Net Accounts Payable Salaries Payable Benefits Payable Contracts Payable Advances (Including Tuition \u0026 Fees) Compensated Absences Due to Affiliated Organizations Net Pension Liability Change in Deferred inflows/outflows of resources: Deferred Inflows of Resources Deferred Outflows of Resources \r\nNet Cash Used by Operating Activities \r\nNON-CASH INVESTING, NON-CAPITAL FINANCING, AND CAPITAL AND RELATED FINANCING TRANSACTIONS \r\nGift of Capital Assets Loss on Disposal of Capital Assets Accrual of Capital Asset Related Payables Capital Assets Acquired by Incurring Capital Lease Obligations Amortization of Deferred Gain/Loss of Capital Debt Refunded Special Item - Capital Asset Transfer Unrealized Gain/Loss on Investments \r\n \r\nAugusta University \r\n \r\n$ \r\n \r\n(208,763,978) \r\n \r\n28,011,451 \r\n \r\n(10,198,761) 78,343 \r\n237,673 195,937 (15,977,693) 997,402 197,090 118,413 (1,798,522) 1,274,942 314,459 71,966,285 \r\n \r\n(14,216,195) (57,238,697) \r\n \r\n$ \r\n \r\n(204,801,851) \r\n \r\n$ \r\n \r\n276,500 \r\n \r\n$ \r\n \r\n2,082,593 \r\n \r\n$ \r\n \r\n954,435 \r\n \r\n$ \r\n \r\n1,147,517 \r\n \r\n$ \r\n \r\n118,109 \r\n \r\n$ \r\n \r\n5,265,951 \r\n \r\n$ \r\n \r\n700,334 \r\n \r\nThe notes to the financial statements are an integral part of this statement. \r\n \r\n2017 Annual Financial Report 27 \r\n \r\n AUGUSTA UNIVERSITY STATEMENT OF FIDUCIARY NET POSITION JUNE 30, 2017 \r\nASSETS Cash and Cash Equivalents Investments Bond Securities Equity Mutual Funds - Domestic Equity Securities - Domestic \r\nTotal Assets \r\nNET POSITION Held in Trust for: Pension Benefits \r\n \r\nEarly Retirement Plan - Augusta \r\nUniversity \r\n \r\n$ \r\n \r\n6,241,462 \r\n \r\n12,190,357 44,174,540 27,801,706 \r\n90,408,065 \r\n \r\n$ \r\n \r\n90,408,065 \r\n \r\nThe notes to the financial statements are an integral part of this statement. 28 Augusta University \r\n \r\n AUGUSTA UNIVERSITY STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FOR FISCAL YEAR ENDED JUNE 30, 2017 \r\nADDITIONS Contributions Employer Investment Income Dividends and Interest Net Appreciation in Investments Reported at Fair Value Less: Investment Expense \r\nTotal Additions DEDUCTIONS \r\nBenefits Change in Net Position Held in Trust for Pension and Other Employee Benefits Net Position, Beginning of Year \r\nNet Position, End of Year \r\n \r\nEarly Retirement Plan - Augusta \r\nUniversity \r\n \r\n$ \r\n \r\n13,084,672 \r\n \r\n1,607,191 \r\n9,172,329 (161,162) 23,703,030 \r\n \r\n13,617,313 \r\n \r\n10,085,717 80,322,348 \r\n \r\n$ \r\n \r\n90,408,065 \r\n \r\nThe notes to the financial statements are an integral part of this statement. \r\n \r\n2017 Annual Financial Report 29 \r\n \r\n AUGUSTA UNIVERSITY COMBINING STATEMENT OF NET POSITION COMPONENT UNITS JUNE 30, 2017 \r\n \r\nASSETS Current Assets Cash and Cash Equivalents Short-term Investments Accounts Receivable, net Federal Financial Assistance Affiliated Organizations Component Units Primary Government Other Investment in Capital Leases Primary Government Inventories Prepaid Items Total Current Assets \r\n \r\nAugusta University Foundation, \r\nInc. \r\n \r\nAugusta University Research Institute, Inc. \r\n \r\nAU Health System Inc \r\n \r\nGeorgia Health Sciences Foundation, \r\nInc. \r\n \r\nMedical College of Georgia Foundation \r\n \r\nAU Medical Associates \r\n \r\nTotal \r\n \r\n$ 544,073 $ 8,395,707 $ 36,607,910 $ 263,626 $ 2,530,713 $ 9,752,279 $ 58,094,308 \r\n \r\n1,466,910 \r\n \r\n38,494,241 \r\n \r\n10,196,373 \r\n \r\n13,471,819 \r\n \r\n63,629,343 \r\n \r\n211,941 \r\n244,713 1,051,395 \r\n885 3,519,917 \r\n \r\n5,254,618 \r\n \r\n505,048 \r\n \r\n18,196 \r\n \r\n4,150,056 126,458,519 \r\n \r\n13,668,521 \r\n \r\n19,002,610 16,525,792 241,744,176 \r\n \r\n500,000 4,270,347 \r\n58,754 15,289,100 \r\n \r\n166,242 2,696,955 \r\n \r\n2,061,886 \r\n472,380 11,281,308 \r\n1,151,040 \r\n538,736 38,729,448 \r\n \r\n5,254,618 2,778,875 \r\n500,000 4,640,632 142,421,129 \r\n2,202,435 19,002,610 17,124,167 315,648,117 \r\n \r\nNon-Current Assets Cash and Cash Equivalents Accounts Receivable, net Pledges \u0026 Contributions Other Investments Notes Receivable, net Investment in Capital Leases Primary Government Other Assets Investments (Externally Restricted) Capital Assets, net \r\nTotal Non-Current Assets TOTAL ASSETS \r\n \r\n4,308,982 \r\n \r\n69,973 \r\n \r\n4,378,955 \r\n \r\n237,174 219,218 7,776,876 \r\n \r\n291,102 \r\n \r\n95,322,236 201,290 \r\n \r\n1,780,440 4,629,129 \r\n \r\n972,567 16,588 \r\n108,479,442 \r\n \r\n25,338,392 \r\n \r\n2,990,181 235,806 \r\n241,837,177 201,290 \r\n \r\n25,095,150 522,500 \r\n19,539,674 897,307 \r\n58,596,881 $ 62,116,798 \r\n \r\n361,075 $ 14,029,596 \r\n \r\n6,353,031 \r\n262,810,454 364,687,011 $ 606,431,187 \r\n \r\n522,500 2,423,183 \r\n9,355,252 $ 24,644,352 \r\n \r\n300,291 127,714,592 \r\n5,487,039 242,970,519 $ 245,667,474 \r\n \r\n23,706,252 2,183,441 \r\n6,725,011 57,953,096 $ 96,682,544 \r\n \r\n48,801,402 9,881,763 \r\n149,677,449 275,919,811 733,923,834 $ 1,049,571,95 \r\n1 \r\n \r\nThe notes to the financial statements are an integral part of this statement. 30 Augusta University \r\n \r\n AUGUSTA UNIVERSITY COMBINING STATEMENT OF NET POSITION COMPONENT UNITS JUNE 30, 2017 \r\n \r\nLIABILITIES Current Liabilities Accounts Payable Salaries Payable Due to Affiliated Organizations Due to Component Units Due to Primary Government Advances (Including Tuition and Fees) Other Liabilities Notes and Loans Payable Lease Purchase Obligations External Revenue Bonds \u0026 Notes Payable Liabilities Under Split Interest Agreements Compensated Absences Total Current Liabilities \r\n \r\nAugusta University Foundation, \r\nInc. \r\n \r\nAugusta University Research Institute, Inc. \r\n \r\nAU Health System Inc \r\n \r\nGeorgia Health Sciences Foundation, \r\nInc. \r\n \r\n$ 474,559 $ \r\n \r\n76,753 $ 54,936,629 $ 125,769 \r\n \r\n5,796,209 \r\n \r\n197,028 \r\n \r\n2,061,886 \r\n \r\n9,195 \r\n \r\n500,000 \r\n \r\n113,505 \r\n \r\n5,472,694 \r\n \r\n17,911,829 \r\n \r\n62,440 \r\n \r\n82,445 \r\n \r\n16,536 \r\n \r\n8,314,540 3,445,833 \r\n \r\n1,541,873 3,058 \r\n789,686 \r\n \r\n900,000 \r\n \r\n5,932,665 3,950,000 \r\n \r\n1,767,537 \r\n \r\n5,565,983 \r\n \r\n16,893,026 119,742,617 \r\n \r\n90,485 2,622,506 \r\n \r\nMedical College of Georgia Foundation \r\n \r\nAU Medical Associates \r\n \r\nTotal \r\n \r\n$ 6,379,207 667,623 585,165 \r\n13,603,248 \r\n \r\n$ 61,992,917 6,463,832 2,853,274 500,000 \r\n37,163,716 \r\n \r\n27,172 2,309,104 \r\n \r\n1,068,514 \r\n \r\n1,541,873 9,512,265 6,544,623 \r\n \r\n865,000 \r\n \r\n5,932,665 5,715,000 \r\n \r\n2,336,276 \r\n \r\n1,950,458 25,119,215 \r\n \r\n90,485 18,843,484 157,154,134 \r\n \r\nNon-Current Liabilities \r\nOther Liabilities \r\nNotes and Loans Payable \r\nLease Purchase Obligations External \r\nRevenue Bonds \u0026 Notes Payable \r\nLiabilities Under Split Interest Agreements \r\nInterest Rate Swap \r\nOther Post Employment Benefits Obligation \r\nTotal Non-Current Liabilities \r\nTOTAL LIABILITIES \r\n \r\n376,000 24,158,605 \r\n24,534,605 26,302,142 \r\n \r\n8,682,920 37,037,500 \r\n24,048,493 110,420,000 \r\n \r\n20,812,794 \r\n \r\n-- 5,565,983 \r\n \r\n201,001,707 320,744,324 \r\n \r\n203,461 \r\n203,461 2,825,967 \r\n \r\n-- \r\n945,194 945,194 3,281,470 \r\n \r\n2,102,916 \r\n23,854,028 \r\n11,531,792 37,488,736 62,607,951 \r\n \r\n10,785,836 37,413,500 \r\n24,048,493 158,432,633 \r\n1,148,655 20,812,794 \r\n11,531,792 264,173,703 421,327,837 \r\n \r\nNET POSITION Net Investment in Capital Assets Restricted for: Nonexpendable Expendable Unrestricted (Deficit) \r\n \r\n713,937 \r\n18,885,674 16,426,174 \r\n(211,129) \r\n \r\n-- \r\n \r\n77,975,963 \r\n \r\n-- \r\n \r\n3,177,935 \r\n \r\n6,725,011 \r\n \r\n88,592,846 \r\n \r\n-- 69,973 8,393,640 \r\n \r\n-- -- 207,710,900 \r\n \r\n2,423,183 15,336,006 \r\n4,059,196 \r\n \r\n127,714,592 77,800,657 33,692,820 \r\n \r\n-- -- 27,349,582 \r\n \r\n149,023,449 109,632,810 280,995,009 \r\n \r\nTOTAL NET POSITION \r\n \r\n$ 35,814,656 $ 8,463,613 $ 285,686,863 $ 21,818,385 $ 242,386,004 $ 34,074,593 $ 628,244,114 \r\n \r\nThe notes to the financial statements are an integral part of this statement. \r\n \r\n2017 Annual Financial Report 31 \r\n \r\n AUGUSTA UNIVERSITY COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION COMPONENT UNITS FOR FISCAL YEAR ENDED JUNE 30, 2017 \r\n \r\nOPERATING REVENUES Grants and Contracts Federal Other Sales and Services Rents and Royalties Auxiliary Enterprises Food Services Health Services Gifts and Contributions Endowment Income Other Operating Revenues \r\nTotal Operating Revenues \r\nOPERATING EXPENSES Staff Salaries Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation \r\nTotal Operating Expenses \r\nOperating Income (Loss) \r\n \r\nAugusta University Foundation, \r\nInc. \r\n \r\nAugusta University Research Institute, Inc. \r\n \r\nAU Health System Inc \r\n \r\nGeorgia Health Sciences Foundation, \r\nInc. \r\n \r\nMedical College of Georgia Foundation \r\n \r\nAU Medical Associates \r\n \r\nTotal \r\n \r\n$ 50,742,878 \r\n \r\n9,547,201 \r\n \r\n$ \r\n \r\n$ 453,808 \r\n \r\n$ 31,962,778 \r\n \r\n1,276,274 \r\n \r\n478,227 \r\n \r\n250,102 \r\n \r\n405,857 922,460 \r\n12,300 $ \r\n \r\n$ 1,458,843 \r\n \r\n1,615,076 81,403 \r\n \r\n$ 52,357,954 9,953,058 \r\n33,339,046 3,557,149 \r\n \r\n1,108,608 1,023,803 \r\n16,966 \r\n \r\n1,941,197 612,613,382 \r\n \r\n1,356,302 1,595,639 \r\n \r\n2,406,967 27,069 \r\n \r\n140,467,104 \r\n \r\n1,941,197 753,080,486 \r\n4,871,877 1,023,803 1,639,674 \r\n \r\n3,879,459 \r\n \r\n60,768,306 646,767,459 \r\n \r\n4,292,558 \r\n \r\n3,892,879 142,163,583 861,764,244 \r\n \r\n1,051,168 \r\n1,059,977 16,122 \r\n \r\n248,460,099 54,263,244 78,804,212 813,662 \r\n \r\n60,496,796 \r\n \r\n3,982,641 265,946,995 \r\n33,593,642 \r\n \r\n987,036 134,746 1,096,559 \r\n6,037,878 \r\n \r\n848,864 127,613 \r\n4,367 1,845,941 \r\n26,524 6,847,271 \r\n19,502 \r\n \r\n29,489,419 27,193,176 89,452,222 \r\n2,393,843 169,172 98,365 \r\n13,319,265 781,266 \r\n \r\n278,798,382 81,584,033 \r\n169,243,470 3,346,618 4,162,840 4,107,530 \r\n353,708,182 34,410,532 \r\n \r\n2,127,267 \r\n \r\n60,496,796 685,864,495 \r\n \r\n8,256,219 \r\n \r\n9,720,082 162,896,728 929,361,587 \r\n \r\n$ 1,752,192 $ 271,510 $ (39,097,036) $ (3,963,661) $ (5,827,203) $ (20,733,145) $ (67,597,343) \r\n \r\nThe notes to the financial statements are an integral part of this statement. 32 Augusta University \r\n \r\n AUGUSTA UNIVERSITY COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION COMPONENT UNITS JUNE 30, 2017 \r\n \r\nNONOPERATING REVENUES (EXPENSES) \r\nState Appropriations Grants and Contracts \r\nFederal State Other Investment Income Interest Expense Other Nonoperating Revenues (Expenses) \r\n \r\nAugusta University Foundation, \r\nInc. \r\n \r\nAugusta University Research Institute, Inc. \r\n \r\nAU Health System Inc \r\n \r\nGeorgia Health Sciences Foundation, \r\nInc. \r\n \r\nMedical College of Georgia Foundation \r\n \r\nAU Medical Associates \r\n \r\nTotal \r\n \r\n$ 31,409,501 \r\n \r\n$ 31,409,501 \r\n \r\n$ 1,912,775 $ (997,521) \r\n(271,369) \r\n \r\n55,228 (99,563) \r\n \r\n2,967,388 3,178,581 \r\n741 4,114,965 $ 2,307,576 \r\n359,819 \r\n \r\n342,379 $ 27,183,044 $ 2,106,759 \r\n \r\n(26,021) \r\n \r\n(788,272) \r\n \r\n2,967,388 3,178,581 \r\n741 35,715,150 \r\n495,762 \r\n \r\n(25,075,751) (25,086,864) \r\n \r\nNet Nonoperating Revenues \r\n \r\n643,885 \r\n \r\n(44,335) 44,338,571 \r\n \r\n316,358 \r\n \r\n27,183,044 (23,757,264) 48,680,259 \r\n \r\nIncome (Loss) Before Other Revenues, Expenses, Gains, or Losses \r\n \r\n2,396,077 \r\n \r\n227,175 \r\n \r\n5,241,535 \r\n \r\n(3,647,303) 21,355,841 (44,490,409) (18,917,084) \r\n \r\nCapital Grants and Gifts \r\nFederal \r\nOther \r\nAdditions to Permanent and Term Endowments \r\n \r\n741,239 \r\n \r\n88,747 1,955,837 \r\n \r\n355,219 \r\n \r\n1,988,107 \r\n \r\n88,747 1,955,837 \r\n3,084,565 \r\n \r\nTotal Other Revenues, Expenses, Gains or Losses \r\n \r\n741,239 \r\n \r\n-- \r\n \r\n2,044,584 \r\n \r\n355,219 \r\n \r\n1,988,107 \r\n \r\n-- \r\n \r\n5,129,149 \r\n \r\nChange in Net Position \r\n \r\n3,137,316 \r\n \r\n227,175 \r\n \r\n7,286,119 \r\n \r\n(3,292,084) 23,343,948 (44,490,409) (13,787,935) \r\n \r\nNet Position, Beginning of Year, As Originally Reported \r\nPrior Year Adjustments \r\nNet Position, Beginning of Year, Restated \r\n \r\n32,677,340 32,677,340 \r\n \r\n-- 8,236,438 \r\n8,236,438 \r\n \r\n278,400,744 278,400,744 \r\n \r\n-- 25,110,469 \r\n25,110,469 \r\n \r\n219,042,056 219,042,056 \r\n \r\n78,687,368 (122,366) \r\n \r\n576,130,168 65,901,881 \r\n \r\n78,565,002 642,032,049 \r\n \r\nNet Position-End of Year \r\n \r\n$ 35,814,656 $ 8,463,613 $ 285,686,863 $ 21,818,385 $ 242,386,004 $ 34,074,593 $ 628,244,114 \r\n \r\nThe notes to the financial statements are an integral part of this statement. \r\n \r\n2017 Annual Financial Report 33 \r\n \r\n  AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2017 \r\nNote 1 Summary of Significant Accounting Policies \r\nNature of Operations The Augusta University (University) serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge and by disseminating knowledge to the people of Georgia, the nation, and throughout the world. \r\nReporting Entity As defined by Official Code of Georgia Annotated (O.C.G.A)  20-3-50, the Institution is part of the University System of Georgia (USG), an organizational unit of the State of Georgia (the State) under the governance of the Board of Regents (Board). The Board has constitutional authority to govern, control and manage the USG. The Board is composed of 19 members, one member from each congressional district in the State and five additional members from the state-at-large, appointed by the Governor and confirmed by the Senate. Members of the Board serve a seven year term and members may be reappointed to subsequent terms by a sitting governor. \r\nThe University does not have the right to sue/be sued without recourse to the State. The University's property is the property of the State and subject to all the limitations and restrictions imposed upon other property of the State by the Constitution and laws of the State. In addition, the University is not legally separate from the State. Accordingly, the University is included within the State's basic financial statements as part of the primary government as defined in section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards. \r\nThe accompanying basic financial statements are intended to supplement the State's Comprehensive Annual Financial Report (CAFR) by presenting the financial position and changes in financial position and cash flows of only that portion of the business-type activities of the State that are attributable to the transactions of the University. In addition, certain discretely presented component units of the State, as discussed below, have been included since they have been determined to be essential to the fair presentation to these departmental financial statements. These financial statements do not purport to, and do not, present fairly the financial position of the State as of June 30, 2017, the changes in its financial position or its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. \r\nThe accompanying basic financial statements should be read in conjunction with the State's CAFR. The most recent State of Georgia CAFR can be obtained through the State Accounting Office, 200 Piedmont Avenue, Suite 1604 (West Tower), Atlanta, Georgia 30334 or online at sao.georgia.gov/comprehensive-annual-financial-reports. \r\nDiscretely Presented Component Units The below organizations are legally separate, tax-exempt component units of the State. Although the University (primary government) is not fiscally accountable for these entities, it has been determined that the nature and significance of the relationship between the primary government and the below organizations is such that exclusion from these departmental financial statements would render them misleading. The below organizations met the requirements for discrete presentation as defined by GASB Codification Sections 2100 and 2600. Each of the below organization's fiscal year ends on June 30 each year. Separately issued financial statements are available from the addresses listed below. \r\n Augusta University Foundation, Inc. 1120 15th Street, FI-1049, Augusta, GA, 30912 \r\n Augusta University Research Institute, Inc. 1120 15th Street, AA 311, Richmond, Augusta, GA, 30912 \r\n Medical College of Georgia Foundation, 545 15th Street, Augusta, GA 30901 \r\n MCG Health Systems, Inc. d/b/a AU Health System, 1120 15th Street. FY139, Augusta, GA 30912 \r\n2017 Annual Financial Report 35 \r\n \r\n  Medical College of Georgia Physicians Practice Group Foundation d/b/a AU Medical Associates and Subsidiaries, 1499 Walton Way, Ste. 1400, Augusta, GA 30901 \r\n Georgia Health Sciences Foundation, Inc., 1120 15th Street, FI-1000, Augusta, GA, 30912 \r\nSee Component Unit Note for additional information related to discretely presented component units. \r\nBasis of Accounting and Financial Statement Presentation The financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) as prescribed by the GASB and are presented as required by these standards to provide a comprehensive, entity-wide perspective of the University's assets, deferred outflows, liabilities, deferred inflows, net position, revenues, expenses, changes in net position and cash flows. \r\nThe University's business-type activities and fiduciary fund financial statements have been presented using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis, revenues are recognized when earned, and expenses are recorded when an obligation has been incurred. Grants and similar items are recognized as revenues in the fiscal year in which eligibility requirements imposed by the provider have been met. All significant intra-fund transactions have been eliminated. \r\nThe University reports the following Fiduciary Fund: \r\nPension Trust Fund - Accounts for the activities of the Early Retirement Plan. \r\nNew Accounting Pronouncements For fiscal year 2017, the University adopted GASB Statement No. 82, Pension Issues-an amendment of GASB Statements No. 67, No. 68, and No. 73. This Statement addresses accounting and financial reporting issues regarding (1) the presentation of payroll-related measures in required supplementary information, (2) the selection of assumptions and the treatment of deviations from the guidance in an Actuarial Standard of Practice for financial reporting purposes, and (3) the classification of payments made by employers to satisfy employee (plan member) contribution requirements. \r\nFor fiscal year 2017, the University adopted GASB Statement No. 80, Blending Requirements for Certain Component Units-an amendment of GASB Statement No. 14. This Statement amends the blending requirements for the financial statement presentation of component units of all state and local governments. The additional criterion requires blending of a component unit incorporated as a not-for-profit corporation in which the primary government is the sole corporate member. The additional criterion does not apply to component units included in the financial reporting entity pursuant to the provisions of GASB Statement No. 39, Determining Whether Certain Organizations Are Component Units. The adoption of this Statement does not have a significant impact on the University's financial statements. \r\nFor fiscal year 2017, the University adopted GASB Statement No. 78, Pensions Provided through Certain MultipleEmployer Defined Benefit Pension Plans. The objective of this Statement is to address a practice issue regarding the scope and applicability of GASB Statement No. 68, Accounting and Financial Reporting for Pensions. The adoption of this Statement does not have a significant impact on the University's financial statements. \r\nFor fiscal year 2017, the University adopted GASB Statement No. 77, Tax Abatement Disclosures. This Statement requires governments that enter into tax abatement agreements to disclose certain information about the agreements. The adoption of this Statement does not have a significant impact on the University's financial statements. \r\nFor fiscal year 2017, the University adopted GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans. This Statement replaces GASB Statements No. 43, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, as amended, and No. 57, OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans. It also includes requirements for defined contribution other postemployment benefit (OPEB) plans that replace the requirements for those OPEB plans in GASB Statements No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans, as amended, No. 43, and No. 50, Pension Disclosures. The objective of this Statement is to improve the usefulness of information about postemployment benefits other than pensions. The adoption of this Statement does not have a significant impact on the University's financial statements. \r\n36 Augusta University \r\n \r\n Future Accounting Pronouncements In fiscal year 2018, the University will adopt GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. The provisions of this Statement establish accounting and financial reporting standards for defined benefit OPEB and defined contribution OPEB that are provided to the employees of state and local governmental employers through OPEB plans that are administered through trusts or equivalent arrangements. Implementation of this Statement will require the University to record a liability for its proportionate share of the OPEB Liability of plans in which it participates. Actuarial estimates are currently being made to determine the University's liability, the effects of which are believed to be material. \r\nCash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits, and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. \r\nInvestments Investments include financial instruments with terms in excess of 13 months, certain other securities for the production of revenue, land, and other real estate held as investments by endowments. The University accounts for its investments at fair value. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses, and Changes in Net Position. The Board of Regents Diversified Fund is included as investments. \r\nAccounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of whom reside in the State of Georgia. Accounts receivable also includes amounts due from federal, state, and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the University's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts. \r\nInventories Consumable supplies are carried at the lower of cost or market on the first-in, first-out basis. Resale inventories are valued at cost using the first in, first out basis. \r\nNon-current Investments Investments that are externally restricted and cannot be used to pay current liabilities are classified as non-current assets in the Statement of Net Position. \r\nPrepaid Items Payments made to vendors and state and local government organizations for services that will benefit periods beyond June 30, 2017 are recorded as prepaid items. \r\nCapital Assets Capital assets are recorded at cost at the date of acquisition, or acquisition value (entry price) at the date of donation in the case of gifts. For equipment, the University's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. Routine repairs and maintenance are charged to operating expense in the year in which the expense was incurred. Depreciation, which also includes amortization of intangible assets such as water, timber, and mineral rights, easements, patents, trademarks, and copyrights, as well as software, is computed using the straight-line method over the estimated useful lives of the assets, generally 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements. \r\nTo fully understand plant additions in the University, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) - an organization that is external to the University. GSFIC issues bonds for and on behalf of the State of Georgia, pursuant to powers granted to it in the Constitution of the State of Georgia and the Act creating the GSFIC. The bonds so issued constitute direct and general obligations of the State of Georgia, to the payment of which the full faith, credit, and taxing power of the State are pledged. \r\n2017 Annual Financial Report 37 \r\n \r\n For projects managed by GSFIC, GSFIC retains construction in progress in its accounting records throughout the construction period and transfers the entire project to the institutional unit of the USG when complete. For projects managed by institutions of the USG, the institutions retain construction in progress on their books and are reimbursed by GSFIC. \r\nCapital Liability Reserve Fund The Capital Liability Reserve Fund (Fund) was established by the Board of Regents to protect the fiscal integrity of the USG to maintain the strongest possible credit ratings associated with Public Private Venture (PPV) projects and to ensure that the Board of Regents can effectively support its long-term capital lease obligations. All USG institutions participating in the PPV program finance the Fund. The Fund serves as a pooled reserve that is managed by the Board of Regents. The Fund shall only be used to address significant shortfalls and only insofar as a requesting USG institution is unable to make the required PPV capital lease payment to the designated affiliated organization. The Fund will continue as long as the Board of Regents has rental obligations under the PPV program and at the conclusion of the program, funds will be returned to each institution. The $197,730 balance included on the Institution's Statement of Net Position as Due from USO - Capital Liability Reserve Fund represents the University's contribution to the Fund. \r\nDeferred Outflows of Resources Deferred outflows of resources consist of the consumption of net position by the institution that are applicable to a future reporting period. \r\nAdvances Advances include amounts received for tuition and fees and certain auxiliary activities prior to the end of the fiscal year but related to the subsequent accounting period. Advances also include amounts received from grant and contract sponsors that have not yet been earned. \r\nDeposits Held for Other Organizations Deposits held for other organizations result primarily from the University acting as an agent or fiduciary for another entity. Deposits held for others include scholarships, fellowships, study abroad deposits and other funds held for various governments, companies, clubs or individuals. \r\nCompensated Absences Employee vacation pay is accrued at the end of the fiscal year for financial statement purposes. The liability and expense incurred are recorded at the end of the fiscal year as compensated absences in the Statement of Net Position, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Position. \r\nNon-current Liabilities Non-current liabilities include: (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as non-current assets. \r\nDeferred Inflows of Resources Deferred inflows of resources consist of the acquisition of net position by the institution that are applicable to a future reporting period. \r\nPensions and Net Pension Liability The net pension liability represents the University's proportionate share of the difference between the total pension liability as a result of the exchange for employee services for compensation and the fiduciary net position or the fair value of the plan assets as of a given measurement date. \r\nFor purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position, additions to/deductions from fiduciary net position have been determined on the same basis as they are reported by Teachers' Retirement System of Georgia and Employees' Retirement System of Georgia. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. \r\n38 Augusta University \r\n \r\n Net Position The University's net position is classified as follows: \r\nNet Investment in capital assets represents the University's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of net investment in capital assets. The term \"debt obligations\" as used in this definition does not include debt of the GSFIC as discussed previously in Note 1 - Capital Assets section. \r\nRestricted - nonexpendable net position includes endowments and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. For institution-controlled, donor-restricted endowments, the by-laws of the Board of Regents of the University System of Georgia permits each individual institution to use prudent judgment in the spending of current realized and unrealized endowment appreciation. Donor-restricted endowment appreciation is periodically transferred to restricted - expendable accounts for expenditure as specified by the purpose of the endowment. The University maintains pertinent information related to each endowment fund including donor; amount and date of donation; restrictions by the source of limitations; limitations on investments, etc. \r\nRestricted - expendable net position includes resources in which the University is legally or contractually obligated to spend resources in accordance with restrictions by external third parties. \r\nUnrestricted net position represents resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the University, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Office of the State Treasurer. These resources also include auxiliary enterprises, which are substantially self-supporting activities that provide services for students, faculty and staff. \r\nWhen an expense is incurred that can be paid using either restricted or unrestricted resources, the University's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources. \r\nIncome Taxes The University, as a political subdivision of the State of Georgia, is excluded from Federal income taxes under Section 115(1) of the Internal Revenue Code, as amended. \r\nClassification of Revenues and Expenses The Statement of Revenues, Expenses and Changes in Net Position classifies fiscal year activity as operating and non-operating according to the following criteria: \r\n Operating revenue includes activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of scholarship allowances, (2) certain federal, state and local grants and contracts, and (3) sales and services. \r\n Nonoperating revenue includes activities that have the characteristics of nonexchange transactions, such as gifts and contributions, and other revenue sources that are defined as non-operating revenue by GASB Statements No. 9, Reporting Cash Flows of Proprietary and Non-expendable Trust Funds and Governmental Entities That Use Proprietary Fund Accounting, and No. 34, Basic Financial Statements--and Management's Discussion and Analysis--for State and Local Governments, such as state appropriations and investment income. \r\n Operating expense includes activities that have the characteristics of exchange transactions. \r\n Nonoperating expense includes activities that have the characteristics of non-exchange transactions, such as capital financing costs and costs related to investment activity. \r\n2017 Annual Financial Report 39 \r\n \r\n Special Item Significant transactions or other events within the control of management that are either unusual in nature or infrequent in occurrence are special items. \r\nAugusta University transferred property to the Georgia Technology Authority in fiscal year 2017 consisting of approximately 16.47 acres of land formerly known as the Georgia Golf Hall of Fame located at 1 Eleventh Street in Augusta, Richmond County, Georgia valued at $5,265,951. \r\nScholarship Allowances Scholarship allowances are the difference between the stated charge for goods and services provided by the University, and the amount that is paid by students and/or third parties making payments on the students' behalf. Certain governmental grants, such as Pell grants, and other Federal, state or nongovernmental programs are recorded as either operating or non-operating revenues in the University's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the University has recorded contra revenue for scholarship allowances. Student tuition and fees reported on the Statement of Revenues, Expenses and Changes in Net Position are net of discounts and allowances of $15,603,679. \r\nRestatement of Prior Year Net Position The University made the following restatements: \r\n \r\nNet position, beginning of year, as originally reported \r\n \r\nDiscretely Presented Component \r\nUnits \r\n$ 576,130,168 \r\n \r\nChanges in financial reporting entity Correction of prior year errors \r\n \r\n66,024,247 (122,366) \r\n \r\nNet position, beginning of year, restated \r\n \r\n$ 642,032,049 \r\n \r\nChanges in Financial Reporting Entity The determination was made that Augusta University Foundation, Inc., Augusta University Research Institute, Inc., and Georgia Health Sciences Foundation, Inc. met requirements for inclusion as discretely presented component units, which increased beginning net position in the amount of $66,024,247. \r\nNote 2 Deposits and Investments \r\nCash and cash equivalents and investments as of June 30, 2017 are classified in the accompanying statement of net position and statement of fiduciary net position as follows: \r\n \r\nCash \u0026 Cash Equivalents Investments Non Current - Investments Investments (Externally Restricted) \r\n \r\n$ \r\n \r\n19,300,362 \r\n \r\n84,166,603 \r\n \r\n82,393,086 \r\n \r\n2,408,636 \r\n \r\n$ \r\n \r\n188,268,687 \r\n \r\n40 Augusta University \r\n \r\n Cash on hand, deposits and investments as of June 30, 2017 consist of the following: \r\n \r\nCash on Hand Deposits with Financial Institutions Investments \r\n \r\n$ \r\n \r\n77,543 \r\n \r\n9,666,012 \r\n \r\n178,525,132 \r\n \r\n$ \r\n \r\n188,268,687 \r\n \r\nA. Deposits with Financial Institutions Deposits include certificates of deposits and demand deposit accounts, including certain interest bearing demand deposit accounts. The custodial credit risk for deposits is the risk that in the event of a bank failure, the University's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the University) cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral any one or more of the following securities as enumerated in the O.C.G.A  50-17-59: \r\n1. Bonds, bills, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia. \r\n2. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia. \r\n3. Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose. \r\n4. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia. \r\n5. Bonds, bills, certificates of indebtedness, notes or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association and the Federal National Mortgage Association. \r\n6. Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation. The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia. \r\nAt June 30, 2017, the bank balances of the University's deposits totaled $28,090,035. This balance includes deposits in Fiduciary funds as these balances are not separable from the holdings of the USG. Of these deposits, none were exposed to custodial credit risk. \r\n \r\nB. Investments The University maintains an investment policy which fosters sound and prudent judgment in the management of assets to ensure safety of capital consistent with the fiduciary responsibility it has to the citizens of Georgia and which conforms to Board of Regents investment policy. All investments are consistent with donor intent, Board of Regents policy and applicable federal and state laws. \r\nThe University has adopted GASB Statement No. 72, Fair Value Measurements and Application, which requires fair value measurement be classified and disclosed in one of the following three categories (\"Fair Value Hierarchy\"): \r\nLevel 1 - Quoted prices are available in active markets for identical investments as of the reporting date. \r\nLevel 2 - Pricing inputs are observable for the investments, either directly or indirectly, as of the reporting date, but are not the same as those used in Level 1; inputs include comparable market transactions, pricing of similar instruments, values reported by the administrator, and pricing expectations based on internal modeling. Fair value is determined through the use of models or other valuation methodologies. \r\n \r\n2017 Annual Financial Report 41 \r\n \r\n Level 3 - Pricing inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investments. \r\n \r\nThe following table summarizes the valuation of the University's investments measured at fair value on a recurring basis and at net asset value as of June 30, 2017. \r\n \r\nInvestment type: Debt Securities U.S. Treasuries U.S. Agencies Explicitly Guaranteed Implicitly Guaranteed Bond Securities Money Market Mutual Funds Equity Mutual Funds - Domestic Equity Securities - Domestic \r\n \r\nFair Value \r\n \r\nFair Value Hierarchy \r\n \r\nLevel 1 \r\n \r\nLevel 2 \r\n \r\n$ \r\n \r\n4,015,232 $ \r\n \r\n4,015,232 \r\n \r\n25,180,564 50,942,385 12,190,357 \r\n3,407,163 44,174,540 27,801,706 \r\n \r\n$ \r\n12,190,357 3,407,163 \r\n44,174,540 27,801,706 \r\n \r\n25,180,564 50,942,385 \r\n \r\n167,711,947 $ 91,588,998 $ 76,122,949 \r\n \r\nInvestment Pools Board of Regents Diversified Fund \r\n \r\n10,813,185 \r\n \r\nTotal Investments \r\n \r\n$ 178,525,132 \r\n \r\nInvestments classified in Level 1 are valued using prices quoted in active markets for those securities. \r\nInvestments classified in Level 2 are valued using a matrix pricing technique. Matrix pricing is used to value securities based on the securities' relationship to benchmark quoted prices. \r\nThe University holds a position in an external investment pool. The unit of account is each share held, and the value of the position would be the fair value of the pool's share price multiplied by the number of shares held. The University does not \"look through\" the pool to report a pro rata share of the pool's investments, receivables, and payables. \r\nInvestment Pool The Board of Regents Investment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. Additional information on the Board of Regents Investment Pool is disclosed in the audited Financial Statements of the USG. This audit can be obtained from USG's web site at usg.edu/fiscal_affairs/financial_reporting. \r\nThe Effective Duration of the Diversified Fund is 5.65 years. Of the University's total investment in the Diversified Fund, 33% is invested in debt securities. \r\nInterest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The University's Investment Policy and Guidelines manages interest rate risk by recognizing that shortterm loss of principal may be necessary in order to achieve long-term safety and growth of principal; and that in order to maximize income from debt instruments with maturities longer than sixty days, market values may be exposed to short-term volatility. \r\n \r\n42 Augusta University \r\n \r\n Fair Value \r\n \r\nLess Than 3 Months \r\n \r\nInvestment Maturity \r\n \r\n4-12 Months \r\n \r\n1-5 Years \r\n \r\n6-10 Years \r\n \r\nMore Than 10 Years \r\n \r\nInvestment type: Debt Securities U.S. Treasuries U.S. Agencies Explicitly Guaranteed Implicitly Guaranteed Bond Securities Money Market Mutual Funds \r\n \r\n$ 4,015,232 $ \r\n \r\n9,999 \r\n \r\n$ 4,005,233 \r\n \r\n25,180,564 50,942,385 12,190,357 \r\n3,407,163 \r\n \r\n19,950,563 $ 2,365,797 \r\n \r\n33,066,874 \r\n \r\n9,618,179 \r\n \r\n3,407,163 \r\n \r\n2,864,204 8,257,332 \r\n$ 9,589,149 $ 2,601,208 \r\n \r\n95,735,701 $ 56,434,599 $ 11,983,976 $ 15,126,769 $ 9,589,149 $ 2,601,208 \r\n \r\nOther Investments Equity Mutual Funds - Domestic Equity Securities - Domestic \r\n \r\n44,174,540 27,801,706 \r\n \r\nInvestment Pools Board of Regents Diversified Fund \r\n \r\n10,813,185 \r\n \r\nTotal Investments \r\n \r\n$ 178,525,132 \r\n \r\nCustodial Credit Risk Custodial credit risk for investments is the risk that, in the event of a failure of the counterparty to a transaction, the University will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The University does not have a formal policy for managing custodial credit risk for investments. Investment Managers are held accountable for custodial safety. The Institution's Investment Policy and Guidelines require that managers be registered in good standing as investment advisors; and will be experienced with proven track records. \r\n \r\nAt June 30, 2017, $95,735,701 were uninsured and held by the investment's counterparty's trust department or agent, in the University's name. \r\n \r\nCredit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The University does not have a formal policy for managing credit quality risk. All investment vehicles are designed to comply with Georgia Code 50-17-63. \r\n \r\nThe investments subject to credit quality risk are reflected below: \r\n \r\nRelated Debt Investments U. S. Agency Securities Bond Securities Money Market Mutual Fund \r\n \r\nFair Value \r\n$ 50,942,385 12,190,357 3,407,163 $ \r\n \r\nAA \r\n \r\nUnrated \r\n \r\n$ 2,043,331 \r\n \r\n50,942,385 12,190,357 \r\n1,363,832 \r\n \r\n$ 66,539,905 $ \r\n \r\n2,043,331 $ 64,496,574 \r\n \r\nConcentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. The University's Investment Policy and Guidelines for managing concentration of credit risk requires that stocks and debt issues be diversified. The University also relies upon the concentration of credit risk policy of the individual investment vehicles related to Augusta University's investment assets. \r\n \r\n2017 Annual Financial Report 43 \r\n \r\n At June 30, 2017, approximately 10.57%, 7.22%, 9.15%, 6.63%, and 20.45% of the Institution's investments were invested in Government National Mortgage Association, Federal National Mortgage Association, Federal National Mortgage Association Pool, Federal Home Loan Mortgage Corporation, and Vanguard Institutional Index Fund respectively. \r\nNote 3 Accounts Receivable \r\nAccounts receivable consisted of the following at June 30, 2017: \r\n \r\nBusiness Type Activities \r\n \r\nStudent Tuition and Fees Auxiliary Enterprises and Other Operating Activities Federal Financial Assistance Georgia State Financing and Investment Commission Due from Component Units Due From Other USG Institutions Other \r\nLess: Allowance for Doubtful Accounts \r\nNet Accounts Receivable \r\n \r\n$ \r\n \r\n9,234,285 \r\n \r\n867,824 \r\n \r\n8,976,659 \r\n \r\n1,534,351 37,163,716 \r\n197,730 23,062,532 81,037,097 \r\n532,918 \r\n \r\n$ \r\n \r\n80,504,179 \r\n \r\nNote 4 Inventories \r\nInventories consisted of the following at June 30, 2017: Consumable Supplies Merchandise for Resale \r\n \r\n$ \r\n \r\n140,435 \r\n \r\n703,223 \r\n \r\nTotal \r\n \r\n$ \r\n \r\n843,658 \r\n \r\nNote 5 Notes and Loans Receivable \r\nThe Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2017. The Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The Federal government reimburses the University for amounts canceled under these provisions. As the University determines that loans are uncollectible and not eligible for reimbursement by the federal government, the loans are written off and assigned to the U.S. Department of Education. The University has provided an allowance for uncollectible loans, which, in management's opinion, is sufficient to absorb loans that will ultimately be written off. At June 30, 2017, the allowance for uncollectible loans was $396,258. \r\nNote 6 Capital Assets \r\n \r\nChanges in capital assets for the year ended June 30, 2017 are shown below: \r\n \r\n44 Augusta University \r\n \r\n Capital Assets, Not Being Depreciated: Land Capitalized Collections Construction Work-in-Progress \r\nTotal Capital Assets Not Being Depreciated \r\nCapital Assets, Being Depreciated/Amortized: Infrastructure Building and Building Improvements Facilities and Other Improvements Equipment Library Collections \r\nTotal Capital Assets Being Depreciated/Amortized \r\nLess: Accumulated Depreciation/Amortization Infrastructure Building and Building Improvements Facilities and Other Improvements Equipment Library Collections \r\nTotal Accumulated Depreciation/Amortization \r\nTotal Capital Assets, Being Depreciated/Amortized, Net \r\nCapital Assets, net \r\n \r\nBeginning Balances July 1, 2016 \r\n \r\nSpecial Item and Other Transfers \r\n \r\nAdditions \r\n \r\nReductions \r\n \r\nEnding Balance June 30, 2017 \r\n \r\n$ 28,365,902 $ 87,006 \r\n19,218,372 47,671,280 \r\n \r\n(5,265,951) $ \r\n \r\n114,785 \r\n \r\n(5,265,951) \r\n \r\n10,587,866 10,702,651 \r\n \r\n$ \r\n11,380,345 11,380,345 \r\n \r\n23,214,736 87,006 \r\n18,425,893 41,727,635 \r\n \r\n6,526,145 702,623,281 \r\n16,953,730 119,309,109 \r\n29,007,155 874,419,420 \r\n \r\n672,853 \r\n \r\n13,693,008 \r\n \r\n2,627,513 \r\n \r\n6,495,180 \r\n \r\n448,960 \r\n \r\n-- \r\n \r\n23,937,514 \r\n \r\n(1,958,940) 375,028 \r\n6,322,293 546,323 \r\n5,284,704 \r\n \r\n7,198,998 718,275,229 \r\n19,206,215 119,481,996 \r\n28,909,792 893,072,230 \r\n \r\n2,256,062 265,775,477 \r\n7,314,406 90,106,617 21,717,138 387,169,700 \r\n487,249,720 \r\n$ 534,921,000 $ \r\n \r\n301,392 \r\n \r\n17,715,259 \r\n \r\n677,131 \r\n \r\n8,009,700 \r\n \r\n1,307,969 \r\n \r\n-- \r\n \r\n28,011,451 \r\n \r\n-- \r\n \r\n(4,073,937) \r\n \r\n(5,265,951) $ \r\n \r\n6,628,714 $ \r\n \r\n712,800 337,525 5,770,649 546,323 7,367,297 \r\n \r\n2,557,454 282,777,936 \r\n7,654,012 92,345,668 22,478,784 407,813,854 \r\n \r\n(2,082,593) \r\n \r\n485,258,376 \r\n \r\n9,297,752 $ 526,986,011 \r\n \r\nFor projects managed by GSFIC, GSFIC retains construction-in-progress on its books throughout the construction period and transfers the entire project to the University when complete. For projects managed by the University, the University retains construction-in-progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2017, GSFIC did not transfer capital additions to the University related to GSFIC managed projects. At June 30, 2017, GSFIC had construction in progress of approximately $40,157,236 for incomplete GSFIC managed projects for the University. \r\nA comparison of depreciation expense for the last three fiscal years is as follows: \r\n \r\nFiscal Year \r\n \r\nDepreciation Expense \r\n \r\n2017 \r\n \r\n$ \r\n \r\n28,011,451 \r\n \r\n2016 \r\n \r\n$ \r\n \r\n28,894,244 \r\n \r\n2015 \r\n \r\n$ \r\n \r\n28,498,895 \r\n \r\nNote 7 Advances (Including Tuition and Fees) \r\nAdvances, including tuition and fees, consisted of the following at June 30, 2017: \r\n \r\n2017 Annual Financial Report 45 \r\n \r\n Prepaid Tuition and Fees Research Other - Advances \r\nTotals \r\n \r\nCurrent Liabilities \r\n \r\n$ \r\n \r\n15,019,943 \r\n \r\n32,084,721 \r\n \r\n1,754,992 \r\n \r\n$ \r\n \r\n48,859,656 \r\n \r\nNote 8 Long-Term Liabilities \r\n \r\nChanges in long-term liability for the year ended June 30, 2017 was as follows: \r\n \r\nLease Purchase Obligations \r\n \r\nBeginning \r\n \r\nEnding \r\n \r\nBalance \r\n \r\nBalance \r\n \r\nCurrent \r\n \r\nJuly 1, 2016 \r\n \r\nAdditions \r\n \r\nReductions \r\n \r\nJune 30, 2017 \r\n \r\nPortion \r\n \r\n$ 57,861,095 $ 1,147,517 $ 3,482,411 $ 55,526,201 $ 3,633,884 \r\n \r\nOther Liabilities Compensated Absences Net Pension Liability Total \r\n \r\n37,707,284 333,942,164 371,649,448 \r\n \r\n27,274,878 84,716,066 111,990,944 \r\n \r\n25,999,936 12,749,781 38,749,717 \r\n \r\n38,982,226 405,908,449 444,890,675 \r\n \r\n21,347,559 21,347,559 \r\n \r\nTotal Long-Term Obligations \r\n \r\n$ 429,510,543 $ 113,138,461 $ 42,232,128 $ 500,416,876 $ 24,981,443 \r\n \r\nNote 9 Service Concession Arrangements \r\nAt June 30, 2017, the University had no service concession arrangements that met the materiality threshold for discrete financial reporting. \r\nNote 10 Net Position \r\nThe breakdown of business type activity net position for the University fund at June 30, 2017 is as follows: \r\n \r\n46 Augusta University \r\n \r\n Net Investment in Capital Assets \r\n \r\n$ \r\n \r\nRestricted for Nonexpendable Permanent Endowment \r\n \r\nExpendable Sponsored and Other Organized Activities Federal Loans Institutional Loans Quasi-Endowments Capital Projects \r\nSub-Total \r\n \r\nUnrestricted Auxiliary Enterprises Operations Auxiliary Enterprises Renewals \u0026 Replacement Reserve Reserve for Encumbrances Reserve for Inventory Other Unrestricted \r\nSub-Total \r\n \r\nTotal Net Position \r\n \r\n$ \r\n \r\n472,466,154 \r\n2,408,636 \r\n28,991,305 5,400,825 1,022,961 8,374,399 \r\n43,789,490 \r\n1,759,981 3,705,638 17,914,990 \r\n144,616 (311,457,595) (287,932,370) 230,731,910 \r\n \r\nChanges in Net Position for the year ended June 30, 2017 are as follows: \r\n \r\nBeginning Balance July 1, 2016 \r\n \r\nAdditions \r\n \r\nReductions \r\n \r\nEnding Balance June 30, 2017 \r\n \r\nNet Investments in Capital Assets $ 477,493,762 $ 26,742,231 $ 31,769,839 $ 472,466,154 \r\n \r\nRestricted Net Position \r\n \r\n32,618,537 \r\n \r\n538,131,995 \r\n \r\n524,552,406 \r\n \r\n46,198,126 \r\n \r\nUnrestricted Net Position \r\n \r\n(298,694,151) \r\n \r\n325,830,466 \r\n \r\n315,068,685 \r\n \r\n(287,932,370) \r\n \r\nTotal Net Position \r\n \r\n$ 211,418,148 $ 890,704,692 $ 871,390,930 $ 230,731,910 \r\n \r\nNote 11 Endowments \r\nDonor Restricted Endowments Investments of the University's endowment funds are pooled, unless required to be separately invested by the donor. For University controlled, donor-restricted endowments, where the donor has not provided specific instructions, the Board of Regents permits Institutions to develop policies for authorizing and spending realized and unrealized endowment income and appreciation as they determined to be prudent. Realized and unrealized appreciation in excess of the amount budgeted for current spending is retained by the endowments. Current year net appreciation for the endowment accounts was $235,150 and is reflected as expendable restricted net position. \r\nNote 12 Significant Commitments \r\nSee the net position note for amounts reserved for outstanding encumbrances at June 30, 2017. In addition to these encumbrances, the University had other significant unearned outstanding construction or renovation contracts in the \r\n \r\n2017 Annual Financial Report 47 \r\n \r\n amount of $2,332,069 executed as of June 30, 2017. This amount is not reflected in the accompanying basic financial statements. \r\n \r\nNote 13 Leases \r\n \r\nLease Obligations The University is obligated under various capital and operating lease agreements for the acquisition or use of real property and equipment. \r\n \r\nCapital Leases The University acquires certain real property and equipment through multi-year capital leases with varying terms and options. In accordance with O.C.G.A 50-5-64, these agreements shall terminate absolutely and without further obligation at the close of the fiscal year in which it was executed and at the close of each succeeding fiscal year for which it may be renewed. These agreements may be renewed only by a positive action taken by the University. In addition, these agreements shall terminate if the State does not provide adequate funding, but that is considered a remote possibility. The University's principal and interest expenditures related to capital leases for fiscal year 2017 were $3,482,411 and $1,926,562, respectively. Interest rates range from 2.437% - 10.10%. \r\n \r\nThe following is a summary of the carrying values of assets held under capital lease at June 30, 2017: \r\n \r\nDescription \r\nLeased Equipment Leased Buildings \u0026 Building Improvements Total Assets Held Under Capital Lease \r\n \r\nGross Amount \r\n \r\nLess: Accumulated Depreciation \r\n \r\nNet, Assets Held Under Capital Lease at June 30, 2017 \r\n \r\nOutstanding Balances per Lease \r\nSchedules at June 30, 2017 \r\n \r\n(+) \r\n \r\n(-) \r\n \r\n(=) \r\n \r\n$ \r\n \r\n7,458,579 $ \r\n \r\n2,719,730 $ \r\n \r\n4,738,849 $ \r\n \r\n4,522,363 \r\n \r\n59,576,418 \r\n \r\n20,375,022 \r\n \r\n39,201,396 \r\n \r\n51,003,838 \r\n \r\n$ \r\n \r\n67,034,997 $ \r\n \r\n23,094,752 $ \r\n \r\n43,940,245 $ \r\n \r\n55,526,201 \r\n \r\nThe following schedule lists the pertinent information for each of the University's capital leases: \r\n \r\nDescription \r\n \r\nLessor \r\n \r\nOriginal Principal \r\n \r\nLease Term \r\n \r\nBegin \r\n \r\nEnd Month/ \r\n \r\nMonth/Year \r\n \r\nYear \r\n \r\nOutstanding Principal \r\n \r\nCRC \r\n \r\nMCG-PPG, CRC LLC \r\n \r\n$ 27,704,398 30 years \r\n \r\n1/2006 \r\n \r\n6/2034 \r\n \r\n$ 24,857,292 (1) \r\n \r\nUniversity Housing \r\n \r\nASU Foundation \r\n \r\n20,246,137 30 years \r\n \r\n9/2005 \r\n \r\n1/2035 \r\n \r\n16,914,315 (1) \r\n \r\nStudent Center Telephone System Telephone System \r\n \r\nASU Foundation \r\nKey Govt Finance, Inc. \r\nKey Govt Finance, Inc. \r\n \r\n11,782,962 29 years 4,972,657 4 years 302,400 2 years \r\n \r\n3/2006 9/2015 3/2017 \r\n \r\n12/2033 9/2019 3/2019 \r\n \r\n9,232,231 (1) 3,057,582 \r\n189,726 \r\n \r\nComputer Lease Multiple Individual Copier Leases \r\nTotal Leases \r\n \r\nDeLage Landen Pollock \r\n \r\n100,980 3 years 1,709,727 5 years $ 66,819,261 \r\n \r\n1/2016 9/2012 \r\n \r\n1/2019 4/2022 \r\n \r\n54,793 1,220,262 $ 55,526,201 \r\n \r\n(1) These capital leases are related party transactions with affiliated organizations. \r\nCertain capital leases provide for renewal and/or purchase options. Generally purchase options at bargain prices of one dollar are exercisable at the expiration of the lease terms. \r\nOperating Leases The University is obligated under various operating leases for the use of equipment. Some of these leases are considered for accounting purposes to be operating leases. Although lease terms vary, many leases are subject to appropriation from the General Assembly to continue the obligation. Other leases generally contain provisions that, at the expiration date of the original term of the lease, the University has the option of renewing the lease on a year-to- \r\n48 Augusta University \r\n \r\n year basis. Leases renewed yearly for a specified time period, i.e. lease expires at 12 months and must be renewed for the next year, may not meet the qualification as an operating lease. The University's operating lease expense for fiscal 2017 was $2,643. \r\n \r\nFuture commitments for capital leases and for non-cancellable operating leases having remaining terms in excess of one year as of June 30, 2017, are as follows: \r\n \r\nYear Ending June 30: 2018 2019 2020 2021 2022 2023 through 2027 2028 through 2032 2033 through 2035 \r\n \r\nReal Property and Equipment Capital Leases Operating Leases \r\n \r\n$ \r\n \r\n5,513,733 $ \r\n \r\n376 \r\n \r\n5,465,191 \r\n \r\n5,325,329 \r\n \r\n4,195,732 \r\n \r\n4,128,703 \r\n \r\n19,762,136 \r\n \r\n19,747,303 \r\n \r\n8,202,656 \r\n \r\nTotal minimum lease payments \r\n \r\n72,340,783 $ \r\n \r\n376 \r\n \r\nLess: Interest \r\n \r\n13,771,920 \r\n \r\nLess: Executory costs \r\n \r\n3,042,662 \r\n \r\nPrincipal Outstanding \r\n \r\n$ 55,526,201 \r\n \r\nNote 14 Retirement Plans \r\nThe University participates in various retirement plans administered by the State of Georgia under two major retirement systems: Teachers Retirement System of Georgia (TRS) and Employees' Retirement System of Georgia (ERS). These two systems issue separate publicly available financial reports that include the applicable financial statements and required supplementary information. The reports may be obtained from the respective administrative offices. \r\nThe significant retirement plans that the University participates in are described below. More detailed information can be found in the plan agreements and related legislation. Each plan, including benefit and contribution provisions, was established and can be amended by State law. \r\nA. Teachers Retirement System of Georgia and Employees' Retirement System of Georgia \r\nGeneral Information about the Teachers Retirement System \r\nPlan description All teachers of the University as defined in 47-3-60 of the Official Code of Georgia Annotated (O.C.G.A.) are provided a pension through the Teachers Retirement System of Georgia (TRS). TRS, a cost-sharing multiple-employer defined benefit pension plan, is administered by the TRS Board of Trustees (TRS Board). Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. TRS issues a publicly available financial report that can be obtained at trsga.com/publications. \r\nBenefits Provided TRS provides service retirement, disability retirement, and death benefits. Normal retirement benefits are determined as 2% of the average of the employee's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. An employee is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. Ten years of service is required for disability and death benefits eligibility. Disability benefits are based on the employee's creditable service and compensation up to the time of disability. Death benefits equal the amount that would be payable to the employee's \r\n \r\n2017 Annual Financial Report 49 \r\n \r\n beneficiary had the employee retired on the date of death. Death benefits are based on the employee's creditable service and compensation up to the date of death. \r\nContributions Per Title 47 of the O.C.G.A., contribution requirements of active employees and participating employers, as actuarially determined, are established and may be amended by the TRS Board. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees were required to contribute 6% of their annual pay during fiscal year 2017. The University's contractually required contribution rate for the year ended June 30, 2017 was 14.27% of annual the University payroll. The University's contributions to TRS totaled $27,473,760 for the year ended June 30, 2017. \r\nGeneral Information about the Employees' Retirement System \r\nPlan description ERS is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly during the 1949 Legislative Session for the purpose of providing retirement allowances for employees of the State of Georgia and its political subdivisions. ERS is directed by a Board of Trustees. Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. ERS issues a publicly available financial report that can be obtained at ers.ga.gov/formspubs/formspubs. \r\nBenefits provided The ERS Plan supports three benefit tiers: Old Plan, New Plan, and Georgia State Employees' Pension and Savings Plan (GSEPS). Employees under the old plan started membership prior to July 1, 1982 and are subject to plan provisions in effect prior to July 1, 1982. Members hired on or after July 1, 1982 but prior to January 1, 2009 are new plan members subject to modified plan provisions. Effective January 1, 2009, new state employees and rehired state employees who did not retain membership rights under the Old or New Plans are members of GSEPS. ERS members hired prior to January 1, 2009 also have the option to irrevocably change their membership to GSEPS. \r\nUnder the old plan, the new plan, and GSEPS, a member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60 or 30 years of creditable service regardless of age. Additionally, there are some provisions allowing for early retirement after 25 years of creditable service for members under age 60. \r\nRetirement benefits paid to members are based upon the monthly average of the member's highest 24 consecutive calendar months, multiplied by the number of years of creditable service, multiplied by the applicable benefit factor. Annually, postretirement cost-of-living adjustments may also be made to members' benefits, provided the members were hired prior to July 1, 2009. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension, at reduced rates, to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS. \r\nContributions Member contributions under the old plan are 4% of annual compensation, up to $4,200, plus 6% of annual compensation in excess of $4,200. Under the old plan, the State pays member contributions in excess of 1.25% of annual compensation. Under the old plan, these State contributions are included in the members' accounts for refund purposes and are used in the computation of the members' earnable compensation for the purpose of computing retirement benefits. Member contributions under the new plan and GSEPS are 1.25% of annual compensation. University's contractually required contribution rate, actuarially determined annually, for the year ended June 30, 2017 was 24.69% of annual covered payroll for old and new plan members and 21.69% for GSEPS members. The University's contributions to ERS totaled $457,473 for the year ended June 30, 2017. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. \r\nPension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions \r\nAt June 30, 2017, the University reported a liability for its proportionate share of the net pension liability for TRS and ERS. The net pension liability was measured as of June 30, 2016. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2015. An expected total pension liability as of June 30, 2016 was determined using standard roll-forward techniques. The University's proportion of the net pension \r\n50 Augusta University \r\n \r\n liability was based on contributions to TRS and ERS during the fiscal year ended June 30, 2016. At June 30, 2016, the University's TRS proportion was 1.675586%, which was an decrease of (0.041076)% from its proportion measured as of June 30, 2015. At June 30, 2016, the University's ERS proportion was 0.031106%, which was a increase of 0.003888% from its proportion measured as of June 30, 2015. \r\n \r\nFor the year ended June 30, 2017, the University recognized pension expense of $35,876,044 for TRS and $242,228 for ERS. At June 30, 2017, the University reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: \r\n \r\nTRS \r\n \r\nDeferred Outflows of Resources \r\n \r\nDeferred Inflows of Resources \r\n \r\nERS \r\n \r\nDeferred Outflows of Resources \r\n \r\nDeferred Inflows of Resources \r\n \r\nDifferences between expected and actual experience \r\n \r\n$ 5,149,880 $ 1,709,450 \r\n \r\n$ \r\n \r\n3,398 \r\n \r\nChanges of assumptions \r\n \r\n8,959,861 \r\n \r\n12,464 \r\n \r\nNet difference between projected and actual earnings on pension plan investments \r\n \r\n43,731,471 \r\n \r\nChanges in proportion and differences between contributions and proportionate share of contributions \r\nContributions subsequent to the measurement date \r\n \r\n2,298,767 27,473,760 \r\n \r\n7,793,076 \r\n \r\nTotal \r\n \r\n$ 87,613,739 $ 9,502,526 $ \r\n \r\n149,605 \r\n114,869 457,473 734,411 $ \r\n \r\n3,398 \r\n \r\nThe University's contributions subsequent to the measurement date are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the year ended June 30, 2017. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: \r\n \r\nYear Ended June 30: \r\n \r\nTRS \r\n \r\nERS \r\n \r\n2018 2019 2020 2021 2022 \r\n \r\n$ \r\n \r\n5,581,047 $ \r\n \r\n$ \r\n \r\n5,581,031 $ \r\n \r\n$ \r\n \r\n23,456,098 $ \r\n \r\n$ \r\n \r\n15,610,318 $ \r\n \r\n$ \r\n \r\n408,959 \r\n \r\n108,347 34,532 80,659 50,002 \r\n \r\nActuarial assumptions \r\n \r\nThe total pension liability as of June 30, 2016 was determined by an actuarial valuation as of June 30, 2015 using the following actuarial assumptions, applied to all periods included in the measurement: \r\n \r\nTeachers Retirement System Inflation Salary increases Investment rate of return \r\n \r\n2.75% 3.25% - 9.00%, average, including inflation 7.50%, net of pension plan investment expense, including inflation \r\n \r\nPost retirement mortality rates were based on the RP 2000 White Collar Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB (set forward one year for males) for service retirements and dependent beneficiaries. The RP 2000 Disabled Mortality Table with future mortality improvement projected to 2025 with Society of Actuaries' projection scale BB (set forward two years for males and \r\n2017 Annual Financial Report 51 \r\n \r\n four years for females) was used for death after disability retirement. Rates of mortality in active service were based on the RP 2000 Employee Mortality Table projected to 2025 with projection scale BB. \r\n \r\nThe actuarial assumptions used in the June 30, 2015 valuation were based on the results of an actuarial experience study for the period July 1, 2009  June 30, 2014. \r\n \r\nEmployees' Retirement System \r\n \r\nInflation \r\n \r\n2.75% \r\n \r\nSalary increases \r\n \r\n3.25  7.00%, including inflation \r\n \r\nInvestment rate of return \r\n \r\n7.50%, net of pension plan investment expense, including inflation \r\n \r\nPost retirement mortality rates were based on the RP 2000 Combined Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB and set forward 2 years for both males and females for service retirements and dependent beneficiaries. The RP 2000 Disabled Mortality Table with future mortality improvement projected to 2025 with Society of Actuaries' projection scale BB and set back 7 years for males and set forward 3 years for females was used for death after disability retirement. There is a margin for future mortality improvement in the tables used by the System. Based on the results of the most recent experience study adopted by the Board on December 17, 2015, the numbers of expected future deaths are 9 12% less than the actual number of deaths that occurred during the study period for service retirements and beneficiaries and for disability retirements. Rates of mortality in active service were based on the RP 2000 Employee Mortality Table projected to 2025 with projection scale BB. \r\n \r\nThe actuarial assumptions used in the June 30, 2015 valuation were based on the results of an actuarial experience study for the period July 1, 2009  June 30, 2014. \r\n \r\nThe long-term expected rate of return on TRS and ERS pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected nominal returns, net of pension plan investment expense and the assumed rate of inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: \r\n \r\nAsset class Fixed income Domestic large equities Domestic mid equities Domestic small equities International developed market equities International emerging market equities Alternatives \r\nTotal \r\n \r\nTRS target allocation 30.00% 39.80% 3.70% 1.50% 19.40% 5.60% --% \r\n100.00% \r\n \r\nERS target allocation \r\n30.00% 37.20% \r\n3.40% 1.40% 17.80% 5.20% 5.00% 100.00% \r\n \r\nLong-term expected real rate of return* \r\n(0.50)% 9.00 % 12.00 % 13.50 % 8.00 % 12.00 % 10.50 % \r\n \r\n* Rates shown are net of the 2.75% assumed rate of inflation \r\n \r\nDiscount rate \r\nThe discount rate used to measure the total TRS and ERS pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and State of Georgia contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the TRS and ERS pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. \r\n52 Augusta University \r\n \r\n The following presents the University's proportionate share of the net pension liability calculated using the discount rate of 7.50%, as well as what the University's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.50%) or 1-percentage-point higher (8.50%) than the current rate: \r\n \r\nTeachers Retirement System: Proportionate share of the net pension liability \r\n \r\n1% \r\n \r\nCurrent \r\n \r\nDecrease \r\n \r\ndiscount rate \r\n \r\n6.50% \r\n \r\n7.50% \r\n \r\n$ 538,073,978 $ 345,692,075 $ \r\n \r\n1% Increase 8.50% 187,297,288 \r\n \r\nEmployees' Retirement System: Proportionate share of the net pension liability \r\n \r\n1% \r\n \r\nCurrent \r\n \r\nDecrease \r\n \r\ndiscount rate \r\n \r\n6.50% \r\n \r\n7.50% \r\n \r\n$ \r\n \r\n1,994,080 $ \r\n \r\n1,471,444 $ \r\n \r\n1% Increase 8.50% \r\n1,026,055 \r\n \r\nPension plan fiduciary net position \r\n \r\nDetailed information about the pension plan's fiduciary net position is available in the separately issued TRS and ERS financial reports which are publicly available at trsga.com/publications and ers.ga.gov/formspubs/formspubs, respectively. \r\n \r\nB. Early Retirement Pension Plan \r\n \r\nPlan Description Augusta University Early Retirement Pension Plan (ERP) is a single-employer defined benefit pension plan administered by Bryan, Pendleton, Swats, and McAllister, LLC. The plan was derived by Augusta University as a means of workforce reduction and was approved by the Board of Regents of the University System of Georgia (BOR) effective January 1, 2000. \r\n \r\nThe plan was designed to provide eligible participants additional benefits above the amounts payable through Teachers Retirement System of Georgia (TRS). The plan was designed to allow vested employees aged 55 or employees of any age with 25 years of creditable service to retire without penalties as applied by the Teachers Retirement System of Georgia (TRS) for early retirement. \r\n \r\nThe plan would allow for all participants to retire as if they were vested and aged 60 or had attained 30 years of creditable service. Any member who opted into the Optional Retirement Plan aged 55 with 10 years of service by June 30, 2000 was also eligible to participate in the plan. \r\n \r\nThe plan is closed to new entrants. There were no active plan participants. As of January 1, 2017, plan participants consisted of the following: \r\n \r\nInactive Plan Participants: \r\n \r\nRetirees and Beneficiaries Currently Receiving Benefits \r\n \r\n628 \r\n \r\nTerminated Employees Entitled to Deferred Benefits \r\n \r\n0 \r\n \r\nDisabled Employees Entitled to Deferred Benefits \r\n \r\n0 \r\n \r\nTotal \r\n \r\n628 \r\n \r\nBenefits Provided TRS provides a benefit equal to 2.0% of the participant's average annual compensation during the two consecutive years of creditable service which produce the highest such average, multiplied by the number of years of creditable service, limited to 40 years. If the participant has less than 30 years of creditable service and has not attained age 60 \r\n2017 Annual Financial Report 53 \r\n \r\n at the time of retirement, the benefit will be reduced by the lesser of 1/12 of 7% for each month that retirement precedes age 60 or 7% for each year or fraction of a year by which the participant has less than 30 years of creditable service at the time of retirement. In addition, a one-time 3% increase is applied to the first $37,500 of the participant's benefit at retirement. \r\n \r\nThe ERP provides the additional benefits that would have been payable under TRS based on the following adjustments: \r\n \r\n Age of the participant was increased five years  Participant's creditable service was increased five years  Participant's annual rate of earnings as of August 1, 1999 was projected five years into the future with 3% \r\nincreases each year \r\n \r\nERP benefits will be increased 3% a year as a cost-of-living adjustment (COLA): 1-1/2% on each January 1 and July 1. The ERP provided COLA's for both the ERP and TRS benefits until actual eligibility for a COLA through TRS occurred. Since that time, the ERP has provided COLA's only on the portion of the benefit paid by the ERP, and TRS has provided COLA's under the terms of the TRS plan. \r\n \r\nThe ERP does not issue a standalone report. \r\n \r\nFunding Policy The fund sources that provided for an employee's salary, as of December 31, 1999, would be responsible for funding the annuity to provide for retiree benefits. There is no additional cost to the employee/retiree, USG, or State of Georgia for this plan. Contributions are made by Augusta University based on the actuarial valuation of the plan. For fiscal year 2017, affiliated organizations contributed $5,886,802 to the plan on-behalf of the University. \r\n \r\nSince this plan was not pre-funded, Augusta University's approach to collect and deposit as much into the ERP fund in the earlier years as is possible, thereby, realizing a greater return on investment. Effective January 1, 2016, the period to amortize the unfunded accrued liability was extended 2 years.With this change, the plan should be fully funded by June 30, 2025. The funding policy is reasonable and in compliance with minimum funding requirements set forth in Code Section 47-20-10 of the Public Retirement Systems Standards Law. \r\n \r\nInvestments Augusta University maintains an investment policy which fosters sound and prudent judgment in the management of assets to ensure safety of capital consistent with the fiduciary responsibility of the institution to the citizens of Georgia and which conforms to the USG investment policy. All investments are consistent with USG policy and applicable Federal and state laws. \r\n \r\nInvestments are reported at fair value. Securities traded on a national or international exchange are valued at the last reported sales price. The Augusta University's Investment Policy and Guidelines for managing concentration of credit risk requires that stocks and debt issues be diversified. Augusta University also relies upon the concentration of credit risk policy of the individual investment vehicles related to plan assets. More than 5% of the Pension Plan's Investments are in iShares Core Total U.S. Aggregate Bond Exchange-traded Fund (ETF), Vanguard Institutional Index Fund, iShares Russell 1000 Value ETF, and iShares Russell 1000 Growth ETF. These investments are 8.51%, 41.69%, 5.98%, and 10.19% respectively of the Plan's total investments. \r\n \r\nFor the fiscal year ended June 30, 2017, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was 13.39%. \r\n \r\nNet Pension Liability (NPL) The components of the net pension liability at June 30, 2017 were as follows: \r\n \r\nTotal Pension Liability Plan Fiduciary Net Position \r\n \r\n$ 149,152,995 (90,408,065) \r\n \r\nNet Pension Liability \r\n \r\n$ 58,744,930 \r\n \r\nPlan Fiduciary Net Position as a percentage of total pension liability is 60.61%. \r\n \r\n54 Augusta University \r\n \r\n Actuarial Assumptions The total pension liability was determined by an actuarial valuation as of January 1, 2017 with the results rolled forward to the June 30, 2017 measurement date using the following actuarial assumptions, applied to all periods included in the measurement: (a) rate of return of 7.50% per annum, compounded annually (b) inflation of 3 percent, and (c) cost of living increases of 3 percent per annum. \r\n \r\nTo better recognize current and future mortality improvements, effective June 30, 2016 mortality rates were based on the RP-2014 Mortality Table, adjusted to 2006, with generational mortality improvement projected after year 2006 using Scale MP-2015 rather than the previously used RP-2000 Mortality Table for Healthy Annuitants with projected improvement from year 2000 to year 2022 under Projection Scale AA. \r\n \r\nThe projection of cash flows used to determine the discount rate of 7.5% per annum, compounded annually assumes that employer contributions will be made at rates equal to the actuarially determined contribution rates. Based on that assumption, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members.Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. \r\n \r\nThe long-term expected rate of return on pension plan investments was determined using a building- block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the longterm expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the pension plan's target asset allocation are summarized in the following table: \r\n \r\nAsset Class \r\nDomestic Equity International Equity Fixed Income Real Estate Cash \r\n \r\nTarget Allocation 79.62% \r\n--% 13.48% \r\n--% 6.90% \r\n \r\nLong-Term Expected Real Rate of \r\nReturn 6.50% \r\n7.25% 1.25% 5.75% 0.50% \r\n \r\nSensitivity of Net Pension Liability to Changes in the Discount Rate The following represents the net pension liability calculated using the stated discount rate, as well as what the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentagepoint higher than the current rate: \r\n \r\nNet Pension Liability \r\n \r\n1% \r\n \r\nCurrent \r\n \r\nDecrease \r\n \r\ndiscount rate \r\n \r\n6.50% \r\n \r\n7.50% \r\n \r\n$ 71,235,851 $ 58,744,930 $ \r\n \r\n1% Increase 8.50% \r\n47,883,650 \r\n \r\n2017 Annual Financial Report 55 \r\n \r\n Schedule of Changes in Net Pension Liability For the year ended June 30, 2017, the USG recognized net pension liability of $58,744,930 calculated as follows: \r\n \r\nTotal Pension Liability (a) \r\n \r\nPlan Fiduciary Net Position (b) \r\n \r\nNet Pension Liability (a) - (b) \r\n \r\nBalance, June 30, 2016 \r\n \r\n$ \r\n \r\n151,817,059 $ \r\n \r\n80,322,348 $ \r\n \r\n71,494,711 \r\n \r\nInterest Experience losses (gains) Contributions - Employer Net investment income Benefit payments \r\n \r\n10,875,630 77,619 \r\n(13,617,313) \r\n \r\n13,084,672 10,618,358 (13,617,313) \r\n \r\n10,875,630 77,619 \r\n(13,084,672) (10,618,358) \r\n-- \r\n \r\nNet Change \r\n \r\n(2,664,064) \r\n \r\n10,085,717 \r\n \r\n(12,749,781) \r\n \r\nBalance, June 30, 2017 \r\n \r\n$ \r\n \r\n149,152,995 $ \r\n \r\n90,408,065 $ \r\n \r\n58,744,930 \r\n \r\nAffiliated organizations contributed $5,886,802 to the plan on behalf of the USG. \r\n \r\nSchedule of Changes in Pension Expense For the year ended June 30, 2017, the USG recognized pension expense of $5,409,026 from the following sources: \r\n \r\nInterest Projected investment income Recognition of experience (gain)/loss Investment losses (gains) Pension Expense June 30, 2016 \r\n \r\nPension Expense $ 10,875,630 \r\n(6,004,202) 77,619 \r\n459,979 $ 5,409,026 \r\n \r\nDeferred Outflows/Inflows of Resources At June 30, 2017, the USG reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: \r\n \r\nNet difference between projected and actual earnings on pension plan investments \r\n \r\nDeferred Pension Outflows of Resources \r\n \r\nDeferred Pension Inflows of Resources \r\n \r\n3,631,819 \r\n \r\n3,691,325 \r\n \r\nAmounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: \r\n \r\nYear Ending June \r\n \r\n302:018 \r\n \r\n$ \r\n \r\n2019 \r\n \r\n$ \r\n \r\n2020 \r\n \r\n$ \r\n \r\n2021 \r\n \r\n$ \r\n \r\n459,979 459,979 (56,630) (922,834) \r\n \r\n56 Augusta University \r\n \r\n C. Defined Contribution Plan: \r\nRegents Retirement Plan \r\nPlan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A.  47-21-1 et.seq. and administered by the Board of Regents of the University System of Georgia (Board). O.C.G.A.  47-3-68(a) defines who may participate in the Regents Retirement Plan. An \"eligible university system employee\" is a faculty member or all exempt full and partial benefit eligible employees, as designated by the regulations of the Board. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from three approved vendors (VALIC, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts. \r\nFunding Policy The institutions of the USG make monthly employer contributions to the Regents Retirement Plan on behalf of participants at rates determined by the Board. The Board reviews the contribution amount every three (3) years. For fiscal year 2017, the employer contribution was 9.24% for the participating employee's earnable compensation. Employees contribute 6% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times. \r\nThe University and the covered employees made the required contributions of $13,457,333 (9.24%) and $8,738,532 (6%), respectively. \r\nVALIC, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices. \r\nNote 15 Risk Management \r\nThe USG offers its employees and retirees under the age of 65 access to three self insured healthcare plan options and one fully insured plan option. For the USG's Plan Year 2017, the following self-insured health care options were available: Blue Choice HMO plan, (Blue Cross and Blue Shield of Georgia) Consumer Choice HSA plan, and the (Blue Cross and Blue Shield of Georgia) Comprehensive Care plan. \r\nThe University's participating employees and eligible retirees pay premiums into the plan fund to access benefits coverage. All units of the USG share the risk of loss for claims associated with these plans. The plan fund is considered to be a self-sustaining risk fund. The USG has contracted with Blue Cross and Blue Shield of Georgia, a wholly owned subsidiary of Anthem, Inc., to serve as the claims administrator for the self-insured healthcare plan options. In addition to the self-insured healthcare plan options offered to the employees and eligible retirees of the USG, a fully insured HMO healthcare plan option also is offered through Kaiser Permanente. The Comprehensive Care plan has a carvedout prescription drug plan administered through CVS Caremark. Pharmacy drug claims are processed in accordance with guidelines established for the Board of Regents' Prescription Drug Benefit Program. Generally, claims are submitted by participating pharmacies directly to CVS Caremark for verification, processing and payment. CVS Caremark maintains an eligibility file based on information furnished by Blue Cross and Blue Shield of Georgia on behalf of the various organizational units of the University System of Georgia. The dental plan is administered through Delta Dental. \r\nRetirees age 65 and older participate in a secondary healthcare coverage for Medicare-eligible retirees and dependents provided through a retiree health care exchange option. The USG makes contributions to a health reimbursement account, which can be used by the retiree to pay premiums and out-of-pocket healthcare-related expenses. \r\nThe Department of Administrative Services (DOAS) has the responsibility for the State of Georgia of making and carrying out decisions that will minimize the adverse effects of accidental losses that involve State government assets. The State believes it is more economical to manage its risks internally and set aside assets for claim settlement. Accordingly, DOAS processes claims for risk of loss to which the State is exposed, including general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' indemnification. \r\n2017 Annual Financial Report 57 \r\n \r\n Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. \r\nThe University is part of the State of Georgia reporting entity, and as such, is covered by the State of Georgia risk management program administered by DOAS. Premiums for the risk management program are charged to the various state organizations by DOAS to provide claims servicing and claims payment. \r\nA self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the O.C.G.A.  45-9-1. \r\nThe program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund. \r\nNote 16 Contingencies \r\nAmounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditure disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although the University expects such amounts, if any, to be immaterial to its overall financial position. \r\nLitigation, claims and assessments filed against the University, if any, are generally considered to be actions against the State of Georgia. Accordingly, significant litigation, claims and assessments pending against the State of Georgia are disclosed in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 2017. \r\nNote 17 Post-Employment Benefits Other Than Pension Benefits \r\nPursuant to the general powers conferred by the Official Code of Georgia Annotated Section 20-3-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee. \r\nThe Board of Regents Retiree Health Benefit Plan is a single-employer, defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The University pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. \r\nAs of June 30, 2017, there were 2,040 employees who had retired or were disabled that were receiving these postemployment health and life insurance benefits. For the year ended June 30, 2017, the University recognized $11,177,314 in expenses, which was net of $2,630,051 of participant contributions. \r\nNote 18 Operating Expenses with Functional Classifications \r\nBusiness-type activity operating expenses by functional classification for fiscal 2017 are shown below: \r\n58 Augusta University \r\n \r\n Functional Classification Instruction Research Public Service Academic Support Student Services Institutional Support Plant Operations and Maintenance Scholarships and Fellowships Auxiliary Enterprises Patient Care \r\nTotal Operating Expenses \r\nFunctional Classification \r\nInstruction Research Public Service Academic Support Student Services Institutional Support Plant Operations and Maintenance Scholarships and Fellowships Auxiliary Enterprises Patient Care Total Operating Expenses \r\n \r\nFaculty Salaries \r\n \r\nStaff Salaries \r\n \r\nNatural Classification \r\nEmployee Benefits \r\n \r\nPersonal Services \r\n \r\n$ 67,271,644 $ 31,448,195 $ 34,269,080 $ \r\n \r\n9,758,747 \r\n \r\n12,952,846 \r\n \r\n5,737,471 \r\n \r\n9,371,402 \r\n \r\n17,180,728 \r\n \r\n7,074,725 \r\n \r\n11,070,890 \r\n \r\n28,149,492 \r\n \r\n13,348,507 \r\n \r\n286,662 \r\n \r\n3,939,293 \r\n \r\n1,340,650 \r\n \r\n1,716,715 \r\n \r\n29,029,249 \r\n \r\n26,104,932 \r\n \r\n88,171 \r\n \r\n11,808,342 \r\n \r\n4,452,506 \r\n \r\n1,600 \r\n \r\n124,852 \r\n \r\n4,437,191 \r\n \r\n1,702,237 \r\n \r\n73,692,728 \r\n \r\n109,424,773 \r\n \r\n45,616,475 \r\n \r\n85,678 $ 61 \r\n5,066 8,312 40,628 191,075 6,993 \r\n3,882 \r\n \r\n$ 173,381,811 $ 248,371,709 $ 139,646,583 $ \r\n \r\n341,695 $ \r\n \r\nTravel 2,047,689 466,452 551,434 266,866 127,094 267,284 45,770 \r\n77,545 410,018 4,260,152 \r\n \r\nScholarships and Fellowships \r\n \r\nUtilities \r\n \r\nNatural Classification \r\nSupplies and Other Services \r\n \r\nDepreciation/ Amortization \r\n \r\nTotal Operating Expenses \r\n \r\n$ \r\n \r\n516,710 $ \r\n \r\n788,235 $ 15,016,692 $ \r\n \r\n8,845,595 $ 160,289,518 \r\n \r\n37,468 \r\n \r\n4,426 \r\n \r\n17,651,576 \r\n \r\n464,896 \r\n \r\n47,073,943 \r\n \r\n93,141 \r\n \r\n128,670 \r\n \r\n8,977,991 \r\n \r\n303,824 \r\n \r\n43,686,981 \r\n \r\n34,762 \r\n \r\n109,859 \r\n \r\n2,945,762 \r\n \r\n1,767,330 \r\n \r\n57,701,780 \r\n \r\n6,457 \r\n \r\n44,571 \r\n \r\n2,394,094 \r\n \r\n11,364 \r\n \r\n8,190,813 \r\n \r\n183,752 \r\n \r\n25,157,386 \r\n \r\n8,312,750 \r\n \r\n90,963,143 \r\n \r\n8,459,509 \r\n \r\n18,949,534 \r\n \r\n6,626,299 \r\n \r\n50,437,124 \r\n \r\n7,675,581 \r\n \r\n7,677,181 \r\n \r\n924,661 \r\n \r\n479,137 \r\n \r\n8,054,016 \r\n \r\n1,679,393 \r\n \r\n17,482,914 \r\n \r\n392,353 \r\n \r\n129,124,025 \r\n \r\n358,660,372 \r\n \r\n$ \r\n \r\n9,288,780 $ 10,590,512 $ 228,271,076 $ 28,011,451 $ 842,163,769 \r\n \r\nNote 19 Component Units \r\nAugusta University Foundation, Inc. The Augusta University Foundation (AUF) is a private nonprofit organization that reports under FASB standards. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. \r\nThe AUF acts primarily as a fund-raising organization to supplement the resources that are available to Augusta University in support of its programs. During the year ended June 30, 2017, the AUF distributed approximately $993,566 to Augusta University in support of capital outlay projects, scholarships and other supporting activities. \r\nMedical College of Georgia Foundation Medical College of Georgia Foundation, Inc. (the \"Foundation\") is a nonprofit corporation incorporated under the laws of the State of Georgia in 1954. The Foundation serves the needs and interests of the Medical College of Georgia, the Augusta University Health Sciences campus and the Augusta University Health System. The Foundation presents its financial statements in accordance with Financial Accounting Standards Board (FASB) ASC, Financial Statements of Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. \r\n2017 Annual Financial Report 59 \r\n \r\n Medical College of Georgia Foundation, Inc. (the \"Foundation\") receives and administers funds for the support of the Medical College of Georgia, the Augusta University Health Sciences campus and the Augusta University Health System, and manages investments and distributed funds in accordance with donor instructions and board of director's intentions for gifts. The Foundation provides support for faculty chairs, research, scholarships and other institutional programs. During the year ended June 30, 2017, the Foundation paid approximately $3,450,000 to Augusta University and its affiliates in support of students and University programs. The Foundation paid approximately $6,260,000 to nonaffiliated organizations on behalf of Augusta University. \r\nAU Medical Associates AU Medical Associates (the Company), was formed in 1958 as a nonprofit organization for the purpose of enhancing the clinical, research, and educational missions of the Augusta University (AU or the University) and billing and collecting for medical services provided to patients. Revenues are obtained primarily from physician fees charged to patients at AU Medical Center and AU Children's Medical Center, which are operated by AU Health System, Inc. and AU Medical Center (AUMC). \r\nAugusta University Research Institute, Inc. Augusta University Research Institute (AURI) is a legally separate, tax-exempt component unit of the State of Georgia reporting entity. The AURI serves to enhance the research mission of Augusta University by securing sponsored research funding and by providing funding of special research initiatives. During the year ended June 30, 2017, the AURI distributed approximately $59,758,599 million to Augusta University in support of capital outlay projects, scholarships and other supporting activities. \r\nAU Health System Inc AU Health System, Inc. (the Health System), located in Augusta, Georgia, is a legally separate, tax-exempt organization, which was established to promote the health science education missions and other tax-exempt functions and purposes of the Augusta University (the University), AU Medical Associates (AUMA) and AU Medical Center, Inc. (AUMC) (a discretely presented component unit) by strategically coordinating operations of AUMA and AUMC. The Health System was incorporated under the laws of the State of Georgia as a non-profit corporation on June 1, 2010. It began operations on June 1, 2010 as part of a Joint Operating Agreement (the Agreement) with AUMA and AUMC. The Agreement was subsequently amended on June 26, 2014 to incorporate Roosevelt Warm Springs Rehabilitation \u0026 Specialty Hospitals, Inc. (RWSH) (a discretely presented component unit) and on August 28, 2014 to incorporate AU Health Professions Associates, Inc. (Health Professions Associates), Augusta University Nursing Associates, Inc. (Nursing Associates) and AU - Dental Associates (Dental Associates). \r\nGeorgia Health Sciences Foundation, Inc. The Georgia Health Sciences Foundation (GHSF) is a private nonprofit organization that reports under FASB standards. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. \r\nThe GHSF acts primarily as a fund-raising organization to supplement the resources that are available to Augusta University in support of its programs. During the year ended June 30, 2017, the GHSF distributed approximately $3,872,387 to Augusta University in support of capital outlay projects, scholarships and other supporting activities. \r\n60 Augusta University \r\n \r\n Component unit's investments are comprised of the following amounts at June 30, 2017: \r\n \r\nFair Value \r\n \r\nLevel 1 \r\n \r\nFair Value Hierarchy Level 2 \r\n \r\nLevel 3 \r\n \r\nInvestment type U.S. Treasuries U.S. Agencies Explicitly Guaranteed Implicitly Guaranteed Bond Securities Corporate Debt Money Market Mutual Funds Municipal Obligations Mutual Bond Funds Repurchase Agreements Equity Mutual Funds - Domestic Equity Mutual Funds - International Equity Securities - Domestic Equity Securities - International Real Estate Held for Investment Purposes Real Estate Investment Trusts Split Interest Investments Commodity Fund Certificates of Deposit Joint Ventures/Partnerships Other Pooled Investments Alternative Investments Accrued Interest and Dividends \r\n \r\n$ 31,639,999 $$ 8,368,347 $$ 23,271,652 $$ \r\n \r\n-- \r\n \r\n2,279,263 8,621,434 41,233,946 57,972,747 2,289,511 10,687,844 3,786,916 \r\n654,000 8,111,189 1,740,089 83,937,136 37,563,974 \r\n24,346,197 207,418 \r\n1,906,300 177,095 \r\n5,970,898 107,685,947 \r\n \r\n-- -- 22,492,411 -- 212,349 -- 3,786,916 -- 8,111,189 1,740,089 83,937,136 37,563,974 \r\n-- 207,418 \r\n-- 177,095 5,970,898 \r\n-- \r\n \r\n2,279,263 8,621,434 18,741,535 57,972,747 2,077,162 10,687,844 \r\n-- 654,000 \r\n-- -- -- -- \r\n-- -- 1,906,300 -- -- -- \r\n \r\n-- -- -- -- -- -- -- -- -- -- -- -- \r\n24,346,197 -- -- -- -- \r\n107,685,947 \r\n \r\n296,720 803,246 587,426 \r\n \r\n-- -- 587,426 \r\n \r\n296,720 -- -- \r\n \r\n-- 803,246 \r\n-- \r\n \r\n432,499,295 $ 173,155,248 $$ 126,508,657 $$ 132,835,390 \r\n \r\nInvestment Pools Board of Regents Short-Term Fund Balanced Income Fund Total Return Fund Diversified Fund for Foundations \r\nOther Investment Pools \r\n \r\n22,991,748 422,025 443,688 \r\n3,855,824 291,102 \r\n \r\nTotal Investments \r\n \r\n$ 460,503,682 \r\n \r\nOf the investments disclosed above, $5,359,713 of the Board of Regents Short-Term investment pool held by Augusta University Research Institute, Inc. is reported as cash and equivalents on the Statement of Net Position. \r\n \r\n2017 Annual Financial Report 61 \r\n \r\n Component unit's endowments are comprised of the following amounts at June 30, 2017: \r\n \r\nUnrestricted and Quasi \r\nEndowments \r\n \r\nTemporarily Restricted and Term Endowment \r\n \r\nPermanently Restricted and True Endowment \r\n \r\nBeginning \r\n \r\n$ \r\n \r\nContributions \r\n \r\nNet realized and unrealized gains \r\n \r\nAppropriation of endowment assets for expenditure \r\n \r\n4,384,246 $ -- \r\n149,111 -- \r\n \r\n56,749,511 $ 28,269 \r\n29,409,816 (4,182,270) \r\n \r\n157,142,752 $ 3,101,267 -- -- \r\n \r\nTransfers to comply with donor intent Ending \r\n \r\n8,227,553 \r\n \r\n(8,001,175) \r\n \r\n(11,221,243) \r\n \r\n$ \r\n \r\n12,760,910 $ \r\n \r\n74,004,151 $ 149,022,776 $ \r\n \r\nComponent unit's capital assets are comprised of the following amounts at June 30, 2017: \r\n \r\nCapital Assets not being Depreciated: Land (and other assets) Construction in Progress Software Development-in-Progress \r\nTotal Capital Assets not being Depreciated \r\nCapital Assets being Depreciated: Buildings and Building Improvements Leased Buildings and Building Improvements Improvements other then Buildings Machinery and Equipment Software \r\nTotal Capital Assets being Depreciated/Amortized \r\nLess Total Accumulated Depreciation/Amortization \r\nTotal Capital Assets being Depreciated/Amortized, Net \r\nCapital Assets, Net \r\n \r\n$ \r\n \r\n25,814,647 \r\n \r\n9,467,135 \r\n \r\n16,686,054 \r\n \r\n51,967,836 \r\n \r\n35,748,622 1,486,141 \r\n169,050,673 257,417,248 \r\n26,510,913 490,213,597 \r\n \r\n266,261,622 \r\n \r\n223,951,975 \r\n \r\n$ \r\n \r\n275,919,811 \r\n \r\nTotal \r\n218,276,509 3,129,536 \r\n29,558,927 (4,182,270) (10,994,865) 235,787,837 \r\n \r\nComponent unit's long-term liabilities are comprised of the following amounts at June 30, 2017: \r\n \r\nBeginning Balance \r\nJuly 1, 2016 \r\n \r\nAdditions \r\n \r\nReductions \r\n \r\nEnding Balance June 30, 2017 \r\n \r\nAmounts due within One Year \r\n \r\nCompensated Absences \r\n \r\n$ \r\n \r\nLease Purchase Obligation (Capital Lease) \r\n \r\nLiabilities under split interest agreement \r\n \r\n16,878,469 $ 38,250,418 \r\n1,302,793 \r\n \r\nNotes and Loans Payable Interest Rate Swap Other Post Employment Benefits Obligation \r\n \r\n46,566,981 30,884,787 \r\n5,274,929 \r\n \r\nRevenue/Mortgage Bonds Payable \r\nUnamortized Issuance and Other Bond Related Costs \r\nBond - Premium \r\n \r\n167,010,000 \r\n(937,116) 3,851,537 \r\n \r\n6,609,853 $ 6,987,756 \r\n702 885,592 \r\n-- 6,256,863 \r\n-- \r\n \r\n4,644,838 $ 15,257,016 \r\n64,355 3,494,450 10,071,993 \r\n-- 5,505,000 \r\n \r\n18,843,484 $ 29,981,158 \r\n1,239,140 43,958,123 20,812,794 11,531,792 161,505,000 \r\n \r\n18,843,484 5,932,665 90,485 6,544,623 -- -- 5,715,000 \r\n \r\n-- \r\n \r\n(41,806) \r\n \r\n(895,310) \r\n \r\n-- \r\n \r\n-- \r\n \r\n313,594 \r\n \r\n3,537,943 \r\n \r\n-- \r\n \r\nTotal Long Term Liabilities \r\n \r\n$ 309,082,798 $ 20,740,766 $ 39,309,440 $ 290,514,124 $ 37,126,257 \r\n \r\n62 Augusta University \r\n \r\n Component unit's capital lease obligations are comprised of the following amounts at June 30, 2017: \r\n \r\nYear ending June 30: 2018 2019 2020 2021 2022 2023 through 2027 2028 through 2032 \r\nTotal minimum lease payments Less: Interest \r\nPrincipal Outstanding \r\n \r\n1 \r\n \r\n$ \r\n \r\n2 \r\n \r\n3 \r\n \r\n4 \r\n \r\n5 \r\n \r\n6-10 \r\n \r\n11-15 \r\n \r\n$ \r\n \r\n7,571,738 7,041,306 6,479,949 5,009,286 3,935,316 5,141,578 \r\n153,870 35,333,043 \r\n5,351,885 29,981,158 \r\n \r\nComponent unit's notes and loans are comprised of the following amounts at June 30, 2017: \r\n \r\nYear ending June 30: 2018 2019 \r\n \r\nPrincipal \r\n \r\n1 \r\n \r\n$ \r\n \r\n2 \r\n \r\n$ \r\n \r\n6,544,623 $ 37,413,500 43,958,123 $ \r\n \r\nInterest \r\n512,038 $ -- \r\n512,038 $ \r\n \r\nComponent unit's bonds payable are comprised of the following amounts at June 30, 2017: \r\n \r\nTotal \r\n7,056,661 37,413,500 44,470,161 \r\n \r\nYear ending June 30: 2018 2019 2020 2021 2022 2023 through 2027 2028 through 2032 2033 through 2037 2038 through 2042 \r\nUnamortized Issuance and Other Bond Related Costs Bond Premium \r\n \r\nPrincipal \r\n \r\nInterest \r\n \r\n1 \r\n \r\n$ \r\n \r\n2 \r\n \r\n3 \r\n \r\n4 \r\n \r\n5 \r\n \r\n6-10 \r\n \r\n11-15 \r\n \r\n16-20 \r\n \r\n21-25 \r\n \r\n$ \r\n \r\n5,715,000 $ 5,945,000 6,190,000 6,405,000 6,650,000 37,195,000 44,335,000 44,760,000 4,310,000 161,505,000 \r\n(895,310) 3,537,943 \r\n164,147,633 $ \r\n \r\n6,366,382 $ 6,112,814 5,871,461 5,613,125 5,332,889 21,963,120 12,545,962 4,407,612 \r\n-- 68,213,365 \r\n-- -- \r\n68,213,365 $ \r\n \r\nTotal \r\n12,081,382 12,057,814 12,061,461 12,018,125 11,982,889 59,158,120 56,880,962 49,167,612 \r\n4,310,000 229,718,365 \r\n(895,310) 3,537,943 \r\n232,360,998 \r\n \r\n2017 Annual Financial Report 63 \r\n \r\n Amounts due to component units related to direct financing lease activity as of June 30, 2017 is as follows: \r\n \r\nYear Ending June 30: 2018 2019 2020 2021 2022 2023 through 2027 2028 through 2032 2033 through 2037 \r\nTotal minimum lease payments to be received Less: Unearned Income Net Investment in Direct Financing Lease \r\n \r\nYear: \r\n \r\n1 \r\n \r\n$ \r\n \r\n2 \r\n \r\n3 \r\n \r\n4 \r\n \r\n5 \r\n \r\n6-10 \r\n \r\n11-15 \r\n \r\n16-20 \r\n \r\n$ \r\n \r\n3,887,916 3,918,012 3,953,260 3,951,870 3,952,459 19,762,136 19,747,303 8,202,657 67,375,613 (16,371,776) 51,003,837 \r\n \r\n64 Augusta University \r\n \r\n  AUGUSTA UNIVERSITY REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CONTRIBUTIONS DEFINED BENEFIT PENSION PLANS FOR THE LAST TEN YEARS \r\n \r\nEarly Retirement Plan \r\nEmployees' Retirement System \r\nTeachers' Retirement System \r\n \r\nYear Ended 6/30/2017 6/30/2016 6/30/2015 6/30/2014 6/30/2013 6/30/2012 6/30/2011 6/30/2010 6/30/2009 6/30/2008 \r\n \r\nActuarially Determined Contribution \r\n(a) \r\n$ 12,107,903 $ 12,760,669 $ 12,996,582 $ 13,045,051 $ 13,055,907 $ 12,861,601 $ 12,973,559 $ 13,050,409 $ 13,225,850 $ 12,996,492 \r\n \r\nContributions in Relation to the \r\nActuarially Determined Contribution \r\n(b) \r\n \r\n$ \r\n \r\n13,084,672 \r\n \r\n$ \r\n \r\n13,084,672 \r\n \r\n$ \r\n \r\n13,084,672 \r\n \r\n$ \r\n \r\n13,084,672 \r\n \r\n$ \r\n \r\n13,225,850 \r\n \r\n$ \r\n \r\n13,225,850 \r\n \r\n$ \r\n \r\n13,225,850 \r\n \r\n$ \r\n \r\n13,225,850 \r\n \r\n$ \r\n \r\n13,225,850 \r\n \r\n$ \r\n \r\n12,996,492 \r\n \r\nContribution Deficiency (Excess) \r\n(a-b) \r\n \r\n$ (976,769) \r\n \r\n$ (324,003) \r\n \r\n$ (88,090) \r\n \r\n$ (39,621) \r\n \r\n$ (169,943) \r\n \r\n$ (364,249) \r\n \r\n$ (252,291) \r\n \r\n$ (175,441) \r\n \r\n$ \r\n \r\n-- \r\n \r\n$ \r\n \r\n-- \r\n \r\nCovered Payroll (c) \r\nN/A N/A N/A N/A N/A N/A N/A N/A N/A N/A \r\n \r\nContributions as a Percentage of Covered Payroll (b/c) \r\nN/A \r\nN/A \r\nN/A \r\nN/A \r\nN/A \r\nN/A \r\nN/A \r\nN/A \r\nN/A \r\nN/A \r\n \r\n6/30/2017 $ 457,473 $ 6/30/2016 $ 178,786 $ 6/30/2015 $ 143,532 $ 6/30/2014 $ 104,806 $ 6/30/2013 $ 89,395 $ 6/30/2012 $ 65,638 $ 6/30/2011 $ 87,040 $ 6/30/2010 $ 94,168 $ 6/30/2009 $ 89,258 $ 6/30/2008 $ 65,531 $ \r\n \r\n457,473 $ 178,786 $ 143,532 $ 104,806 $ \r\n89,395 $ 65,638 $ 87,040 $ 94,168 $ 89,258 $ 65,531 $ \r\n \r\n--$ --$ --$ --$ --$ --$ --$ --$ --$ --$ \r\n \r\n1,845,641 723,246 653,608 567,746 599,617 564,385 836,119 904,592 853,028 625,917 \r\n \r\n24.79% 24.72% 21.96% 18.46% 14.91% 11.63% 10.41% 10.41% 10.46% 10.47% \r\n \r\n6/30/2017 6/30/2016 6/30/2015 6/30/2014 6/30/2013 6/30/2012 6/30/2011 6/30/2010 6/30/2009 6/30/2008 \r\n \r\n$ 27,473,760 $ $ 26,234,649 $ $ 23,837,005 $ $ 21,780,531 $ $ 19,623,178 $ $ 18,166,483 $ $ 17,965,990 $ $ 17,059,127 $ $ 16,179,733 $ $ 15,920,765 $ \r\n \r\n27,473,760 $ 26,234,649 $ 23,837,005 $ 21,780,531 $ 19,623,178 $ 18,166,483 $ 17,965,990 $ 17,059,127 $ 16,179,733 $ 15,920,765 $ \r\n \r\n--$ --$ --$ --$ --$ --$ --$ --$ --$ --$ \r\n \r\n192,528,053 183,847,072 181,274,041 177,368,194 171,985,813 176,716,761 174,766,440 175,145,041 174,350,571 171,559,968 \r\n \r\n14.27% 14.27% 13.15% 12.28% 11.41% 10.28% 10.28% 9.74% 9.28% 9.28% \r\n \r\n66 Augusta University \r\n \r\n AUGUSTA UNIVERSITY REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY MULTIPLE EMPLOYER DEFINED BENEFIT PENSION PLANS FOR THE LAST THREE FISCAL YEARS* \r\n \r\nEmployees' Retirement System \r\n \r\nYear Ended 6/30/2017 6/30/2016 6/30/2015 \r\n \r\nTeachers Retirement System \r\n \r\n6/30/2017 6/30/2016 6/30/2015 \r\n \r\nProportion of the Net Pension Liability \r\n \r\nProportionate Share of \r\nthe Net Pension Liability \r\n \r\n0.03% $ \r\n \r\n1,471,444 $ \r\n \r\n0.03% $ \r\n \r\n1,102,710 $ \r\n \r\n0.03% $ \r\n \r\n945,681 $ \r\n \r\nCovered Payroll \r\n723,246 \r\n653,608 \r\n567,746 \r\n \r\nProportionate Share \r\nof the Net Pension Liability as a Percentage of \r\nCovered Payroll \r\n \r\nPlan Fiduciary Net Position as a \r\nPercentage of the Total Pension Liability \r\n \r\n203.45% \r\n \r\n72.34% \r\n \r\n168.71% \r\n \r\n76.20% \r\n \r\n166.57% \r\n \r\n77.99% \r\n \r\n1.68% $ 1.71% $ 1.74% $ \r\n \r\n345,692,075 $ 261,344,743 $ 219,614,941 $ \r\n \r\n183,847,072 181,274,041 177,368,194 \r\n \r\n188.03% 144.17% 123.82% \r\n \r\n76.06% 81.44% 84.03% \r\n \r\n*This schedule is intended to show information for 10 years. Additional years will be displayed as they become available. 2017 Annual Financial Report 67 \r\n \r\n AUGUSTA UNIVERSITY REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF EMPLOYERS' AND NONEMPLOYERS' NET PENSION LIABILITY EARLY RETIREMENT PLAN - AUGUSTA UNIVERSITY SINGLE EMPLOYER DEFINED BENEFIT PENSION PLAN FOR THE LAST FOUR FISCAL YEARS* (Dollar amounts in millions) \r\n \r\nTotal Pension Liability Plan Fiduciary Net Position \r\nNet Pension Liability Plan Fiduciary Net Position as a Percentage of the Total Pension Liability Covered Payroll Employers' and Nonemployers' Net Pension Liability as a Percentage of \r\nCovered Payroll \r\n \r\n2017 \r\n \r\n2016 \r\n \r\n2015 \r\n \r\n2014 \r\n \r\n$ 149.2 $ 151.8 $ 143.8 $ 145.4 \r\n \r\n(90.4) \r\n \r\n(80.3) \r\n \r\n(79.1) \r\n \r\n(76.2) \r\n \r\n$ 58.8 $ 71.5 $ 64.7 $ 69.2 \r\n \r\n60.6% \r\n \r\n52.9% \r\n \r\n55.0% \r\n \r\n52.4% \r\n \r\n--% \r\n \r\n--% \r\n \r\n--% \r\n \r\n--% \r\n \r\nN/A \r\n \r\nN/A \r\n \r\nN/A \r\n \r\nN/A \r\n \r\n* This schedule is intended to show information for 10 years. Additional years will be displayed as they become available. 2017 Annual Financial Report 68 \r\n \r\n AUGUSTA UNIVERSITY REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN NET PENSION LIABILITY EARLY RETIREMENT PLAN - AUGUSTA UNIVERSITY SINGLE EMPLOYER DEFINED BENEFIT PENSION PLAN FOR THE LAST FOUR FISCAL YEARS* (Dollar amounts in millions) \r\n \r\nTotal Pension Liability Interest Differences Between Expected and Actual Experience Changes of Assumptions Benefit Payments/Refunds \r\nNet Change in Total Pension Liability Total Pension Liability - Beginning \r\nTotal Pension Liability - Ending (a) \r\nPlan Fiduciary Net Position Contributions - Employer Net Investment Income Benefit Payments/Refunds \r\nNet Change in Plan Fiduciary Net Position Plan Fiduciary Net Position - Beginning \r\nPlan Fiduciary Net Position - Ending (b) \r\nNet Pension Liability Ending (a - b) \r\n \r\n2017 \r\n \r\n2016 \r\n \r\n2015 \r\n \r\n2014 \r\n \r\n$ \r\n \r\n10.9 $ \r\n \r\n10.3 $ \r\n \r\n10.4 $ \r\n \r\n10.6 \r\n \r\n0.1 \r\n \r\n1.3 \r\n \r\n1.3 \r\n \r\n(0.1) \r\n \r\n9.9 \r\n \r\n(13.6) \r\n \r\n(13.5) \r\n \r\n(13.3) \r\n \r\n(13.1) \r\n \r\n(2.6) 151.8 \r\n \r\n8 143.8 \r\n \r\n(1.6) 145.4 \r\n \r\n(2.6) 148 \r\n \r\n$ \r\n \r\n149.2 $ \r\n \r\n151.8 $ \r\n \r\n143.8 $ \r\n \r\n145.4 \r\n \r\n$ \r\n \r\n13.1 $ \r\n \r\n13.1 $ \r\n \r\n13.1 $ \r\n \r\n13.1 \r\n \r\n10.6 \r\n \r\n1.6 \r\n \r\n3.1 \r\n \r\n11.8 \r\n \r\n(13.6) \r\n \r\n(13.5) \r\n \r\n(13.3) \r\n \r\n(13.1) \r\n \r\n10.1 \r\n \r\n1.2 \r\n \r\n2.9 \r\n \r\n11.8 \r\n \r\n80.3 \r\n \r\n79.1 \r\n \r\n76.2 \r\n \r\n64.4 \r\n \r\n$ \r\n \r\n90.4 $ \r\n \r\n80.3 $ \r\n \r\n79.1 $ \r\n \r\n76.2 \r\n \r\n$ \r\n \r\n58.8 $ \r\n \r\n71.5 $ \r\n \r\n64.7 $ \r\n \r\n69.2 \r\n \r\n* This schedule is intended to show information for 10 years. Additional years will be displayed as they become available. 2017 Annual Financial Report 69 \r\n \r\n AUGUSTA UNIVERSITY REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF INVESTMENT RETURNS EARLY RETIREMENT PLAN - AUGUSTA UNIVERSITY SINGLE EMPLOYER DEFINED BENEFIT PENSION PLAN FOR THE LAST FOUR FISCAL YEARS* \r\nAnnual Money-Weighted Rate of Return, Net of Investment Expense \r\n \r\n2017 13.39% \r\n \r\n2016 2.02% \r\n \r\n2015 4.13% \r\n \r\n2014 18.35% \r\n \r\n* This schedule is intended to show information for 10 years. Additional years will be displayed as they become available. 2017 Annual Financial Report 70 \r\n \r\n AUGUSTA UNIVERSITY REQUIRED SUPPLEMENTARY INFORMATION NOTES TO THE REQUIRED SUPPLEMENTAL INFORMATION DEFINED BENEFIT PENSION PLANS METHODS AND ASSUMPTIONS FOR FISCAL YEAR ENDED JUNE 30, 2017 \r\nChanges of Assumptions Early Retirement Plan: The expectation of retired life mortality was changed effective June 30, 2016 to the RP-2014 Mortality Table rather than the RP-2000 Mortality Table used previously. Mortality rates were adjusted to better recognize current and future mortality improvements. Employees' Retirement System: On December 17, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement, disability, withdrawal and salary increases. Teachers Retirement System: In 2010 and later, the expectation of retired life mortality was changed to the RP 2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience. In 2010, assumed rates of salary increase were adjusted to more closely reflect actual and anticipated experience. On November 18, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement, disability, withdrawal and salary increases. The expectation of retired life mortality was changed to RP 2000 White Collar Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB (set forward one year for males). \r\n2017 Annual Financial Report 71 \r\n \r\n  AUGUSTA UNIVERSITY BALANCE SHEET (NON-GAAP BASIS) BUDGET FUNDS JUNE 30. 2017 (UNAUDITED) \r\n \r\nASSETS Investments Accounts Receivable \r\nFederal Financial Assistance Other Prepaid Expenditures Inventories \r\nTotal Assets \r\nLIABILITIES AND FUND EQUITY Liabilities \r\nCash Overdraft Accrued Payroll Encumbrance Payable Accounts Payable Unearned Revenue \r\nTotal Liabilities \r\nFund Balances Reserved Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Inventories Tuition Carry - Forward Carry-Over \"Per Governor's Office of Planning and Budget\" Unreserved Surplus \r\nTotal Fund Balances \r\nTotal Liabilities and Fund Balances \r\n \r\n$ \r\n \r\n76,596,750.91 \r\n \r\n6,773,709.24 69,749,337.22 \r\n637,005.42 140,435.25 \r\n \r\n$ \r\n \r\n153,897,238.04 \r\n \r\n$ \r\n \r\n3,919,634.22 \r\n \r\n3,038,330.26 \r\n \r\n17,117,851.61 \r\n \r\n2,006,748.41 \r\n \r\n48,104,692.44 \r\n \r\n74,187,256.94 \r\n \r\n5,236,606.99 27,153,934.15 \r\n102,721.78 41,582,045.46 \r\n324,865.53 144,616.30 2,400,337.05 2,700,782.22 \r\n \r\n64,071.62 \r\n \r\n79,709,981.10 \r\n \r\n$ \r\n \r\n153,897,238.04 \r\n \r\nActual amounts were prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework. \r\n \r\n2017 Annual Financial Report 73 \r\n \r\n AUGUSTA UNIVERSITY SUMMARY BUDGET COMPARISON AND SURPLUS ANALYIS REPORT (NON-GAAP BASIS) BUDGET FUNDS FOR FISCAL YEAR ENDED JUNE 30. 2017 \r\n \r\nREVENUES State Appropriations Other Funds \r\nTotal Revenue \r\n \r\nFINAL BUDGET \r\n \r\n$ \r\n \r\n199,176,690.00 $ \r\n \r\n780,075,435.00 \r\n \r\n979,252,125.00 \r\n \r\nCARRY-OVER FROM PRIOR YEARS Transfers from Reserved Fund Balance \r\n \r\n7,322,608.00 \r\n \r\nTotal Funds Available \r\n \r\n986,574,733.00 \r\n \r\nEXPENDITURES Public Service/Special Funding Initiative Teaching \r\nTotal Expenditures \r\n \r\n23,131,617.00 963,443,116.00 986,574,733.00 \r\n \r\nExcess of Funds Available over Expenditures \r\n \r\n$ \r\n \r\n-- \r\n \r\nFUND BALANCE JULY 1 Reserved Unreserved \r\n \r\nADJUSTMENTS Prior Year Payables/Expenditures Year Ended June 30, 2016 Prior Year Reserved Fund Balance Included in Funds Available \r\n \r\nENDING FUND BALANCE JUNE 30 \r\n \r\n$ \r\n \r\nSUMMARY OF FUND BALANCE \r\n \r\nReserved \r\n \r\nDepartment Sales and Services \r\n \r\n$ \r\n \r\nIndirect Cost Recovery \r\n \r\nInventories \r\n \r\nTechnology Fees \r\n \r\nRestricted/Sponsored Funds \r\n \r\nUncollectible Accounts Receivable \r\n \r\nTuition Carry - Forward \r\n \r\nCarry-Over \"Per Governor's Office of Planning and Budget\" \r\n \r\nTotal Reserved \r\n \r\nUnreserved \r\n \r\nSurplus \r\n \r\nTotal Fund Balance \r\n \r\n$ \r\n \r\nACTUAL \r\n \r\nVARIANCE \r\n \r\n199,176,690.00 $ 633,367,090.58 832,543,780.58 \r\n \r\n-- (146,708,344.42) (146,708,344.42) \r\n \r\n64,579,508.42 897,123,289.00 \r\n \r\n57,256,900.42 (89,451,444.00) \r\n \r\n20,430,832.97 797,483,079.89 817,913,912.86 \r\n79,209,376.14 $ \r\n \r\n2,700,784.03 165,960,036.11 168,660,820.14 \r\n79,209,376.14 \r\n \r\n65,020,216.94 44,166.59 \r\n \r\n59,896.44 (44,166.59) (64,579,508.42) \r\n79,709,981.10 \r\n \r\n5,236,606.99 27,153,934.15 \r\n144,616.30 102,721.78 41,582,045.46 324,865.53 2,400,337.05 2,700,782.22 79,645,909.48 \r\n64,071.62 \r\n79,709,981.10 \r\n \r\nActual amounts were prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework. \r\n \r\n74 Augusta University \r\n \r\n AUGUSTA UNIVERSITY STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BY PROGRAM AND FUNDING SOURCE BUDGET FUND FOR THE FISCAL YEAR ENDED JUNE 30. 2017 \r\n \r\nPublic Service / Special Funding Initiatives State Appropriation State General Funds State Funds - Prior Year Cary-Over State General Funds - Prior Year \r\n \r\nOriginal Appropriation \r\n \r\nAmended Appropriation \r\n \r\nFinal Budget \r\n \r\nFunds Available Compared to Budget \r\n \r\nCurrent Year Revenues \r\n \r\nPrior Year Reserve Carry-Over \r\n \r\n$ 13,699,009.00 $ 13,699,009.00 $ 15,809,009.00 $ 15,809,009.00 $ \r\n \r\n-- \r\n \r\n-- \r\n \r\n-- \r\n \r\n7,322,608.00 \r\n \r\n-- \r\n \r\n7,322,608.45 \r\n \r\nTotal Public Service / Special Funding Initiatives \r\n \r\n13,699,009.00 \r\n \r\n13,699,009.00 \r\n \r\n23,131,617.00 \r\n \r\n15,809,009.00 \r\n \r\n7,322,608.45 \r\n \r\nTeaching State Appropriation State General Funds Other Funds \r\n \r\n189,237,117.00 593,660,580.00 \r\n \r\n189,237,117.00 593,660,580.00 \r\n \r\n183,367,681.00 780,075,435.00 \r\n \r\n183,367,681.00 633,367,090.58 \r\n \r\n-- 57,256,899.97 \r\n \r\nTotal Teaching \r\n \r\n782,897,697.00 \r\n \r\n782,897,697.00 \r\n \r\n963,443,116.00 \r\n \r\n816,734,771.58 \r\n \r\n57,256,899.97 \r\n \r\nTotal Operating Activity \r\n \r\n$ 796,596,706.00 $ 796,596,706.00 $ 986,574,733.00 $ 832,543,780.58 $ 64,579,508.42 \r\n \r\nActual amounts were prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework. \r\n2017 Annual Financial Report 75 \r\n \r\n AUGUSTA UNIVERSITY STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BY PROGRAM AND FUNDING SOURCE BUDGET FUND FOR THE FISCAL YEAR ENDED JUNE 30. 2017 \r\n \r\nPublic Service / Special Funding Initiatives State Appropriation State General Funds State Funds - Prior Year Cary-Over State General Funds - Prior Year \r\n \r\nFunds Available Compared to Budget \r\n \r\nProgram Transfers or Adjustments \r\n \r\nTotal Funds Available \r\n \r\nVariance Negative \r\n \r\nExpenditures Compared to Budget \r\n \r\nActual \r\n \r\nVariance Positive \r\n \r\nExcess of Funds Available \r\nOver Expenditures \r\n \r\n$ \r\n \r\n-- $ 15,809,009.00 $ \r\n \r\n-- $ 15,809,006.74 $ \r\n \r\n2.26 $ \r\n \r\n2.26 \r\n \r\n-- \r\n \r\n7,322,608.45 \r\n \r\n0.45 \r\n \r\n4,621,826.23 \r\n \r\n2,700,781.77 \r\n \r\n2,700,782.22 \r\n \r\nTotal Public Service / Special Funding Initiatives \r\n \r\n-- \r\n \r\n23,131,617.45 \r\n \r\n0.45 \r\n \r\n20,430,832.97 \r\n \r\n2,700,784.03 \r\n \r\n2,700,784.48 \r\n \r\nTeaching State Appropriation State General Funds Other Funds \r\n \r\n-- \r\n \r\n183,367,681.00 \r\n \r\n-- \r\n \r\n690,623,990.55 \r\n \r\n-- (89,451,444.45) \r\n \r\n183,367,681.00 614,115,398.89 \r\n \r\n-- 165,960,036.11 \r\n \r\n-- 76,508,591.66 \r\n \r\nTotal Teaching \r\n \r\n-- \r\n \r\n873,991,671.55 \r\n \r\n(89,451,444.45) \r\n \r\n797,483,079.89 \r\n \r\n165,960,036.11 \r\n \r\n76,508,591.66 \r\n \r\nTotal Operating Activity \r\n \r\n$ \r\n \r\n-- $ 897,123,289.00 $ (89,451,444.00) $ 817,913,912.86 $ 168,660,820.14 $ 79,209,376.14 \r\n \r\nActual amounts were prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework. \r\n76 Augusta University \r\n \r\n AUGUSTA UNIVERSITY STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE BUDGET FUND FOR THE FISCAL YEAR ENDED JUNE 30. 2017 \r\nPublic Service / Special Funding Initiatives State Appropriation State General Funds State Funds - Prior Year Cary-Over State General Funds - Prior Year \r\nTotal Public Service / Special Funding Initiatives \r\nTeaching State Appropriation State General Funds Other Funds \r\nTotal Teaching \r\nTotal Operating Activity \r\nPrior Year Reserves Not Available for Expenditure Inventories Uncollectible Accounts Receivable \r\nBudget Unit Totals \r\n \r\nBeginning Fund Balance \r\n \r\nFund Balance Carried Over from \r\nPrior Year as Funds Available \r\n \r\nReturn of Fiscal Year 2016 \r\nSurplus \r\n \r\nPrior Year Adjustments \r\n \r\nOther Adjustments \r\n \r\n$ \r\n \r\n--$ \r\n \r\n--$ \r\n \r\n--$ \r\n \r\n--$ \r\n \r\n-- \r\n \r\n7,323,210.05 \r\n \r\n(7,322,608.45) \r\n \r\n(601.60) \r\n \r\n16,845.07 \r\n \r\n-- \r\n \r\n7,323,210.05 \r\n \r\n(7,322,608.45) \r\n \r\n(601.60) \r\n \r\n16,845.07 \r\n \r\n-- \r\n \r\n41,494.06 57,258,970.90 \r\n57,300,464.96 \r\n64,623,675.01 \r\n \r\n-- (57,256,899.97) \r\n(57,256,899.97) \r\n(64,579,508.42) \r\n \r\n(41,494.06) (2,070.93) \r\n(43,564.99) \r\n(44,166.59) \r\n \r\n33,194.13 9,857.24 \r\n43,051.37 \r\n59,896.44 \r\n \r\n4,134.91 (32,908.22) \r\n(28,773.31) \r\n(28,773.31) \r\n \r\n148,751.21 291,957.31 \r\n$ 65,064,383.53 $ (64,579,508.42) $ \r\n \r\n(44,166.59) $ \r\n \r\n59,896.44 $ \r\n \r\n(4,134.91) 32,908.22 \r\n-- \r\n \r\nActual amounts were prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework. \r\n2017 Annual Financial Report 77 \r\n \r\n AUGUSTA UNIVERSITY STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE BUDGET FUND FOR THE FISCAL YEAR ENDED JUNE 30. 2017 \r\n \r\nPublic Service / Special Funding Initiatives State Appropriation State General Funds State Funds - Prior Year Cary-Over State General Funds - Prior Year \r\n \r\nEarly Return of Fiscal Year 2017 \r\nSurplus \r\n \r\nExcess of Funds Available \r\nOver Expenditures \r\n \r\nEnding Fund Balance \r\n \r\nAnalysis of Ending Fund Balance \r\n \r\nReserved \r\n \r\nSurplus \r\n \r\nTotal \r\n \r\n$ \r\n \r\n--$ \r\n \r\n2.26 $ \r\n \r\n2.26 $ \r\n \r\n--$ \r\n \r\n2.26 $ \r\n \r\n2.26 \r\n \r\n-- \r\n \r\n2,700,782.22 \r\n \r\n2,717,627.29 \r\n \r\n2,700,782.22 \r\n \r\n16,845.07 \r\n \r\n2,717,627.29 \r\n \r\nTotal Public Service / Special Funding Initiatives \r\n \r\n-- \r\n \r\n2,700,784.48 \r\n \r\n2,717,629.55 \r\n \r\n2,700,782.22 \r\n \r\n16,847.33 \r\n \r\n2,717,629.55 \r\n \r\nTeaching State Appropriation State General Funds Other Funds \r\n \r\n-- \r\n \r\n-- \r\n \r\n37,329.04 \r\n \r\n-- \r\n \r\n-- \r\n \r\n76,508,591.66 \r\n \r\n76,485,540.68 \r\n \r\n76,475,645.43 \r\n \r\n37,329.04 9,895.25 \r\n \r\n37,329.04 76,485,540.68 \r\n \r\nTotal Teaching \r\n \r\n-- \r\n \r\n76,508,591.66 \r\n \r\n76,522,869.72 \r\n \r\n76,475,645.43 \r\n \r\n47,224.29 \r\n \r\n76,522,869.72 \r\n \r\nTotal Operating Activity \r\n \r\n-- \r\n \r\n79,209,376.14 \r\n \r\n79,240,499.27 \r\n \r\n79,176,427.65 \r\n \r\n64,071.62 \r\n \r\n79,240,499.27 \r\n \r\nPrior Year Reserves Not Available for Expenditure Inventories Uncollectible Accounts Receivable \r\n \r\n144,616.30 324,865.53 \r\n \r\n144,616.30 324,865.53 \r\n \r\n144,616.30 324,865.53 \r\n \r\nBudget Unit Totals \r\n \r\n$ \r\n \r\n-- $ 79,209,376.14 $ 79,709,981.10 $ 79,645,909.48 $ \r\n \r\n64,071.62 $ 79,709,981.10 \r\n \r\nDepartmental Sales and Services Indirect Cost Recovery Technology Fees Restricted/Sponsored Funds Carry-Over \"Per Governor's Office of Planning and Budget\" Tuition Carry-Forward Uncollectible Accounts Receivable Inventories Surplus \r\n \r\nReserved \r\n \r\n$ \r\n \r\n5,236,606.99 $ \r\n \r\n27,153,934.15 \r\n \r\n102,721.78 \r\n \r\n41,582,045.46 \r\n \r\nSurplus \r\n \r\n--$ -- -- -- \r\n \r\nTotal 5,236,606.99 27,153,934.15 \r\n102,721.78 41,582,045.46 \r\n \r\n2,700,782.22 2,400,337.05 \r\n324,865.53 144,616.30 \r\n-- \r\n \r\n-- -- -- -- 64,071.62 \r\n \r\n2,700,782.22 2,400,337.05 \r\n324,865.53 144,616.30 \r\n64,071.62 \r\n \r\n$ 79,645,909.48 $ \r\n \r\n64,071.62 $ 79,709,981.10 \r\n \r\nActual amounts were prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework. \r\n78 Augusta University \r\n \r\n   "},{"id":"dlg_ggpd_s-ga-ba800-b-pr1-bm42-b2016-belec-p-btext","title":"Augusta University annual financial report, 2016 June 30","collection_id":"dlg_ggpd","collection_title":"Georgia Government Publications","dcterms_contributor":["Georgia. Department of Audits and Accounts, issuing body."],"dcterms_spatial":["United States, Georgia, 32.75042, -83.50018"],"dcterms_creator":["Georgia. Department of Audits and Accounts"],"dc_date":["2016-06-30"],"dcterms_description":["Began with: Fiscal year ended June 30, 2016, issued 2017?; ceased with fiscal year 2021?","In Georgia Government Publications database, for fiscal year ending June 30, 2017-, a briefer report on the audit called: Augusta University, Augusta, Georgia, report on audit for fiscal year ended ... or: Report on audit ... Augusta University, Augusta, Georgia is classed with this title.","In Georgia Government Publications database, briefer report on audit only appears for fiscal year ended June 30, 2018-","Augusta University named prominently on some issues, but Georgia. Department of Audits and Accounts appears to be responsible for creating and issuing the serial.","Fiscal year ended June 30, 2016 (received via FTP on January 31, 2018 from Georgia Department of Audits and Accounts); title from PDF cover (Georgia Government Publications database, viewed July 21, 2020).","Fiscal year 2023 (Georgia Government Publications database, viewed January 9, 2025)."],"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":["Atlanta, Ga. : Georgia. Department of Audits and Accounts"],"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/InC/1.0/"],"dcterms_is_part_of":null,"dcterms_subject":["Augusta University--Appropriations and expenditures--Periodicals.","Augusta University","Education, Higher--Georgia--Auditing--Periodicals.","Education, Higher--Georgia--Finance--Statistics--Periodicals.","Education--Auditing","Expenditures, Public","Georgia","Georgia Government Documents--Serial"],"dcterms_title":["Augusta University annual financial report, 2016 June 30"],"dcterms_type":["Text"],"dcterms_provenance":["University of Georgia. Map and Government Information Library"],"edm_is_shown_by":["https://dlg.galileo.usg.edu/do:dlg_ggpd_s-ga-ba800-b-pr1-bm42-b2016-belec-p-btext"],"edm_is_shown_at":["https://dlg.galileo.usg.edu/id:dlg_ggpd_s-ga-ba800-b-pr1-bm42-b2016-belec-p-btext"],"dcterms_temporal":null,"dcterms_rights_holder":null,"dcterms_bibliographic_citation":null,"dlg_local_right":null,"dcterms_medium":["reports"],"dcterms_extent":null,"dlg_subject_personal":null,"iiif_manifest_url_ss":null,"dcterms_subject_fast":null,"fulltext":"AUGUSTA UNIVERSITY \r\nAnnual Financial Report Fiscal Year Ended June 30, 2016 \r\nAugusta, Georgia \r\n \r\n AUGUSTA UNIVERSITY - TABLE OF CONTENTS - \r\n \r\nPage \r\n \r\nSECTION I \r\n \r\nFINANCIAL \r\n \r\nINDEPENDENT AUDITOR'S REPORT \r\n \r\nREQUIRED SUPPLEMENTARY INFORMATION \r\n \r\nMANAGEMENT'S DISCUSSION AND ANALYSIS \r\n \r\ni \r\n \r\nBASIC FINANCIAL STATEMENTS \r\n \r\nEXHIBITS \r\n \r\nA STATEMENT OF NET POSITION \r\n \r\n2 \r\n \r\nB STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION \r\n \r\n4 \r\n \r\nC STATEMENT OF CASH FLOWS \r\n \r\n6 \r\n \r\nD STATEMENT OF FIDUCIARY NET POSITION \r\n \r\nFIDUCIARY FUNDS \r\n \r\n7 \r\n \r\nE STATEMENT OF CHANGES IN FIDUCIARY NET POSITION \r\n \r\nFIDUCIARY FUNDS \r\n \r\n8 \r\n \r\nF NOTES TO THE FINANCIAL STATEMENTS \r\n \r\n9 \r\n \r\nREQUIRED SUPPLEMENTARY INFORMATION \r\n \r\nSCHEDULES \r\n \r\n1 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY \r\n \r\nTEACHERS RETIREMENT SYSTEM OF GEORGIA \r\n \r\n57 \r\n \r\n2 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY \r\n \r\nEMPLOYEES' RETIREMENT SYSTEM OF GEORGIA \r\n \r\n58 \r\n \r\n3 SCHEDULE OF CONTRIBUTIONS  TEACHERS RETIREMENT SYSTEM OF GEORGIA \r\n \r\n59 \r\n \r\n4 SCHEDULE OF CONTRIBUTIONS  EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 60 \r\n \r\n5 SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS \r\n \r\nEARLY RETIREMENT PLAN \r\n \r\n61 \r\n \r\n6 SCHEDULE OF CONTRIBUTIONS  EARLY RETIREMENT PLAN \r\n \r\n62 \r\n \r\n7 SCHEDULE OF INVESTMENT RETURNS  EARLY RETIREMENT PLAN \r\n \r\n63 \r\n \r\n8 NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION \r\n \r\n64 \r\n \r\n (This page left intentionally blank) \r\n \r\n AUGUSTA UNIVERSITY - TABLE OF CONTENTS - \r\n \r\nSECTION I \r\nFINANCIAL \r\nSUPPLEMENTARY INFORMATION \r\nSCHEDULES \r\n9 BALANCE SHEET (NON-GAAP BASIS) BUDGET FUND 10 SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT \r\n(NON-GAAP BASIS) BUDGET FUND 11 STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET \r\nBY PROGRAM AND FUNDING SOURCE (NON-GAAP BASIS) BUDGET FUND \r\n12 STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE (NON-GAAP BASIS) BUDGET FUND \r\n \r\nPage \r\n67 68 70 72 \r\n \r\nSECTION II \r\nCOMPLIANCE AND INTERNAL CONTROL REPORTS \r\nINDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS \r\n \r\nSECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\nSECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\n \r\n (This page left intentionally blank) \r\n \r\n SECTION I FINANCIAL \r\n \r\n (This page left intentionally blank) \r\n \r\n Greg S. Griffin \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 \r\n \r\nAugust 7, 2017 \r\nHonorable Nathan Deal, Governor Members of the General Assembly of Georgia Members of the Board of Regents of the University System of Georgia \r\nand Dr. Brooks Keel, President Augusta University \r\n \r\nINDEPENDENT AUDITOR'S REPORT \r\nLadies and Gentlemen: \r\nReport on the Financial Statements \r\nWe have audited the accompanying financial statements of the business-type activities, the aggregate remaining fund information and the aggregate discretely presented component units of Augusta University (Institution), a unit of the University System of Georgia, which is an organizational unit of the State of Georgia, as of and for the year ended June 30, 2016 and the related notes to the financial statements, which comprise the Institution's basic financial statements as listed in the tables of contents. \r\nManagement's Responsibility for the Financial Statements \r\nManagement is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. \r\nAuditor's Responsibility \r\nOur responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the aggregate discretely presented component units. Those statements were audited by other auditors whose report has been furnished to us, and our opinions, insofar as it relates to the amounts included for the aggregate discretely presented component units are based solely on the reports of the other auditors. \r\nWe conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements \r\n \r\n (This page left intentionally blank) \r\n \r\n are free from material misstatement. The financial statements of the Medical College of Georgia Physicians Practice Group Foundation (d/b/a AU Medical Associates) and Subsidiaries and the Medical College of Georgia Foundation, Inc. were not audited in accordance with Government Auditing Standards \r\nAn audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to Augusta University's preparation and fair presentation of the 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 Augusta University'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 financial statements. \r\nWe believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. \r\nOpinions \r\nIn our opinion, based on our audit and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities, the aggregate remaining fund information and the aggregate discretely presented component units of Augusta University as of June 30, 2016, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. \r\nEmphasis of Matter \r\nAs discussed in Note 1, the financial statements of Augusta University are intended to present the financial position, changes in financial position and, where applicable, cash flows of only that portion of the financial reporting entity of the State of Georgia that is attributable to the transactions of Augusta University. They do not purport to, and do not, present fairly the financial position of the State of Georgia as of June 30, 2016, the changes in its financial position or its cash flows for the year then ended, in accordance with accounting principles generally accepted in the United States of America. Our opinions are not modified with respect to this matter. \r\nAs described in Note 1 to the financial statements, in 2016, Augusta University adopted new accounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 72, Fair Value Measurement and Application. Our opinions are not modified with respect to this matter. \r\nAs discussed in Note 1 to the financial statements, the prior period financial statements have been restated due to a re-evaluation of capital lease agreements. Our opinions are not modified with respect to this matter. \r\nOther Matters \r\nRequired Supplementary Information \r\nAccounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis on pages i through vii and the Schedules of Proportionate Share of the Net Pension Liability, Schedules of Contributions to Retirement Systems and the Notes \r\n \r\n (This page left intentionally blank) \r\n \r\n to the Required Supplemental Information on pages 57 through 64 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. \r\nWe and other auditors have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquires of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. \r\nOther Information \r\nOur audit was conducted for the purpose of forming opinions on the basic financial statements of Augusta University. The accompanying supplementary information (Schedules 9 through 12) is presented for purposes of additional analysis and is not a required part of the basic financial statements. \r\nThe accompanying supplementary information (Schedules 9 through 12) is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting or other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America by us and other auditors. In our opinion, based on our audit, the procedures performed as described above, and the report of the other auditors, the information is fairly stated in all material respects in relation to the basic financial statements taken as a whole. \r\nOther Reporting Required by Government Auditing Standards \r\nIn accordance with Government Auditing Standards, we have also issued our report dated August 7, 2017, on our consideration of Augusta 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 Augusta University's internal control over financial reporting and compliance. \r\nRespectfully, \r\nGreg S. Griffin State Auditor \r\n \r\n (This page left intentionally blank) \r\n \r\n REQUIRED SUPPLEMENTARY INFORMATION \r\n \r\n (This page left intentionally blank) \r\n \r\n AUGUSTA UNIVERSITY \r\nManagement's Discussion and Analysis \r\nIntroduction \r\nLocated in Augusta, Georgia, Augusta University is a public research university and medical center dedicated to training the next generation of innovators, leaders, and health care providers. The Institution is one of the 29 institutions of higher education of the University System of Georgia. \r\nHome to three campuses in Augusta and various satellite locations across Georgia, Augusta University is at the forefront of groundbreaking research focused on improving and enriching the human experience. \r\nOffering undergraduate programs in the liberal arts and sciences, business and education, as well as a full range of graduate programs and hands-on clinical research opportunities, Augusta University is Georgia's innovation center for education and health care. \r\nThe combination of nationally ranked business and nursing schools as well as the state's flagship public medical school and only dental school, makes Augusta University a destination of choice for the students of today and leaders of tomorrow. \r\nA brief historical comparison of student levels is shown by the comparison numbers that follow. \r\nStudents Students (Headcount) (FTE) \r\n \r\nFiscal Year 2016 Fiscal Year 2015 Fiscal Year 2014 \r\n \r\n8,333 8,530 8,995 \r\n \r\n7,749 7,901 8,280 \r\n \r\nOverview of the Financial Statements and Financial Analysis \r\nAugusta University is pleased to present its financial statements for fiscal year 2016. The emphasis of discussions about these statements will be on current year data. There are three financial statements presented: the Statement of Net Position; the Statement of Revenues, Expenses, and Changes in Net Position; and the Statement of Cash Flows. This discussion and analysis of the Institution's financial statements provides an overview of its financial activities for the year. Comparative data is provided for fiscal year 2016 and fiscal year 2015. However, the comparative data for fiscal year 2015 does not reflect the restatement of July 1, 2015 net position. See Note 1 in the Notes to the Financial Statements for more information about the restatement. \r\n \r\nStatement of Net Position \r\nThe Statement of Net Position is a financial condition snapshot as of June 30, 2016 and includes all assets, deferred outflows of resources, liabilities, and deferred inflows of resources, both current and noncurrent. The differences between current and non-current assets are discussed in the Notes to the Financial Statements. The Statement of Net Position is prepared under the accrual basis of accounting which requires revenue and asset recognition when the service is provided, and expense and liability recognition when goods or services are received despite when cash is actually exchanged. \r\n \r\ni \r\n \r\n From the data presented, readers of the Statement of Net Position are able to determine the assets available to continue the operations of the Institution and how much the Institution owes vendors. The difference between assets, deferred outflows of resources, liabilities, and deferred inflows of resources (net position) is one indicator of the Institution's financial health. Increases or decreases in net position provide an indicator of the improvement or decline of the Institution's financial health when considered in conjunction with other non-financial conditions, such as facilities and enrollment. Net position is divided into three major categories. \r\nThe first category is the net investment in capital assets. It provides the Institution's equity in property, plant, and equipment owned by the Institution. \r\nThe next category is restricted, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable, restricted resources is available only for investment purposes. Expendable, restricted resources are available for expenditure by the Institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. \r\nThe final category is unrestricted. Unrestricted resources are available to the Institution for any lawful purpose. \r\nStatement of Net Position, Condensed \r\n \r\nJune 30, 2016 \r\n \r\nJune 30, 2015 (1) \r\n \r\nAssets Current Assets Capital Assets, Net Other Assets \r\nTotal Assets \r\n \r\n$ 105,894,122 534,921,000 78,086,444 \r\n718,901,566 \r\n \r\n$ \r\n \r\n92,443,689 \r\n \r\n534,422,694 \r\n \r\n82,218,343 \r\n \r\n709,084,726 \r\n \r\nDeferred Outflows of Resources \r\n \r\n37,714,705 \r\n \r\n30,262,748 \r\n \r\nLiabilities Current Liabilities Noncurrent Liabilities \r\n \r\n111,401,169 405,488,965 \r\n \r\n99,045,594 353,681,320 \r\n \r\nTotal Liabilities \r\n \r\n516,890,134 \r\n \r\n452,726,914 \r\n \r\nDeferred Inflows of Resources \r\n \r\n28,307,989 \r\n \r\n76,793,236 \r\n \r\nNet Position Net Investment in Capital Assets Restricted Nonexpendable Expendable Unrestricted (Deficit) \r\n \r\n477,493,762 \r\n2,172,437 30,446,100 -298,694,151 \r\n \r\n480,176,661 \r\n2,146,676 40,599,863 -313,095,876 \r\n \r\nTotal Net Position \r\n \r\n$ 211,418,148 \r\n \r\n$ 209,827,324 \r\n \r\n(1) The June 30, 2015 amounts do not reflect the effects of the restatement of July 1, 2015 net position. See Note 1 in the Notes to the Financial Statement for more information. \r\n \r\nii \r\n \r\n Total assets and deferred outflows of resources increased by $17,268,797 which was primarily due to an increase of $13,450,433 in the category of Current Assets. This increase was primarily due to an increase in the Other Receivable category. \r\nTotal liabilities and deferred inflows of resources increased for the year by $15,677,973. The combination of the increase in total assets and deferred outflows of resources and the increase in total liabilities and deferred inflows of resources yielded an increase in net position of $1,590,824. The increase in net position is primarily in the category of Unrestricted in the amount of $14,401,725. \r\nStatement of Revenues, Expenses, and Changes in Net Position \r\nChanges in total net position as presented on the Statement of Net Position are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Position. The purpose of the statement is to present the revenues received by the Institution, both operating and nonoperating, and the expenses paid by the Institution, operating and nonoperating, and any other revenues, expenses, gains and losses received or spent by the Institution. Generally, operating revenues are received for providing goods and services to the various customers and constituencies of the Institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the Institution. Nonoperating revenues are revenues received for which goods and services are not provided. For example, state appropriations are nonoperating because they are provided by the Legislature to the Institution without the Legislature directly receiving commensurate goods and services for those revenues. \r\nStatement of Revenues, Expenses and Changes in Net Position, Condensed \r\n \r\nJune 30, 2016 \r\n \r\nJune 30, 2015 (1) \r\n \r\nOperating Revenues Operating Expenses \r\n \r\n$ 584,805,340 799,623,572 \r\n \r\n$ 563,602,692 763,393,472 \r\n \r\nOperating Loss \r\n \r\n-214,818,232 \r\n \r\n-199,790,780 \r\n \r\nNonoperating Revenues and Expenses \r\n \r\n220,679,013 \r\n \r\n212,306,147 \r\n \r\nIncome Before Other Revenues, Expenses, Gains or Losses \r\n \r\n5,860,781 \r\n \r\n12,515,367 \r\n \r\nOther Revenues, Expenses, Gains or Losses \r\n \r\n8,478,364 \r\n \r\n44,205,570 \r\n \r\nIncrease in Net Position \r\n \r\n14,339,145 \r\n \r\n56,720,937 \r\n \r\nNet Position at Beginning of Year, as Originally Reported \r\n \r\n209,827,324 \r\n \r\n506,452,240 \r\n \r\nPrior Year Adjustments \r\n \r\n-12,748,321 \r\n \r\n-353,345,853 \r\n \r\nNet Position at Beginning of Year, Restated \r\n \r\n197,079,003 \r\n \r\n153,106,387 \r\n \r\nNet Position at End of Year \r\n \r\n$ 211,418,148 \r\n \r\n$ 209,827,324 \r\n \r\n(1) The June 30, 2015 amounts do not reflect the effects of the restatement of July 1, 2015 net position. See Note 1 in the Notes to the Financial Statement for more information \r\n \r\niii \r\n \r\n The Statement of Revenues, Expenses, and Changes in Net Position reflects a positive year, which is represented by an increase in net position at the end of the year. Some highlights of the information presented on this statement are as follows: \r\n \r\nRevenue by Source For the Years Ended June 30, 2016 and June 30, 2015 \r\n \r\nJune 30, 2016 \r\n \r\nJune 30, 2015 (1) \r\n \r\nOperating Revenue Tuition and Fees Grants and Contracts Sales and Services of Educational Departments Auxiliary Other \r\n \r\n$ 86,148,215 470,062,674 10,167,422 17,473,339 953,690 \r\n \r\n$ \r\n \r\n81,330,970 \r\n \r\n455,641,730 \r\n \r\n8,771,719 \r\n \r\n17,150,840 \r\n \r\n707,433 \r\n \r\nTotal Operating Revenue \r\n \r\n584,805,340 \r\n \r\n563,602,692 \r\n \r\nNonoperating Revenue State Appropriations Grants and Contracts Gifts Investment Income Other \r\n \r\n195,068,634 13,626,484 13,982,821 570,075 -571,795 \r\n \r\n187,452,806 11,341,159 15,325,649 832,923 164,639 \r\n \r\nTotal Nonoperating Revenue \r\n \r\n222,676,219 \r\n \r\n215,117,176 \r\n \r\nCapital Grants and Gifts State Other \r\n \r\n8,433,386 44,978 \r\n \r\n43,334,970 665,386 \r\n \r\nTotal Capital Grants and Gifts \r\n \r\n8,478,364 \r\n \r\n44,000,356 \r\n \r\nSpecial Item Capital Asset Transfer \r\n \r\n0 \r\n \r\n205,214 \r\n \r\nTotal Revenues \r\n \r\n$ 815,959,923 \r\n \r\n$ 822,925,438 \r\n \r\n(1) The June 30, 2015 amounts do not reflect the effects of the restatement of July 1, 2015 net position. See Note 1 in the Notes to the Financial Statement for more information. \r\n \r\niv \r\n \r\n Expenses (By Functional Classification) For the Years Ended June 30, 2016 and June 30, 2015 \r\n \r\nJune 30, 2016 \r\n \r\nJune 30, 2015 \r\n \r\nOperating Expenses Instruction Research Public Service Academic Support Student Services Institutional Support Plant Operations and Maintenance Scholarships and Fellowships Auxiliary Enterprises Patient Care \r\n \r\n$ 158,840,109 46,651,886 43,779,261 57,002,258 7,549,692 79,236,910 42,821,068 7,475,123 15,521,733 \r\n340,745,532 \r\n \r\n$ 145,984,569 48,898,576 41,590,342 54,458,527 6,581,581 76,347,566 42,308,061 7,641,748 16,521,450 \r\n323,061,052 \r\n \r\nTotal Operating Expenses \r\n \r\n799,623,572 \r\n \r\n763,393,472 \r\n \r\nNonoperating Expenses Interest Expense \r\n \r\n1,997,206 \r\n \r\n2,811,029 \r\n \r\nTotal Expenses \r\n \r\n$ 801,620,778 \r\n \r\n$ 766,204,501 \r\n \r\nOperating revenues increased by $21,202,648 in fiscal year 2016. Tuition and Fees included a 5.9% increase and operating revenues increased in all categories including Grants and Contracts, Sales and Services, Auxiliary, and Other revenues. \r\n \r\nNonoperating revenues increased by $7,559,043 for the year primarily due to an increase in State Appropriations in fiscal year 2016. \r\n \r\nThe compensation and employee benefits category increased by $24,214,245 which was a 4.7% increase and primarily affected the Instruction, Student Services, and Institutional Support categories. \r\n \r\nUtilities decreased $941,612 which was an 8% decrease in total utilities during the past year. The decrease was primarily associated with savings related to natural gas and water usage during fiscal year 2016. \r\n \r\nStatement of Cash Flows \r\n \r\nThe final statement presented by Augusta University is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the Institution during the year. Cash flow information can be used to evaluate the financial viability of the Institution's ability to meet financial obligations as they mature. The Statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the Institution. The second section reflects cash flows from noncapital financing activities. This section reflects the cash received and spent for nonoperating, noninvesting, and noncapital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Position. \r\n \r\nv \r\n \r\n Cash Flows for the Years Ended June 30, 2016 and June 30, 2015, Condensed \r\n \r\nJune 30, 2016 \r\n \r\nJune 30, 2015 \r\n \r\nCash Provided (Used) By: \r\n \r\nOperating Activities \r\n \r\n$ -208,903,768 \r\n \r\nNoncapital Financing Activities \r\n \r\n219,974,030 \r\n \r\nCapital and Related Financing Activities \r\n \r\n-32,087,181 \r\n \r\nInvesting Activities \r\n \r\n4,753,588 \r\n \r\n$ -190,726,186 216,016,797 -17,414,081 -9,737,527 \r\n \r\nNet Change in Cash Cash, Beginning of Year \r\n \r\n-16,263,331 34,155,875 \r\n \r\n-1,860,997 36,016,872 \r\n \r\nCash, End of Year \r\n \r\n$ \r\n \r\n17,892,544 \r\n \r\n$ \r\n \r\n34,155,875 \r\n \r\nCapital Assets \r\n \r\nThe Institution had capital asset additions in fiscal year 2016. The College of Dental Medicine, Ambulatory Surgery Center was completed in fiscal year 2016 at a total cost of $598,402. In addition, the Institution had additions of $210,824 for the J. Harold Harrison Education Commons Building which was substantially completed in fiscal year 2015. Both of these project amounts were funded by Augusta University, and the projects were managed by Georgia State Financing and Investment Commission (GSFIC). \r\n \r\nOther on-going projects funded by GSFIC included $5,231,203. Projected funding by GSFIC for fiscal year 2017 will be approximately the same. \r\n \r\nFor additional information concerning Capital Assets, see Notes 1, 7, 12, and 13 in the Notes to the Financial Statements. \r\n \r\nLong-Term Liabilities \r\n \r\nAugusta University had Long-Term Liabilities of $429,510,543 of which $24,021,578 was reflected as current liability at June 30, 2016. \r\n \r\nFor additional information concerning Long-Term Liabilities, see Note 9 in the Notes to the Financial Statements. \r\n \r\nThe Notes to the Financial Statements are an integral part of the basic financial statements and communicate information essential for fair presentation. For example, the notes convey information concerning significant accounting policies used to prepare the financial statements, detailed information on cash and investments, receivables, capital leases, compensated absences, retirement and other postemployment benefits, capital assets, and a report of operating expenses by function. \r\n \r\nEconomic Outlook \r\n \r\nAugusta University continued to manage resources prudently in fiscal year 2016 and remains committed to student affordability and strategic allocation of resources to our core mission of teaching, discovery, clinical care, and service. Although enrollment declined 12.8% from fall of 2012 to fall of 2015, management considers Augusta University's economic outlook to be positive. Enrollment trends have stabilized and we anticipate that fiscal year 2017 will be similar to the prior year in terms of operating revenues and expenditures. \r\n \r\nvi \r\n \r\n Operating Revenue Highlights \r\n \r\n State Appropriations increased from $187.5 million in fiscal year 2015 to $195.1 million in fiscal year 2016, an increase of 4.1%. This included $18.6 million in special funding initiative. In fiscal year 2016, Augusta University was allocated $6.3 million in new recurring funds for institutional priorities including cyber security education, medical and dental education, and student engagement and success. State appropriations accounted for 24% of total revenue in fiscal year 2016. \r\n \r\n Although enrollment for fall 2015 decreased by 2.3%, tuition and fee revenue increased from $81.3 million in fiscal year 2015 to $86.1 million in fiscal year 2016. This is due in part to an increase in tuition rates per credit hour for both undergraduate and graduate students. Of more significance is the fact that while headcount decreased year over year, credit hours delivered actually increased by 0.6% over the same period. Tuition and fees accounted or 10.5% of total revenue for fiscal year 2016. \r\n \r\nDr. Brooks A. Keel, PhD., President Augusta University \r\n \r\nAnthony E. Wagner, Executive Vice President Augusta University \r\n \r\nvii \r\n \r\n (This page left intentionally blank) \r\n \r\n BASIC FINANCIAL STATEMENTS - 1 - \r\n \r\n        AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nNote 1. Summary of Significant Accounting Policies \r\nNature of Operations Augusta University (the Institution) serves the State and national communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country. Augusta University is also custodian of the Early Retirement Plan. \r\nReporting Entity As defined by Official Code of Georgia Annotated (O.C.G.A.) 20-3-50, the Institution is part of the University System of Georgia (USG), an organizational unit of the State of Georgia (the State) under the governance of the Board of Regents (Board). The Board has constitutional authority to govern, control and manage the USG. The Board is composed of 19 members, one member from each congressional district in the State and five additional members from the state-at-large, appointed by the Governor and confirmed by the Senate. Members of the Board serve a seven year term and members may be reappointed to subsequent terms by a sitting governor. \r\nThe Institution does not have the right to sue/be sued without recourse to the State. The Institution's property is the property of the State and subject to all the limitations and restrictions imposed upon other property of the State by the Constitution and laws of the State. In addition, the Institution is not legally separate from the State. Accordingly, the Institution is included within the State's basic financial statements as part of the primary government as defined in section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards. \r\nThe accompanying basic financial statements are intended to supplement the State's Comprehensive Annual Financial Report (CAFR) by presenting the financial position and changes in financial position and cash flows of only that portion of the business-type activities of the State that is attributable to the transactions of the Institution. In addition, the following discretely presented component units of the State have been included since they have been determined to be essential to the fair presentation to these departmental statements: Medical College of Georgia Foundation, Inc. (MCGF), MCG Health System, Inc. d/b/a AU Health System (the Health System), and the Medical College of Georgia Physicians Practice Group d/b/a AU Medical Associates (AUMA). These financial statements do not purport to, and do not, present fairly the financial position of the State as of June 30, 2016, the changes in its financial position or its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. \r\nThe accompanying basic financial statements should be read in conjunction with the State's CAFR. The most recent State of Georgia CAFR can be obtained through the State Accounting Office, 200 Piedmont Avenue, Suite 1604 (West Tower), Atlanta, Georgia 30334 or found at https://sao.georgia.gov/comprehensive-annual-financial-reports. \r\nMCGF is a nonprofit corporation incorporated under the laws of the State in 1954. MCGF serves the needs and interests of the Institution, the Augusta University Health Sciences campus and the Augusta University Health System. MCGF receives and administers funds for the support and enhancement of the Institution, the Augusta University Health Sciences campus and the Augusta University Health System, and manages investments and distributed funds in accordance with donor instructions and board of director's intentions for gifts. MCGF provides support for faculty chairs, research in the health sciences fields, scholarships to qualified students and other institutional programs. MCGF is \r\n \r\n- 9 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\na 501(c)(3) and 509(a)(1) public charity and functions as an independent corporation governed by its articles of incorporation, by-laws and its Board of Directors. Separately issued financial statements are available from the Foundation at the following address: Medical College of Georgia Foundation, Inc., 545 15th Street, Augusta, Georgia, 30901. \r\nThe Health System is a legally separate, tax-exempt organization, which was established to promote the health science education missions and other tax-exempt functions and purposes of the Institution, AUMA, and MCG Health, Inc. d/b/a AU Medical Center (AUMC) by strategically coordinating operations of AUMA and AUMC. The Health System was incorporated under the laws of the State as a nonprofit corporation on June 1, 2010. It began operations on June 1, 2010 as part of a Joint Operating Agreement (the Agreement) with AUMA and AUMC. The Agreement was subsequently amended on June 26, 2014 to incorporate Roosevelt Warm Springs Rehabilitation \u0026 Specialty Hospitals, Inc. and on August 28, 2014 to incorporate Georgia Regents Health Professions Associates, Inc., Georgia Regents Nursing Associates, Inc., and Medical College of Georgia Dental Foundation d/b/a Georgia Regents Dental Associates. Separately issued financial statements are available from the Foundation at the following address: AU Health System, Inc., 1120 15th Street, Room BA 8255, Augusta, Georgia, 30912. \r\nAUMA was formed in 1958 as a nonprofit organization for the purpose of enhancing the clinical, research, and educational missions of the Institution and billing and collecting for medical services provided to patients. Revenues are obtained primarily from physician fees charged to patients at AU Medical Center and AU Children's Medical Center, which are operated by AUMC. Separately issued financial statements are available from the Foundation at the following address: Augusta University Medical Associates, 1499 Walton Way, Augusta, Georgia 30901. \r\nSee Note 19 for additional information related to Component Units. \r\nBasis of Accounting and Financial Statement Presentation The financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) as prescribed by the GASB and are presented as required by these standards to provide a comprehensive, entity-wide perspective of the Institution's assets, deferred outflows of resources, liabilities, deferred inflows of resources, net position, revenues, expenses, changes in net position and cash flows. \r\nThe Institution's business-type activities and fiduciary fund financial statements have been presented using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis, revenues are recognized when earned, and expenses are recorded when an obligation has been incurred. Grants and similar items are recognized as revenues in the fiscal year in which eligibility requirements imposed by the provider have been met. All significant intra-Institution transactions have been eliminated. \r\nThe Institution reports the following Fiduciary Fund: \r\nPension Trust Fund  Accounts for the activities of the Early Retirement Plan. \r\nNew Accounting Pronouncements \r\nFor fiscal year 2016, the Institution adopted Governmental Accounting Standards Board (GASB) Statement No. 72, Fair Value Measurement and Application. This Statement addresses accounting and financial reporting issues related to fair value measurements. \r\n \r\n- 10 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nFor fiscal year 2016, the Institution adopted GASB Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets that are not within the Scope of GASB Statement No. 68, and Amendments to Certain Provisions of GASB Statements No. 67 and 68. The objective of this Statement is to improve the usefulness of information about pensions included in the general purpose external financial reports of state and local governments for making decisions and assessing accountability. The adoption of this Statement does not have a significant impact on the Institution's financial statements. \r\nFor fiscal year 2016, the Institution adopted GASB Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. The objective of this Statement is to identify in the context of the current governmental financial reporting environment--the hierarchy of GAAP. The \"GAAP hierarchy\" consists of the sources of accounting principles used to prepare financial statements of state and local governmental entities in conformity with GAAP and the framework for selecting those principles. This Statement reduces the GAAP hierarchy to two categories of authoritative GAAP and addresses the use of authoritative and non-authoritative literature in the event that the accounting treatment for a transaction or other event is not specified within a source of authoritative GAAP. The adoption of this Statement does not have a significant impact on the Institution's financial statements. \r\nFor fiscal year 2016, the Institution adopted GASB Statement No. 79, Certain External Investment Pools and Pool Participants. This Statement addresses accounting and financial reporting for certain external investment pools and pool participants. The adoption of this Statement does not have a significant impact on the Institution's financial statements. \r\nCash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits, and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. \r\nInvestments Investments include financial instruments with terms in excess of 13 months, certain other securities for the production of revenue, land, and other real estate held as investments by endowments. The Institution accounts for its investments at fair value. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses and Changes in Net Position. The Board of Regents Diversified Fund is included in Investments. \r\nAccounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of whom reside in the State. Accounts receivable also includes amounts due from the federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the Institution's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts. \r\nInventories Consumable supplies are carried at the lower of cost or market on the first-in, first-out basis. Resale Inventories are valued at cost using the \"first in, first out\" basis. \r\nNon-current Investments Investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Position. \r\n- 11 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nPrepaid Items Payments made to vendors and state and local government organizations for services that will benefit periods beyond June 30, 2016 are recorded as prepaid items. \r\nCapital Assets Capital assets are recorded at cost at the date of acquisition, or acquisition value (entry price) at the date of donation in the case of gifts. For equipment, the Institution's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. Routine repairs and maintenance are charged to operating expense in the year in which the expense was incurred. Depreciation, which also includes amortization of intangible assets such as water, timber, and mineral rights, easements, patents, trademarks, and copyrights, as well as software, is computed using the straight-line method over the estimated useful lives of the assets, generally 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values generally are 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements. \r\nTo fully understand plant additions in the Institution, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC)  an organization that is external to the Institution. GSFIC issues bonds for and on behalf of the State, pursuant to powers granted to it in the Constitution of the State and the Act creating the GSFIC. These bonds constitute direct and general obligations of the State, to the payment of which the full faith, credit and taxing power of the State are pledged. \r\nDue From USO - Capital Liability Reserve Fund The Capital Liability Reserve Fund (Fund) was established by the Board of Regents to protect the fiscal integrity of the USG to maintain the strongest possible credit ratings associated with Public Private Venture (PPV) projects and to ensure that the Board of Regents can effectively support its long-term capital lease obligations. The Fund is financed by all USG institutions participating in the PPV program. The Fund serves as a pooled reserve that is managed by the University System Office. The Fund shall only be used to address significant shortfalls and only insofar as a requesting USG University is unable to make the required PPV capital lease payment to the designated cooperative organization. The Fund will continue as long as the USG has rental obligations under the PPV program. At the conclusion of the Institution's participation in the program, funds will be returned to the Institution. The $197,730 balance included on the Institution's Statement of Net Position represents the Institution's contribution to the Fund. \r\nDeferred Outflows of Resources Deferred outflows of resources consists of the consumption of net assets by the Institution that are applicable to a future reporting period. \r\nAdvances Advances include amounts received for tuition and fees and certain auxiliary activities prior to the end of the fiscal year, but related to the subsequent accounting period. Advances also include amounts received from grant and contract sponsors that have not yet been earned. \r\nDeposits Held for Other Organizations Deposits held for other organizations result primarily from the Institution acting as an agent, or fiduciary, for another entity. Deposits held for others consist of scholarships, fellowships, study abroad deposits and other funds held for various governments, companies, clubs, or individuals. \r\n \r\n- 12 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nCompensated Absences Employee vacation pay is accrued at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Position, and as a component of compensation and benefit expense in the Statement of Revenues, Expenses, and Changes in Net Position. \r\nNoncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as non-current assets. \r\nDeferred Inflows of Resources Deferred inflows of resources consists of the acquisition of net assets by the Institution that are applicable to a future reporting period. \r\nPensions and Net Pension Liability The net pension liability represents the difference between the total pension obligation as a result of the exchange for employee services for compensation and the fiduciary net position or the fair value of the plan assets as of a given measurement date. \r\nFor the purpose of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position, additions/deductions from fiduciary net position have been determined on the same basis as they are reported by Teachers Retirement System of Georgia and Employees' Retirement System of Georgia. For this purpose, benefit payments (including refunds of employees' contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. \r\nNet Position The Institution's net position is classified as follows: \r\nNet Investment in Capital Assets: This represents the Institution's total investment in capital assets, net of accumulated amortization/depreciation and reduced by outstanding debt obligations related to those capital assets. The term \"debt obligations\" as used in this definition does not include debt of the GSFIC as discussed previously in Note 1  Capital Assets section. Deferred outflows of resources and deferred inflows of resources that are attributable to the acquisition, construction or improvement of capital assets or related debt are included in Net Investment in Capital Assets. If there are significant unspent related debt proceeds or deferred inflows of resources at the end of the reporting period, the portion of the debt or deferred inflows of resources attributable to the unspent amount are not included in Net Investment in Capital Assets. \r\nRestricted  non-expendable includes endowment and similar type funds, in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may be either expended or added to principal. For Institution-controlled, donorrestricted endowments, the by-laws of the Board of Regents of the University of Georgia permits each individual Institution to use prudent judgment in the spending of current realized and unrealized endowment appreciation. Donor-restricted endowment appreciation is periodically transferred to restricted-expendable accounts for expenditure as specified by the purpose of the endowment. The Institution maintains pertinent information related to each endowment fund including donor; amount and date of donation; restrictions by the source of limitations; limitations on investments, etc. \r\n \r\n- 13 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nRestricted  expendable includes resources in which the Institution is legally or contractually obligated to spend resources in accordance with restrictions by external third parties. \r\nUnrestricted: Unrestricted represents resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the Institution, and may be used at the discretion of the Institution to meet current expenses for those purposes, except for unexpended state appropriations (surplus) in the amount of $44,167. Unexpended state appropriations must be refunded to the Office of the State Treasurer. Unrestricted Net Position also includes resources specifically designated by management, such as: \r\n Auxiliary Enterprises Operations  These resources are used for the continued operation of auxiliary enterprise activities, which are substantially self-supporting business operations conducted on campuses that provide services to students, faculty, and staff. \r\n Auxiliary Enterprises Renewals and Replacement (R\u0026R) Reserve  These resources can be used for renewals and replacement of capitalizable assets related to auxiliary services. This R\u0026R reserve can also be used for major renovations and rehabilitations auxiliary projects that do not meet the capitalization threshold. \r\nWhen an expense is incurred that can be paid using either restricted or unrestricted resources, the Institution's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources. \r\nSee Note 10, Net Position, for additional information. \r\nIncome Taxes Augusta University, as a political subdivision of the State, is excluded from Federal income taxes under Section 115(1) of the Internal Revenue Code, as amended. \r\nClassification of Revenues and Expenses The Statement of Revenues, Expenses, and Changes in Net Position classifies fiscal year activity as operating and non-operating according to the following criteria: \r\n Operating revenue includes activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of scholarship allowances, (2) certain federal, state and local grants and contracts, and (3) sales and services. \r\n Non-operating revenue includes activities that have the characteristics of non-exchange transactions, such as gifts and contributions, and other revenue sources that are defined as non-operating revenue by GASB No. 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities That Use Proprietary Fund Accounting, and GASB No. 34, such as state appropriations and investment income. \r\n Operating Expenses: Operating expense includes activities that have the characteristics of exchange transactions. \r\n Non-operating expense includes activities that have the characteristics of non-exchange transactions, such as capital financing costs and costs related to investment activity. \r\n \r\n- 14 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nScholarship Allowances Scholarship allowances are the difference between the stated charge for goods and services provided by the Institution, and the amount that is paid by students and/or third parties making payments on the students' behalf. Certain governmental grants, such as Pell grants, and other Federal, state or nongovernmental programs are recorded as either operating or non-operating revenues in the Institution's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the Institution has recorded contra revenue for scholarship allowances. Student tuition and fees reported on the Statement of Revenues, Expenses, and Changes in Net Position are net of discounts and allowances of $14,541,818. \r\n \r\nRestatement of Prior Year Net Position The Institution made the following restatements related to business-type activities: \r\n \r\n For fiscal year 2016, the Institution increased beginning net position, increased deferred outflows of resources, and increased deferred inflows of resources related to the re-evaluation of capital lease agreements between the Institution and the related affiliates. This change is in accordance with generally accepted accounting principles. \r\n \r\n For fiscal year 2016, the Institution decreased beginning net position $17,013,591 related to a prior understatement in amounts due to affiliated organizations. \r\n \r\n For fiscal year 2016, the Institution increased net position $3,819,750 related to recognizing associated revenue related to sponsored grants that have met eligibility requirements for revenue recognition. \r\n \r\nBelow is a summary of adjustments made to July 1, 2015 Net Position. \r\n \r\nBusiness-type Activities: \r\n \r\nNet Position, Beginning of Year, As Originally Reported \r\n \r\n$ 209,827,324 \r\n \r\nAdjustments related to re-evaulation of capital lease agreements Increase in capital lease liability Increase in deferred loss on debt refunding Increase in deferred gain on debt refunding \r\nIncrease due to Upper Payment Limits (UPL) with Component Unit Increase due to revenue recognition for sponsored grants \r\n \r\n-1,633,369 2,973,434 \r\n-894,546 -17,013,591 \r\n3,819,751 \r\n \r\nNet Position, Beginning of Year, Restated \r\n \r\n$ 197,079,003 \r\n \r\nChanges in Financial Accounting and Reporting \r\n \r\nIn fiscal year 2016, MCGF, the Health System, and AUMA have been determined to be essential to the fair presentation to these departmental statements resulting in an increase in the beginning net position for the discretely presented component units. \r\n \r\n- 15 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nNote 2. Deposits and Investments \r\nDeposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the Institution's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the Institution) cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral any one or more of the following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59: \r\n1. Bonds, bills, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia. \r\n2. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia. \r\n3. Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose. \r\n4. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia. \r\n5. Bonds, bills, certificates of indebtedness, notes or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association and the Federal National Mortgage Association. \r\n6. Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation. The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia. \r\nAt June 30, 2016, the carrying value of deposits was $14,987,160 and the bank balance was $25,797,190. Of the Institution's deposits, $25,547,190 were uninsured. Of these uninsured deposits, $25,547,190 were collateralized with securities held by the financial institution, by its trust department or agency, in the Institution's name. \r\n \r\n- 16 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nReconciliation of Cash and Cash Equivalents Balances to Carrying Value of Deposits: \r\n \r\nBusiness-type Activities: Statement of Net Position \r\nCash and Cash Equivalents \r\nFiduciary Fund: Statement of Fiduciary Net Position \r\nCash and Cash Equivalents \r\n \r\n$ \r\n \r\n17,892,544 \r\n \r\n6,161,947 \r\n \r\nTotal Cash and Cash Equivalents \r\n \r\n24,054,491 \r\n \r\nLess: Cash on Hand \r\nInvestments with original maturity less than 90 days reported as Cash and Cash Equivalents \r\n \r\n-71,329 -8,996,002 \r\n \r\nTotal Carrying Value of Deposits - June 30, 2016 \r\n \r\n$ \r\n \r\n14,987,160 \r\n \r\nInvestments The Institution maintains an investment policy which fosters sound and prudent judgment in the management of assets to ensure safety of capital consistent with the fiduciary responsibility each institution has to the citizens of Georgia and which conforms to Board of Regents investment policy. All investments are consistent with donor intent, Board of Regents policy, and applicable federal and state laws. \r\n \r\nThe Institution has adopted GASB No. 72, Fair Value Measurements and Application, which requires fair value measurement be classified and disclosed in one of the following three categories (\"Fair Value Hierarchy\"): \r\n \r\nLevel 1  Quoted prices are available in active markets for identical investments as of the reporting date. \r\nLevel 2  Pricing inputs are observable for the investments, either directly or indirectly, as of the reporting date, but are not the same as those used in Level 1; inputs include comparable market transactions, pricing of similar instruments, values reported by the administrator, and pricing expectations based on internal modeling. Fair value is determined through the use of models or other valuation methodologies. \r\n \r\nLevel 3  Pricing inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investments. \r\n \r\n- 17 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nThe following table summarizes the valuation of the Institution's investments measured at fair value on a recurring basis and at net asset value as of June 30, 2016. \r\n \r\nInvestment Type \r\n \r\nLevel 1 \r\n \r\nLevel 2 \r\n \r\nSee Note 2 \r\n \r\nTotal \r\n \r\nBond Securities \r\n \r\n$ \r\n \r\nBOR Pool \r\n \r\nEquity Mutual Funds \r\n \r\nEquity Securities \r\n \r\nMoney Market Mutual Funds \r\n \r\nReal Estate Investment Trusts \r\n \r\nUS Agencies-Explicitly Guaranteed \r\n \r\nUS Agencies-Implicitly Guaranteed \r\n \r\nUS Treasuries \r\n \r\n12,513,934 \r\n34,636,685 23,752,424 \r\n4,663,577 3,257,358 \r\n$ 4,309,425 \r\n23,000 \r\n \r\n$ \r\n \r\n$ \r\n \r\n9,898,104 \r\n \r\n12,681,606 52,426,142 \r\n \r\n12,513,934 9,898,104 \r\n34,636,685 23,752,424 \r\n4,663,577 3,257,358 12,681,606 56,735,567 \r\n23,000 \r\n \r\nTotal Investments \r\n \r\n$ \r\n \r\n83,156,403 $ \r\n \r\n65,107,748 $ \r\n \r\n9,898,104 $ \r\n \r\n158,162,255 \r\n \r\nNote 2: The Institution holds a position in an external investment pool that is not a 2a7-like external investment pool. The unit of account is each share held, and the value of the position would be the fair value of the pool's share price multiplied by the number of shares held. The Institution does not \"look through\" the pool to report a pro rata share of the pool's investments, receivables and payables. \r\n \r\nInvestments classified in Level 1 are valued using prices quoted in active markets for those securities. \r\n \r\nInvestments classified in Level 2 are valued using a matrix pricing technique. Matrix pricing is used to value securities based on the securities relationship to benchmark quoted prices. \r\nBusiness-Type Activities The Institution's investments as of June 30, 2016 are presented below. All investments are presented by investment type and debt securities are presented by maturity. \r\n \r\nInvestment Type \r\n \r\nDebt Securities \r\n \r\nU. S. Treasuries \r\n \r\n$ \r\n \r\nU. S. Agencies \r\n \r\nExplicitly Guaranteed \r\n \r\nImplicitly Guaranteed \r\n \r\nFair Value \r\n \r\nLess Than 3 Months \r\n \r\nInvestment Maturity 4 - 12 Months \r\n \r\n1 - 5 Years \r\n \r\n23,000 $ \r\n \r\n23,000 \r\n \r\n12,681,606 56,735,567 \r\n \r\n5,192,362 $ 7,475,516 $ \r\n \r\n16,285,346 \r\n \r\n34,405,820 \r\n \r\n13,728 6,044,401 \r\n \r\nInvestment Pools Board of Regents Diversified Fund \r\nTotal Investments \r\n \r\n69,440,173 $ 21,500,708 $ 41,881,336 $ 6,058,129 \r\n9,898,104 $ 79,338,277 \r\n \r\n- 18 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nThe Institution does not have a formal policy addressing variable-rate securities. The Institution relies upon the judgment of its Investment Managers and the policies of the investment vehicles related to Augusta University's investment assets. \r\nThe Board of Regents Investment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. \r\nEach participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. Additional information on the Board of Regents Investment Pool is disclosed in the audited Financial Statements of the Board of Regents of the University System of Georgia  System Office (oversight unit). This audit can be obtained from the Georgia Department of Audits  Education Audit Division or on their web site at http://www.audits.ga.gov. \r\nInterest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The Institution's Investment Policy and Guidelines manages interest rate risk by recognizing that short-term loss of principal may be necessary in order to achieve long-term safety and growth of principal; and that in order to maximize income from debt instruments with maturities longer than sixty days, market values may be exposed to short-term volatility. \r\nThe Effective Duration of the Diversified Fund is 4.64 years. Of the Institution's total investment of $9,898,104 in the Diversified Fund, $3,464,336 is invested in debt securities. \r\nCustodial Credit Risk Custodial credit risk for investments is the risk that, in the event of a failure of the counterparty to a transaction, the Institution will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The Institution does not have a formal policy for managing custodial credit risk for investments. Investment Managers are held accountable for custodial safety. The Institution's Investment Policy and Guidelines require that managers be registered in good standing as investment advisors; and will be experienced with proven track records. \r\nAt June 30, 2016, $69,440,173 of the Institution's applicable investments were uninsured and held by the investment's counterparty's trust department or agent, in the Institution's name. \r\nCredit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The Institution does not have a formal policy for managing credit quality risk. All investment vehicles are designed to comply with Georgia Code  50-17-63. \r\nThe investments subject to credit quality risk are reflected below: \r\n \r\nRelated Debt Investment \r\n \r\nFair Value \r\n \r\nUnrated \r\n \r\nU.S. Agency Securities \r\n \r\n$ 56,735,567 $ 56,735,567 \r\n \r\n- 19 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nConcentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. The Institution's Investment Policy and Guidelines for managing concentration of credit risk requires that stocks and debt issues be diversified. The Institution also relies upon the concentration of credit risk policy of the individual investment vehicles related to Augusta University's investment assets. More than 5% of the Institution's investments are in Federal National Mortgage Association Notes, Federal Home Loan Mortgage Corporation Notes, Federal National Mortgage Association Pool, National Credit Union Administration Guaranteed Notes, Federal Home Loan Mortgage Corporation Pool, and Government National Mortgage Association Notes. These investments are 26.15%, 20.49%, 18.64%, 6.56%, 6.23%, and 5.58% respectively of the Institution's total investments. \r\nFiduciary Fund Type  Pension Trust Fund Augusta University's Pension Trust Fund consists of the Early Retirement Pension Plan (ERP). See Note 14 in the Notes to the Financial Statements for additional information about the Early Retirement Plan. \r\nThe Institution's Pension Plan investments as of June 30, 2016, are presented below. All investments are presented by investment type and debt securities are presented by maturity. \r\n \r\nInvestment Type \r\n \r\nFair Value \r\n \r\nInvestment Maturity Less Than 3 Months 1 - 5 Years 6 - 10 Years \r\n \r\nDebt Securities Bond Securities Money Market Mutual Fund \r\n \r\n$ 12,513,934 \r\n \r\n$ 2,202,149 $ 10,311,785 \r\n \r\n4,663,577 $ 4,663,577 \r\n \r\n17,177,511 $ 4,663,577 $ 2,202,149 $ 10,311,785 \r\n \r\nOther Investments Equity Mutual Funds - Domestic Equity Mutual Funds - International Equity Securities - Domestic Equity Securities - International Real Estate Investment Trust \r\n \r\n30,977,764 3,658,921 \r\n20,803,503 2,948,921 3,257,358 \r\n \r\nTotal Investments \r\n \r\n$ 78,823,978 \r\n \r\nInterest Rate Risk Interest rate risk is the risk that changes in interest rates for debt investments will adversely affect the fair value of an investment. The Institution's Investment Policy and Guidelines manages interest rate risk by recognizing that short-term loss of principal may be necessary in order to achieve long-term safety and growth of principal; and that in order to maximize income from debt instruments with maturities longer than sixty days, market values may be exposed to short-term volatility. \r\n \r\n- 20 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nCustodial Credit Risk Custodial credit risk for investments is the risk that, in the event of a failure of the counterparty to a transaction, the Institution will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The Institution does not have a formal policy for managing custodial credit risk for investments. Investment Managers are held accountable for custodial safety. The Institution's Investment Policy and Guidelines requires that managers be registered in good standing as investment advisors; and will be experienced with proven track records. \r\n \r\nAt June 30, 2016, $17,177,511 of the Institution's Pension Plan applicable investments were uninsured and held by the investment's counterparty's trust department or agent, in the Institution's name. \r\n \r\nCredit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The Institution does not have a formal policy for managing credit quality risk. All investment vehicles are designed to comply with Georgia Code  50-17-63. \r\n \r\nThe investments subject to credit quality risk are reflected below: \r\n \r\nRelated Debt Investment \r\n \r\nFair Value \r\n \r\nAA \r\n \r\nUnrated \r\n \r\nBond Securities \r\n \r\n$ 12,513,934 \r\n \r\n$ 12,513,934 \r\n \r\nMoney Market Mutual Fund \r\n \r\n4,663,577 $ 1,419,369 \r\n \r\n3,244,208 \r\n \r\n$ 17,177,511 $ 1,419,369 $ 15,758,142 \r\nConcentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. The Institution's Investment Policy and Guidelines for managing concentration of credit risk requires that stocks and debt issues be diversified. The Institution also relies upon the concentration of credit risk policy of the individual investment vehicles related to Augusta University's Pension Plan investment assets. More than 5% of the Pension Plan's Investments are in iShares Core Total U.S. Aggregate Bond Exchange-traded Fund (ETF), Vanguard Institutional Index Fund, iShares Russell 1000 Value ETF, and iShares Russell 1000 Growth ETF. These investments are 9.7%, 39.3%, 5.9%, and 9.5% respectively of the Plan's total investments. \r\n \r\n- 21 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nNote 3. Accounts Receivable Accounts receivable consisted of the following at June 30, 2016: \r\n \r\nJune 30, 2016 \r\n \r\nStudent Tuition and Fees \r\n \r\n$ \r\n \r\nAuxiliary Enterprises and Other Operating Activities \r\n \r\nFederal Financial Assistance \r\n \r\nGeorgia State Financing and Investment Commission \r\n \r\nMargin Allocation Funds \r\n \r\nDue from Other USG Institutions \r\n \r\nOther \r\n \r\n8,900,025 870,780 \r\n8,766,339 569,030 \r\n3,710,738 197,730 \r\n51,221,199 \r\n \r\n74,235,841 \r\n \r\nLess Allowance for Doubtful Accounts Net Accounts Receivable \r\nNote 4. Inventories Inventories consisted of the following at June 30, 2016: \r\n \r\n449,310 \r\n \r\n$ \r\n \r\n73,786,531 \r\n \r\nJune 30, 2016 \r\n \r\nConsumable Supplies Merchandise for Resale \r\n \r\n$ \r\n \r\n146,010 \r\n \r\n775,991 \r\n \r\nTotal Inventories \r\n \r\n$ \r\n \r\nNote 5. Prepaid Items \r\n \r\nPrepaid Items consisted of the following at June 30, 2016: \r\n \r\n922,001 \r\n \r\nJune 30, 2016 \r\n \r\nGeorgia State Financing and Investment Commision \r\n \r\n$ \r\n \r\n12,634,402 \r\n \r\nMiscellaneous \r\n \r\n877,519 \r\n \r\nTotal \r\n \r\n$ \r\n \r\n13,511,921 \r\n \r\n- 22 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nNote 6. Notes/Loans Receivable \r\nThe Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2016. The Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The Federal government reimburses the Institution for amounts cancelled under these provisions. As the Institution determines that loans are uncollectible and not eligible for reimbursement by the Federal government, the loans are written off and assigned to the U. S. Department of Education. The Institution has provided an allowance for uncollectible loans, which, in management's opinion, is sufficient to absorb loans that will ultimately be written off. At June 30, 2016, the allowance for uncollectible loans was approximately $375,591. \r\nNote 7. Capital Assets \r\nFollowing are the changes in capital assets for the year ended June 30, 2016: \r\n \r\nBeginning Balance July 1, 2015 \r\n \r\nCapital Leases Recategorization \r\n \r\nAdditions \r\n \r\nReductions \r\n \r\nEnding Balance June 30, 2016 \r\n \r\nCapital Assets, Not Being Depreciated: Land Capitalized Collections Construction Work-In-Progress \r\n \r\n$ 28,365,902 87,006 \r\n11,325,550 $ \r\n \r\n$ 0 $ 16,380,442 $ 8,487,620 \r\n \r\n28,365,902 87,006 \r\n19,218,372 \r\n \r\nTotal Capital Assets, Not Being Depreciated \r\n \r\n39,778,458 \r\n \r\n0 \r\n \r\n16,380,442 \r\n \r\n8,487,620 \r\n \r\n47,671,280 \r\n \r\nCapital Assets, Being Depreciated: Infrastructure Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections \r\n \r\n6,526,145 629,999,581 \r\n15,849,383 123,755,644 \r\n61,613,020 31,343,172 \r\n \r\n59,576,418 \r\n2,036,602 -61,613,020 \r\n \r\n13,306,282 1,104,347 8,864,924 \r\n373,592 \r\n \r\n259,000 15,348,061 \r\n2,709,609 \r\n \r\n6,526,145 702,623,281 \r\n16,953,730 119,309,109 \r\n0 29,007,155 \r\n \r\nTotal Capital Assets Being Depreciated \r\n \r\n869,086,945 \r\n \r\n0 \r\n \r\n23,649,145 18,316,670 \r\n \r\n874,419,420 \r\n \r\nLess: Accumulated Depreciation Infrastructure Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections \r\n \r\n1,954,670 230,577,912 \r\n6,724,639 93,958,865 18,191,535 23,035,088 \r\n \r\n16,883,972 \r\n1,307,563 -18,191,535 \r\n \r\n301,392 18,572,593 \r\n589,767 8,038,833 \r\n1,391,659 \r\n \r\n259,000 13,198,644 \r\n2,709,609 \r\n \r\n2,256,062 265,775,477 \r\n7,314,406 90,106,617 \r\n0 21,717,138 \r\n \r\nTotal Accumulated Depreciation \r\n \r\n374,442,709 \r\n \r\n0 \r\n \r\n28,894,244 16,167,253 \r\n \r\n387,169,700 \r\n \r\nTotal Capital Assets, Being Depreciated, Net \r\n \r\n494,644,236 \r\n \r\n0 \r\n \r\n-5,245,099 \r\n \r\n2,149,417 \r\n \r\n487,249,720 \r\n \r\nCapital Assets, Net \r\n \r\n$ 534,422,694 $ \r\n \r\n0 $ 11,135,343 $ 10,637,037 $ 534,921,000 \r\n \r\n- 23 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nFor projects managed by GSFIC, GSFIC retains construction-in-progress on its books throughout the construction period and transfers the entire project to the Institution when complete. For projects managed by the Institution, the Institution retains construction-in-progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2016, GSFIC transferred capital additions valued at $809,226 to the Institution. In addition, at June 30, 2016, GSFIC had construction in progress of approximately $11,460,783 for incomplete projects for the Institution. \r\nNote 8. Advances (Including Tuition and Fees) \r\nAdvances (Including Tuitions and Fees) consisted of the following at June 30, 2016: \r\n \r\nCurrent Liabilities \r\n \r\nPrepaid Tuition and Fees Research Other - Advances \r\n \r\n$ \r\n \r\n14,782,515 \r\n \r\n29,228,812 \r\n \r\n6,646,851 \r\n \r\nTotal Advances \r\nNote 9. Long-Term Liabilities \r\n \r\n$ \r\n \r\n50,658,178 \r\n \r\nLong-Term liability activity for the year ended June 30, 2016 was as follows: \r\n \r\nBeginning Balance July 1, 2015 (Restated) \r\n \r\nAdditions \r\n \r\nReductions \r\n \r\nEnding Balance June 30, 2016 \r\n \r\nCurrent Portion \r\n \r\nLeases Lease Purchase Obligations $ \r\n \r\n55,879,401 $ \r\n \r\n5,330,912 $ \r\n \r\n3,349,218 $ 57,861,095 $ \r\n \r\n3,344,882 \r\n \r\nOther Liabilities Compensated Absences Net Pension Liability \r\n \r\n36,679,959 285,215,111 \r\n \r\n26,684,642 48,727,053 \r\n \r\n25,657,317 \r\n \r\n37,707,284 333,942,164 \r\n \r\n20,676,696 \r\n \r\nTotal Total Long-Term Obligations \r\n \r\n321,895,070 \r\n \r\n75,411,695 \r\n \r\n25,657,317 371,649,448 \r\n \r\n20,676,696 \r\n \r\n$ 377,774,471 $ 80,742,607 $ 29,006,535 $ 429,510,543 $ 24,021,578 \r\n \r\n- 24 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nNote 10. Net Position \r\nNet position is reported in the following three categories: Net Investment in Capital Assets, Restricted Non-Expendable, Restricted-Expendable, and Unrestricted. \r\nThe amounts within each category at June 30, 2016 were as follows: \r\n \r\nJune 30, 2016 \r\n \r\nNet Investments in Capital Assets \r\n \r\n$ \r\n \r\n477,493,762 \r\n \r\nRestricted for Nonexpendable Permanent Endowment \r\n \r\n2,172,437 \r\n \r\nExpendable Organized Activities Federal Loans Institutional Loans Quasi-Endowments \r\n \r\n15,585,507 6,228,024 957,563 7,675,006 \r\n \r\nTotal Expendable \r\n \r\n30,446,100 \r\n \r\nUnrestricted Auxiliary Operations R \u0026 R Reserve Reserve for Encumbrances Reserve for Inventory USO Reserve Fund Other Unrestricted \r\n \r\n1,451,461 3,311,270 22,137,295 \r\n148,751 197,730 -325,940,658 \r\n \r\nTotal Unrestricted \r\n \r\n-298,694,151 \r\n \r\nTotal Net Position \r\nNote 11. Endowments \r\n \r\n$ \r\n \r\n211,418,148 \r\n \r\nDonor Restricted Endowments: Investments of the Institution's endowment funds are pooled, unless required to be separately invested by the donor. For Institution controlled, donor-restricted endowments, where the donor has not provided specific instructions, the Board of Regents permits Augusta University to develop policies for authorizing and spending realized and unrealized endowment income and appreciation as they determined to be prudent. Realized and unrealized appreciation in excess of the amount budgeted for current spending is retained by the endowments. Current year net appreciation for the endowment accounts was $24,365 and is reflected as expendable restricted net position. \r\n \r\n- 25 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nFor endowment funds where the donor has not provided specific instructions, investment return of the Institution's endowment funds is predicated on the total return concept. The main goal of Augusta University's endowment fund investment guidelines is that principal be preserved at a level that protects the historic purchasing power of the original endowment amounts, while generating sufficient annual income to perform the original intent of the endowment. The objective being to emphasize longterm capital appreciation and growth of income, and to increase principal value at a rate at least equal to the rate of inflation. Annual payouts from the Institution's endowment funds are based on a spending policy which limits spending to no more than 3.5% of the three-year average of the endowment principal's market value, measured on March 31. To the extent that the total return for the current year exceeds the payout, the excess is added to principal. If current year earnings do not meet the payout requirements, the Institution uses accumulated income and appreciation from restricted expendable net asset endowment balances to make up the difference. \r\nNote 12. Significant Commitments \r\nSee Note 10 for amounts reserved for outstanding encumbrances at June 30, 2016. In addition to these encumbrances, the Institution had other significant unearned, outstanding, construction or renovation contracts executed in the amount of $11,611,315 as of June 30, 2016. This amount is not reflected in the accompanying basic financial statements. \r\nNote 13. Lease Obligations \r\nThe Institution is obligated under various operating leases for the use of equipment, and also is obligated under capital leases and installment purchase agreements for the acquisition of equipment and real property. \r\nCapital Leases Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between 2019 and 2035. Expenditures for fiscal year 2016 were $5,507,168 of which $1,997,206 represented interest and $160,744 represented executory costs. Total principal paid on capital leases was $3,349,218 for the fiscal year ended June 30, 2016. Interest rates range from 2.496% to 12.99%. \r\n \r\nDescription \r\n \r\nCAPITAL LEASE SCHEDULE \r\n \r\nLessor \r\n \r\nOriginal Principal \r\n \r\nLease Term \r\n \r\nBegin \r\n \r\nOutstanding \r\n \r\nPrincipal Balance \r\n \r\nEnd \r\n \r\nat June 30, 2016 \r\n \r\nMultiple Individual Copier Leases Computer Lease Telephone System CRC University Housing Student Center \r\n \r\nPollock \r\n \r\n$ \r\n \r\nDeLage Landen \r\n \r\nKey Government Finance, Inc. \r\n \r\nMCG-PPG, CRC LLC \r\n \r\nASU Foundation \r\n \r\nASU Foundation \r\n \r\n1,878,204 100,980 \r\n4,972,657 27,704,398 20,246,137 11,782,962 \r\n \r\n5 years 3 years 4 years 30 years 30 years 29 years \r\n \r\n3/2011 1/2016 9/2015 1/2006 8/2005 1/2006 \r\n \r\n3/2021 $ 1/2019 9/2019 6/2034 1/2035 12/2033 \r\n \r\nTotal Leases \r\n \r\n$ 66,685,338 \r\n \r\n$ \r\n \r\n(1) These capital leases are related party transactions with affiliated organizations. \r\n \r\n631,417 87,664 \r\n4,027,044 25,973,613 (1) 17,480,542 (1) \r\n9,660,815 (1) \r\n57,861,095 \r\n \r\n- 26 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nOperating Leases Augusta University's non-cancellable operating leases have remaining terms of less than one year. All agreements are cancellable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, operating leases are generally renewed or replaced by other leases. Operating leases are generally payable on a monthly basis. \r\n \r\nFacilities and equipment rented through operating leases are not recorded as assets on the balance sheet. Operating lease expenditures totaled $2,037 for the fiscal year ended June 30, 2016. \r\n \r\nFuture Commitments Future commitments for capital leases (which include other installment purchase agreements) and for non-cancellable operating leases having remaining terms in excess of one year as of June 30, 2016, were as follows: \r\n \r\nReal Property and Equipment \r\n \r\nCapital Leases \r\n \r\nOperating Leases \r\n \r\nYear Ending June 30: 2017 2018 2019 2020 2021 2022 - 2026 2027 - 2031 2032 - 2035 \r\n \r\n$ \r\n \r\n5,256,639 $ \r\n \r\n679 \r\n \r\n5,198,349 \r\n \r\n5,149,087 \r\n \r\n5,110,025 \r\n \r\n3,980,428 \r\n \r\n18,406,720 \r\n \r\n19,026,525 \r\n \r\n14,231,309 \r\n \r\nTotal Minimum Lease Payments \r\n \r\n76,359,082 $ \r\n \r\n679 \r\n \r\nLess: Interest Less: Executory Cost (if paid) \r\n \r\n15,294,112 3,203,875 \r\n \r\nPrincipal Outstanding \r\n \r\n$ \r\n \r\n57,861,095 \r\n \r\nThe following is a summary of the carrying values of assets held under capital lease at June 30, 2016: \r\n \r\nDescription \r\n \r\nGross Amount (+) \r\n \r\nAccumulated Depreciation \r\n(-) \r\n \r\nNet Capital Assets Held Under Capital Lease \r\nat June 30, 2016 (=) \r\n \r\nOutstanding Balances per Lease Schedules at June 30, 2016 \r\n \r\nLeased Equipment \r\n \r\n$ \r\n \r\nLeased Buildings and Building Improvements \r\n \r\n7,128,363 $ 2,176,551 $ \r\n \r\n61,655,306 \r\n \r\n18,600,764 \r\n \r\n4,951,812 $ 43,054,542 \r\n \r\n4,746,125 53,114,970 \r\n \r\nTotal Assets Held Under Capital Lease at June 30, 2016 \r\n \r\n$ \r\n \r\n68,783,669 $ 20,777,315 $ \r\n \r\n48,006,354 $ \r\n \r\n57,861,095 \r\n \r\n- 27 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nCertain capital leases provide for renewal and/or purchase options. Generally purchase options at bargain prices of one dollar are exercisable at the expiration of the lease terms. \r\nAugusta University had three capital leases with affiliated organizations in the current fiscal year. \r\nIn November 2004, Augusta University entered into a capital lease of $27,659,678 at 6.85% with the MCG-PPG Cancer Research Center, LLC, whereby the Institution leases the third, fourth, and fifth floors of the Cancer Research Center for a thirty year period that began January 2006 and expires December 2035. At the end of the lease, title to the building is transferred to the Institution. In October 2014, the MCG-PPG Cancer Research Center, LLC refunded the bonds associated with this lease and passed the perceived economic advantages of this refunding to the Institution by reducing the effective interest rate to 2.93% and the lease term maturity to June 2034. The outstanding liability at June 30, 2016, on this capital lease is $25,973,613. \r\nIn August 2004, Augusta University entered into a capital lease of $20,246,137 at 5.23% with the Augusta State University Foundation whereby the Institution leases a student housing complex for a thirty year period that began September 2005 and will expire January 2035. In November 2012, the Augusta State University Foundation refunded the bonds associated with this lease and passed the perceived economic advantages of this refunding to the Institution by reducing the weighted average interest rate to 4.088% with a maturity date of January 2035. The outstanding liability at June 30, 2016, on this capital lease is $17,480,542. \r\nIn February 2005, the Institution entered into another capital lease of $11,782,962 at 4.72% with the Augusta State University Foundation whereby the Institution leases a student activities center for a twenty-nine year term that began March 2005 and will expire June 2034. In October 2014, the Augusta State University Foundation refunded the bonds associated with this lease and passed the perceived economic advantages of this refunding to the Institution by reducing the weighted average interest rate to 3.128% with a maturity date of December 2033. The outstanding liability at June 30, 2016, on this capital lease is $9,660,815. \r\nAugusta University also has various capital leases for equipment with an outstanding balance at June 30, 2016 in the amount of $4,746,125. \r\nNote 14. Retirement Plans \r\nThe Institution participates in various retirement plans administered by the State of Georgia under two major retirement systems: Teachers Retirement System of Georgia (TRS) and Employees' Retirement System of Georgia (ERS). These two systems issue separate publicly available financial reports that include the applicable financial statements and required supplementary information. The reports may be obtained from the respective administrative offices. \r\nIn addition to the retirement plans administered by TRS and ERS, USG administers the Regents' Retirement Plan as an optional retirement plan. The Institution administers the Early Retirement Pension Plan. \r\nThe significant retirement plans that the Institution participates in are described below. More detailed information can be found in the plan agreements and related legislation. Each plan, including benefit and contribution provisions, was established and can be amended by State law. \r\n \r\n- 28 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nTeachers Retirement System of Georgia and Employees' Retirement System of Georgia \r\nSummary of Significant Accounting Policies \r\nPensions: For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Teachers Retirement System of Georgia (TRS) and Employees' Retirement System (ERS), additions to/deductions for TRS's and ERS's fiduciary net position have been determined on the same basis as they are reported by TRS and ERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. \r\nGeneral Information about the Teachers Retirement System \r\nPlan description: All teachers of the Institution as defined in 47-3-60 of the Official Code of Georgia Annotated (O.C.G.A.) are provided a pension through the Teachers Retirement System of Georgia (TRS). TRS, a cost-sharing multiple-employer defined benefit pension plan, is administered by the TRS Board of Trustees (TRS Board). Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. TRS issues a publicly available financial report that can be obtained at www.trsga.com/publications. \r\nBenefits provided: TRS provides service retirement, disability retirement, and death benefits. Normal retirement benefits are determined as 2% of the average of the employee's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. An employee is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. Ten years of service is required for disability and death benefits eligibility. Disability benefits are based on the employee's creditable service and compensation up to the time of disability. Death benefits equal the amount that would be payable to the employee's beneficiary had the employee retired on the date of death. Death benefits are based on the employee's creditable service and compensation up to the date of death. \r\nContributions: Per Title 47 of the O.C.G.A., contribution requirements of active employees and participating employers, as actuarially determined, are established and may be amended by the TRS Board. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees were required to contribute 6% of their annual pay during fiscal year 2016. The Institution's contractually required contribution rate for the year ended June 30, 2016 was 14.27% of annual Institution payroll. Institution contributions to TRS were $26,234,649 for the year ended June 30, 2016. \r\nGeneral Information about the Employees' Retirement System \r\nPlan description: ERS is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly during the 1949 Legislative Session for the purpose of providing retirement allowances for employees of the State of Georgia and its political subdivisions. ERS is directed by a Board of Trustees. Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. ERS issues a publicly available financial report that can be obtained at www.ers.ga.gov/formspubs/formspubs. \r\n \r\n- 29 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nBenefits provided: The ERS Plan supports three benefit tiers: Old Plan, New Plan, and Georgia State Employees' Pension and Savings Plan (GSEPS). Employees under the old plan started membership prior to July 1, 1982 and are subject to plan provisions in effect prior to July 1, 1982. Members hired on or after July 1, 1982 but prior to January 1, 2009 are new plan members subject to modified plan provisions. Effective January 1, 2009, new state employees and rehired state employees who did not retain membership rights under the Old or New Plans are members of GSEPS. ERS members hired prior to January 1, 2009 also have the option to irrevocably change their membership to GSEPS. \r\nUnder the old plan, the new plan, and GSEPS, a member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60 or 30 years of creditable service regardless of age. Additionally, there are some provisions allowing for early retirement after 25 years of creditable service for members under age 60. \r\nRetirement benefits paid to members are based upon the monthly average of the member's highest 24 consecutive calendar months, multiplied by the number of years of creditable service, multiplied by the applicable benefit factor. Annually, postretirement cost-of-living adjustments may also be made to members' benefits, provided the members were hired prior to July 1, 2009. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension, at reduced rates, to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS. \r\nContributions: Member contributions under the old plan are 4% of annual compensation, up to $4,200, plus 6% of annual compensation in excess of $4,200. Under the old plan, the state pays member contributions in excess of 1.25% of annual compensation. Under the old plan, these state contributions are included in the members' accounts for refund purposes and are used in the computation of the members' earnable compensation for the purpose of computing retirement benefits. Member contributions under the new plan and GSEPS are 1.25% of annual compensation. The Institution's contractually required contribution rate, actuarially determined annually, for the year ended June 30, 2016 was 24.72% of annual covered payroll for old and new plan members and 21.69% for GSEPS members. The Institution's contributions to ERS totaled $178,786 for the year ended June 30, 2016. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. \r\nPension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions \r\nAt June 30, 2016, the Institution reported a liability for its proportionate share of the net pension liability for TRS and ERS. The net pension liability was measured as of June 30, 2015. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2014. An expected total pension liability as of June 30, 2015 was determined using standard roll-forward techniques. The Institution's proportion of the net pension liability was based on contributions to TRS and ERS during the fiscal year ended June 30, 2015. At June 30 2015, the Institution's TRS proportion was 1.716662%, which was a decrease of (0.021667)% from its proportion measured as of June 30, 2014. At June 30, 2015, the Institution's ERS proportion was 0.027218%, which was an increase of 0.002004% from its proportion measured as of June 30, 2014. \r\n \r\n- 30 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nFor the year ended June 30, 2016, the Institution recognized pension expense of $17,287,274 for TRS and $102,875 for ERS. At June 30, 2016, the Institution reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: \r\n \r\nTRS \r\n \r\nDeferred \r\n \r\nDeferred \r\n \r\nOutflows of \r\n \r\nInflows of \r\n \r\nResources \r\n \r\nResources \r\n \r\nERS \r\n \r\nDeferred \r\n \r\nDeferred \r\n \r\nOutflows of \r\n \r\nInflows of \r\n \r\nResources \r\n \r\nResources \r\n \r\nDifferences between expected and actual experience \r\n \r\n$ \r\n \r\n2,298,662 \r\n \r\n$ \r\n \r\n8,810 \r\n \r\nNet diffierence between projected and actual earnings on pension plan investments \r\n \r\n22,044,704 \r\n \r\n79,562 \r\n \r\nChanges in proportion and differences \r\n \r\nbetween Institution contributions \r\n \r\nand proportionate share of contributions \r\n \r\n$ \r\n \r\n3,256,587 \r\n \r\n2,981,705 $ \r\n \r\n56,620 \r\n \r\nInstitution contributions subsequent to the measurement date \r\nTotal \r\n \r\n26,234,649 \r\n \r\n$ \r\n \r\n29,491,236 $ \r\n \r\n27,325,071 $ \r\n \r\n178,786 235,406 $ \r\n \r\n88,372 \r\n \r\nThe Institution contributions subsequent to the measurement date of $26,234,649 for TRS and $178,786 for ERS are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the year ended June 30, 2017. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: \r\n \r\nYear Ending June 30: \r\n \r\nTRS \r\n \r\nERS \r\n \r\n2017 2018 2019 2020 2021 \r\n \r\n$ -10,536,095 $ $ -10,536,095 $ $ -10,536,112 $ $ 7,791,240 $ $ -251,422 \r\n \r\n-3,418 -19,699 -35,463 26,828 \r\n \r\nActuarial assumptions: The total pension liability as of June 30, 2015 was determined by an actuarial valuation as of June 30, 2014 using the following actuarial assumptions, applied to all periods included in the measurement: \r\n \r\nTeachers Retirement System: Inflation \r\n \r\n3.00% \r\n \r\nSalary increases Investment rate of return \r\n \r\n3.75  7.00%, average including inflation 7.50%, net of pension plan investment expense, including inflation \r\n \r\nMortality rates were based on the RP-2000 Combined Mortality Table for Males or Females set back two years for males and set back three years for females. \r\n \r\n- 31 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nThe actuarial assumptions used in the June 30, 2014 valuation were based on the results of an actuarial experience study for the period July 1, 2004  June 30, 2009. \r\n \r\nEmployees' Retirement System: Inflation \r\n \r\n3.00% \r\n \r\nSalary increases Investment rate of return \r\n \r\n5.45  9.25%, including inflation 7.50%, net of pension plan investment expense, including inflation \r\n \r\nMortality rates were based on the RP-2000 Combined Mortality Table for the periods after service retirement, for dependent beneficiaries, and for deaths in active service, and the RP-2000 Disabled Mortality Table set back eleven years for males for the period after disability retirement. \r\n \r\nThe actuarial assumptions used in the June 30, 2014 valuation were based on the results of an actuarial experience study for the period July 1, 2004  June 30, 2009. \r\n \r\nThe long-term expected rate of return on TRS and ERS pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected nominal returns, net of pension plan investment expense and the assumed rate of inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: \r\n \r\nAsset class \r\n \r\nTarget allocation \r\n \r\nLong-term expected real rate of return* \r\n \r\nFixed income Domestic large equities Domestic mid equities Domestic small equities International developed market equities International emerging market equities \r\n \r\n30.00% 39.70% \r\n3.70% 1.60% 18.90% 6.10% \r\n \r\n3.00% 6.50% 10.00% 13.00% 6.50% 11.00% \r\n \r\nTotal \r\n \r\n100.00% \r\n \r\n* Rates shown are net of the 3.00% assumed rate of inflation \r\nDiscount rate: The discount rate used to measure the total TRS and ERS pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and State of Georgia contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the TRS and ERS pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. \r\n \r\n- 32 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nSensitivity of the Institution's proportionate share of the net pension liability to changes in the discount rate: The following presents the Institution's proportionate share of the net pension liability calculated using the discount rate of 7.50%, as well as what the Institution's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.50%) or 1-percentage-point higher (8.50%) than the current rate: \r\n \r\nTeachers Retirement System: \r\nInstitution's proportionate share of the Net Pension Liability \r\n \r\n1% Decrease (6.50%) \r\n \r\nCurrent Discount Rate (7.50%) \r\n \r\n1% Increase (8.50%) \r\n \r\n$ 449,101,182 $ \r\n \r\n261,344,743 $ 106,588,762 \r\n \r\nEmployees' Retirement System: \r\nInstitution's proportionate share of the Net Pension Liability \r\n \r\n1% Decrease (6.50%) \r\n \r\nCurrent Discount Rate (7.50%) \r\n \r\n1% Increase (8.50%) \r\n \r\n$ \r\n \r\n1,563,130 $ \r\n \r\n1,102,710 $ \r\n \r\n710,183 \r\n \r\nPension plan fiduciary net position: Detailed information about the pension plan's fiduciary net position is available in the separately issued TRS and ERS financial reports which are publically available at www.trsga.com/publications and www.ers.ga.gov/formspubs/formspubs, respectively. \r\nRegents Retirement Plan \r\nPlan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 47-21-1 et.seq. and administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An \"eligible university system employee\" is a faculty member or all exempt full and partial benefit eligible employees, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from three approved vendors (VALIC, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts. \r\nFunding Policy The Institution makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2016, the employer contribution was 9.24% for the participating employee's earnable compensation. Employees contribute 6% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and nonforfeitable at all times. \r\n \r\n- 33 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nThe Institution and the covered employees made the required contributions of $13,660,980 (9.24%) and $8,870,768 (6%), respectively. \r\nVALIC, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices. \r\n \r\nEarly Retirement Pension Plan \r\n \r\nPlan Description Augusta University Early Retirement Pension Plan (ERP) is a single-employer defined benefit pension plan administered by Bryan, Pendleton, Swats, and McAlister. The plan was derived by Augusta University as a means of workforce reduction and was approved by the Board of Regents of the University System of Georgia (BOR) effective January 1, 2000. \r\nThe plan was designed to provide eligible participants additional benefits above the amounts payable through Teachers Retirement System of Georgia (TRS). The plan was designed to allow vested employees aged 55 or employees of any age with 25 years of creditable service to retire without penalties as applied by the Teachers Retirement System of Georgia (TRS) for early retirement. The plan would allow for all participants to retire as if they were vested and aged 60 or had attained 30 years of creditable service. Any member who opted into the Optional Retirement Plan aged 55 with 10 years of service by June 30, 2000 was also eligible to participate in the plan. \r\nThe plan is closed to new entrants. There were no active plan participants. As of January 1, 2016, plan participants consisted of the following: \r\n \r\nInactive Plan Participants: \r\n \r\nRetirees and Beneficiaries Currently Receiving Benefits \r\n \r\n638 \r\n \r\nTerminated Employees Entitled to Deferred Benefits \r\n \r\n0 \r\n \r\nDisabled Employees Entitled to Deferred Benefits \r\n \r\n0 \r\n \r\nTotal \r\n \r\n638 \r\n \r\nBenefits Provided TRS provides a benefit equal to 2% of the participant's average annual compensation during the two consecutive years of creditable service which produce the highest such average, multiplied by the number of years of creditable service, limited to 40 years. If the participant has less than 30 years of creditable service and has not attained age 60 at the time of retirement, the benefit will be reduced by the lesser of 1/12 of 7% for each month that retirement precedes age 60 or 7% for each year or fraction of a year by which the participant has less than 30 years of creditable service at the time of retirement. In addition, a one-time 3% increase is applied to the first $37,500 of the participant's benefit at retirement. \r\n \r\nThe ERP provides the additional benefits that would have been payable under TRS based on the following adjustments: \r\n Age of the participant was increased five years  Participant's creditable service was increased five years  Participant's annual rate of earnings as of August 1, 1999 was projected five years into the \r\nfuture with 3% increases each year \r\n \r\n- 34 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nERP benefits will be increased 3% a year as a cost-of-living adjustment (COLA): 1-1/2% on each January 1 and July 1. The ERP provided COLA's for both the ERP and TRS benefits until actual eligibility for a COLA through TRS occurred. Since that time, the ERP has provided COLA's only on the portion of the benefit paid by the ERP, and TRS has provided COLA's under the terms of the TRS plan. \r\nThe ERP does not issue a standalone report. \r\nFunding Policy The fund sources that provided for an employee's salary, as of December 31, 1999, would be responsible for funding the annuity to provide for retiree benefits. There is no additional cost to the employee/retiree, Board of Regents, or State of Georgia for this plan. Contributions are made by the Institution based on the actuarial valuation of the plan. For fiscal year 2016, affiliated organizations contributed $5,886,802 to the plan on-behalf of the Institution. \r\nSince this plan was not pre-funded, Augusta University's approach to collect and deposit as much into the ERP fund in the earlier years as is possible, thereby, realizing a greater return on investment. Effective January 1, 2016, the period to amortize the unfunded accrued liability was extended 2 years. With this change, the plan should be fully funded by June 30, 2025. The funding policy is reasonable and in compliance with minimum funding requirements set forth in Code Section 47-20-10 of the Public Retirement Systems Standards Law. \r\nInvestments Augusta University maintains an investment policy which fosters sound and prudent judgment in the management of assets to ensure safety of capital consistent with the fiduciary responsibility of the Institution to the citizens of Georgia and which conforms to the Board of Regents investment policy. All investments are consistent with Board of Regents policy and applicable Federal and state laws. \r\nInvestments are reported at fair value. Securities traded on a national or international exchange are valued at the last reported sales price. The Institution's Investment Policy and Guidelines for managing concentration of credit risk requires that stocks and debt issues be diversified. The Institution also relies upon the concentration of credit risk policy of the individual investment vehicles related to plan assets. More than 5% of the Pension Plan's Investments are in iShares Core Total U.S. Aggregate Bond Exchange-traded Fund (ETF), Vanguard Institutional Index Fund, iShares Russell 1000 Value ETF, and iShares Russell 1000 Growth ETF. These investments are 9.7%, 39.3%, 5.9%, and 9.5% respectively of the Plan's total investments. \r\nFor the fiscal year ended June 30, 2016, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was 2.02%. \r\nNet Pension Liability (NPL) The components of the net pension liability at June 30, 2016 were as follows: \r\n \r\nTotal Pension Liability Plan Fiduciary Net Position \r\n \r\n$ 151,817,059 -80,322,348 \r\n \r\nNet Pension Liability \r\n \r\n$ 71,494,711 \r\n \r\nPlan Fiduciary Net Position as a percentage of total pension liability is 52.91%. \r\n \r\n- 35 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nActuarial Assumptions The total pension liability was determined by an actuarial valuation as of January 1, 2016 with the results rolled forward to the June 30, 2016 measurement date using the following actuarial assumptions, applied to all periods included in the measurement: (a) rate of return of 7.50% per annum, compounded annually (b) inflation of 3 percent, and (c) cost of living increases of 3 percent per annum. \r\nTo better recognize current and future mortality improvements, effective June 30, 2016 mortality rates were based on the RP-2014 Mortality Table, adjusted to 2006, with generational mortality improvement projected after year 2006 using Scale MP-2015 rather than the previously used RP-2000 Mortality Table for Healthy Annuitants with projected improvement from year 2000 to year 2022 under Projection Scale AA. \r\nThe projection of cash flows used to determine the discount rate of 7.5% per annum, compounded annually assumes that employer contributions will be made at rates equal to the actuarially determined contribution rates. Based on that assumption, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. \r\nThe long-term expected rate of return on pension plan investments was determined using a buildingblock method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the pension plan's target asset allocation are summarized in the following table: \r\n \r\nAsset Class \r\n \r\nTarget Allocation \r\n \r\nLong-Term Expected Real Rate of Return \r\n \r\nDomestic Equity International Equity Fixed Income Real Estate Cash \r\n \r\n64.46% 8.23% \r\n15.58% 4.06% 7.67% \r\n \r\n6.50% 7.25% 1.25% 5.75% 0.50% \r\n \r\nSensitivity of Net Pension Liability to Changes in the Discount Rate The following represents the net pension liability calculated using the stated discount rate, as well as what the net pension liability would be if it were calculated using a discount rate that is 1-percentagepoint lower or 1-percentage-point higher than the current rate: \r\n \r\nNet Pension Liability \r\n \r\n1% Decrease 6.50% \r\n$ 84,587,641 \r\n \r\nCurrent Rate 7.50% \r\n \r\n1% Increase 8.50% \r\n \r\n$ 71,494,711 $ 60,145,990 \r\n \r\n- 36 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nSchedule of Changes in Net Pension Liability For the year ended June 30, 2016, the Institution recognized net pension liability of $71,494,711 calculated as follows: \r\n \r\nBalance, June 30, 2015 $ \r\n \r\nTotal Pension Liability (a) \r\n143,780,226 $ \r\n \r\nPlan Fiduciary Net Position \r\n(b) \r\n79,125,737 $ \r\n \r\nNet Pension Liability (a) - (b) \r\n64,654,489 \r\n \r\nInterest Experience losses (gains) Changes of assumptions Contributions - Employer Net investment income Benefit payments \r\n \r\n10,278,138 1,349,554 9,885,919 \r\n-13,476,778 \r\n \r\n13,084,672 1,588,717 \r\n-13,476,778 \r\n \r\n10,278,138 1,349,554 9,885,919 \r\n-13,084,672 -1,588,717 0 \r\n \r\nNet Change \r\n \r\n8,036,833 \r\n \r\n1,196,611 \r\n \r\n6,840,222 \r\n \r\nBalance, June 30, 2016 $ \r\n \r\n151,817,059 $ \r\n \r\n80,322,348 $ \r\n \r\n71,494,711 \r\n \r\nAffiliated organizations contributed $5,886,802 to the plan on behalf of the Institution. \r\nSchedule of Changes in Pension Expense For the year ended June 30, 2016, the Institution recognized pension expense of $16,976,695 at June 30, 2016. \r\nPension Expense \r\n \r\nInterest \r\n \r\n$ \r\n \r\nProjected Investment Income \r\n \r\nRecognition of experience (gains) losses \r\n \r\nRecognition of changes in assumptions \r\n \r\nInvestment losses (gains) \r\n \r\n10,278,138 -5,919,726 1,349,554 9,885,919 1,382,810 \r\n \r\nPension Expense June 30, 2016 \r\n \r\n$ \r\n \r\n16,976,695 \r\n \r\n- 37 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nDeferred Outflows/Inflows of Resources At June 30, 2016, the Institution reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: \r\n \r\nDeferred Pension Outflows of Resources \r\n \r\nDeferred Pension Inflows of Resources \r\n \r\nNet difference between projected and \r\n \r\nactual earnings on pension plan \r\n \r\ninvestments \r\n \r\n$ \r\n \r\n5,014,629 $ \r\n \r\n0 \r\n \r\nAmounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: \r\n \r\nYear Ending June 30: \r\n \r\n2017 2018 2019 2020 \r\nNote 15. Risk Management \r\n \r\n$ 1,382,810 $ 1,382,810 $ 1,382,808 $ 866,201 \r\n \r\nThe USG offers its employees and retirees under the age of 65 access to four different healthcare plan options. For the USG's Plan Year 2016, the following healthcare plan options were available: \r\n \r\n BlueChoice HMO  Comprehensive Care  Consumer Choice HSA  Kaiser Permanente HMO \r\nThe Institution, participating employees and retirees pay premiums to the healthcare plan options to access benefits coverage. The respective health plan options are included in the financial statements of the Board of Regents of the University System of Georgia  University System Office. All units of the USG share the risk of loss for claims associated with the self-insured plans; including the BlueChoice HMO, Comprehensive Care, and Consumer Choice HSA Plan. \r\nRetirees age 65 and older participate in a secondary healthcare coverage for Medicare-eligible retirees and dependents provided through a retiree healthcare exchange option. The USG makes contributions to a health reimbursement account, which can be used by the retiree to pay premiums and out-ofpocket healthcare-related expenses. \r\nThe reserves for these plans are considered to be a self-sustaining risk fund. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia to serve as the claims administrator for the selfinsured healthcare plans. In addition to the self-insured healthcare plan options offered to the employees of the USG, fully insured HMO healthcare plan are also offered to System employees. \r\n \r\n- 38 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nThe Department of Administrative Services (DOAS) has the responsibility for the State of Georgia of making and carrying out decisions that will minimize the adverse effects of accidental losses that involve State government assets. The State believes it is more economical to manage its risks internally and set aside assets for claim settlement. Accordingly, DOAS processes claims for risk of loss to which the State is exposed, including general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. The Institution, as an organizational unit of the Board of Regents of the University System of Georgia, is part of the State of Georgia reporting entity, and as such, is covered by the State of Georgia risk management program administered by DOAS. Premiums for the risk management program are charged to the various state organizations by DOAS to provide claims servicing and claims payment. \r\nA self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. \r\nThe program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund. \r\nNote 16. Contingencies \r\nAmounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditure disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although the Institution expects such amounts, if any, to be immaterial to its overall financial position. \r\nLitigation, claims and assessments filed against the Institution (an organizational unit of the University System of Georgia), if any, are generally considered to be actions against the State of Georgia. Accordingly, significant litigation, claims and assessments pending against the State of Georgia are disclosed in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 2016. \r\nNote 17. Post-Employment Benefits Other Than Pension Benefits \r\nPursuant to the general powers conferred by the Official Code of Georgia Annotated Section 20-3-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee. \r\n \r\n- 39 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nThe Board of Regents Retiree Health Benefit Plan is a single-employer, defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The Institution pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. \r\nAs of June 30, 2016, there were 2,014 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2016, the Institution recognized as incurred $8,821,712 of expenditures, which was net of $3,937,129 of participant contributions. \r\n \r\nNote 18. Natural Classifications with Functional Classifications Operating expenses by functional classification for fiscal year 2016 are shown below: \r\n \r\nNatural Classification \r\n \r\nInstruction \r\n \r\nResearch \r\n \r\nFunctional Classification Fiscal Year 2016 \r\n \r\nPublic Service \r\n \r\nAcademic Support \r\n \r\nStudent Services \r\n \r\nInstitutional Support \r\n \r\nFaculty \r\n \r\n$ \r\n \r\nStaff \r\n \r\nEmployee Benefits \r\n \r\nOther Personal Services \r\n \r\nTravel \r\n \r\nScholarships and Fellowships \r\n \r\nUtilities \r\n \r\nSupplies and Other Services \r\n \r\nDepreciation \r\n \r\n64,282,523 $ 31,768,570 29,425,965 \r\n75,129 2,111,879 \r\n555,244 735,269 21,021,092 8,864,438 \r\n \r\n10,443,552 $ 12,500,049 \r\n6,394,251 359 \r\n453,789 63,552 5,096 \r\n16,243,270 547,968 \r\n \r\n10,132,963 $ 16,359,973 \r\n7,550,668 14,626 \r\n458,528 90,000 \r\n114,413 8,722,426 \r\n335,664 \r\n \r\n11,997,400 $ 26,330,469 13,592,460 \r\n47,461 269,903 \r\n15,063 114,245 2,798,003 1,837,254 \r\n \r\n211,599 $ 3,456,003 1,231,478 \r\n49,846 114,453 \r\n69,075 53,824 2,337,481 25,933 \r\n \r\n2,592,447 27,633,746 16,154,667 \r\n358,366 253,995 \r\n225,753 23,543,666 \r\n8,474,270 \r\n \r\nTotal Expenses \r\n \r\n$ 158,840,109 $ 46,651,886 $ 43,779,261 $ 57,002,258 $ 7,549,692 $ 79,236,910 \r\n \r\nNatural Classification \r\n \r\nPlant Operations and \r\nMaintenance \r\n \r\nFunctional Classification \r\n \r\nFiscal Year 2016 \r\n \r\nScholarships and \r\n \r\nAuxiliary \r\n \r\nPatient \r\n \r\nFellowships Enterprises \r\n \r\nCare \r\n \r\nTotal Expenses \r\n \r\nFaculty Staff Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation \r\n \r\n$ 115,057 $ 74,644,409 $ 174,419,950 \r\n \r\n$ 11,230,553 \r\n \r\n4,303,970 104,217,825 237,801,158 \r\n \r\n4,456,204 \r\n \r\n1,676,116 48,236,674 128,718,483 \r\n \r\n23,244 \r\n \r\n1,050 \r\n \r\n570,081 \r\n \r\n30,111 \r\n \r\n80,320 \r\n \r\n425,763 \r\n \r\n4,198,741 \r\n \r\n$ 7,475,123 \r\n \r\n935,491 \r\n \r\n9,203,548 \r\n \r\n8,633,405 \r\n \r\n520,467 \r\n \r\n411,524 10,813,996 \r\n \r\n11,354,106 \r\n \r\n6,175,040 112,808,287 205,003,371 \r\n \r\n7,116,689 \r\n \r\n1,692,028 \r\n \r\n28,894,244 \r\n \r\nTotal Expenses \r\n \r\n$ 42,821,068 $ 7,475,123 $ 15,521,733 $ 340,745,532 $ 799,623,572 \r\n \r\n- 40 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nNote 19. Component Units \r\n \r\nMCG Health System, Inc. d/b/a AU Medical Center MCG Health System, Inc. d/b/a AU Health System (the Health System), located in Augusta, Georgia, is a legally separate, tax exempt component unit of the State of Georgia reporting entity. Although the Institution is not fiscally accountable for the Health System, the nature and significance of the relationship between the Institution and the Health System is such that exclusion from these departmental financial statements would render them misleading. \r\n \r\nDuring fiscal year 2016, the Health System distributed approximately $43.0 million to the Institution for restricted and unrestricted purposes. \r\n \r\nDeposits and Investments for Component Units: \r\n \r\nDeposits: At June 30, 2016, $33,426,737 of the Health System's deposits were uninsured, uncollateralized or collateralized by securities held by the pledging institution, its trust department or agent in other than the company's name. \r\n \r\nInvestments: At June 30 2016, the Health System maintains an investment policy, which fosters and sound and prudent judgement in the management of assets to ensure safety of capital consistent with the fiduciary responsibility each institution has to the citizens of Georgia and which conforms to Board of Regents policy. All investments are consistent with donor intent, Board of Regents policy and applicable federal and state laws. \r\n \r\nA summary of investments follows: \r\n \r\nInvestment type \r\n \r\nFair Value \r\n \r\nLess Than 3 Months \r\n \r\n4-12 Months \r\n \r\nInvestment Maturity \r\n \r\n1-5 Years \r\n \r\n6-10 Years \r\n \r\nMore Than 10 Years \r\n \r\nDebt Securities \r\n \r\nU.S. Treasuries \r\n \r\n$ \r\n \r\nU.S. Agencies \r\n \r\nExplicitly Guaranteed \r\n \r\nImplicitly Guaranteed \r\n \r\nCorporate Debt \r\n \r\nMortgage Backed Securities (Commercial) \r\n \r\nMunicipal Obligation \r\n \r\n25,397,420 \r\n \r\n$ 24,438,435 $ 958,985 \r\n \r\n3,789,668 6,803,614 42,193,406 $ 26,587,722 16,797,700 \r\n \r\n$ 1,250,488 \r\n \r\n1,281,276 5,631,952 \r\n866,851 \r\n \r\n260,013 4,169,092 33,850,519 12,146,458 14,434,492 \r\n \r\n208,582 $ 98,814 \r\n1,460,447 4,141,790 1,496,357 \r\n \r\n3,321,073 1,254,432 \r\n10,299,474 \r\n \r\n121,569,530 $ 1,250,488 $ 7,780,079 $ 89,299,009 $ 8,364,975 $ 14,874,979 \r\n \r\nOther Investments Equity Securities - Domestic Equity Securities - International Accured Interest and Dividends Joint Venture \r\n \r\n20,301,494 8,240,248 559,509 5,385,330 \r\n \r\nTotal Investments \r\n \r\n$ 156,056,111 \r\n \r\n- 41 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nAs of June 30, 2016 and June 30, 2015, the Health System utilized two investment managers. These managers are required to make investments in adherence to the Health System's current investment policy and objectives. \r\n \r\nThe custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to transact, the Health System will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The entire balance of the Health System's investments is held by the investment managers in the Health System's name as of June 30, 2016. \r\n \r\nThe Health System's investment strategy utilizes the total return approach with respect to investment returns, which recognizes that total return is comprised of both income and capital gains (realized and unrealized). When considering investment performance, the Health System measures the total returns, including dividends on stock, interest on fixed-income securities and capital gains. The Health System's long-term return objective is stated at 2% plus the Consumer Price Index. \r\n \r\nThe Health System allows for an overall level of investment risk sufficient to achieve the long-term return objective described above, managed primarily through its asset allocation policy. The Health System's investment policy requires cash levels adequate to meet all expected or unexpected cash flow needs by investing at least 90% of the Health System's assets in securities that can be sold readily and efficiently. The Health System's investment policy also states that the fixed income maturity for any single security should not exceed five years. \r\n \r\nCapital Assets for Component Units: The Health System Capital Assets activity for the year ending June 30, 2016 was as follows: \r\n \r\nCapital Assets, Not Being Depreciated Land Construction Work-in-Progress \r\n \r\nBeginning Balance July 1, 2015 \r\n \r\nAdditions \r\n \r\nReductions \r\n \r\nEnding Balance June 30, 2016 \r\n \r\n$ 11,267,344 \r\n \r\n$ 11,267,344 \r\n \r\n58,260,455 $ 18,897,336 $ 55,598,805 \r\n \r\n21,558,986 \r\n \r\nTotal Capital Assets Not Being Depreciated \r\n \r\n69,527,799 \r\n \r\n18,897,336 \r\n \r\n55,598,805 \r\n \r\n32,826,330 \r\n \r\nCapital Assets, Being Depreciated: Building and Building Improvements Facilities and Other Improvements Equipment Software \r\n \r\n32,847,341 119,324,446 233,291,686 \r\n9,491,310 \r\n \r\n44,491,858 13,223,606 \r\n392,427 \r\n \r\n355,557 7,755,924 \r\n \r\n32,847,341 163,460,747 238,759,368 \r\n9,883,737 \r\n \r\nTotal Assets Being Depreciated \r\n \r\n394,954,783 \r\n \r\n58,107,891 \r\n \r\n8,111,481 \r\n \r\n444,951,193 \r\n \r\nLess: Accumulated Depreciation Building and Building Improvements Facilities and Other Improvements Equipment Software \r\nTotal Accumulated Depreciation \r\n \r\n5,610,565 44,164,346 142,362,385 \r\n5,810,049 \r\n197,947,345 \r\n \r\n943,507 7,787,507 21,900,411 1,631,976 \r\n32,263,401 \r\n \r\n7,214,967 7,214,967 \r\n \r\n6,554,072 51,951,853 157,047,829 \r\n7,442,025 \r\n222,995,779 \r\n \r\nTotal Capital Assets, Being Depreciated, Net \r\n \r\n197,007,438 \r\n \r\n25,844,490 \r\n \r\n896,514 \r\n \r\n221,955,414 \r\n \r\nCapital Assets, net \r\n \r\n$ 266,535,237 $ 44,741,826 $ 56,495,319 $ 254,781,744 \r\n \r\n- 42 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nLong-Term Liabilities for Component Units: Changes in long-term liabilities for the Health System for the fiscal year ended June 30, 2016 are shown below: \r\n \r\nBeginning Balance July 1, 2015 \r\n \r\nAdditions \r\n \r\nReductions \r\n \r\nEnding Balance June 30, 2016 \r\n \r\nCurrent Portion \r\n \r\nCompensated Absensces \r\n \r\n$ \r\n \r\nLease Purchase Obligation (Capital Lease) \r\n \r\nNotes and Loans Payable \r\n \r\nInterest Rate Swap \r\n \r\nRevenue/Mortgage Bonds Payable \r\n \r\n15,113,158 $ 41,003,334 47,112,500 22,158,481 121,890,000 \r\n \r\n4,912,058 $ 3,781,313 \r\n8,726,306 \r\n \r\n4,384,282 $ 6,534,229 3,241,667 \r\n3,700,000 \r\n \r\n15,640,934 $ 38,250,418 43,870,833 30,884,787 118,190,000 \r\n \r\n15,640,934 6,696,954 3,387,500 \r\n3,820,000 \r\n \r\nTotal Long-Term Obligations \r\n \r\n$ 247,277,473 $ 17,419,677 $ 17,860,178 $ 246,836,972 $ 29,545,388 \r\n \r\nCapital Lease Obligations: On June 27, 2013, the Health System entered into capital lease obligations as part of the Managed Services Alliance Agreement (MSA) with a global healthcare technology company (the Imaging Alliance Partner) to innovate the delivery of healthcare in a new business model. Under the MSA Agreement, the Imaging Alliance Partner will provide the Health System diagnostic imaging equipment, patient monitoring technology, maintenance services, education, performance improvement consulting, and other services. The Health System and the Imaging Alliance Partner are jointly incentivized in the MSA for clinical and operational outcomes. The MSA was effective July 1, 2013 and has a term of fifteen years. Equipment and technology financed through the MSA are recorded as capital lease obligations. The interest rate in the MSA is 6%. \r\nIn connection with the MSA, the Health System agreed to sell and leaseback certain equipment, which is accounted for as a capital lease, from the Imaging Alliance Partner. The net carrying value of the equipment sold was approximately $20,920,000 on the date of sale. Since the net carrying value of the equipment sold was equal to their sales price, there was no gain or loss recognized on the sale. \r\nThe assets under capital lease are included in capital assets with a cost of $52,640,000 and accumulated amortization of $20,282,000 at June 30, 2016. Amortization of assets under capital lease is included in depreciation and amortization expense. \r\nOn September 1, 2014, the Health System entered into a capital lease obligation to purchase a unified communication system. As of June 30, 2016, the balance of this obligation under capital lease was $2,000,000. \r\n \r\n- 43 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nOn December 14, 2015, the Health System entered into a capital lease obligation to purchase medical equipment. As of June 30, 2016, the balance of this obligation under capital lease was $71,000. \r\n \r\nYear ending June 30: 2017 2018 2019 2020 2021 2022 through 2026 2027 through 2031 \r\n \r\nCapital Leases \r\n \r\n$ \r\n \r\n8,822,279 \r\n \r\n8,551,937 \r\n \r\n8,016,685 \r\n \r\n7,365,238 \r\n \r\n5,641,800 \r\n \r\n6,679,686 \r\n \r\n353,311 \r\n \r\nTotal Minimum Lease Payments \r\n \r\n45,430,936 \r\n \r\nLess: Interest \r\n \r\n7,180,518 \r\n \r\nPrincipal Outstanding \r\n \r\n$ 38,250,418 \r\n \r\nNotes and Loans Payable On June 27, 2012, the Health System entered into a note in the amount of $50,000,000. Funds from the note are to be used to fund certain construction and renovation projects and to purchase new and replacement equipment. Through June 30, 2015, the note bore a fixed interest rate of 2.05% for a three-year term, and the interest was due monthly. \r\n \r\nOn June 30, 2015, the Health System entered into a modification of the terms of the note. Effective July 1, 2015, the note is modified to a variable interest note and incurs interest at a rate of LIBOR plus 0.65% per annum. Interest rates are reset monthly. The note is extended for a three-year term through July 1, 2018, and the interest is due monthly. \r\n \r\nYear ending June 30: 2017 2018 2019 \r\n \r\nPrincipal \r\n \r\n$ \r\n \r\n3,387,500 \r\n \r\n3,445,833 \r\n \r\n37,037,500 \r\n \r\n$ 43,870,833 \r\nRevenue Bonds Payable: Series 2008A and 2008B Bonds On April 1, 2008, the Health System issued a total of $135,000,000 of Development Authority of Richmond County Revenues Bonds, Series 2008A and 2008B (2008 Bonds), Proceeds from the 2008 Bonds were to be used to fund certain construction and renovation projects and to purchase new and replacement equipment. The proceeds were also used to refund outstanding capital lease obligations and to pay certain costs associated with the issuance of the 2008 Bonds. Each 2008 Bond series was generally secured through the trust indenture by the gross revenues of the Health System. \r\n \r\n- 44 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nSeries 2014A and 2014B Bonds On July 15, 2014, the Health System refunded the 2008A and 2008B Bonds with the 2014A and 2014B Bonds (2014 Bonds), which are a direct bank placement of bonds in the amount of $60,945,000 for each of the 2014A and 2014B Bonds. The amortization of the 2014A and 2014B Bonds is approximately the same as the amortization of the 2008A and 2008B Bonds. \r\nAs of June 30, 2016, debt service requirements of the variable rate debt and net payments on the related swap, assuming current interest rates remain the same for their term, were as follows: \r\n \r\nYear ending June 30: 2017 2018 2019 2020 2021 2022 through 2026 2027 through 2031 2032 through 2036 2037 through 2041 \r\n \r\nRevenue Bonds \r\n \r\n$ \r\n \r\n3,820,000 \r\n \r\n3,950,000 \r\n \r\n4,080,000 \r\n \r\n4,220,000 \r\n \r\n4,360,000 \r\n \r\n24,100,000 \r\n \r\n28,440,000 \r\n \r\n33,520,000 \r\n \r\n11,700,000 \r\n \r\nPrincipal Outstanding \r\n \r\n$ 118,190,000 \r\n \r\nSwap Concurrent with the issuance of the 2008 Bonds, the Health System entered into a variable-to-fixed interest rate swap (the Swap) to convert the Health System's variable interest rate on the 2008 Bonds into a synthetic fixed rate of 3.302%. \r\n \r\nThe Swap matures on July 1, 2037. The notional amount of the Swap at June 30, 2016 and June 30, 2015 was $118,190,000 and $121,890,000, respectively. The notional amount decreased from the initial notional amount of $135,000,000. The notional value of the Swap declines in conjunction with payments of bond principal such that the outstanding balance of the bonds approximate the notional amount of the Swap at all times. Under the Swap, the Health System pays the counterparty interest at a fixed rate of 3.302% and receives interest payments at a variable rate computed as 68% of LIBOR. \r\n \r\nThe fair value of the Swap is recorded as an asset or liability, depending on whether the termination of the Swap would result in amounts due to the Health System or the Swap counterparty. At June 30, 2016, the fair value of the Swap represented a liability to the Health System in the amount of $30,885,000 the Health System or the Swap counterparty is required to post collateral with the other party in the event that the fair value of the Swap exceeds certain thresholds, as defined. At June 30, 2016, the Health System had $11,400,000 posted cash collateral with the Swap counterparty, respectively. \r\n \r\n- 45 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nAs of June 30, 2016 and 2015, the Health System was exposed to credit risk in the amount of the fair value of the Swap. The Health System has two Swap counterparties. As of June 30, 2016, the Swap counterparties were rated A+ Fitch Ratings, A1 by Moody's Investors Services, and A by Standard \u0026 Poor's. To mitigate the potential for credit risk, various levels of collateralization by the counterparty may be required should the counterparty's credit rating be downgraded and the fair value of the Swap be in a liability position at a level above certain thresholds specified in the Swap agreement. \r\n \r\nThe Health System or the counterparty may terminate the Swap if the other party fails to perform under the terms of the agreement. If the Swap is terminated, the variable rate bonds would no longer carry a synthetic fixed interest rate. Also, if at the time of termination, the Swap has a negative fair value (unfavorable to the Health System), the Health System would be liable to the counterparty for a payment equal to the Swap's fair value. \r\n \r\nMedical College of Georgia Foundation, Inc. Medical College of Georgia Foundation, Inc. (the \"Foundation\") is a component unit of the State of Georgia reporting entity. Although the Institution is not fiscally accountable for the Foundation, the nature and significance of the relationship between the Institution and the Foundation is such that exclusion from these departmental financial statements would render them misleading. \r\n \r\nThe Foundation is a private nonprofit organization that reports under FASB Standards. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. \r\n \r\nDuring fiscal year 2016, the Foundation distributed approximately $3.7 million to the Institution for restricted and unrestricted purposes. \r\nInvestments for Component Units: Medical College of Georgia Foundation holds endowment and other investments in the amount of $214,424,385. The $187 million donor-restricted corpus of the endowment is nonexpendable, but the earnings on the investment may be expended as restricted by the donors. Medical College of Georgia Foundation, in conjunction with the donors, has established a spending plan whereby a certain percentage (generally not to exceed 3.5% of a rolling average of endowment net assets using the prior three calendar years ended December 31, 2015, 2014, and 2013) may be distributed for purposes of supporting unrestricted and temporarily restricted activities. \r\n \r\nInvestments are comprised of the following amounts at June 30, 2016: \r\n \r\nFair Value \r\n \r\nMoney Market Account Corporate Bonds Equity Securities Split Interest Investments Real Estate Diversifying Strategies \r\n \r\n$ \r\n \r\n1,863,823 \r\n \r\n22,563,325 \r\n \r\n72,570,132 \r\n \r\n1,852,683 \r\n \r\n25,899,932 \r\n \r\n89,674,490 \r\n \r\nTotal Investments \r\n \r\n$ 214,424,385 \r\n \r\n- 46 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nCapital Assets for Component Units: The Medical College of Georgia Foundation holds the following Capital Assets as of June 30, 2016: \r\n \r\nCapital Assets not being Depreciated: Land \r\n \r\nJune 30, 2016 $ 4,070,983 \r\n \r\nCapital Assets being Depreciated: Buildings and Building Improvements Machinery and Equipment \r\nTotal Capital Assets being Depreciated/Amortized \r\n \r\n218,321 204,859 423,180 \r\n \r\nLess Total Accumulated Depreciation/Amortization \r\n \r\n218,326 \r\n \r\nTotal Capital Assets being Depreciated, Net \r\n \r\n204,854 \r\n \r\nCapital Assets, net \r\n \r\n$ 4,275,837 \r\n \r\nLong-term Liabilities for Component Units At June 30, 2016, the Medical College of Georgia Foundation long-term liabilities consisted of a $944,492 liability due under a split-interest agreement. \r\n \r\nChanges in long-term liabilities for the Medical College of Georgia Foundation for the fiscal year ended June 30, 2016 are show below: \r\n \r\nAmounts due \r\n \r\nBalance \r\n \r\nBalance \r\n \r\nwithin One \r\n \r\nJuly 1, 2015 \r\n \r\nAdditions \r\n \r\nReductions \r\n \r\nJune 30, 2016 \r\n \r\nYear \r\n \r\nLiabilities under split interest agreement $ Notes and Loans Payable \r\n \r\n834,695 $ 2,213,206 \r\n \r\n109,797 $ \r\n \r\n$ 8 \r\n \r\n944,492 2,213,198 $ \r\n \r\n2,213,198 \r\n \r\nTotal Long Term Liablilities \r\n \r\n$ \r\n \r\n3,047,901 $ \r\n \r\n109,797 $ \r\n \r\n8 $ \r\n \r\n3,157,690 $ \r\n \r\n2,213,198 \r\n \r\nNotes and Loans Payable During the year ended June 30, 2013, the Foundation entered into a non-revolving secured draw loan not to exceed $3,000,000 with a financial Institution to provide financing to obtain land located around Augusta University. The agreement was modified on October 7, 2014 to raise the not to exceed amount to $5,000,000. The draw note bears interest at a fixed 3.25%, and matures in October 2016. The note is collateralized by various real property owned by Resurgens Properties, LLC funded by the draw note. \r\n \r\n- 47 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nAnnual debt service requirements to maturity for Notes and Loans payable are as follows: \r\n \r\nYear ended June 30: \r\n \r\nNotes and Loans Payable \r\n \r\nYear \r\n \r\nPrincipal \r\n \r\n2017 \r\n \r\n1 \r\n \r\n$ 2,213,198 \r\n \r\nMedical College of Georgia Physicians Practice Group Foundation (d/b/a AU Medical Associates) and Subsidiaries The Medical College of Georgia Physicians Practice Group Foundation, d/b/a AU Medical Associates (AUMA or the Company), was formed in 1958 as a nonprofit organization for the purpose of enhancing the clinical, research, and educational missions of the Augusta University (AU) and billing and collecting for medical services provided to patients. Revenues are obtained primarily from physician fees charged to patients at AU Medical Center and AU Children's Medical Center, which are operated by MCG Health, Inc. and d/b/a AU Medical Center (AUMC). \r\nPPG Properties, LLC is a limited liability company formed in 2001 by AUMA to manage real estate rental properties. This entity has no termination date. \r\nPPG Alternative Collections, LLC is a limited liability company formed in 2003 by AUMA to bill and collect for anesthesia services provided to patients. This entity has no termination date. \r\nGeorgia Esoteric and Molecular Labs, LLC is a limited liability company formed in 2004 by AUMA to operate a specialized pathology laboratory with genetic or molecular testing capabilities. This entity has no termination date. \r\nMCG-PPG Cancer Research Center, LLC (CRC) was formed in 2004 by AUMA to construct, own and operate a portion of a building to house a cancer research center on the campus of AU. This entity has no termination date. \r\nGRMCGRMA, SP is an offshore captive, which AUMA entered into effective July 9, 2013 to provide insurance coverage. \r\nAUMA is the sole equity member and has sole voting control of each of the LLC's. \r\nAUMA is a component unit of the State of Georgia reporting entity. Although the Institution is not fiscally accountable for the Foundation, the nature and significance of the relationship between the Institution and the Foundation is such that exclusion from these departmental financial statements would render them misleading. \r\nAUMA is a private nonprofit organization that reports under modified cash standards. As such, certain revenue/expense recognition criteria and presentation features are different from GASB revenue/expense recognition criteria and presentation features. AUMA's modified cash financial statements were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. In addition, adjustments were made to convert patient receivables and Other Post-employment Benefits Obligations from the modified cash basis to accrual basis. \r\n \r\n- 48 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nDuring fiscal year 2016, AUMA distributed approximately $100.8 million to the Institution for restricted and unrestricted purposes, including collections for medical services provided to patients. Note 13 of this financial report provides information on related party leases between AUMA (listed as MCG-PPG, CRC LLC) and the Institution. \r\n \r\nPatient Receivables For the year 2016, patient receivables amounted to $10,535,982, which is net of uncollectible amounts of $48,016,723. \r\n \r\nInvestments for Component Units: Investments are comprised of the following amounts at June 30, 2016: \r\n \r\nCost \r\n \r\nFair Value \r\n \r\nCertificates of Deposit Government and Agency Securities Corporte Bonds Equity Securities Mutual Funds Joint Ventrues/Partnerships Board of Regents Short-Term Fund \r\n \r\n$ \r\n \r\n6,999,101 $ \r\n \r\n7,002,565 \r\n \r\n11,588,501 \r\n \r\n11,750,847 \r\n \r\n11,368,117 \r\n \r\n12,067,476 \r\n \r\n7,288,642 \r\n \r\n9,704,850 \r\n \r\n1,192,584 \r\n \r\n1,561,700 \r\n \r\n435,000 \r\n \r\n1,270,491 \r\n \r\n6,273,349 \r\n \r\n6,280,747 \r\n \r\nTotal Investments \r\n \r\n$ 45,145,294 $ \r\n \r\nCapital Assets for Component Units: PPG held the following Capital Assets as of June 30, 2016: \r\n \r\n49,638,676 \r\n \r\nCapital Assets not being Depreciated: Land (and other assets) \r\n \r\nJune 30, 2016 \r\n \r\n$ \r\n \r\n4,044,523 \r\n \r\nCapital Assets being Depreciated: Buildings and Building Improvements Machinery and Equipment \r\nTotal Capital Assets being Depreciated/Amortized \r\n \r\n3,585,200 10,208,231 13,793,431 \r\n \r\nLess Total Accumulated Depreciation/Amortization \r\n \r\n10,528,475 \r\n \r\nTotal Capital Assets being Depreciated, Net \r\n \r\n3,264,956 \r\n \r\nCapital Assets, net \r\n \r\n$ \r\n \r\n7,309,479 \r\n \r\n- 49 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nLong-Term Liabilities for Component Units: Changes in long-term liabilities for component units for the fiscal year ended June 30, 2016 are show below: \r\n \r\nNotes and Loans Payable Note Premium Other Post-Employment Benefit Obligation \r\n \r\nBalance July 1, 2015 \r\n \r\nAdditions \r\n \r\nReductions \r\n \r\nBalance June 30, 2016 \r\n \r\nAmounts due within One Year \r\n \r\n$ 24,490,000 \r\n \r\n$ \r\n \r\n2,262,660 \r\n \r\n$ 5,274,929 \r\n \r\n810,000 $ 196,729 \r\n \r\n23,680,000 $ 2,065,931 5,274,929 \r\n \r\n835,000 \r\n \r\nTotal Long Term Liablilities \r\n \r\n$ 26,752,660 $ 5,274,929 $ 1,006,729 $ 31,020,860 $ 835,000 \r\n \r\nNotes and Loans Payable: In 2004, the CRC issued a total of $32,870,000 Development Authority of Richmond County Education Facilities Revenue Bonds (the 2004 Bonds), Series 2004A and Series 2004B. Proceeds from the 2004 Bonds provided the funds to finance the cost of the construction of a portion of a cancer research center building on the campus of Augusta University. Semi-annual interest payments at interest rates range from 2.5% to 5.0%. \r\n \r\nOn October 30, 2014, CRC issued the Development Authority of Richmond County Revenue Refunding Bonds (the 2014 Bonds), Series 2014A, in the amount of $24,490,000. Proceeds of the Series 2014 Bonds were used to refund all of the 2004 Bonds, fund a debt service reserve fund for the Series 2014 Bonds, and pay the cost of issuing the 2014 Series Bonds, Semi-annual interest payments at interest rates range from 3.0% to 5.0%. \r\nThe effective interest rate at June 30, 2016 was 2.93%. Principal payments are due annually through December 2034. \r\n \r\nAnnual debt services requirements to maturity for Notes and Loans payable are as follows: \r\n \r\nYear ending June 30: 2017 2018 2019 2020 2021 2022 through 2026 2027 through 2031 2032 through 2036 \r\n \r\nYear \r\n1$ 2 3 4 5 6 - 10 11 - 15 16 - 20 \r\n \r\nPrincipal \r\n835,000 865,000 905,000 945,000 970,000 5,585,000 6,940,000 6,635,000 \r\n \r\nTotal Minimum Lease Payments \r\n \r\n23,680,000 \r\n \r\nLess: Interest \r\n \r\n2,065,931 \r\n \r\nPrincipal Outstanding \r\n \r\n$ 21,614,069 \r\n \r\n- 50 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nPost-Employment Benefits Other Than Pension Benefits \r\nPlan Description and Funding Policy The Augusta University Medical Associates Retiree Plan (Plan) is a single-employer, defined-benefit, healthcare plan administered by the Medical College of Georgia Physicians Practice Group Foundation d/b/a Augusta University Medical Associates \u0026 Subsidiaries. The following description of the Plan provides only general information. Participants should refer to the Plan agreement for a complete description of the Plan's provisions. \r\n \r\nNon-Faculty Participants Employees must attain age 60 with 10 years of service at retirement. No retiree contributions are required for non-faculty employees who attain age 60 with 20 years of services. Spouses of eligible retirees are covered during the retiree's lifetime. All benefits cease upon the death of the retiree. \r\n \r\nFaculty Participants Employees who meet the university's retirement eligibility must have 10 years of service with Augusta University Medical Associates at retirement to receive lifetime benefits. If the eligible retiree has less than 10 years of service, temporary benefits are payable for the number of years equal to the retiree's years of service. The university's retirement eligibility is either the attainment of age 60 with 10 years of service with the university or the attainment of 25 years of service with the university. Spouses are covered for the same period that the retiree is covered. Additionally, a spouse of a retiree who is eligible for lifetime benefits is covered for 10 years following the retiree's death. \r\n \r\nMembership of the Plan consisted of the following at June 30, 2016: \r\n \r\nNon-Faculty Participants Actives (Covered) Actives (Not Covered) Retiress (Covered) \r\nFaculty Participants Actives (Covered) Actives (Not Covered) Retirees (Covered) Retirees (Fringe Benefits Only) Surviving Spouses (Covered) \r\n \r\n276 47 26 \r\n469 40 \r\n218 12 34 \r\n \r\nThe benefits of the Plan are funded on a pay-as-you-go basis. The company funds on a cash basis as benefits are paid. No assets have been segregated and restricted to provide for postemployment benefits. \r\n \r\n- 51 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nRetiree contributions are assumed to increase at the health care cost trend rate. Non-faculty retirees and their spouses contribute 25% of the group premium rate below if the retiree is eligible for benefits but has less than 20 years of service. There are no other retiree contributions. For the fiscal year ended 2016, the Augusta University Medical Associates contributed $20,853,454 to the plan, for current premiums or claims. Plan members receiving benefits contributed $1,176,526 for current premiums or claims. \r\n \r\nPre-65 Non-Faculty Annual Premium Post-65 Non-Faculty Annual Premium \r\n \r\nRetiree \r\n$ 7,149 $ 4,647 \r\n \r\nMedical and fringe benefit claims cost with trend rate for future increases: \r\n \r\nSpouse \r\n$ 8,936 $ 5,808 \r\n \r\nAnnual Cost \r\n \r\nTrend Rate \r\n \r\nNon-Faculty Participants Pre-65 Medical Claims - per Retiree/Spouse Post-65 Medical Claims - per Retiree/Spouse \r\n \r\n$ 13,725 8% graded * \r\n \r\n$ \r\n \r\n4,118 8% graded * \r\n \r\nFaculty Participants Pre-65 Premium Reimbursement - per Retiree Retired before January 1, 2010 Retired on or after January 1, 2010 Pre-65 Premium Reimbursement - per Spouse Retired before January 1, 2010 Retired on or after January 1, 2010 Pre-65 Medical Reimbursement - per Retiree/Spouse Post-65 Total Reimbursement - per Retiree/Spouse Tuition Benefit - per Retiree Membership Dues Benefit - per Retiree \r\n* - 8% graded uniformly to 5% over a 10 year period \r\n \r\n$ \r\n \r\n3,052 8% graded * \r\n \r\n$ \r\n \r\n1,277 8% graded * \r\n \r\n$ \r\n \r\n3,406 8% graded * \r\n \r\n$ \r\n \r\n1,427 8% graded * \r\n \r\n$ \r\n \r\n2,324 8% graded * \r\n \r\n$ \r\n \r\n1,000 No Increase \r\n \r\n$ \r\n \r\n722 \r\n \r\n7% \r\n \r\n$ \r\n \r\n147 \r\n \r\n2.50% \r\n \r\nAnnual OPEB Cost and Net OPEB Obligation The annual OPEB cost (expense) (AOC) for the Plan is calculated based on the annual required contribution (ARC) of the employer, an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities over a period not to exceed 30 years. \r\n \r\n- 52 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nThe following table presents the components of the company's annual OPEB cost, the amount actually contributed, and changes in the net OPEB obligation (NOO) for the Plan for fiscal year 2016: \r\n \r\nAnnual Required Contribution Interest on Net OPEB Obligation (NOO) Amortization of NOO \r\nTotal Expense or Annual OPEB Cost (AOC) Actual Contribution Toward OPEB Cost \r\nIncrease in NOO Net OPEB Obligation, beginning of year Prior Year Adjustment \r\n \r\n$ \r\n \r\n6,451,455 \r\n \r\n0 \r\n \r\n0 \r\n \r\n6,451,455 \r\n \r\n-1,176,526 \r\n \r\n5,274,929 \r\n \r\n0 \r\n \r\n0 \r\n \r\nNet OPEB Obligation, end of year \r\n \r\n$ \r\n \r\n5,274,929 \r\n \r\nThe company's annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan and the net OPEB obligation for the Plan were as follows: \r\n \r\nFiscal Year Ended \r\n \r\nAnnual OPEB Cost \r\n \r\nContribution \r\n \r\n2016 \r\n \r\n$ \r\n \r\n6,451,455 $ 1,176,526 \r\n \r\nPercentage of Annual OPEB Cost \r\nContributed \r\n \r\n18.2% \r\n \r\n$ \r\n \r\nNet OPEB Obligation \r\n5,274,929 \r\n \r\nFunded Status, Funding Progress, and Actuarial Methods and Assumptions \r\n \r\nActuarial Valuation \r\nDate \r\n6/30/2016 \r\n \r\nActuarial Value of Assets \r\n(a) \r\n \r\n$ \r\n \r\n0$ \r\n \r\nActuarial Accrued Liability (ALL) Entry Age \r\n(b) \r\n44,838,509 $ \r\n \r\nUnfunded AAL \r\n(UAAL) (b-a) \r\n44,838,509 \r\n \r\nFunded Ratio (a/b) \r\n0.0% $ \r\n \r\nAnnual Covered Payroll \r\n( c ) \r\n20,853,454 \r\n \r\nUAAL as a Percentage of Covered \r\nPayroll ((b-a)/c) \r\n215.0% \r\n \r\nActuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trends. Actuarially determined amounts are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress with multi-year trend information is presented as required supplementary information following the notes to the financial statements. \r\nThe multi-year trend schedules indicate whether the actuarial values of plan assets are increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. \r\n \r\n- 53 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nActuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and Plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. \r\n \r\nSummary of actuarial assumptions \r\n \r\nValuation date  June 30, 2016 \r\n \r\nActuarial valuation method  Entry Age Normal Actuarial Cost Method. A method under which the actuarial value of the projected benefits of each individual included in the actuarial valuation is allocated on a level basis over the earnings of the individual between entry age and assumed exit age(s). \r\n \r\nAsset valuation method  Not applicable \r\n \r\nMortality rates  RP-2014 mortality tables, adjusted to 2006, with generational mortality improvement projected after year 2006 using Scale MP-2016. \r\n \r\nDisability rates  None assumed \r\n \r\nWithdrawal rates: \r\n \r\nLess than \r\n \r\n1 Year \r\n \r\n1 to 3 Years 4 to 8 Years \r\n \r\n9+ Years \r\n \r\nAge \r\n \r\nof Service of Service \r\n \r\nof Service \r\n \r\nof Service \r\n \r\n25 \r\n \r\n10.87% \r\n \r\n8.57% \r\n \r\n30 \r\n \r\n9.31% \r\n \r\n6.79% \r\n \r\n35 \r\n \r\n8.39% \r\n \r\n5.51% \r\n \r\n40 \r\n \r\n7.95% \r\n \r\n5.17% \r\n \r\n45 \r\n \r\n7.74% \r\n \r\n4.73% \r\n \r\n50 \r\n \r\n7.80% \r\n \r\n4.45% \r\n \r\n55 \r\n \r\n6.76% \r\n \r\n3.91% \r\n \r\n60 \r\n \r\n6.81% \r\n \r\n3.92% \r\n \r\n65 \r\n \r\n0.00% \r\n \r\n0.00% \r\n \r\n6.48% 4.19% 3.57% 3.01% 2.91% 2.66% 1.29% 1.06% 0.00% \r\n \r\n4.37% 2.42% 2.51% 2.07% 1.87% 1.75% 0.44% 0.10% 0.00% \r\n \r\n- 54 - \r\n \r\n AUGUSTA UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS \r\nJUNE 30, 2016 \r\n \r\nEXHIBIT \"F\" \r\n \r\nRetirement rates: \r\n \r\nAge \r\n \r\nNon-Faculty \r\n \r\n55 - 59 60 \r\n61 - 64 65 \r\n66 - 69 70 - 74 \r\n75 \r\n \r\n0% 35% 25% 35% 50% 100% 100% \r\n \r\nDiscount rate  4.5 per annum \r\n \r\nFaculty \r\n5% 20% 15% 25% 25% 50% 100% \r\n \r\nSalary increases  Not applicable \r\n \r\nExpected long-term rate of return on plan assets  Not applicable \r\n \r\nAge variance  Medical claims were adjusted downward 3% each year for aging for attained ages 55 to 65, while claims were increased by 3% each year for aging for attained ages 65 to 75. \r\n \r\nNon-Faculty Participants Pre-65 Medical Claims - per Retiree/Spouse Post-65 Medical Claims - per Retiree/Spouse \r\n \r\nAnnual Cost \r\n \r\nTrend Rate \r\n \r\n$ \r\n \r\n13,725 8% graded * \r\n \r\n$ \r\n \r\n4,118 8% graded * \r\n \r\nFaculty Participants Pre-65 Premium Reimbursement - per Retiree Retired before January 1, 2010 Retired on or after January 1, 2010 Pre-65 Premium Reimbursement - per Spouse Retired before January 1, 2010 Retired on or after January 1, 2010 Pre-65 Medical Reimbursement - per Retiree/Spouse Post-65 Total Reimbursement - per Retiree/Spouse Tuition Benefit - per Retiree Membership Dues Benefit - per Retiree \r\n \r\n$ \r\n \r\n3,052 8% graded * \r\n \r\n$ \r\n \r\n1,277 8% graded * \r\n \r\n$ \r\n \r\n3,406 8% graded * \r\n \r\n$ \r\n \r\n1,427 8% graded * \r\n \r\n$ \r\n \r\n2,324 8% graded * \r\n \r\n$ \r\n \r\n1,000 No Increase \r\n \r\n$ \r\n \r\n722 \r\n \r\n7% \r\n \r\n$ \r\n \r\n147 \r\n \r\n2.50% \r\n \r\n* - 8% graded uniformly to 5% over a 10 year period \r\n \r\n- 55 - \r\n \r\n REQUIRED SUPPLEMENTARY INFORMATION - 56 - \r\n \r\n          SUPPLEMENTARY INFORMATION - 66 - \r\n \r\n   (This page left intentionally blank) \r\n \r\n     (This page left intentionally blank) \r\n \r\n SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS \r\n \r\n (This page left intentionally blank) \r\n \r\n Greg S. Griffin \r\nSTATE AUDITOR \r\n(404) 656-2174 \r\n \r\nDEPARTMENT OF AUDITS AND ACCOUNTS \r\n270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 \r\nAugust 7, 2017 \r\n \r\nHonorable Nathan Deal, Governor Members of the General Assembly of Georgia Members of the Board of Regents of the University System of Georgia \r\nand Dr. Brooks Keel, President Augusta University \r\nINDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS \r\nLadies and Gentlemen: \r\nWe have audited, 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, the business-type activities and aggregate discretely presented component units of Augusta University as of and for the year ended June 30, 2016 and the related notes to the financial statements, and have issued our report thereon dated August 7, 2017. \r\nOur report includes a reference to other auditors who audited the financial statements of the aggregate discretely presented component units as described in our report on the Augusta University's basic financial statements. \r\nThe financial statements of the Medical College of Georgia Foundation, Inc. and The Medical College of Georgia Physicians Practice Group Foundation were audited in accordance with auditing standards generally accepted in the United States of America, but were not audited in accordance with Government Auditing Standards, and accordingly, this report does not include reporting on internal control over financial reporting or instances of reportable noncompliance associated with those entities. \r\nThis report includes our consideration of the results of other auditors' testing of internal control over financial reporting and compliance and other matters that are reported on separately by those other auditors. However, this report, insofar as it relates to the results of the other auditors is based solely on the reports of the other auditors. \r\nInternal Control Over Financial Reporting \r\nIn planning and performing our audit of the financial statements, we considered Augusta 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 financial \r\n \r\n (This page left intentionally blank) \r\n \r\n statements, but not for the purpose of expressing an opinion on the effectiveness of the Augusta University's internal control. Accordingly, we do not express an opinion on the effectiveness of Augusta University's internal control. \r\nA 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 and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we and other auditors 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. We did identify a certain deficiency in internal control, described in the accompanying Schedule of Findings and Questioned Costs as item FS 2016-001 that we consider to be a significant deficiency. \r\nCompliance and Other Matters \r\nAs part of obtaining reasonable assurance about whether Augusta University's financial statements are free from material misstatement, we and other auditors 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 and those of other auditors disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. \r\nWe noted certain matters that were reported to management of Augusta University in a separate letter. \r\nAugusta University's Response to Findings \r\nAugusta University's response to the finding identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. Augusta University's response to Findings was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it. \r\nPurpose of this Report \r\nThe 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 entity'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 entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. \r\nRespectfully submitted, \r\nGreg S. Griffin State Auditor \r\n \r\n (This page left intentionally blank) \r\n \r\n SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\n (This page left intentionally blank) \r\n \r\n AUGUSTA UNIVERSITY AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2016 \r\n \r\nPRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFINDING CONTROL NUMBER AND STATUS \r\n \r\nFS 2015-001 \r\n \r\nPartially resolved  See Corrective Action/Responses \r\n \r\nCORRECTIVE ACTION/RESPONSES \r\nCAPITAL ASSETS Inadequate Internal Control over Capital Assets Finding Control Number: FS 2015-001 \r\nThe previously implemented corrective action only partially resolved the deficiency and continued efforts to maintain accurate property records and complete an annual inventory in accordance with the Board of Regents Business Procedures Manual physical inventory requirements are being made. These include mandatory training for all property control managers, inventory being performed throughout the year rather than annually, and inventory results being tested on a sample basis. We anticipate this finding will be resolved by fiscal year end 2017. \r\n \r\nPRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported \r\n \r\n (This page left intentionally blank) \r\n \r\n SECTION IV CURRENT YEAR FINDINGS AND QUESTIONED COSTS \r\n \r\n (This page left intentionally blank) \r\n \r\n AUGUSTA UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS \r\nYEAR ENDED JUNE 30, 2016 \r\n \r\nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \r\n \r\nFS 2016-001 Internal Controls over Capital Assets \r\n \r\nControl Category: Internal Control Impact: Compliance Impact: Repeat of Prior Year Finding: \r\n \r\nCapital Assets Significant Deficiency None FS 2015-001 \r\n \r\nDescription: Capital asset activity recorded by the Institution contained significant errors and omissions. \r\n \r\nCriteria: The Institution should maintain capital asset records in accordance with capitalization guidelines and instructions provided in Section 7 of the Board of Regents' Business Procedures Manual. \r\n \r\nCondition: A sample of forty equipment items revealed two items that could not be located, resulting in a projected misstatement in the amount of $4,063,915. In addition, the asset location was not properly updated within the accounting system for four assets and one asset included on the listing had an incorrect serial number. \r\n \r\nCause: In discussing these issues with Institution management, they stated that the deficiencies were attributable to assistant equipment control officers in five departments not properly updating their physical inventory listings. \r\n \r\nEffect or Potential Effect: The breakdown of internal control by the Institution over maintaining capital assets could result in potential misappropriation of assets and misrepresentation of the Institution's financial position and results of operations. \r\n \r\nRecommendation: The Institution should review its accounting controls and procedures over the recording of capital assets and ensure appropriate documentation is complete so that capital assets are properly maintained and accurately recorded. \r\n \r\nViews of Responsible Officials and Corrective Action Plans: We concur with this finding. We acknowledge that our inventory procedures were not followed and a complete annual inventory was not performed during the fiscal year. All departments will have a delegated property manager who will be held responsible for completing a departmental inventory annually. Inventory records will be maintained and provided to enable update in the system. \r\n \r\nProcedures and policies will be reviewed and/or revised as necessary to ensure inventory is completed in accordance with the Board of Regents Business Procedures Manual physical inventory requirements. \r\n \r\nContact Person: Greg Woodlief \r\n \r\nTitle: \r\n \r\nSenior Manager of Purchasing and Contracts \r\n \r\nTelephone: (706) 721-2213 \r\n \r\nFax: \r\n \r\n(706) 723-0303 \r\n \r\nEmail: \r\n \r\ngwoodlief@augusta.edu \r\n \r\n "}],"pages":{"current_page":1,"next_page":null,"prev_page":null,"total_pages":1,"limit_value":10,"offset_value":0,"total_count":8,"first_page?":true,"last_page?":true},"facets":[{"name":"type_facet","items":[{"value":"Text","hits":8}],"options":{"sort":"count","limit":16,"offset":0,"prefix":null}},{"name":"creator_facet","items":[{"value":"Georgia. 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