June 30, 2019

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June 30, 2019 NOTRE DAME DE NAMUR UNIVERSITY JUNE 30, 2019 SINGLE AUDIT REPORT Notre Dame de Namur University Single Audit Report Independent Auditors’ Report 1 - 2 Financial Statements Statement of Financial Position 3 Statement of Activities and Changes in Net Assets 4 Statement of Functional Expenses 5 Statement of Cash Flows 6 Notes to Financial Statements 7 - 32 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 33- 34 Independent Auditors’ Report on Compliance for Each Major Federal Program and Internal Control over Compliance Required by the Uniform Guidance 35 - 36 Schedule of Expenditures of Federal Awards 37 Notes to Schedule of Expenditures of Federal Awards 38 Schedule of Findings and Questioned Costs 39 - 41 Summary Schedule of Prior Audit Findings 42 - 47 Corrective Action Plan 48 - 49 Independent Auditors’ Report THE BOARD OF TRUSTEES NOTRE DAME DE NAMUR UNIVERSITY Belmont, California Report on the Financial Statements We have audited the accompanying financial statements of NOTRE DAME DE NAMUR UNIVERSITY (the University), which comprise the statement of financial position as of June 30, 2019 and 2018, and the related statements of activities and changes in net assets and cash flows for the years then ended, the statement of functional expenses for the year ended June 30, 2019 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 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. 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 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 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 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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. San Francisco ● San Jose ● San Mateo ● Petaluma Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the University as of June 30, 2019 and 2018, and the results of its activities and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Effect of Adopting New Accounting Standard As described in Note 2(u), the University adopted the Financial Accounting Standards Board Accounting Standards Update (ASU) 2016-14 Not-For-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities. Accordingly, the accounting change has been retrospectively applied to all periods presented with the exception of the omission of certain information as permitted by the ASU. Our opinion is not modified with respect to that matter. Emphasis of a Matter As discussed in Note 2(t), to the financial statements, the University has suffered increasing continual pressure on operating margins and free cash flows. the University’s Board of Trustees’ evaluation of the conditions and plans to mitigate these matters are also described in Note 2(t). Our opinion is not modified with respect to this matter. Other Matters Supplementary Information 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, as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, is presented for purposes of additional analysis 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 information 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 March 30, 2020 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. 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. San Francisco, California March 30, 2020 2 Notre Dame de Namur University Statement of Financial Position June 30, 2019 2018 Assets Cash and cash equivalents $ 10,460,248 $ 16,204,888 Accounts receivable, net: Students 939,504 773,450 Other 91,922 49,926 Promises 49,144 2,401,798 Prepaid expenses and other assets 508,614 689,609 Investments 26,220,965 26,243,341 Notes receivable, students, net 421,836 495,741 Plant properties, net 29,983,368 29,458,154 Total assets $ 68,675,601 $ 76,316,907 Liabilities and Net Assets Liabilities: Accounts payable $ 597,562 $ 627,894 Accrued payroll and related expenses 2,472,304 2,427,083 Deferred revenue 727,503 787,425 Student deposits 683,716 850,552 Accrued asset retirement obligation 1,415,104 1,429,704 Loans payable 10,885,952 11,468,946 Advances from federal government for student loans 452,751 452,751 Total liabilities 17,234,892 18,044,355 Net Assets: Without donor restrictions 23,869,910 26,994,513 With donor restrictions 27,570,799 31,278,039 Total net assets 51,440,709 58,272,552 Total liabilities and net assets $ 68,675,601 $ 76,316,907 See accompanying notes to the financial statements. 3 Notre Dame de Namur University Statement of Activities and Changes in Net Assets Year Ended June 30, 2019 and 2018 2019 2018 Without Donor With Donor Without Donor With Donor Restrictions Restrictions Total Restrictions Restrictions Total Revenues, Gains and Other Support: Tuition and fees $ 33,513,080 $ - $ 33,513,080 $ 34,677,498 $ - $ 34,677,498 Less: Scholarships and grants - endowment (531,216) - (531,216) (574,703) - (574,703) Scholarships and grants - other (10,705,630) - (10,705,630) (10,290,468) - (10,290,468) Tuition and fees, net 22,276,234 22,276,234 23,812,327 23,812,327 Private gifts, grants and contracts 224,016 495,319 719,335 1,968,976 1,296,488 3,265,464 Lease contribution 103,752 - 103,752 138,336 - 138,336 Government grants 182,099 - 182,099 117,135 - 117,135 Investment income, net 671,228 1,499,988 2,171,216 575,159 1,212,527 1,787,686 Auxiliary enterprises and other sources 6,200,918 - 6,200,918 6,146,209 - 6,146,209 Net assets released from restriction 1,288,049 (1,288,049) - 807,477 (807,477) - Total revenues, gains and other support 30,946,296 707,258 31,653,554 33,565,619 1,701,538 35,267,157 Operating Expenses: Program services: Instruction 10,769,816 - 10,769,816 11,554,055 - 11,554,055 Academic support 3,266,385 - 3,266,385 2,682,175 - 2,682,175 Student services 8,529,548 - 8,529,548 8,129,166 - 8,129,166 Auxiliary enterprises 4,995,141 - 4,995,141 5,577,281 - 5,577,281 Supporting services: Institutional support
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