REPORT NO. 2009-160 MARCH 2009 UNIVERSITY OF CENTRAL FLORIDA_part1 pdf

REPORT NO. 2009-160
M
ARCH 2009

UNIVERSITY OF CENTRAL FLORIDA
Financial Audit
For the Fiscal Year Ended
June 30, 2008


This is trial version
www.adultpdf.com

BOARD OF TRUSTEES AND PRESIDENT
Members of the Board of Trustees and President who served during the 2007-08 fiscal year are listed below:

Board Member


Richard Walsh, Chair
Thomas Yochum, Vice-Chair
Judith Albertson
Logan Berkowitz from 5-08-08 (1)
Olga Calvet
Dr. Manoj Chopra (2)
Patrick Christiansen
Alan S. Florez
Michael Grindstaff from 3-18-08 (3)
Brandie Hollinger to 5-07-08 (1)
Phyllis Klock
Richard Nunis to 1-08-08 (4)

Harris Rosen
Conrad Santiago
Al Weiss

Dr. John C. Hitt, President

Notes: (1) Student body president.
(2) Faculty senate chair.
(3) Not yet approved by the Florida Senate.
(4) Position was vacant from January 9, 2008,
through March 17, 2008.


The Auditor General conducts audits of governmental entities to provide the Legislature, Florida’s citizens, public entity
management, and other stakeholders unbiased, timely, and relevant information for use in promoting government
accountability and stewardship and improving government operations.
The audit team leader was James H. Cole, CPA, and the audit was supervised by Brenda C. Racis, CPA. Please address
inquiries regarding this report to James R. Stultz, CPA, Audit Manager, by e-mail at
or by telephone
at (850) 922-2263.
This report and other audit reports prepared by the Auditor General can be obtained on our Web site
www.myflorida.com/audgen
; by telephone at (850) 487-9024; or by mail at G74 Claude Pepper Building, 111 West Madison
Street, Tallahassee, Florida 32399-1450.
This is trial version
www.adultpdf.com
MARCH 2009 REPORT NO. 2009-160
UNIVERSITY OF CENTRAL FLORIDA
TABLE OF CONTENTS
PAGE

NO.
EXECUTIVE
SUMMARY i
INDEPENDENT
AUDITOR’S REPORT ON FINANCIAL STATEMENTS 1
MANAGEMENT’S
DISCUSSION AND ANALYSIS 3
BASIC
FINANCIAL STATEMENTS
Statement of Net Assets 11
Statement of Revenues, Expenses, and Changes in Net Assets 13
Statement of Cash Flows 14
Notes to Financial Statements 16
INDEPENDENT
AUDITOR’S REPORT ON INTERNAL CONTROL OVER
FINANCIAL
REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED
ON AN AUDIT OF THE FINANCIAL STATEMENTS PERFORMED
IN
ACCORDANCE WITH
GOVERNMENT

AUDITING

STANDARDS
39
Internal Control Over Financial Reporting 39
Compliance and Other Matters 40
PRIOR

AUDIT FOLLOW-UP 41


This is trial version
www.adultpdf.com
MARCH 2009 REPORT NO. 2009-160
and cash flows thereof for the fiscal year then ended, in conformity with accounting principles generally accepted in
the United States of America.
In accordance with Government Auditing Standards, we have also issued our report on our consideration of the
University of Central Florida’s internal control over financial reporting and on our tests of its compliance with
certain provisions of laws, rules, regulations, contracts, and grant agreements and other matters included under the
heading INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF THE
FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING
STANDARDS
. 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 and should be considered in assessing the results of our audit.
The MANAGEMENT’S DISCUSSION AND ANALYSIS on pages 3 through 10 is not a required part of the
basic financial statements, but is supplementary information required by accounting principles generally accepted in
the United States of America. We have applied certain limited procedures, which consisted principally of inquiries
of management regarding the methods of measurement and presentation of the required supplementary
information. However, we did not audit the information and express no opinion on it.
Respectfully submitted,


David W. Martin, CPA
February 26, 2009

-2-
This is trial version
www.adultpdf.com
MARCH 2009 REPORT NO. 2009-160

MANAGEMENT’S DISCUSSION AND ANALYSIS
The management’s discussion and analysis (MD&A) provides an overview of the financial position and activities of
the University for the fiscal year ended June 30, 2008, and should be read in conjunction with the financial
statements and notes thereto. This overview is required by Governmental Accounting Standards Board (GASB)
Statement No. 35, Basic Financial Statements–and Management’s Discussion and Analysis–for Public Colleges and Universities, as
amended by GASB Statements Nos. 37 and 38. On March 18, 2008, the name of the UCF Health Facilities
Corporation (a University direct-support organization) was changed to the UCF Finance Corporation. This entity is
a component unit of the University, and its financial information was blended into the University financial
statements. Wherever necessary, this entity’s financial information is identified in the comparative information
noted below in the discussion of the variances between the 2007-08 and 2006-07 fiscal years. The MD&A, and
financial statements and notes thereto, are the responsibility of University management.
OVERVIEW OF FINANCIAL STATEMENTS
Pursuant to GASB Statement No. 35, the University’s financial report includes three basic financial statements: the
statement of net assets; the statement of revenues, expenses, and changes in net assets; and the statement of cash
flows. The financial statements, and notes thereto, encompass the University and its component units. These
component units include:
¾ Blended Component Unit
• The UCF Finance Corporation
¾ Discretely Presented Component Units
• The University of Central Florida Foundation, Inc.
• The University of Central Florida Research Foundation, Inc.
• The UCF Athletics Association, Inc.
• The UCF Convocation Corporation.
• The Golden Knights Corporation.
Information regarding these component units, including summaries of their separately issued financial statements, is

presented in the notes to the financial statements. This MD&A focuses on the University, excluding the component
units. For those component units reporting under GASB standards, MD&A information is included in their
separately issued audit reports.
FINANCIAL HIGHLIGHTS
The University’s assets totaled $1,130.1 million at June 30, 2008. This balance reflects a $142.8 million, or
14.5 percent, increase from the 2006-07 fiscal year. Liabilities increased by $17.8 million, or 5.5 percent, totaling
$340 million at June 30, 2008, compared to $322.2 million at June 30, 2007. As a result, the University’s net assets
increased by $125 million, reaching a year-end balance of $790.1 million.
-3-
This is trial version
www.adultpdf.com
MARCH 2009 REPORT NO. 2009-160
The University’s revenues totaled $786.8 million for the 2007-08 fiscal year, representing a 9.7 percent increase over
the 2006-07 fiscal year due mainly to the University’s continued enrollment growth, continued growth in sponsored
research, and an increase of capital donations for the College of Medicine. Expenses totaled $661.8 million for the
2007-08 fiscal year, representing an increase of 5.9 percent over the 2006-07 fiscal year.
T
HE STATEMENT OF NET ASSETS
The statement of net assets reflects the assets and liabilities of the University, using the accrual basis of accounting,
and presents the financial position of the University at a specified time. The difference between total assets and
total liabilities, net assets, is one indicator of the University’s current financial condition. The changes in net assets
that occur over time indicate improvement or deterioration in the University’s financial condition.
The following summarizes the University’s assets, liabilities, and net assets at June 30:
2008 2007
Assets
Current Assets 362,778$ 302,923$
Capital Assets, Net 628,837 571,465
Other Noncurrent Assets 138,520 112,979
Total Assets
1,130,135 987,367

Liabilities
Current Liabilities 88,935 73,117
Noncurrent Liabilities 251,088 249,089
Total Liabilities 340,023 322,206
Net Assets
Invested in Capital Assets,
Net of Related Debt 480,871 425,445
Restricted 168,169 143,096
Unrestricted 141,072 96,620
Total Net Assets
790,112$ 665,161$
Condensed Statement of Net Assets
(In Thousands)

Total current assets increased by $60 million from the prior year mainly due to increases in investments of
$43.5 million and amounts due from state of $15.6 million.
The University had significant construction activity during the year. Major construction projects currently in
progress include the (1) Burnett Biomedical Science Center, (2) Physical Science Building, (3) Medical School, and
(4) Arts Complex II. These four projects represent 95 percent of the University’s construction in progress as of
June 30, 2008, and accounted for the $57 million increase in capital assets.
-4-
This is trial version
www.adultpdf.com
MARCH 2009 REPORT NO. 2009-160
T
HE STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS
The statement of revenues, expenses, and changes in net assets presents the University’s revenue and expense
activity, categorized as operating and nonoperating. Revenues and expenses are recognized when earned or
incurred, regardless of when cash is received or paid.
The following summarizes the University’s activity for the 2007-08 and 2006-07 fiscal years:

2007-08 2006-07
Operating Revenues 291,414$ 261,272$
Operating Expenses 627,251 589,085
Operating Loss
(335,837) (327,813)
Net Nonoperating Revenues 366,566 347,537
Income Before Other Revenues,
Expenses, Gains, or Losses
30,729 19,724
Other Revenues, Expenses, Gains, or Losses 94,222 72,788
Net Increase in Net Assets
124,951 92,512
Net Assets, Beginning of Year 665,161 572,649
Net Assets, End of Yea
r
790,112$ 665,161$
Condensed Statement of Revenue, Expenses,
and Changes in Net Assets
(In Thousands)

The increase in net assets of $125 million is the result of several factors. Major increases in revenue were as follows:
¾ Grants and contracts increased by $18.3 million, or 20.1 percent.
¾ Net student tuition and fees increased by $9.2 million, or 7.7 percent.
¾ Capital grants, contracts, and donations increased by $19.4 million.
¾ Federal and State student financial aid increased $8.7 million, or 10.8 percent.
Operating Revenues
GASB Statement No. 35 categorizes revenues as either operating or nonoperating. Operating revenues generally
result from exchange transactions where each of the parties to the transaction either give up or receive something of
equal or similar value.
-5-

This is trial version
www.adultpdf.com