Warner University, Inc. Independent Auditor's Report, Financial Statements, and Supplemental Information Years Ended June 30, 20
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WARNER UNIVERSITY, INC. INDEPENDENT AUDITOR'S REPORT, FINANCIAL STATEMENTS, AND SUPPLEMENTAL INFORMATION YEARS ENDED JUNE 30, 2017 AND 2016 WARNER UNIVERSITY, INC. FINANCIAL STATEMENTS AND SUPPLEMENTAL INFORMATION YEARS ENDED JUNE 30, 2017 AND 2016 TABLE OF CONTENTS Page Independent Auditor's Report 1-2 Financial Statements: Statements of Financial Position 3 Statements of Activities 4 Statements of Cash Flows 5-6 Notes to Financial Statements 7-20 Supplemental Information: Independent 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 21-22 Independent Auditor's Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by the Uniform Guidance and Chapter 10.650 Rules of the Auditor General 23-25 Schedule of Expenditures of Federal Awards and Florida Financial Assistance Programs 26 Notes to Schedule of Expenditures of Federal Awards and Florida Financial Assistance Programs 27-29 Schedule of Findings and Questioned Costs 30-43 Summary of Population, Items Tested, and Findings for Florida Financial Assistance Programs 44 Schedule of Prior Audit Findings and Questioned Costs: Federal Awards Programs 45 Florida Financial Assistance Programs 46 Institution's Corrective Action Plan 47-53 Bunting, Tripp & Ingley, LLP ROGER A. lNGLEY' CPA CERTIFIED PUBLIC ACCOUNT ANTS 230 EAST TILLMAN AVENUE DWI(iHT L. REEVES, CPA A Tradition of Excellence Since 1926 P. 0. Box 990 MICHELLE G. HURST, CPA LAKE WALES, FLORIDA 33859- 0990 DAVID w. ALLEN, CPA WILLIAM M. )ACOBS, CPA 863/676-7981 SUZANNE B. FLETCHER, CPA FAX 863/ 676- 8899 e-mail: [email protected] www. bticpa. com L.A. WHEELER, III, CPA p AUL T. SWYGERT' CPA SALVATORE D. TROPEA, CPA Independent Auditor's Report SARAH E. CLEMONS, CPA ALSO WITH OFFICES IN LAURA s. SALZLEIN' CPA TAMPA, FLORIDA To the Board of Trustees Warner University, Inc. Lake Wales, Florida Report on the Financial Statements We have audited the accompanying financial statements of Warner University, Inc. (a nonprofit organization), which comprise the statements of financial position as of June 30, 2017 and 2016, and the related statements of activities and cash flows for the years then ended, and the related notes to the financial statements. Manai:ement's Responsibility for the Financial Statements The University's management 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. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement. An 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 entity'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 the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 1 MEMBERS AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS • FLORIDA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Warner University, Inc. as of June 30, 2017 and 2016, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters As described in Note N to the financial statements, the 2017 financial statements have been restated to correct the effects of an error in the accounting treatment for a severance agreement with its former president. Accordingly, amounts reported for accrued expenses and institutional support have been restated in the 201 7 financial statements now presented, and an adjustment has been made to umestricted net assets as of June 30, 2017, to correct the error. Our opinion is not modified with respect to this matter. As described in Note Oto the financial statements, the 2017 financial statements have been restated to adjust the classification of net assets. Accordingly, amounts reported for beginning umestricted and permanently restricted net assets at July 1, 2016 have been restated as well as umestricted and permanently restricted contributions, to reflect the reclassifiction. Our opinion is not modified with respect to this matter. Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying Supplemental Schedules of Change in Net Assets and the Schedule of Expenditures of Federal Awards and Florida Financial Assistance Programs, as required by Title 2 U.S, Code ofFederal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and Chapter 10.650, Rules ofthe Auditor General, is presented for purposes of additional analysis and are not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole. Other Reportine Required by Government Auditine Standards In accordance with Government Auditing Standards, we have also issued our report dated March 26, 2018, on our consideration of Warner University Inc.' 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 the 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 preformed in accordance with Government Auditing Standards in considering Warner University, Inc.'s internal control over financial reporting and compliance. ~.1- Lake Wales, Florida March 26, 2018 2 WARNER UNIVERSITY, INC. STATEMENTS OF FINANCIAL POSITION JUNE 30, 2017 AND 2016 2016 2017 Restated ASSETS Cash and equivalents $ 1,002,963 $ 820,900 Accounts receivable from students, net 2,649,488 2,784,305 Contributions receivable, net 1,255,469 692,278 Investments 2,590,649 2,374,527 Inventory 261,539 243,725 Prepaids and other 111,132 168,763 Loans receivable from students, Perkins 321,937 324,552 Property and equipment, net 25,684,267 25,969,687 Total assets $ 33,877,444 $ 33,378,737 LIABILITIES AND NET ASSETS Liabilities Accounts payable $ 267,916 $ 149,501 Accrued expenses 862,119 849,023 Deferred revenue 584,503 582,557 Student deposits 892,324 785,535 Annuities payable 114,295 126,245 Refundable Federal funds - student loans 296,016 312,230 Lines of credit 3,125,000 1,425,000 Long term debt 11,490,902 11,949,857 Total liabilities 17,633,075 16,179,948 Net Assets Unrestricted 6,498,815 7,806,518 Temporarily restricted 3,679,921 3,417,638 Permanently restricted 6,065,633 5,974,633 Total net assets 16,244,369 17,198,789 Total liabilities and net assets $ 33,877,444 $ 33,378,737 See accompanying Notes to Financial Statements. 3 WARNER UNIVERSITY, INC. STATEMENTS OF ACTIVITIES YEARS ENDED JUNE 30, 2017 AND 2016 Temporarily Unrestricted Restricted Revenues, Gains (Losses), and Other Support Tuition and fees $ 17,015,004 $ - Institutional scholarships (5,693,846) - Net tuition and fees 11,321,158 - Auxiliary enterprises 2,776,642 - Contributions received 1,476,735 788,590 Other support 12,736 - Investment income 200,239 - Net realized and unrealized gains (losses) on investments 50,301