Fiscal Year 2013-14
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THE RESEARCH FOUNDATION FOR THE STATE UNIVERSITY OF NEW YORK OMB Circular A-133 Audit Report Year ended June 30, 2014 (With Independent Auditors’ Report Thereon) THE RESEARCH FOUNDATION FOR THE STATE UNIVERSITY OF NEW YORK OMB Circular A-133 Audit Report Year ended June 30, 2014 Table of Contents Page(s) Independent Auditors’ Report 1 – 2 Financial Statements: Balance Sheets 3 Statements of Activities 4 Statements of Cash Flows 5 Notes to Financial Statements 6 – 30 Schedule of Expenditures of Federal Awards 31 – 56 Notes to Schedule of Expenditures of Federal Awards 57 – 64 Independent Auditors’ 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 65 – 66 Independent Auditors’ Report on Compliance for Each Major Program and Report on Internal Control over Compliance Required by OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations 67 – 68 Schedule of Findings and Questioned Costs 69 – 73 Summary of Prior Year’s Findings and Questioned Costs (Not Covered by Auditors’ Reports) 74 – 75 KPMG LLP 515 Broadway Albany, NY 12207-2974 Independent Auditors’ Report The Board of Directors The Research Foundation for The State University of New York: Report on the Financial Statements We have audited the accompanying financial statements of The Research Foundation for The State University of New York (the RF), which comprise the balance sheets as of June 30, 2014 and 2013, the related statements of activities and cash flows for the years then ended, and the related notes to the financial statements. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; 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. Auditors’ 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 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. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ 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 auditors consider 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. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The Research Foundation for The State University of New York as of June 30, 2014 and 2013, and the changes in its net assets and its cash flows for the years then ended in accordance with U.S. generally accepted accounting principles. KPMG LLP is a Delaware limited liability partnership, the U.S. member firm of KPMG International Cooperative (“KPMG International”), a Swiss entity. Other Matter Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis, as required by Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is 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 schedule of expenditures of federal awards is fairly stated, in all material respects, in relation to the financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated September 30, 2014 on our consideration of the RF’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 the RF’s internal control over financial reporting and compliance. September 30, 2014, except as to the Schedule of Expenditures of Federal Awards, which is as of December 4, 2014 2 THE RESEARCH FOUNDATION FOR THE STATE UNIVERSITY OF NEW YORK Balance Sheets June 30, 2014 and 2013 Assets 2014 2013 Current assets: Cash and cash equivalents $ 219,200 892,331 Accounts receivable, net 236,460,187 217,354,949 Advances to others 9,786,123 13,451,528 Investments 204,291,066 185,014,017 Due from broker for securities sold 4,769,930 333,358 Other assets 7,778,487 3,343,596 Total current assets 463,304,993 420,389,779 Noncurrent assets: Fixed assets, net 141,067,205 71,882,292 Intangible assets, net 65,605,630 75,639,031 Other assets 41,552,324 25,579,225 Total noncurrent assets 248,225,159 173,100,548 Total assets $ 711,530,152 593,490,327 Liabilities and Net Deficit Current liabilities: Accounts payable and accrued expenses $ 86,826,254 85,025,036 Accrued compensation 10,290,934 13,377,599 Accrued leave 30,407,655 29,634,790 Deferred revenue 150,274,576 137,603,158 Deposits held for others 27,361,223 4,465,447 Current portion of capital lease obligations 7,037,035 6,738,508 Current portion of long-term debt 1,165,631 1,150,878 Line of credit 6,300,000 25,096,988 Total current liabilities 319,663,308 303,092,404 Noncurrent liabilities: Deposits held for others — 1,135,745 Postretirement benefit obligation 278,648,537 280,604,038 Deferred revenue 152,450,318 53,034,270 Capital lease obligations, net of current portion 3,632,983 10,670,018 Long-term debt, net of current portion 7,230,870 8,542,662 Other liabilities 6,302,916 5,260,743 Total noncurrent liabilities 448,265,624 359,247,476 Total liabilities 767,928,932 662,339,880 Unrestricted net assets (deficit): Available for operations 62,597,474 55,672,428 Reserve for future post-retirement benefit costs (118,996,254) (124,521,981) Total net deficit (56,398,780) (68,849,553) Total liabilities and net deficit $ 711,530,152 593,490,327 See accompanying notes to financial statements. 3 THE RESEARCH FOUNDATION FOR THE STATE UNIVERSITY OF NEW YORK Statements of Activities Years ended June 30, 2014 and 2013 2014 2013 Revenue: Grants awarded for research and other sponsored activities: Federal $ 354,576,615 382,783,708 Federal flow through 145,111,559 149,797,157 New York State 188,370,223 193,004,524 Private and other 230,039,324 289,646,332 Total grants awarded for research and other sponsored activities 918,097,721 1,015,231,721 Investment income, net 20,067,417 11,388,943 Inventions and licenses income 20,278,155 7,847,137 Other income 43,497,543 45,035,593 Total revenue 1,001,940,836 1,079,503,394 Expenses: Sponsored programs and other activities 790,813,430 861,800,208 Other program expenses 38,201,028 34,429,287 Administration and support 166,001,332 171,629,729 Total expenses 995,015,790 1,067,859,224 Change in net assets from revenues and expenses 6,925,046 11,644,170 Other changes: Transfer to affiliate organization FRMC — (3,500,000) Postretirement related change other than net periodic benefit gains 5,525,727 34,340,019 Change in net assets 12,450,773 42,484,189 Net deficit at beginning of year (68,849,553) (111,333,742) Net deficit at end of year $ (56,398,780) (68,849,553) See accompanying notes to financial statements. 4 THE RESEARCH FOUNDATION FOR THE STATE UNIVERSITY OF NEW YORK Statements