University of Florida Foundation, Inc. Financial and Compliance Report June 30, 2016 Contents Independent auditor’s report 1-2 Financial statements Statement of financial position 3 Statement of activities 4 Statement of cash flows 5-6 Notes to financial statements 7-33 Supplemental schedules Schedule of receipts, expenditures and endowment balances for Major Gifts Program 34-55 Schedule of receipts, expenditures and endowment balances for Eminent Scholar Program 56 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 57-58 Independent Auditor’s Report on Compliance for Each Major State Financial Assistance Project and Report on Internal Control Over Compliance Required by State of Florida Chapter 10.650, Rules of the Auditor General 59-60 Schedule of expenditures of state financial assistance 61 Notes to schedule of expenditures of state financial assistance 62 Schedule of findings and questioned costs 63 Independent Auditor’s Report To the Board of Directors University of Florida Foundation, Inc. Gainesville, Florida Report on the Financial Statements We have audited the accompanying financial statements of the University of Florida Foundation, Inc. (the Foundation), (a component unit of the University of Florida), which comprise the statement of financial position as of June 30, 2016, and the related statements of activities and cash flows for the year then ended, and the related notes to the financial statements (collectively, 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. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. 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 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. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the University of Florida Foundation, Inc. as of June 30, 2016, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. 1 Report on Summarized Comparative Information We have previously audited the University of Florida Foundation, Inc.’s June 30, 2015 financial statements, and we expressed an unmodified audit opinion on those audited financial statements in our report dated September 24, 2015. In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2015, is consistent, in all material respects, with the audited financial statements from which it has been derived. Other Matters – Supplementary Information Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying supplemental schedules as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the financial statements. The accompanying schedule of expenditures of state financial assistance, as required by the State of Florida Chapter 10.650, Rules of the Auditor General, is presented for purposes of additional analysis and is also not a required part of the financial statements. The supplemental schedules and the schedule of expenditures of state financial assistance are 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 September 23, 2016, on our consideration of the University of Florida Foundation, 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 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 University of Florida Foundation, Inc.’s internal control over financial reporting and compliance. Orlando, Florida September 23, 2016 2 University of Florida Foundation, Inc. Statement of Financial Position June 30, 2016 (with summarized comparative information as of June 30, 2015) 2016 2015 Assets Cash $ 7,697,414 $ 5,121,455 Other receivables 41,950,320 48,017,886 Pledges receivable, net 121,070,975 86,923,916 Investments 1,519,147,213 1,615,176,856 Real estate held for sale 6,645,574 7,544,249 Other assets 7,302,931 7,129,433 Present value of amounts due from externally managed trusts 2,768,376 2,632,102 Property and equipment, net 37,055,362 32,921,456 Land preserve 15,719,467 15,719,467 Permanent collections 40,009,071 39,382,489 Total assets $ 1,799,366,703 $ 1,860,569,309 Liabilities and Net Assets Liabilities Accounts payable, accrued expenses and other liabilities $ 5,326,895 $ 5,326,138 Notes payable 19,067,528 20,493,258 Annuity liabilities 6,948,696 6,664,448 Trust liabilities 12,365,565 14,476,087 Pension liability 15,488,443 10,349,689 Deferred revenue 418,140 821,000 Amounts held on behalf of University of Florida related entities 39,590,740 38,834,077 Total liabilities 99,206,007 96,964,697 Net assets Unrestricted (8,215,114) 8,266,506 Temporarily restricted 434,989,258 527,164,711 Permanently restricted 1,273,386,552 1,228,173,395 Total net assets 1,700,160,696 1,763,604,612 Total liabilities and net assets $ 1,799,366,703 $ 1,860,569,309 See notes to financial statements. 3 University of Florida Foundation, Inc. Statement of Activities Year Ended June 30, 2016 (with summarized comparative information for the year ended June 30, 2015) Temporarily Permanently Total Total Unrestricted Restricted Restricted 2016 2015 Operating revenue and other additions: Contributions $ 213,283 $ 106,565,679 $ 47,876,133 $ 154,655,095 $ 91,916,555 Support from the University of Florida 15,907,965 - - 15,907,965 14,912,304 Investment return, net 11,785,610 (64,428,974) (360,451) (53,003,815) 70,658,545 Alumni program support 1,936,347 61,324 705,126 2,702,797 2,617,478 Other 1,547,533 7,994,789 364,430 9,906,752 9,638,744 Net assets released from restrictions 138,098,933 (138,098,933) - - - Total operating revenue and other additions 169,489,671 (87,906,115) 48,585,238 130,168,794 189,743,626 Operating expenses and other expenditures: Program services: General college support 40,807,168 - - 40,807,168 82,483,434 Student financial aid 22,420,252 - - 22,420,252 45,098,447 Faculty and staff support 20,949,304 - - 20,949,304 57,213,749 Research 15,437,208 - - 15,437,208 32,532,393 Facilities 26,228,415 - - 26,228,415 33,498,896 Other 14,618,873 - - 14,618,873 37,236,654 Total program services 140,461,220 - - 140,461,220 288,063,573 Supporting services: