UAThe University of ArkansasM at Monticello Monticello • Crossett • McGehee UNIVERSITY OF ARKANSAS SYSTEM Consolidated Financial Statements FY2013-14 BOARD OF TRUSTEES Jim von Gremp, Chairman Ben Hyneman, Vice Chairman airman Jane Rogers, Secretary Dr. Stephen A. Broughton, Asst. Secretary Reynie Rutledge David Pryor Mark Waldrip John C. Goodson Mrs. Jane Rogers, Board Chairman Charles “Cliff” Gibson, III Jim von Gremp, Chairman Morril Harriman ADMINISTRATIVE OFFICERS Donald R. Bobbitt President Michael K. Moore Vice President for Academic Affairs Daniel E. Ferritor Vice President for Learning Technologies Barbara A. Goswick Vice President for Finance & CFO Ann Kemp Vice President for Administration Melissa K. Rust Vice President for University Relations Fred H. Harrison \ General Counsel Dr. Donald R. Bobbitt, President Table of Contents Board of Trustees & Administrative Officers .................................................................................... Inside Front Cover Letter of Transmittal ...................................................................................................................................................... 3 Independent Auditor’s Report ....................................................................................................................................... 4 Management Discussion & Analysis ............................................................................................................................. 6 Five Year Summary of Key Financial Data ................................................................................................................. 14 Five Year Summary of Key Student Data ................................................................................................................... 15 Consolidated Financial Statements Statement of Net Position ....................................................................................................................................... 16 Statement of Revenues, Expenses, and Changes in Net Position ........................................................................... 17 Statement of Cash Flows ........................................................................................................................................ 18 Discreetly Presented Component Units University of Arkansas Foundation, Inc. ................................................................................................................ 20 University of Arkansas Fayetteville Campus Foundation, Inc. .............................................................................. 21 Campus Financial Statements Statement of Net Position ....................................................................................................................................... 22 Statement of Revenues, Expenses, and Changes in Net Position ........................................................................... 23 Statement of Cash Flows ........................................................................................................................................ 24 Notes to Financial Statements Note 1: Summary of Significant Accounting Policies. .......................................................................................... 26 Note 2: Reporting Entity. ....................................................................................................................................... 29 Note 3: Hospital Revenue ...................................................................................................................................... 30 Note 4: Compensated Absences. ........................................................................................................................... 31 Note 5: Cash, Cash Equivalents and Investments .................................................................................................. 33 Note 6: Income Taxes ............................................................................................................................................ 38 Note 7: Bonds, Notes, Capital Leases and Installment Contracts .......................................................................... 38 Note 8: Commitments ............................................................................................................................................ 50 Note 9: Short-Term Borrowing ............................................................................................................................. 51 Note 10: Capital Assets ......................................................................................................................................... 52 Note 11: Risk Management ................................................................................................................................... 52 Note 12: Employee Benefits .................................................................................................................................. 53 Note 13: Other Postemployment Benefits (OPEB)................................................................................................ 56 Note 14: Other Organizations ................................................................................................................................ 62 Note 15: Natural & Functional Classification of Operating Expenses .................................................................. 71 Note 16: Contingencies.......................................................................................................................................... 71 Note 17: Elimination of Inter-Company Transactions ........................................................................................... 72 Note 18: Disaggregation of Accounts Receivable and Accounts Payable ............................................................. 73 Note 19: Joint Endeavor ........................................................................................................................................ 73 Note 20: Related Parties ........................................................................................................................................ 74 Note 21: Prior Year Restatements ......................................................................................................................... 75 Note 22: Subsequent Events .................................................................................................................................. 76 Required Supplementary Information ......................................................................................................................... 78 Supplemental Information – Points of Pride ................................................................................................................ 80 Campus Administrators ....................................................................................................................... Inside back cover 1 PAGE INTENTIONALLY LEFT BLANK 2 December 15, 2014 Board of Trustees President Donald R. Bobbitt It is my pleasure to transmit to you the Consolidated Financial Report of the University of Arkansas System for the fiscal year ended June 30, 2014, with comparative data as restated for the fiscal year ended June 30, 2013. The data presented, including the Management Discussion and Analysis, Statement of Net Position, Statement of Revenues, Expenses, and Changes in Net Position, and Statement of Cash Flows, are exhibited on a consolidated basis and include all components of the UA System: UAF (University of Arkansas Fayetteville, including Agricultural Experiment Station, Cooperative Extension Service, Arkansas Archeological Survey, Criminal Justice Institute, and Clinton School of Public Service), UAFS (University of Arkansas at Fort Smith), UALR (University of Arkansas at Little Rock), UAMS (University of Arkansas for Medical Sciences), UAM (University of Arkansas at Monticello), UAPB (University of Arkansas at Pine Bluff), CCCUA (Cossatot Community College of the University of Arkansas), PCCUA (Phillips Community College of the University of Arkansas), UACCB (University of Arkansas Community College at Batesville), UACCH (University of Arkansas Community College at Hope), UACCM (University of Arkansas Community College at Morrilton), ASMSA (Arkansas School for Mathematics, Sciences and the Arts), and SYSTEM (University of Arkansas System Administration, including University of Arkansas System eVersity). These statements were prepared in accordance with generally accepted accounting principles as prescribed by the Governmental Accounting Standards Board (GASB). The financial statements used to prepare the consolidated report, except for the Medical Sciences campus and the discretely presented component units, were audited by the Arkansas Division of Legislative Audit. The financial statements from the Medical Sciences campus were audited by PricewaterhouseCoopers LLP. All received unqualified audit opinions. Barbara A. Goswick, CPA Vice President for Finance & CFO 3 4 5 UNIVERSITY OF ARKANSAS SYSTEM: Management Discussion and Analysis Overview of the Financial Statements and Financial Analysis The University of Arkansas System (“the University”) is pleased to present its financial statements for the fiscal year ended June 30, 2014, with the fiscal year 2013 prior year data presented for comparative purposes. The data presented include the Statement of Net Position, the