University of Miami Single Audit Reports in Accordance With the Uniform Guidance and Chapter 10.650, Rules of the Auditor General of the State of Florida Year Ended May 31, 2016 Federal ID No. 59-0624458 UNIVERSITY OF MIAMI Audit Reports and Required Disclosures Pursuant to the Uniform Guidance And the Rules of the Auditor General of the State of Florida Year Ended May 31, 2016 Table of Contents Page Independent Auditor’s Report 1-2 Basic Financial Statement Section: Statements of Financial Position 3 Statements of Activities 4 Statements of Cash Flows 5 Notes to Financial Statements 6-31 Single Audit Reporting: 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 32-33 Independent Auditor’s Report on Compliance for Each Major Federal Program and State Project; Report on Internal Control Over Compliance in Accordance with the Uniform Guidance and Chapter 10.650, Rules of the Auditor General of the State of Florida 34-35 Schedule of Expenditures of Federal Awards 36-51 Schedule of Expenditures of State of Florida Awards 52-55 Schedule of Expenditures of Local Awards 56-57 Notes to Schedules of Expenditures of Federal, State and Local Awards 58 Schedule of Findings and Questioned Costs 59-63 Independent Auditor’s Report To the Board of Trustees University of Miami Coral Gables, Florida Report on the Financial Statements We have audited the accompanying financial statements of the University of Miami (the University), which comprise the statements of financial position as of May 31, 2016 and 2015, and 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 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 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 Governmental 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 Miami as of May 31, 2016 and 2015, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. 1 Other Matters Other Information Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying schedules of expenditures of federal awards, state financial assistance, and local awards (as presented in the table of contents) as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), and Chapter 10.650, Rules of the Auditor General of the State of Florida are presented for purposes of additional analysis and are 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 reports dated August 25, 2016 and August 26, 2015, 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 those reports 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. Those reports are 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. Fort Lauderdale, Florida August 25, 2016 2 UNIVERSITY OF MIAMI STATEMENTS OF FINANCIAL POSITION As of May 31, 2016 and 2015 ( in millions ) May May Assets 2016 2015 Cash and cash equivalents $ 381.7 $ 130.3 Accounts and loans receivable, net 437.8 410.7 Contributions receivable, net 146.9 158.3 Other assets 77.3 67.5 Investments 994.4 1,133.9 Property and equipment, net 1,721.8 1,664.1 Trusts held by others 45.6 49.1 Total Assets $ 3,805.5 $ 3,613.9 Liabilities Accounts payable and accrued expenses $ 221.9 $ 227.5 Deferred revenues and other deposits 101.5 107.1 Accrued pension and postretirement benefit costs 259.9 217.6 Other liabilities 189.9 178.2 Actuarial liability of annuities payable 7.1 8.8 Liability for medical self-insurance 109.5 97.2 Government advances for student loans 22.7 23.2 Bonds and notes payable 1,151.7 943.5 Total Liabilities 2,064.2 1,803.1 Net Assets Unrestricted 779.3 857.4 Temporarily restricted 462.1 474.9 Permanently restricted 499.9 478.5 Total Net Assets 1,741.3 1,810.8 Total Liabilities and Net Assets$ 3,805.5 $ 3,613.9 See accompanying notes to financial statements. 3 UNIVERSITY OF MIAMI STATEMENTS OF ACTIVITIES For the years ended May 31, 2016 and 2015 ( in millions ) May May 2016 2015 Changes in unrestricted net assets Operating activities Operating revenues Tuition and fees, net $ 517.2 $ 504.8 Grants and contracts, net 507.7 476.6 Net patient revenue - medical professional practice 407.3 385.3 Net patient revenue - hospitals and clinics 1,137.9 1,054.7 Gifts and trusts 64.5 69.6 Net assets released from restrictions 27.3 22.3 Endowment spending distribution 38.4 34.9 Investment return .1 4.8 Auxiliary enterprises, net 118.5 117.3 Other sources 37.6 38.4 Total operating revenues 2,856.5 2,708.7 Operating expenses Compensation and benefits 1,695.6 1,596.3 Supplies and services 687.1 633.7 Depreciation 136.5 130.9 Utilities and maintenance 75.9 75.6 Interest 39.7 37.7 Other 198.6 212.1 Total operating expenses 2,833.4 2,686.3 Change in unrestricted net assets from operating activities 23.1 22.4 Non-Operating activities Endowment, annuity and other investment return, net of distributions (30.1) (.2) Gifts and trusts 8.2 6.4 Net (loss) gain on long lived assets and business units (3.2) 7.4 Loss on early extinguishment of debt (16.8) - Net assets released from restrictions 7.3 1.2 Transfer to permanently restricted net assets (.8) (.5) Change in unrestricted net assets from non-operating activities (35.4) 14.3 Postretirement benefits related changes other than net periodic benefit cost (65.8) (53.4) Decrease in unrestricted net assets (78.1) (16.7) Changes in temporarily restricted net assets Endowment, annuity and other investment return, net of distributions (58.3) (7.9) Gifts and trusts for property and equipment 77.6 86.7 Changes in value of annuities payable and trusts held by others (.1) .8 Net assets released from restrictions for property and equipment (34.8) (23.5) Endowment spending distribution 2.8 2.6 (Decrease) increase in temporarily restricted net assets (12.8) 58.7 Changes in permanently restricted net assets Endowment, annuity and other investment return (2.9) .5 Gifts and trusts 23.3 34.2 Net assets released from restrictions .2 - Transfer from unrestricted net assets .8 .5 Increase in permanently restricted net assets 21.4 35.2 (Decrease) increase in total net assets (69.5) 77.2 Net Assets Beginning of year 1,810.8 1,733.6 End of year $ 1,741.3 $ 1,810.8 See accompanying notes to financial statements.