Financial Statement Audit for the Year Ended June 30, 2010 Issued March 9, 2011
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LOUISIANA STATE UNIVERSITY SYSTEM A COMPONENT UNIT OF THE STATE OF LOUISIANA FINANCIAL STATEMENT AUDIT FOR THE YEAR ENDED JUNE 30, 2010 ISSUED MARCH 9, 2011 LEGISLATIVE AUDITOR 1600 NORTH THIRD STREET POST OFFICE BOX 94397 BATON ROUGE, LOUISIANA 70804-9397 LEGISLATIVE AUDIT ADVISORY COUNCIL SENATOR EDWIN R. MURRAY, CHAIRMAN REPRESENTATIVE NOBLE E. ELLINGTON, VICE CHAIRMAN SENATOR WILLIE L. MOUNT SENATOR BEN W. NEVERS, SR. SENATOR KAREN CARTER PETERSON SENATOR JOHN R. SMITH REPRESENTATIVE CAMERON HENRY REPRESENTATIVE CHARLES E. “CHUCK” KLECKLEY REPRESENTATIVE ANTHONY V. LIGI, JR. REPRESENTATIVE LEDRICKA JOHNSON THIERRY LEGISLATIVE AUDITOR DARYL G. PURPERA, CPA, CFE DIRECTOR OF FINANCIAL AUDIT THOMAS H. COLE, CPA Under the provisions of state law, this report is a public document. A copy of this report has been submitted to the Governor, to the Attorney General, and to other public officials as required by state law. A copy of this report has been made available for public inspection at the Baton Rouge and New Orleans offices of the Legislative Auditor. This document is produced by the Legislative Auditor, State of Louisiana, Post Office Box 94397, Baton Rouge, Louisiana 70804-9397 in accordance with Louisiana Revised Statute 24:513. Five copies of this public document were produced at an approximate cost of $34.50. This material was produced in accordance with the standards for state agencies established pursuant to R.S. 43:31. This report is available on the Legislative Auditor’s Web site at www.lla.la.gov. When contacting the office, you may refer to Agency ID No. 3474 or Report ID No. 80100061 for additional information. In compliance with the Americans With Disabilities Act, if you need special assistance relative to this document, or any documents of the Legislative Auditor, please contact Wayne “Skip” Irwin, Administration Manager, at 225-339-3800. _________________________________________________ TABLE OF CONTENTS Page Independent Auditor's Report ......................................................................................................... 3 Management’s Discussion and Analysis ........................................................................................ 7 Statement Basic Financial Statements: Louisiana State University System Statement of Net Assets ...................................................................................... A ..................17 Component Units Statement of Financial Position .......................................................................... B ..................19 Louisiana State University System Statement of Revenues, Expenses, and Changes in Net Assets .......................... C ..................21 Component Units Statement of Activities ........................................................................................ D ..................23 Louisiana State University System Statement of Cash Flows ..................................................................................... E ..................25 Notes to the Financial Statements ...............................................................................................27 Schedule Required Supplementary Information Schedule - Schedule of Funding Progress for the Other Postemployment Benefits Plans ...................................................................1...................81 Supplemental Information Schedules - Louisiana State University System: Combining Schedule of Net Assets, by University ..............................................2...................84 Combining Schedule of Revenues, Expenses, and Changes in Net Assets, by University ..............................................................................3...................88 Combining Schedule of Cash Flows, by University ............................................4...................92 - 1 - LOUISIANA STATE UNIVERSITY SYSTEM __________________________________ Exhibit Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Basic Financial Statements Performed in Accordance With Government Auditing Standards .......................................... A Appendix Management’s Corrective Action Plan and Response to the Finding and Recommendation ..................................................................... A - 2 - LOUISIANA LEGISLATIVE AUDITOR DARYL G. PURPERA, CPA, CFE January 24, 2011 Independent Auditor's Report LOUISIANA STATE UNIVERSITY SYSTEM STATE OF LOUISIANA Baton Rouge, Louisiana We have audited the accompanying financial statements of the business-type activities and the aggregate discretely presented component units of the Louisiana State University (LSU) System, a component unit of the State of Louisiana, as of and for the year ended June 30, 2010, which collectively comprise the System’s basic financial statements as listed in the table of conntents. These financial statements are the responsibility of management of the LSU System. Our responsibility is to express opinions on these financial sttatements baased on our audit. We did not audit the financial statements of the Louisiana State University School of Medicine in New Orleans Faculty Group Practice doing business as LSU Healthcare Network and Subsidiariees, the Eunice Student Housing Foundation, Inc., and the Health Care Services Foundation and its subsidiary, which are nonprofit corporations included as blended component units in the basic financial statements representing approximately 1.7% of total asseets, 2.8% of total liabilities, 1.9% of total revenues, and 2.0% of total expenses of the LSU System. We also did not audit the financial statements of the LSU Foundation, the Tiger Athletic Foundation, and the University of New Orleans Research and Technology Foundation, which are all of the discretely presented component units presented in the basic financial statements of the LSU System. The financial statements of the blended and discretely presented component units were audited by other auditors whose reports thereon have been furnished to us, and our opinions, insofar as they relate to the amounts included for these component units, are based on the reports 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 of material misstatement. The financial statements of the LSU Foundation and the Tiger Athletic Foundation were not audited in accordance with Government Auditing Standards. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the signifiicant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit and the reports of the other auditors provide a reasonable basis for our oppinions. 1600 NORTH THIRD STREET • POST OFFICE BOX 94397 • BATON ROUGE, LOUISIANA 70804-9397 WWW.LLA.LA.GOV • PHONE: 225-339-3800 • FAX: 225-339-3870 LOUISIANA STATE UNIVERSITY SYSTEM __________________________________ In our opinion, based on our audit and the reports of the other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities and the aggregate discretely presented component units of the LSU System as of June 30, 2010, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. As discussed in note 1-B to the financial statements, the Pennington Medical Foundation and the Foundation for the LSU Health Sciences Center, discretely presented component units of the LSU System for the year ended June 30, 2009, are no longer included in the financial statements and related disclosures as discretely presented component units of the System as the assets of the foundations no longer meet the reporting threshold of 3% of total system assets. As discussed in note 17 to the financial statements, the effect of excluding these foundations is a decrease of $117,143,573 in beginning net assets for the discretely presented component units. This change affects the comparability of the amounts reported for the year ended June 30, 2010, with the amounts reported for the year ended June 30, 2009. As discussed in note 1-Q to the financial statements, the LSU System implemented Governmental Accounting Standards Board (GASB) Statement No. 51, Accounting and Financial Reporting for Intangible Assets, for the year ended June 30, 2010. In accordance with Government Auditing Standards, we have also issued our report dated January 24, 2011, on our consideration of LSU System’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 the internal control over financial reporting or on compliance.