LOUISIANA STATE UNIVERSITY SYSTEM A COMPONENT UNIT OF THE STATE OF LOUISIANA FINANCIAL STATEMENT AUDIT FOR THE YEAR ENDED JUNE 30, 2019 ISSUED FEBRUARY 19, 2020 LOUISIANA LEGISLATIVE AUDITOR 1600 NORTH THIRD STREET POST OFFICE BOX 94397 BATON ROUGE, LOUISIANA 70804-9397 LEGISLATIVE AUDITOR DARYL G. PURPERA, CPA, CFE ASSISTANT LEGISLATIVE AUDITOR FOR STATE AUDIT SERVICES NICOLE B. EDMONSON, CIA, CGAP, MPA DIRECTOR OF FINANCIAL AUDIT ERNEST F. SUMMERVILLE, JR., 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 is available for public inspection at the Baton Rouge office of the Louisiana Legislative Auditor and online at www.lla.la.gov. This document is produced by the Louisiana Legislative Auditor, State of Louisiana, Post Office Box 94397, Baton Rouge, Louisiana 70804-9397 in accordance with Louisiana Revised Statute 24:513. One copy of this public document was produced at an approximate cost of $3.20. 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 website at www.lla.la.gov. When contacting the office, you may refer to Agency ID No. 3474 or Report ID No. 80190082 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 Elizabeth Coxe, Chief Administrative Officer, 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 Position.................................................................................... A ..................19 Component Units - Statement of Financial Position .......................................................................... B ..................21 Louisiana State University System - Statement of Revenues, Expenses, and Changes in Net Position ....................... C ..................22 Component Units - Statement of Activities ........................................................................................ D ..................24 Louisiana State University System - Statement of Cash Flows ..................................................................................... E ..................26 Notes to the Financial Statements ...............................................................................................29 Schedule Required Supplementary Information: Schedule of Proportionate Share of the Total OPEB Liability ...........................................................................................1...................90 Schedule of the Proportionate Share of the Net Pension Liabilities of Cost Sharing Defined Benefit Pension Plans ..............................................................................2...................91 Schedule of Contributions to Cost Sharing Defined Benefit Pension Plans ................................................................3...................92 Supplemental Information Schedules: Combining Schedule of Net Position, by University, June 30, 2019 .......................................................................................................4...................95 1 Louisiana State University System Table of Contents Page Combining Schedule of Revenues, Expenses, and Changes in Net Position, by University, for the Year Ended June 30, 2019 ........................................................................5...................99 Combining Schedule of Cash Flows, by University, for the Year Ended June 30, 2019 ........................................................................6.................103 Combining Schedule of Net Position, by University, June 30, 2018 .......................................................................................................7.................107 Combining Schedule of Revenues, Expenses, and Changes in Net Position, by University, for the Year Ended June 30, 2018 ........................................................................8.................111 Combining Schedule of Cash Flows, by University, for the Year Ended June 30, 2018 ........................................................................9.................115 Exhibit 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 ........................................................................... A 2 LOUISIANA LEGISLATIVE AUDITOR DARYL G. PURPERA, CPA, CFE February 18, 2020 Independent Auditor’s Report LOUISIANA STATE UNIVERSITY SYSTEM STATE OF LOUISIANA Baton Rouge, Louisiana Report on the Financial Statements We have audited the accompanying financial statements of the business-type activities and the discretely presented component units of the Louisiana State University System (System), a component unit of the state of Louisiana, as of and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the System’s basic financial statements as listed in the table of contents. 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 opinions on these financial statements based 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 Subsidiaries; the Health Care Services Foundation and its subsidiary; and the Stephenson Technologies Corporation, which are nonprofit corporations included as blended component units in the basic financial statements representing approximately 1.83%, 0.54%, 7.53%, and 6.69% of total assets, liabilities, revenues, and expenses, respectively. We also did not audit the financial statements of the LSU Foundation, the Tiger Athletic Foundation, or the LSU Health Sciences Foundation in Shreveport, which are discretely presented component units included in the basic financial statements of the System. Those statements were audited by other auditors whose reports have been furnished to us, and our opinions, insofar as they relate to the amounts reported for these component units, are based solely on the reports of the other auditors. 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 Independent Auditor’s Report 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. The financial statements of the Stephenson Technologies Corporation, the LSU Foundation, the Tiger Athletic Foundation, and the LSU Health Sciences Foundation in Shreveport, which were audited by other auditors, were audited in accordance with auditing standards generally accepted in the United States of America, but not in accordance with Government Auditing Standards. 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 opinions. Opinion In our opinion, based on our audit and the reports of 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 discretely presented component units of the