AUDITED CONSOLIDATED FINANCIAL
STATEMENTS AND OTHER FINANCIAL
INFORMATION AND REPORTS AND SCHEDULES
RELATED TO OFFICE OF MANAGEMENT AND
BUDGET CIRCULAR A-133, SECTION 215.97
FLORIDA STATUTES, AND CHAPTER 10.650
RULES OF THE FLORIDA AUDITOR GENERAL
Nova Southeastern University, Inc.
Year Ended June 30, 2011
Report of Independent Certified Public Accountants
Ernst & Young LLP
Nova Southeastern University, Inc.
Audited Consolidated Financial Statements and Other Financial
Information and Reports and Schedules Related to Office of
Management and Budget Circular A-133,
Section 215.97 Florida Statutes, and Chapter 10.650
Rules of the Florida Auditor General
Year Ended June 30, 2011
Contents
Report of Independent Certified Public Accountants ......................................................................1
Audited Consolidated Financial Statements
Consolidated Statements of Financial Position................................................................................3
Consolidated Statements of Activities .............................................................................................4
Consolidated Statements of Cash Flows ..........................................................................................5
Notes to Consolidated Financial Statements....................................................................................6
Supplemental Information
Schedule of Expenditures of Federal Awards and State Financial Assistance ..............................29
Notes to Schedule of Expenditures of Federal Awards and State
Financial Assistance ...................................................................................................................43
Report of Independent Certified Public Accountants 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 .....................................................................................................................46
Report of Independent Certified Public Accountants on Compliance With
Requirements That Could Have a Direct and Material Effect on Each Major
Federal Program and State Financial Assistance Project and on Internal Control
Over Compliance in Accordance With OMB Circular A-133, Section 215.97
Florida Statutes, and Chapter 10.650 Rules of the Florida Auditor General ..............................48
Schedule of Findings and Questioned Costs ..................................................................................50
Summary Schedule of Prior Year Findings ...................................................................................54
State of Florida Student Financial Assistance Programs – Schedule of Populations,
Samples Tested, and Questioned Costs ......................................................................................56
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Report of Independent Certified Public Accountants
The Board of Trustees
Nova Southeastern University, Inc.
We have audited the accompanying consolidated statement of financial position of Nova
Southeastern University, Inc. (the University) as of June 30, 2011, and the related consolidated
statements of activities and cash flows for the year then ended. These financial statements are the
responsibility of the University’s management. Our responsibility is to express an opinion on
these financial statements based on our audit. The prior year summarized comparative
information has been derived from the University’s 2010 consolidated financial statements and,
in our report dated October 14, 2010, we expressed an unqualified opinion on those financial
statements.
We conducted our audit in accordance with auditing standards generally accepted in the
United States 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 of material misstatement. We were not engaged to perform an audit of the
University’s internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the University’s internal control over financial reporting. Accordingly, we
express no such opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the accounting principles used
and significant estimates made by management and evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects,
the consolidated financial position of the University as of June 30, 2011, and the consolidated
changes in their net assets and their cash flows for the year then ended, in conformity with U.S.
generally accepted accounting principles.
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member firm of Ernst & Young Global Limited
In accordance with Government Auditing Standards, we have also issued our report dated
October 10, 2011 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 that report is to describe the
scope of our resting of internal control over financial reporting and compliance and the results of
that testing, and not to provide an opinion on the 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.
Our audit was performed for the purpose of forming an opinion on the consolidated financial
statements taken as a whole. The accompanying schedule of expenditures of federal awards and
state financial assistance is presented for purposes of additional analysis as required by
U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments,
and Non-Profit Organizations, Section 215.97 Florida Statutes, and Chapter 10.650 Rules of the
Florida Auditor General, and is not a required part of the consolidated financial statements. Such
information has been subjected to the auditing procedures applied in the audit of the consolidated
financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the
consolidated financial statements taken as a whole.

October 10, 2011
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A member firm of Ernst & Young Global Limited
Nova Southeastern University
Consolidated Statements of Financial Position
June 30, 2011 and 2010
($ in thousands)
ASSETS
20112010
Current assets:
Cash and cash equivalents
Restricted cash
Investments
Tuition and other receivables, net
Pledges receivable, current portion, net
Bond deposits with trustees, current portion
Prepaid expenses and other current assets Total current assets
Pledges receivable, net
Bond deposits with trustees
Perkins student loans
Foundation assets
Contributions receivable from remainder trusts
Scholarship funds held in trust by others
Designated investments
Restricted investments
Restricted cash
Land, buildings, and equipment, net
Deferred debt issue costs and other assets
Total assets
$
91,370
$ 50,865
3,490
1,498
75,77560,463
32,303
31,747
5,786
3,690
813
668
8,029
7,472
217,566
156,403
7,968
10,058
20,372
18,551
5,204
5,517
4,909
5,436
199
154
3,528
3,272
39,035
45,088
21,569
22,101
3,236
3,075
731,756
693,652
19,522
23,795
$1,074,864
$ 987,102
$
12,748
44,199
71,247
9,933
9,939
10,879
158,945
354,168
4,786
156
17,266
15,031
$ 10,434
51,351
65,504
8,342
8,392
12,797
156,820
339,463
4,797
167
17,649
14,213
$ 550,352
$ 533,109
Unrestricted
Temporarily restricted
Permanently restricted
$ 436,453
67,875
20,184
$ 372,770
63,756
17,467
Total net assets
524,512
453,993
$1,074,864
$ 987,102
LIABILITIES AND NET ASSETS
Current liabilities:
Student deposits
Accounts payable and accrued liabilities
Deferred revenue
Current portion of long-term debt
Accrued insurance cost
Other current liabilities
Total current liabilities
Long-term debt
Refundable Federal Perkins student loans
Due to beneficiaries under remainder trusts and annuities
Deferred revenue
Other liabilities
Total liabilities
Net assets:
See accompanying notes to financial statements.
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June 30, 2011 and 2010
Consolidated Statements of Activities
(with summarized financial information for the year ended June 30, 2010)
($ in thousands)
Unrestricted
Temporarily Permanently
Restricted Restricted 2011
Total
2010
Total
REVENUES, GAINS, AND OTHER SUPPORT:
Tuition and fees
Contributions
Government grants
Auxiliary operations
Interest and dividends
Educational activities
Net unrealized gain on securities
Net realized gain (loss) on sale of securities
Realized gain on sale of property
Other
Net assets released from restrictions
$493,999 $
- $
-
1,345 14,201 2,786 5,106 27,451 -
33,811 - -
892 187 (72)
618 - -
6,065 363 8
1,541 33 (5)
415 - -
12,302 8,961 -
47,077 (47,077)
-
603,171 4,119 2,717 $493,999 $471,394
18,332 10,804
32,557 26,541
33,811 31,652
1,007 2,204
618 537
6,436 6,438
1,569 (2,346)
415 21,263 20,782
- 610,007 568,006
EXPENSES AND TRANSFERS:
rogram expenses
P
Management and general expenses
Fund-raising
Change in net assets before
changes related to Museum
collection items not capitalized
455,875 80,292 3,209 539,376 63,795 -
4,119 -
2,717 455,875 80,292 3,209 539,376 452,814
82,914
3,178
538,906
70,631 29,100
Change in net assets
related to collection
Items not capitalized:
Proceeds from sale of collection items
- - - - Collection items purchased but not capitalized
(112)
- - (112)
INCREASE IN NET ASSETS
Net assets, beginning of year
NET ASSETS, END OF YEAR
20 (79)
63,683 4,119 2,717 70,519 29,041
372,770 63,756 17,467 453,993 424,952
$436,453 $ 67,875 $ 20,184 $ 524,512 $453,993
See accompanying notes to financial statements.
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Nova Southeastern University
Consolidated Statements of Cash Flows
June 30, 2011 and 2010
($ in thousands)
2011
2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Increase in net assets
$ 70,519 $ 29,041
Adjustments to reconcile increase in net assets to
net cash provided by operating activities:
Depreciation expense
32,023 27,377
Amortization expense 726
419
6,626
6,413
Provision for doubtful accounts
Loss on disposal of equipment and buildings
3,711
1,133
(1,569)
2,346
Net (gain) loss on sale of securities and sale of properties
Net unrealized gain on securities
(6,436)
(6,438)
Contributions for investment and capital purchases
(15,283)
(8,213)
Decrease (increase) in assets from prior year:
Tuition and other receivables
(7,182)
(4,297)
Pledges receivable
(6)
46
Prepaid expenses and other current assets
(557)
1,293
313 577
Perkins student loans
Foundation assets
384 703
(45)
(21)
Contributions receivable and scholarship funds
Other assets
3,439 (4,700)
Increase (decrease) in liabilities from prior year:
(7,152)
(7,319)
Accounts payable and accrued liabilities
Accrued insurance costs and other current liabilities
(371)
(272)
Deferred revenue—tuition and other
5,743 5,456
Deferred revenue—county funding
(383)
(58)
Student deposits and other liabilities
3,132 571
Due to beneficiaries under remainder trusts and annuities
(11)
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87,621 44,058
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures
(73,838)
(41,713)
Sales and maturities of investments
283,239 145,239
Purchases of investments
(284,029)
(183,240)
Investments in and contributions to University Park Plaza
803 550
Decrease in restricted cash
(2,153)
1,622
Net cash used in investing activities
(75,978)
(77,542)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt
37,879 (Increase) decrease in bond deposits with trustees
(2,012)
11,276
Repayment of debt
(21,558)
(8,384)
Financing costs
(719)
Increase in refundable Federal Perkins student loans
(11)
(3)
15,283 8,213
Contributions for investment and capital purchases
Net cash provided by financing activities
28,862 11,102
Net increase (decrease) in cash and cash equivalents
40,505 (22,382)
Cash and cash equivalents, beginning of year
50,865 73,247
CASH AND CASH EQUIVALENTS, END OF YEAR
$ 91,370 $ 50,865
Supplemental information:
Interest paid, net of amounts capitalized
$ 11,266 $ 11,141
See accompanying notes to financial statements.
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Nova Southeastern University
Notes to Consolidated Financial Statements
June 30, 2011 and 2010
1. University Organization
Nova Southeastern University, Inc. (NSU, or the university) is a not-for-profit, independent institution and
is exempt from federal income taxes on related income under Section 501 (c)(3) of the Internal Revenue
Code as an organization described in Section 501. Founded in 1964, the university offers undergraduate
degrees, graduate and professional degrees, and certificate programs to approximately 37,600 full- and parttime students in medicine, health sciences, computer sciences, law, education, psychology, business, and
marine biology. Courses are taught at four South Florida campuses, seven student educational centers, and
at sites in more than 24 states and Puerto Rico, as well as 14 foreign countries. NSU serves the citizens of
its community with health, psychology, and law centers; schools for children with hearing impairments and
autism; and programs for retired professionals. NSU’s University School offers innovative alternatives in
primary and secondary education to children from preschool through grade 12.
2. Summary of Significant Accounting Policies
Financial Statement Presentation
The accompanying consolidated financial statements include the university and its wholly owned subsidiaries,
NSU Guaranty Insurance Company, Ltd.; NSU Grande Oaks, LLC.; and NSU Park Plaza, LLC. All
significant intercompany balances and transactions have been eliminated in consolidation. NSU classifies
its transactions and balances into three categories of net assets: (1) Transactions and balances without
donor-imposed stipulations are unrestricted. Unrestricted assets may be used to achieve any institutional
purpose; however, the Board of Trustees may designate unrestricted net assets for a specific purpose. (2)
Transactions and balances with donor-imposed stipulations that expire in time, or can be fulfilled by actions
of the university, are reflected as temporarily restricted. (3) Transactions and balances with donor-imposed
stipulations that neither expire over time, nor can be fulfilled by actions of the university, are categorized as
permanently restricted. Permanently restricted assets are not expendable.
Certain amounts contained in the accompanying fiscal 2010 consolidated financial statements have been
reclassified to conform to the fiscal 2011 presentation.
The consolidated financial statements include prior-year comparative information summarized in total, but
not by net asset class. As this summarized information lacks sufficient detail for presentation in accordance
with accounting principles generally accepted in the United States of America, the data should be read in
conjunction with the prior year’s consolidated financial statements.
The preparation of consolidated financial statements in conformity with accounting principles generally
accepted in the United States of America requires NSU to make estimates and assumptions about the
reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from these estimates.
Cash and Cash Equivalents
Cash equivalents are investments with maturities of 90 days or less when purchased, carried at cost, which
approximates fair value.
Restricted Cash
Current restricted cash represents funds advanced to NSU under various loan programs, but not disbursed
to students by June 30. Long-term restricted cash represents funds contributed in accordance with the jointuse library facility agreement (see Note 14) by NSU and Broward County for capital repair, replacement,
and renewal. In accordance with this agreement, these funds are maintained in an interest-bearing account.
These funds are reflected as a long-term asset on the Consolidated Statements of Financial Position since
they are restricted for long-term capital expenditures.
NSU has cash balances with banks in excess of FDIC-insured limits, which potentially subject NSU to
credit risks. Management believes the risk related to these deposits is minimal.
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Nova Southeastern University
Notes to Consolidated Financial Statements
June 30, 2011 and 2010
Investments
Investments in equity securities with readily determinable market values, debt securities, alternative
investments, and assets held in trust are stated at fair value. Investments received as gifts are recorded at fair
value at the date of donation.
Permanently restricted investments are subject to restrictions requiring that the principal be invested in
perpetuity. Income and net realized and unrealized gains or losses from these investments are classified
based on donor restrictions, if any.
Short-term investments have a maturity of three months to five years from the purchase date and are bought
and held primarily for the purpose of selling in the near future to fund current operations. All short-term
investments are recorded at fair value using the specific identification method; unrealized gains and losses
are reflected in net unrealized gain or loss on securities.
Long-term investments are subject to market and credit risks customarily associated with debt, equity,
and real estate. Investment securities are exposed to various risks, such as interest rate, market, and credit.
Due to the level of risk associated with certain investment securities and the level of uncertainty related
to changes in the value of investment securities, it is at least reasonably possible that changes in risks in
the near term could materially affect investment balances and the amounts reported in the Consolidated
Statements of Financial Position and the Consolidated Statements of Activities.
Bond Deposits with Trustees
Deposits consist of amounts in bond service and reserve funds for various bonds outstanding and proceeds
from bond issuances restricted for construction. The current portion related to bond service is $.8 million
at June 30, 2011 ($.7 million at June 30, 2010). Reserve funds, classified as long-term bond deposits with
trustees, are $20.4 million at June 30, 2011 ($18.5 million at June 30, 2010).
At June 30, 2011 and 2010, approximately $.02 million of unspent bond proceeds restricted for the construction
of the student educational center has been recorded within long-term bond deposits with trustees.
Deferred Debt Issue Costs
Costs related to the issuance of debt ($6.3 million at June 30, 2011 and 2010) are being amortized over
the term of the related debt instrument. The bonds outstanding method, which approximates the effective
interest method, is used to apportion these deferred costs.
Split Interest Agreements
These agreements with donors consist primarily of charitable remainder annuity trusts, unitrusts, and
gift annuities.
Contributions receivable from remainder trusts:
The university is the beneficiary of trusts held and administered by others. The current values of estimated
future cash receipts from the trusts are recognized, in accordance with the donor-imposed restrictions, as
temporarily restricted assets and contributions when NSU is notified of the establishment of the trust.
Changes in the fair values of the trusts are recorded as temporarily restricted other changes within the
Consolidated Statements of Activities.
Due to beneficiaries under remainder trusts and annuities:
NSU is a trustee for trust assets, which are included in investments. In accordance with the donor-imposed
restrictions, temporarily restricted contributions are recognized when the trusts are established, after
recording liabilities for estimated future payments (discounted over the donor’s or other beneficiary’s life
expectancy using published mortality tables). These liabilities are adjusted annually for changes in asset
values and estimated future benefits.
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Nova Southeastern University
Notes to Consolidated Financial Statements
June 30, 2011 and 2010
The university has entered into arrangements whereby assets are transferred from a donor to the university
in exchange for a promise by the university to pay fixed amounts for a specified period of time to the donor
or to other donor designees. Temporarily restricted contributions are recognized for the difference between
the assets received and the estimated future payments (discounted over the specified period of time the
payments are to be made).
Changes in split interest agreements, which are reflected as other revenue in the Consolidated Statements of
Activities, increased by approximately $64,000 for fiscal 2011 and $27,000 for fiscal 2010.
At June 30, 2011, amounts due to beneficiaries under remainder trusts were approximately $105,000
($109,000 at June 30, 2010), and amounts due under annuity agreements were approximately $51,000
($58,000 at June 30, 2010).
Land, Buildings, and Equipment
Land, buildings, and equipment are recorded at acquisition cost or market value at the date of donation
and are subsequently carried net of accumulated depreciation. Leased property meeting certain criteria is
capitalized, and the current value of the lease payments is recorded as a liability. Depreciation is calculated
using the straight-line method over periods from 4 to 50 years. NSU reviews long-lived assets for impairment
when events or circumstances indicate the carrying amount will not be fully recoverable, based on estimated
future cash flows. Interest on capital projects is capitalized during the construction period.
Insurance Programs
The university is partially self-insured for workers’ compensation benefits, wholly owns an off-shore captive
insurance company (see Note 16), participates in partially owned insurance entities and benefit associations,
and maintains claims-made insurance policies with respect to certain other coverage. Liabilities for these
claims are recorded based on actual loss history and actuarial calculations that include provisions for
estimated losses incurred, but not reported, and the portion of insurance risk that has not been transferred
to insurance carriers. Accrued insurance costs, net of 3 percent discount, approximated $9.9 million at
June 30, 2011, and $8.4 million at June 30, 2010. Undiscounted costs at June 30, 2011 and 2010, were
$8.4 million and $8.6 million, respectively. Investments in insurance entities and benefit associations are
accounted for under the equity method and are included in deferred debt issue costs and other assets and
approximated $3.8 million at June 30, 2011, and $2.4 million at June 30, 2010.
Endowment Payout and Value
The Board of Trustees has directed that up to 5 percent of the market value of NSU’s endowment
investment be made available annually for expenditure. This endowment payout is computed monthly.
If endowment income exceeds this payout level, any balance is reinvested according to donor restrictions.
If endowment income is less than 5 percent in any month, only actual endowment income is distributed.
The fair value of NSU’s endowment at June 30, 2011, including cash, was $64.5 million, which includes donorrestricted and board-designated endowments. At June 30, 2010, the fair value was $54.2 million. Any declines
in the fair value of donor-restricted endowments below their respective historical cost value are recorded as
reductions in unrestricted net assets or temporarily restricted net assets, if unspent temporarily restricted
earnings exist. Subsequent market gains are used to restore the deficiency in unrestricted net assets before any
net appreciation above the historical cost value of such funds increases temporarily restricted net assets.
Tuition and Fees
Tuition and fees are reported net of exchange transactions, such as discounts or scholarship allowances,
reducing both student financial aid expenses and tuition revenue. Tuition and fee revenue is recognized
on a pro rata daily basis over the term of instruction. Unearned student tuition and fees relating to future
instructional periods are recorded as current deferred revenue. Deferred tuition revenue was $70.3 million at
June 30, 2011, and $64.6 million at June 30, 2010.
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Nova Southeastern University
Notes to Consolidated Financial Statements
June 30, 2011 and 2010
Contributions
Unconditional contributions are recorded as unrestricted support. Unconditional contributions with donorimposed stipulations are reported as temporarily restricted and reclassified to unrestricted assets when
conditions are satisfied. Contributed assets to be maintained in perpetuity are classified as permanently
restricted. Income from permanently restricted assets is classified according to the terms of the contribution.
Conditional pledges are not recognized until the conditions are met.
Contributions to be received more than one year in the future are discounted based on the expected date of
receipt. Amortization of the discount is recorded as contribution revenue and used in accordance with donorimposed stipulations, if any. An allowance is made for uncollectible contributions based on management’s
judgment, past collection experience, and other relevant factors.
Government Grants
Revenue from grants is recognized as the related expenses are incurred. Grant revenue received and expended
within the same fiscal year is included as temporarily restricted revenue and net assets released from
restrictions in the accompanying Consolidated Statements of Activities.
Museum of Art | Fort Lauderdale
On July 1, 2008, the university merged with the Museum of Art, Inc. (the Museum), a not-for-profit
organization, with NSU as the surviving organization. The merger was accounted for using the purchase
method for business combinations. No consideration was paid in this transaction, and the fair value of the
Museum’s net assets acquired of $13.6 million was recorded as contribution revenue in the Consolidated
Statements of Activities for the year ended June 30, 2009. The results of operations for the Museum have
been included with the university’s activities since the date of the merger.
The Museum acquires art for its collection through purchase or by gift. As permitted by the Financial
Accounting Standards Board’s Accounting Standards Codification (ASC) 958, Not-for-Profit Entities, the
Museum does not include its collection items as assets in the Consolidated Statement of Financial Position.
Accordingly, no value has been assigned to the Museum’s art collection. The collection is insured for $12.0
million. The university’s policy requires any proceeds from the sale of collection items to be used to acquire
other items for the collection. Proceeds from the sale of collection items and expenditures for collection items
purchased are reflected in the accompanying Consolidated Statement of Activities separately from revenues
and expenses.
When the Museum receives contributions of works of art with the donor’s stipulation that they will be sold
rather than added to the collection, such works of art are recognized as unrestricted revenue and as assets at
their fair value.
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Nova Southeastern University
Notes to Consolidated Financial Statements
June 30, 2011 and 2010
Fair Value of Financial Instruments
ASC 820, Fair Value Measurements and Disclosures, which became effective for the university on July 1, 2008,
established a framework for measuring fair value, which included a hierarchy based on the quality of inputs
used to measure fair value and provided specific disclosure requirements based on the hierarchy.
Fair Value Hierarchy
ASC 820 requires the categorization of financial assets and liabilities, based on the inputs to the valuation
technique, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted
prices in active markets for identical assets and liabilities and lowest priority to unobservable inputs. The
various levels of the ASC 820, fair value hierarchy are described as follows:
Level 1—Financial assets and liabilities whose values are based on unadjusted quoted market prices for
identical assets and liabilities in an active market that we have the ability to access.
Level 2—Financial assets and liabilities whose values are based on quoted prices in markets that are not
active or model inputs that are observable for substantially the full term of the asset or liability.
Level 3—Financial assets and liabilities whose values are based on prices or valuation techniques that
require inputs that are both unobservable and significant to the overall fair value measurement.
Investments are carried at fair value. The fair value of alternative investments, which contain certain provisions,
has been estimated using the Net Asset Value (NAV) as reported by the management of the respective
alternative investment fund. Accounting guidance provides for the use of NAV as a practical expedient for
estimating fair value of alternative investments, which contain certain provisions. Accordingly, NAV reported
by each alternative investment fund is used as a practical expedient to estimate the fair value of the university’s
interest. Their classification within Level 2 or 3 is based on the university’s ability to redeem its interest in the
near term. The university considers “near term” to be shoter than a one-year period.
Accounting for Uncertainty in Income Taxes
The university follows the guidance contained in ASC 740, Income Taxes. ASC 740 addresses the accounting
for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a threshold of
more-likely-than-not for recognition and de-recognition of tax positions taken or expected to be taken in a tax
return. There were no uncertain tax positions recorded in the consolidated financial statements for fiscal years
2011 and 2010.
3. Tuition and Other Receivables
Tuition and other receivables at June 30 consist of the following (in thousands):
Student accounts, net of allowance of $5,341
in 2011 and $4,784 in 2010
Unreimbursed grant and contract expenditures
Health centers’ patient accounts, net of allowance of $3,931 in 2011 and $4,218 in 2010
Accrued interest
Other Total
2011
2010
$ 19,732
6,392
$ 21,277
6,138
1,039
910
4,230
$ 32,303
857
176
3,299
$ 31,747
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Nova Southeastern University
Notes to Consolidated Financial Statements
June 30, 2011 and 2010
4. Pledges Receivable
Unconditional promises to give to the university are included in the consolidated financial statements as
pledges receivable and contribution revenue in the appropriate net asset category. Pledges that existed prior to
July 1, 2008, were discounted to current values at the applicable risk-free rate of return (determined as of the
date of the pledges and pertaining to the expected term of the pledges) ranging from 2.3 to 5.0 percent. Upon
adoption of the guidance contained in ASC 820, the university began applying a present value technique
to new pledges made subsequent to July 1, 2008, whereby the estimated future cash flows were discounted
based on a risk-adjusted discount rate in order to determine the fair value of the pledge to be recorded as of
the date the pledge was made. The risk-adjusted discount rates applied ranged from 1.5 to 4.4 percent.
Pledges were expected to be collected as follows as of June 30 (in thousands):
Current:
In one year or less
Less allowance
Between one and five years
Future:
More than five years
Less discount and allowance
Total
2011
2010
$ 7,586
$ 4,867
(1,800)
(1,177)
5,786 3,690
8,202
9,007
2,780
5,263
(3,014)
(4,212)
7,968 10,058
$ 13,754
$ 13,748
At June 30, pledges receivable had the following donor stipulations (in thousands):
Scholarship endowments
Building construction
Other endowments
Subtotal
Less discount and allowance
Total
2011
$ 3,430
9,546
5,592
18,568
(4,814)
$ 13,754
2010
$ 3,403
10,512
5,222
19,137
(5,389)
$ 13,748
In February 2009, the university received an unconditional pledge to be used for the University School
Capital Campaign. The pledge is payable in annual installments and constitutes approximately 41 percent of
the balance of outstanding pledges receivable as of June 30, 2011 (46 percent at June 30, 2010).
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Nova Southeastern University
Notes to Consolidated Financial Statements
June 30, 2011 and 2010
5. Investments
Investments at June 30 consist of (in thousands):
2011
Pooled investments:
Money market funds
$ 438
Mutual funds
29,225
Equity securities
1,851
Commingled funds
7,210
Fund-of-funds
9,084
Corporate obligations
5,442
Government-related obligations
61
Total
53,311
Other investments:
Mutual funds
77
Equity securities
24
39,677 Corporate obligations
Government-related obligations
43,040
Foreign obligations
150
100
Certificate of deposit
Total
83,068 Total investments$136,379 2010
$
367
16,735
4,156
9,888
8,334
407
4,941
44,828
62
32
6,119
76,361
150
100
82,824
$127,652
Investments at June 30 are classified in the Consolidated Statements of Financial Position as follows (in thousands):
20112010
Investments
$75,775
$60,463
Designated investments 39,035 45,088
Restricted investments 21,569 22,101
$136,379
$ 127,652
Investments at June 30, 2011 and 2010, include amounts received under split-interest agreements of approximately
$77,000 and $62,000, respectively.
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Nova Southeastern University
Notes to Consolidated Financial Statements
June 30, 2011 and 2010
6. Land, Buildings, and Equipment
Land, buildings, and equipment at June 30 consist of (in thousands):
Land and improvements
Buildings
Equipment
Library books
Construction in progress
Total
Less accumulated depreciation
Net
20112010
$120,917 $100,380
627,171622,292
105,31382,365
76,022
72,400
33,922
18,774
963,345
896,211
(231,589)
(202,559)
$731,756 $693,652
For fiscal 2011 and 2010, total depreciation expense was approximately $32.0 million and
$27.4 million, respectively.
Included in Land, Buildings, and Equipment at June 30, 2011 and 2010, are facilities at North Miami
Beach with a net book value of $8.9 million and $9.1 million, respectively, from which the proceeds of any
future sale would be restricted for use to benefit the Health Professions Division. Accordingly, $5.8 million
of these amounts are classified as temporarily restricted in the Consolidated Statements of Financial Position.
At June 30, 2011, the university had approximately $9.1 million of unsecured letters of credit relating to
construction projects.
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Nova Southeastern University
Notes to Consolidated Financial Statements
June 30, 2011 and 2010
7. Fair Value Measurements
Fair Value on a Recurring Basis
The following tables present the fair value measurement for those assets and liabilities measured at fair value
on a recurring basis as of June 30, 2011, grouped by fair value hierarchy (in thousands):
2011
Total
Level 1
Level 2
Level 3
Cash equivalents
Money market funds$ 32,731 $ 32,731 $
-
$
Mutual funds
1,078 1,078 -
Subtotal
33,80933,809
-
Current investments
Equity securities
24 24 -
Corporate obligations
35,226 -
35,226 Government-related obligations
40,375 -
40,375 Foreign obligations
150 -
150 Subtotal
75,775
2475,751
Designated and restricted investments
464 464 - Money market funds
Mutual funds
31,071 31,071 - Certificate of deposit
100 100 - Equity securities
1,964 1,964 - Commingled funds
7,646 - 7,646 Fund-of-funds
9,634 - - 9,634
Corporate obligations
9,894 - 9,894 Government-related obligations
2,726 - 2,726 Subtotal
63,499 33,599 20,266 9,634
Scholarship funds held in trust
Money market funds
241 241 - Equity securities
768 768 - Corporate obligations
2,467 - 2,467 Government-related obligations
52
- 52 Subtotal
3,528 1,0092,519
Contributions receivable from remainder trusts
199 - -
199
Total$176,810 $ 68,441 $ 98,536 $ 9,833
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Nova Southeastern University
Notes to Consolidated Financial Statements
June 30, 2011 and 2010
The following tables present the fair value measurement for those assets and liabilities measured at fair value on
a recurring basis as of June 30, 2010, grouped by fair value hierarchy (in thousands):
2010
Total
Level 1
Level 2
Level 3
Cash equivalents
Money market funds
$ 22,470 $ 22,470 $
-
$
Mutual funds
1,709 1,709 -
Subtotal
24,17924,179
-
Current investments
Equity securities
32 32 -
Corporate obligations
4,512 -
4,512 Government-related obligations
55,769 -
55,769 Foreign obligations
150 -
150 Subtotal
60,463
3260,431
Designated and restricted investments
Money market funds
408 408 - Mutual funds
18,664 18,664 - Certificate of deposit
100 100 - 4,620 4,620 - Equity securities
10,992 - 10,992 Commingled funds
Fund-of-funds
9,264 - -
9,264
Corporate obligations
2,014 - 2,014 Government-related obligations
25,533 - 25,533 Subtotal
71,595 23,79238,539 9,264
Scholarship funds held in trust
Money market funds
232 232 - Mutual funds
45 45 - Equity securities
629 629 - 2,319 - 2,319 Corporate obligations
47
- 47 Government-related obligations
Subtotal
3,272 9062,366
Contributions receivable from remainder trusts
154 - -
154
Total
$ 159,663
$ 48,909
$ 101,336
$ 9,418
Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)
The following is a reconciliation of Level 3 investments for which significant unobservable inputs were used to
determine fair value (in thousands):
Fund-of-Funds
Balance as of July 1, 2010
$9,418
Net unrealized gains
154
Purchases
261
Balance as of June 30, 2011
$ 9,833
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Nova Southeastern University
Notes to Consolidated Financial Statements
June 30, 2011 and 2010
There were no realized gains or losses on Level 3 investments during the fiscal year. All net unrealized gains
(losses) in the above table are reflected in the Consolidated Statement of Activities. Net unrealized gains
(losses) are determined based on changes in fair value of the instrument related to future expected cash flow
associated with investments.
Investments included in Level 3 consist of the university’s ownership in alternative investments (interests
in hedge funds, private equity funds, and real estate funds). The fair value of certain alternative investments
represents the ownership interest in the net asset value (NAV) of the respective fund. The fair values of the
investments held by funds that do not have readily determinable fair values are determined by the investment
manager and are based on appraisals or other estimates that require varying degrees of judgment. If no public
market exists for the investments, the fair value is determined by the investment manager taking into consideration, among other things, the cost of the investment, prices of recent significant placements of similar
investments of the same issuer, and subsequent developments concerning the companies to which the investments relate. The university has performed due diligence regarding these investments and believes that the
NAV of its alternative investments is a reasonable estimate of fair value as of June 30, 2011 and 2010.
The following table presents additional information pertaining to alternative investments as of June 30,
2011 (in thousands):
Fair Value
Unfunded
Redemption
2011
Commitments
Frequency
Commingled funds:
$ 5,251 $
-
Daily–Monthly
Equity securities (1)
Debt securities (2)
2,395 -
Monthly
Fund-of-funds:
8,748 -
Annual–Locked
Hedge fund (3)
886 5,740 Locked
Private equity (4)
$ 17,280
$ 5,740
Redemption
Notice Period
10–30 days
10 days prior
to redemption
100 days–None
None
(1) This category includes equity securities in domestic markets. Investments in this category may be redeemed
daily to monthly, subject to 10 to 30 days written notice.
(2) This category includes debt obligations and other asset classes, including debt obligations issued or guaranteed
by U.S. and foreign governments or corporations. Investments may be redeemed monthly, subject to 10 days
written notice.
(3) This category includes several hedge funds that pursue multiple strategies to diversify and reduce volatility. The
fair values of investments in this category have been estimated using the net asset value of the investment funds.
Approximately $5.4 million of the fair value reported above represents an investment made in 2005 for which
the initial lock-up period has expired. As the university did not elect to redeem its shares at the end of the initial
lock-up period, it is subject to a new, three-year lock-up period. However, after the initial lock-up period has
expired, redemptions within a lock-up period are permitted annually at the end of each calendar year, subject to
100 days written notice, and provided that all redemptions in the fund do not exceed 20 percent of the fund’s
total market value. The remaining investments in this category cannot be redeemed within the near term, as
they are subject to a minimum lock-up period of three years as of June 30, 2011.
(4) This category includes several private equity funds. The fair values of the investments in this category have
been estimated using the net asset value of the investment funds. Approximately $132,000 is invested in
a private real estate fund-of-funds and can never be redeemed. The underlying investments in the fund are
expected to be liquidated over the next 7 to 10 years. The remaining investments in this category are subject to
a lock-up period ranging from 3 to 10 years.
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Nova Southeastern University
Notes to Consolidated Financial Statements
June 30, 2011 and 2010
Fair Value on a Nonrecurring Basis
As of June 30, 2011, there were no financial assets or liabilities measured at fair value on a nonrecurring basis.
Financial Instruments Not Measured at Fair Value
The carrying amounts of cash, patient receivables, deposits with bond trustees, and student and other receivables approximate fair value because of the short maturity of these financial instruments. Contributions
receivable carrying amounts approximate fair value because these instruments are recorded at net present
value. The carrying amounts of accounts payable and accrued liabilities approximate fair value because of the
short maturity of these financial instruments. The carrying amount of notes and bonds payable with variable
interest rates approximates their fair value because the variable rates reflect current market rates for bonds
with similar maturities and credit quality. The fair value of notes and bonds payable with fixed interest rates
is based on rates assumed to be currently available for bond issues with similar terms and average maturities. The estimated fair value and carrying amount of these bonds payable at June 30, 2011, approximated
$255.8 million and $260.6 million, respectively. The estimated fair value and carrying amount of these
bonds payable at June 30, 2010, approximated $253.8 million and $240.9 million, respectively.
8. Long-Term Debt
Long-term debt at June 30 is summarized below (in thousands):
BCEFA tax exempt Series 2000A bonds
BCEFA tax exempt Series 2000B bonds, net of $0 discount
at June 30, 2011 ($68 in 2010)
$
2011
8,065 $
2010
8,625
-
13,857
5,140 5,485
37,030
37,017
BCEFA tax exempt Series 2004A bonds, plus $161 premium
at June 30, 2011 ($235 in 2010)
9,667 11,990
BCEFA tax exempt Series 2004B bonds, plus $28 premium
at June 30, 2011 ($30 in 2010)
20,028 20,030
BCEFA tax exempt Series 2004C bonds
29,500 31,200
BCEFA tax exempt Series 2006 bonds, plus $123 premium
at June 30, 2011 ($130 in 2010)
99,913 99,920
BCEFA tax exempt Series 2008A bonds
59,020
59,520
Town of Davie tax exempt Series 2009 bonds
56,087 58,097
HEFFA tax exempt Series 2011 bonds, plus $375 premium at June 30, 2011
37,855 -
1,796 1,828
BCEFA tax exempt Series 2002A bonds
BCEFA tax exempt Series 2002B bonds, net of $220 discount
at June 30, 2011 ($234 in 2010)
Museum of Art, 2007A bonds payable Museum of Art, 2007B bonds payable
-
236
364,101 347,805
Current portion
(9,933)
Long-term debt
$ 354,168 (8,342)
$ 339,463
The Broward County Educational Facilities Authority (the “BCEFA”) was established by Ordinance Number
86-15 of the Broward County Commission for the purpose of assisting institutions of higher education in the
construction, financing, and refinancing of projects for public purposes. The BCEFA bonds were issued on
behalf of the university and are direct obligations of NSU.
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Nova Southeastern University
Notes to Consolidated Financial Statements
June 30, 2011 and 2010
The Town of Davie is a municipal corporation duly organized and existing under the laws of the state of
Florida and is authorized, pursuant to the charter of the town (the “Charter”) and Florida Statutes, to issue
revenue bonds to pay or reimburse the cost of educational facilities to be acquired, constructed, and equipped.
The Higher Education Financing Facilities Authority (the “HEFFA”) is a public body corporate and politic
created and existing under the laws of the state of Florida, pursuant to the provisions of Part II, Chapter 243,
Florida Statutes, and is authorized to issue bonds.
In May 2011, the university issued, through HEFFA, $37.5 million tax exempt 2011 Series bonds. Proceeds
from the issuance of the Series 2011 bonds were used to finance the acquisition, construction, and equipping
of the new student educational center located in Palm Beach Gardens, Florida.
The Series 2011 bonds bear interest at rates ranging from 3.0 percent to 6.4 percent per annum, payable
semiannually on April 1 and October 1. The HEFFA 2011 bonds are due in annual installments of
$1,250,000 to $2,785,000 through 2031. They are collateralized by pledge revenue on a parity with the
obligation of the university under the loan agreement that relates to the BCEFA bonds.
The Town of Davie Series 2009 bonds are due in annual installments of $2,010,950 to $4,256,000 through
2029, bearing a 4.36 percent per annum interest rate. They are collateralized by a pledge of, and first lien
on, tuition and fees and dormitory revenues of the university under the loan agreements related to the
BCEFA Series 2000B, the Series 2002B, the Series 2004A, the Series 2004B, and the Series 2006 bonds.
The university has $6.0 million in an interest-bearing account with a financial institution as a compensating
balance for the 2009 Series bonds.
The BCEFA Series 2008A bonds bear interest at a short-term rate determined by SunTrust Equitable
Securities Corporation, as remarketing agent, on the basis of daily prevailing financial market conditions
(.04 percent at June 30, 2011). The duration of each interest period is determined at the election of the
university, subject to certain conditions. The BCEFA Series 2008A bonds are due in annual installments of
$525,000 to $11,090,000 through 2038. They are collateralized by a pledge of, and first lien on, tuition and
fees and dormitory revenues of the university under the loan agreements related to the Series 2000B, the
Series 2002B, the Series 2004A, the Series 2004B, and the Series 2006 bonds. The bonds are backed by an
irrevocable, direct-pay unsecured letter of credit issued by Bank of America.
The BCEFA Series 2006 bonds bear interest at rates ranging from 4.5 percent to 5.0 percent per annum,
payable semiannually on April 1 and October 1. The BCEFA 2006 bonds are due in annual installments of
$900,000 to $14,300,000 from 2021 to 2036. They are collateralized by a pledge of, and first lien on, tuition
and fees and dormitory revenue on a parity with the obligations of the university under the loan agreement
that relates to the Series 2000B bonds, the Series 2002B bonds, the Series 2004A bonds, the Series 2004B
bonds, and the Series 2004C bonds.
The BCEFA Series 2004A bonds bear interest at rates ranging from 2.0 percent to 5.25 percent per annum,
payable semiannually on April 1 and October 1. The BCEFA 2004A bonds are due in annual installments of
$1,295,000 to $2,250,000 through 2017. They are collateralized by a pledge of, and first lien on, tuition and
fees and dormitory revenues on a parity with the obligations of the university under the loan agreement that
relates to the Series 2000B, the Series 2002B, the Series 2004B, the Series 2004C, and the Series 2006 bonds.
The BCEFA Series 2004B bonds bear interest at rates ranging from 5.0 percent to 5.65 percent per annum,
payable semiannually on April 1 and October 1. The BCEFA 2004B bonds are due in annual installments of
$495,000 to $1,515,000 from 2013 to 2034. They are collateralized by a pledge of, and first lien on, tuition
and fees and dormitory revenue on a parity with the obligations of the university under the loan agreement
that relates to the Series 2000B bonds, the Series 2002B bonds, the Series 2004A bonds, the Series 2004C
bonds, and the Series 2006 bonds.
The BCEFA Series 2004C bonds bear interest at a short-term rate determined by SunTrust Equitable
Securities Corporation, as remarketing agent, on the basis of daily prevailing financial market conditions
(.04 percent at June 30, 2011). The duration of each interest period is determined at the election of the
university, subject to certain conditions. The BCEFA Series 2004C bonds are due in annual installments of
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Nova Southeastern University
Notes to Consolidated Financial Statements
June 30, 2011 and 2010
$1,800,000 to $2,635,000 through 2024. They are collateralized by a pledge of, and first lien on, tuition and
fees and dormitory revenues of the university under the loan agreements related to the Series 2000B, the
Series 2002B, the Series 2004A, the Series 2004B, and the Series 2006 bonds. The bonds are backed by an
irrevocable, direct-pay unsecured letter of credit issued by Bank of America.
The BCEFA Series 2002A bonds bear interest at a short-term rate determined by SunTrust Equitable
Securities Corporation, as remarketing agent, on the basis of prevailing financial market conditions
(.6 percent at June 30, 2011). The duration of each interest period is determined at the election of the
university, subject to certain conditions. The BCEFA Series 2002A bonds are due in annual installments
of $365,000 to $585,000 through 2022. The bonds are backed by an irrevocable, direct-pay letter of credit
issued by SunTrust Bank, which in turn, is collateralized by a first mortgage on the land and building that
house the university’s Center for Psychological Studies.
The BCEFA Series 2002B bonds bear interest at rates ranging from 5.25 percent to 5.75 percent per annum,
payable semiannually on April 1 and October 1. The BCEFA Series 2002B bonds are due in annual install­
ments of $545,000 to $3,860,000 from 2018 to 2032. They are collateralized by a first pledge of, and first lien
on, tuition and fees and dormitory revenues on a parity with the obligations of the university under the loan
agreements related to the Series 2000B, the Series 2004A, the Series 2004B, the Series 2004C, and
the Series 2006 bonds. Under the terms of the BCEFA Series 2002B loan agreement, the university is
required to maintain certain financial ratios. The bonds are also secured by a first mortgage on the Carl
DeSantis Building.
The BCEFA Series 2000A bonds bear interest at a short-term rate determined by SunTrust Equitable
Securities Corporation, as remarketing agent, on the basis of prevailing financial market conditions
(.1 percent at June 30, 2011). The duration of each interest period is determined at the election of the
university, subject to certain conditions. The BCEFA Series 2000A bonds are due in annual installments of
$600,000 to $1,050,000 through 2020. The bonds are backed by an irrevocable, direct-pay unsecured letter
of credit issued by Bank of America.
The BCEFA Series 2000B bonds bear interest at rates ranging from 5.3 percent to 6.25 percent per annum,
payable semiannually on April 1 and October 1. The BCEFA Series 2000B bonds are due in annual install­
ments of $985,000 to $1,655,000 through 2021. They are collateralized by a first pledge of, and first lien
on, tuition and fees and dormitory revenues on a parity with the obligations of the university under the loan
agreements related to the Series 2002B, the Series 2004A, the Series 2004B, the Series 2004C, and the Series
2006 bonds. These bonds were paid in full during fiscal year 2011 with proceeds from the HEFFA 2011
Series bonds.
Pursuant to the terms of all BCEFA bonds, the BCEFA, Broward County, and the state of Florida are
statutorily exempt from liability for payment.
Through the merger agreement with the Museum, the university assumed the following bonds payable:
The MOA 2007A bonds payable to a bank with monthly payments of $11,387, including interest calculated
as follows: From September 26, 2007, to, but not including, October 1, 2012, the rate of 4.91 percent.
Thereafter, a fixed interest rate equal to no greater than 78.5 percent of the sum of (a) the interest rate payable
on a U.S. Treasury Security having a maturity of approximately five years, plus (b) 2.0 percent for five-year
periods commencing on, and in each case as determined by the bank two business days before, each of
October 1, 2012; October 1, 2017; October 1, 2022; and October 1, 2027. The note matures October 1, 2032,
and is secured by land and building.
The MOA 2007B bonds payable to a bank with monthly payments of $1,746, including interest calculated
as follows: From September 26, 2007, to, but not including, October 1, 2012, the rate of 6.76 percent.
Thereafter, a fixed interest rate equal to no greater than the sum of (a) the weekly average yield on U.S.
Treasury Securities (“Treasury Index”) adjusted to a constant maturity equal to five years plus (b) 2.5 percent
for five periods commencing on, and in each case as determined by the bank two business days before, each of
October 1, 2012; October 1, 2017; October 1, 2022; and October 1, 2027. The note matures October 1, 2032,
and is secured by land and building.
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Nova Southeastern University
Notes to Consolidated Financial Statements
June 30, 2011 and 2010
Future maturities of NSU’s long-term debt at June 30, 2011, are as follows (in thousands):
Long-Term Debt
2012
$9,933
20139,828
201410,676
201510,807
201611,122
Thereafter through 2036
311,735
Total
$364,101
The university’s debt agreements contain customary conditions, provisions, and covenants. In the opinion of
management, the university is in compliance with all such covenants as of June 30, 2011.
The university incurred interest charges for fiscal 2011 and fiscal 2010 of $13.2 million and $12.7 million,
respectively. During fiscal 2011 and 2010, the university capitalized interest of $.9 million and $1.2 million,
respectively, to land, buildings, and equipment.
9. Perkins Student Loans and Refundable Federal Perkins Student Loans
NSU participates in the Perkins Student Loan Program, a revolving loan program making loans to qualified
students from federal and institutional contributions as well as prior borrowers’ repayments. At June 30, 2011,
Perkins student loans were $5.2 million ($5.5 million at June 30, 2010). NSU recorded a liability for the
refundable Federal Perkins Student Loans grant of $4.8 million at June 30, 2011 and 2010.
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Nova Southeastern University
Notes to Consolidated Financial Statements
June 30, 2011 and 2010
10. Net Assets
Net assets released from restrictions were satisfied through grant expenditures, capital expenditures,
and scholarships.
Net assets at June 30 were available for the following purposes or periods (in thousands):
Unrestricted20112010
Board designated for:
Gold Circle scholarships
$ 78 $ 78
Scholarships
337
337
Mailman Segal Center
262
311
Athletic scholarships
2,787
1,684
Trustees student scholarships
2,505
2,499
Faculty research and development
2,968
2,960
Law Center 3,583 3,583
Baudhuin Preschool
4,082
4,050
6,853
7,865
Health Professions Division
12,172
4,827
Cumulative realized and unrealized net gain*
Other
96036,587 88029,074
Held by external trustees
2,917
5,835
Due from HPD Foundation
1,256
937
Other unrestricted amounts 191,674 159,466
Physical plant equity 132,865 120,214
Library physical plant equity
71,154
57,244
436,453
372,770
Total
Temporarily Restricted
Gifts restricted by time
5,013
3,155
1,251
1,251
Perkins student loans
Earnings restricted by purpose
124
124
2,247
3,736
Annuities restricted by time
5,842
5,842
Physical plant equity restricted by merger agreement
Gifts restricted by purpose
43,241 39,852
3,363 2,897
Scholarship funds held by trustees and restricted by purpose
Other restrictions
3,141
2,400
3,653 4,499
HPD Foundation**
Total
67,875
63,756
Permanently Restricted
Loan corpus
214
214
Scholarship funds held by trustees and restricted by purpose
172
243
Endowments, primarily scholarships
19,798
17,010
Total
20,184
17,467
Total net assets $524,512 $453,993
*At June 30, 2011, cumulative realized and unrealized net gain includes $.4 million related to the
Foundation’s endowment ($.5 million at June 30, 2010).
**The Foundation’s net assets (see Note 12) include amounts due from or to NSU primarily for its
unrestricted outlays on behalf of the Foundation.
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Nova Southeastern University
Notes to Consolidated Financial Statements
June 30, 2011 and 2010
Endowment Net Assets
ASC 958, Not-for-Profit Entities, provides guidance on the net asset classification of donor-restricted
endowment funds for a not-for-profit organization that is subject to an enacted version of the Uniform Prudent
Management of Institutional Funds Act of 2006 (UPMIFA) and additional disclosures about an organization’s
endowment funds. The university is only subject to the enhanced disclosure requirements under ASC 958, as
the state of Florida has not adopted UPMIFA.
The university’s endowment consists of approximately 233 individual endowments established for a variety
of purposes. The endowment includes both donor-restricted endowment funds and funds designated by the
Board of Trustees. Net assets associated with endowment funds are classified and reported based on the
existence or absence of donor-imposed restrictions.
The Board of Trustees of the university has interpreted the Florida Uniform Management of Institutional
Funds Act (FUMIFA) as requiring the preservation of the fair value of the original gift as of the gift date
of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of
this interpretation, the university classifies as permanently restricted net assets (a) the original value of
gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent
endowment, and (c) accumulations to the permanent endowment made in accordance with the direction of
the applicable donor gift instrument at the time of the gift. The remaining portion of the donor-restricted
endowment fund that is not classified in permanently restricted net assets is classified as temporarily
restricted net assets until those amounts are appropriated for expenditure by the organization in a manner
consistent with the standard of prudence prescribed by FUMIFA. In accordance with FUMIFA, the
university considers the following factors in making a determination to appropriate or accumulate donorrestricted funds:
a)
b)
c)
d)
e)
f)
g)
h)
the purposes of the institution
the intent of the donors of the endowment fund
the terms of the applicable instrument
the long-term and short-term needs of the institution in carrying out its purposes
the general economic conditions
the possible effect of inflation or deflation
the other resources of the institution
perpetuation of the endowment
The university has adopted investment and spending policies for endowment assets that attempt to provide
a predictable stream of funding to programs supported by its endowment while seeking to maintain
purchasing power of the endowment assets. Endowment assets include those assets of donor-restricted funds
that the university must hold in perpetuity or for a donor-specified period, as well as board-designated
funds. Under this policy, as approved by the Board of Trustees, the endowment assets are invested in a
manner that is intended to produce a real return, net of inflation and investment management costs. Actual
returns in any given year may vary.
To satisfy its long-term rate-of-return objectives, the university relies on a total return strategy in which
investment returns are achieved through both capital appreciation (realized and unrealized) and current
yield (interest and dividends). The university targets a diversified asset allocation that places a greater
emphasis on equity-based investments to achieve its long-term objectives within prudent risk constraints.
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Nova Southeastern University
Notes to Consolidated Financial Statements
June 30, 2011 and 2010
Changes in endowment net assets for the fiscal year ended June 30, 2011, consisted of the following
(in thousands):
Net assets, beginning of year Investment return:
Investment income Net depreciation (realized and unrealized)
Total investment return
Contributions
Appropriation of endowment
assets for expenditure
Net assets, end of year
Unrestricted
Temporarily
Restricted
Permanently Restricted
$29,074 $ 8,139 $17,010 $54,223
96
7,401
7,497 12
-
12
5
(5)
-
113
7,396
7,509
1,542
(1,526)
$36,587
1,857
(1,940)
$ 8,068
2011
Total
2,7886,187
-
$19,798
(3,466)
$64,453
Changes in endowment net assets for the fiscal years ended June 30, 2010, consisted of the following
(in thousands):
Net assets, beginning of year Investment return:
Investment income Net depreciation (realized and unrealized)
Total investment return
Contributions
Appropriation of endowment
assets for expenditure
Net assets, end of year
Unrestricted
Temporarily
Restricted
Permanently Restricted
$ 24,197
$ 6,950
$ 15,042 $ 46,189
6
(2)
4
307
4,501
4,808
1,124 1,964 3,570
-
-
$ 8,139 $ 17,010 236
4,503 4,739 482 (344) $ 29,074 65
- 65 2010
Total
(344)
$ 54,223
Endowment net asset composition by type of fund as of June 30, 2011, was as follows (in thousands):
Unrestricted
Donor-restricted endowment funds
$
- Board-designated endowment funds
36,587
Total endowment net assets
$36,587 Temporarily
Restricted
$ 8,068 -
Permanently Restricted
$ 19,798 -
2011
Total
$ 27,866
36,587
$ 8,068 $ 19,798 $ 64,453
Endowment net asset composition by type of fund as of June 30, 2010, was as follows (in thousands):
Unrestricted
Donor-restricted endowment funds
$
-
Board-designated endowment funds
29,074
Total endowment net assets
0
7
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$ 29,074 Temporarily
Restricted
$ 8,139 -
Permanently Restricted
$ 17,010 -
2010
Total
$ 25,149
29,074
$ 8,139 $ 17,010 $ 54,223
23
Nova Southeastern University
Notes to Consolidated Financial Statements
June 30, 2011 and 2010
Amounts classified as permanently restricted and temporarily restricted net assets as of June 30, 2011 and
2010, were as follows (in thousands):
20112010
Permanently Restricted Net Assets
The portion of perpetual endowment funds that is required
$ 19,798 $ 17,010
to be retained permanently by explicit donor stipulation
Total endowment funds classified as permanently restricted
$ 19,798 $ 17,010
net assets
Temporarily Restricted Net Assets
Term endowment funds subject to a time or purpose restriction
$ 8,068 $ 8,139
Total endowment funds classified as temporarily restricted
net assets
$ 8,068 $ 8,139
From time to time, the fair value of assets associated with individual donor-restricted endowment funds may
fall below the level that the donor requires the university to retain as a fund of perpetual duration. These
deficiencies result from unfavorable market fluctuations that may occur. Accordingly, deficiencies of this
nature that are reported in unrestricted net assets were $36,000 at June 30, 2011. There were $1.1 million in
deficiencies as of June 30, 2010.
11. Functional Expenses
Expenses incurred by functional categories for the years ended June 30 were (in thousands):
20112010
Program expenses:
Instruction
$ 310,860
$309,280
Academic support
72,517
73,890
Student aid
2,659
2,219
15,111
15,959
Student services
35,105
32,987
Auxiliary enterprises
3,541
3,198
Educational activities
Research and public services
16,082
15,281
Total program expenses
455,875 452,814
Management and general expenses:
Operation and maintenance
16,694
17,055
Institutional support
63,598 65,859
Total management and general expenses
80,292
82,914
Fund-raising3,209 3,178
Total $ 539,376 $ 538,906
Advertising costs are charged to expenses as incurred and totaled approximately $9.9 million for the year
ended June 30, 2011 ($9.0 million in 2010), and are included in the respective functional categories above.
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Nova Southeastern University
Notes to Consolidated Financial Statements
June 30, 2011 and 2010
12. Foundation
The 1994 merger of Nova University and Southeastern University of the Health Sciences established a
supporting foundation (the “Foundation”) that benefits the Health Professions Division (HPD) of NSU.
Annually, 5 percent of the fair value of Foundation assets (excluding amounts classified as other investments,
deposits, and accrued investment income) are transferred to NSU for HPD’s future use.
As a supporting organization, the Foundation’s financial information is combined with NSU’s consolidated
financial statements. The Foundation’s board members are also members of HPD’s Board of Governors and
some are members of the university’s Board of Trustees. The Foundation, exempt from federal income tax
under Section 501 (c)(3) of the Internal Revenue Code, had assets at June 30 of (in thousands):
2011
2010
Cash and cash equivalents
$
239
$
640
Investments:
Fixed income securities
800
1,084
Equity securities
1,881
2,700
302
853
International securities
Real estate 60
60
Subtotal
3,043
4,697
Receivable1732
Deposits65 67
Other1,545
Total
$ 4,909 $ 5,436
The real estate represents property with a net lease through February 28, 2070. Annual rental income was
adjusted in January 2011 and will be adjusted every five years thereafter, based on the consumer price index.
Foundation liabilities, which are due to NSU unrestricted funds, were $1.2 million at June 30, 2011, and
$.9 million at June 30, 2010, and are eliminated in the accompanying Consolidated Statements of
Financial Position.
Changes in the Foundation’s net assets resulted from the following activity for the years ended June 30 (in thousands):
Temporarily restricted
Net assets, beginning balance Interest and dividend income
Loss on sale of securities
Net unrealized gain on securities
Bal Fantastique proceeds
Gifts
Other
Transfers to HPD endowment
Transfer of land
Temporarily restricted net assets, June 30
Unrestricted
Net assets, beginning balance
Cumulative realized and unrealized net gain
Unrestricted net assets, June 30
Total net assets, June 30
2
7
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20112010
$ 4,499
16
(1)
5
27
129
1,066
(2,088)
-
3,653
$ 5,672
82
(6)
10
22
145
(90)
(243)
(1,093)
4,499
(455)
419
(36)
(925)
470
(455)
$ 3,617
$ 4,044
25
Nova Southeastern University
Notes to Consolidated Financial Statements
June 30, 2011 and 2010
13. Broward County Agreements
The following Broward County grant funds were received and expended during the year ended June 30,
2011 (in thousands):
Broward County
Agreement #
Description
Funds Received
and Expended
Broward Cultural Council
CTP07C-2010
Cultural Tourism Program $
59
Broward Cultural Council
CTP06C-2011 Cultural Tourism Program Broward Cultural Council
ECD14-2010
Education and Community Development 15
Broward Cultural Council
MCI05-2010
Major Cultural Institution 59
Broward Cultural Council
MCI04-2011 Major Cultural Institution 100
Broward Cultural Council
ARRA22-2010
NEA Lifetime Grant Biological Resources Div.
JZ07361 B1 Sea Turtle Conservation 156
Biological Resources Div.
J0838602 B2 Sea Turtle Conservation 19
Biological Resources Div.
RLI#050797-RB Marine Biological Monitoring 87
Human Services Dept.
2010-BARD-CRUSSH-01 CRUSHH 88
Human Services Dept.
SAHCS-SAMHSA-NOVA-02 COATCH 68
Human Services Dept.
08HCS8228RW Ryan White Part A 1,478
-
19
14. Alvin Sherman Library, Research, and Information Technology Center
In December 2001, the university commenced operations of a library, research, and information technology
center and parking garage (collectively the Center). The design, construction, and operation of the Center
were provided for under the terms of an agreement entered into with Broward County (the County) in
fiscal 2000 (the Agreement). The Agreement stipulated that NSU would be the sole owner and operator
of the Center, while County residents would have full access to the Center and full use of its databases and
information resources.
Revenue from the County under the Agreement is recognized on a pro rata basis over the term of the
agreement (commencing in December 2001 with the opening of the Center). Funds of $13.7 million for the
construction of the Center received from the County prior to fiscal year 2002 have been recorded as deferred
revenue and are being amortized into income over the term of the Agreement. The County continues to
provide funding for the Center. Based on the specified purpose of the funds received, these amounts are
either recognized into income upon receipt or recorded as deferred revenue and subsequently amortized
into income over the term of the Agreement. At June 30, 2011 and 2010, $17.8 million and $18.2 million
were recorded as deferred revenue related to these funds, respectively, of which $.5 million was classified as
current at June 30, 2011. During fiscal 2011, $.5 million of revenue was recognized ($.5 million at
June 30, 2010).
Funds received from the County for certain operating expenses of the Center are recognized directly as
unrestricted revenue in the period earned and totaled approximately $3.6 million and $3.7 million during
fiscal 2011 and 2010, respectively.
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Nova Southeastern University
Notes to Consolidated Financial Statements
June 30, 2011 and 2010
15. University Park Plaza
In October 2001, through its wholly owned subsidiary, NSU Park Plaza LLC., the university acquired an
interest in a limited partnership that owns and operates the University Park Plaza Shopping Center located
in Davie, Florida. The partnership will continue until November 1, 2081, unless it is sooner terminated as
expressly provided in the agreement. NSU’s capital contribution was $5.0 million for a 50 percent ownership
in the partnership.
The university’s partnership interest is being accounted for under the equity method. Accordingly, NSU’s
investment balance, which is reflected in deferred debt issue costs and other assets, was reduced by dividends
received of $.8 million during the years ended June 30, 2011 and 2010, and increased by NSU’s 50 percent
share of net income in the amount of $.7 million during the year ended June 30, 2011 ($.6 million during
the year ended June 30, 2010). The investment balance at June 30, 2011 and 2010, was $5.4 million and
$5.5 million, respectively.
NSU has a noncancelable operating lease for facilities located in the University Park Plaza Shopping Center.
During fiscal years 2011 and 2010, rent expense was $1.5 million and $1.6 million, respectively.
16. NSU Guaranty Insurance Company
NSU formed a wholly owned, off-shore captive insurance company in November 2003, NSU Guaranty
Insurance Company, LTD. (the Captive), in the Cayman Islands to fund the deductible portion of claims
filed under insurance carried to cover medical malpractice and educators legal liability. The Captive also
provides coverage for named windstorm property damage to the university.
The insurance contracts between the captive insurance company and NSU do not transfer significant
underwriting risk. The claims liabilities, as determined by independent actuaries, are included in accrued
insurance cost in the accompanying Consolidated Statements of Financial Position.
17. Retirement Benefits
NSU has two voluntary employee benefit 403(b) plans, the defined contribution retirement plan and the tax
deferred annuity plan. Effective January 1, 2010, the plans were merged. The merger of the plans has no effect
on the reportable net assets of the 403(b) plan. NSU and plan participants contribute to the Teacher’s Insurance
and Annuity Association and College Retirement Equity Fund (TIAA-CREF) and AIG Retirement to purchase
fixed and variable annuities represented by individual contracts. The university recorded expenses related to
these benefits of $16.4 million during fiscal 2011 ($15.2 million in 2010).
18. Commitments
NSU has various noncancelable operating leases for facilities, equipment, and vehicles through 2019. During
fiscal 2011 and 2010, rent expense was $12.4 million and $12.8 million, respectively. Future minimum
payments under noncancelable operating leases at June 30, 2011, were (in thousands):
4
7
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2012
2013
2014
2015
2016
Thereafter through 2019
Total
$ 8,612
7,977
7,787
7,910
6,299
10,971
$ 49,556
27
Nova Southeastern University
Notes to Consolidated Financial Statements
June 30, 2011 and 2010
As of June 30, 2011, the Museum had received proceeds from the sale of artwork from its collection as follows
(in thousands):
2008 (Prior to merger)
$ 813
20091,250
201020
Total$ 2,083
These proceeds must be used to purchase new artwork, as the university’s collection policy requires that the
proceeds from the sale of collection items be used to acquire other items for the collection.
19. Related Parties
The university has engaged services of organizations whose owners are members of NSU’s Board of Trustees.
During the years ended June 30, 2011 and 2010, the university paid these organizations $1.9 million in each
respective year.
20. Litigation and Contingencies
In its normal operations, NSU is a defendant in various legal actions. Additionally, NSU has contracts and
grants with various grantors subject to audit, which could result in disallowance of certain costs. Management
is of the opinion that the outcome of these matters will not have a material effect on NSU’s financial position
or operating results.
In May 2007, NSU engaged Westchester General Hospital in litigation for claims arising out of breach of
contract concerning the operation of a Graduate Dental Residency Program funded by Medicare. Westchester
General Hospital countersued for breach of contract and related claims in the amount of $20.0 million. In
June 2010, the Circuit Judge determined the counterclaims were not ripe and granted the university’s motion
to stay the case pending resolution of parallel administrative Medicare appeals. These appeals were ultimately
dismissed, and the stay was lifted on July 1, 2011. Discovery is significantly complete and trial in this case
is set for April 2012. No estimates have been made for potential liabilities or damages, as it is too early to
determine any such probabilities or estimates.
21. Subsequent Events
In July 2010, the university sold property located in Fort Lauderdale for $.9 million.
Pursuant to ASC 855, Subsequent Events, the university has reviewed all subsequent events through
October 10, 2011, the date financial statements were available to be issued.
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Nova Southeastern University, Inc.
Schedule of Expenditures of Federal Awards and State Financial Assistance
Year Ended June 30, 2011
Summary
Total
Expenditures/
Loan
Guarantees
Exhibit
Research and Development-Federal
F-I
$
Student Financial Aid-Federal
F-II
599,368,694
Other Assistance-Federal
F-III
13,787,237
Total Federal Awards
6,858,594
620,014,525
Research and Development-State
S-I
63,170
Student Financial Aid-State
S-II
15,844,798
Other Assistance-State
S-III
3,598,613
Total State Financial Assistance
Total Federal Awards and State Financial Assistance
The accompanying notes are an integral part of this schedule.
19,506,581
$
639,521,106
29
Nova Southeastern University, Inc.
Schedule of Expenditures of Federal Awards and State Financial Assistance
Year Ended June 30, 2011
(Exhibit F-I)
Federal
CFDA
Number
Federal Grantor/Pass-Through
Grantor/Project or Cluster Title
Pass-Through
Entity Identifying
Number
Federal
Expenditures
Research and Develepment-Cluster:
National Science Foundation:
Collaborative Research: ATol: PorTol-The
Porifera Tree of Life Project
Collaborative Research: Assembling the Echinoderm
Tree of Life
Subtotal for CFDA # 47.074
47.074
$
47.074
91,333
20,651
111,984
Total National Science Foundation
111,984
Department of Commerce:
National Coral Reef Institute(NCRI)FY'09
Proposal
National Coral Reef Institute(NCRI)FY'09
Proposal-Supplements
National Coral Reef Institute(NCRI)FY'10
Proposal
Management-Driven Research by the NOAA's Coral Reef
Institutes: FY10 Funding
Subtotal for CFDA # 11.426
South Florida Fish and Invertebrate Monitoring Project
ARRA:Indefinite Delivery, Indefinite Quantity for
South Florida Fish and Invertebrate Monitoring Project
Post-Release Survival and Habitat Utilization of Juvenile
Swordfish in the Florida Straits Receational Fishery
Marine and Estuarine Goal Setting for South Florida (MARES)
Florida's Deep Water Oases: Exploration and Characterization
of Deep-Reef Ecosystems
DNA Forensic Identification of Atlantic Billfishes for Management,
Conservation and Law Enforcement
Turkish/U.S. Cooperative Study of Buoy Gear As An Alternative to Driftnets
11.426
801,784
11.426
84,782
11.426
101,560
11.426
4,000
992,126
11.UNKNOWN
11.UNKNOWN
275,451
157,782
11.454
100,730
11.478
11.460
7,627
11,458
11.UNKNOWN
12,614
11.432
16,530
Subtotal Direct Projects
1,574,318
Pass-Through Projects From:
The Nature Conservancy-NOAA-ARRA:Threatened Coral Recovery
in Florida and the U.S. Virgin Islands
Florida Fish and Wildlife Conservation Commission-Southeast Coral
Reef Monitoring Project-Year 8
Florida Fish and Wildlife Conservation Commission-Momitoring and
Mapping of Threatened Acropora Corals in U.S. Jurisdiction
South Carolina Sea Grant Consortium-Implementation of Regional
Integrated Ocean Observing Systems Support of RCOOS Development
11.463
070809
97,228
11.426
A2B3A4
59,561
11.472
10275
1,936
11.473
S660
42,375
The accompanying notes are an integral part of this schedule.
30
Nova Southeastern University, Inc.
Schedule of Expenditures of Federal Awards and State Financial Assistance
Year Ended June 30, 2011
(Exhibit F-I continued)
Federal
CFDA
Number
Federal Grantor/Pass-Through
Grantor/Project or Cluster Title
Department of Commerce (con't):
University of Central Florida-LAS/BSP Project D- Biomaker Study
to Identify & Trace Coral Reef Contaminants
Florida Department of Environmental Protection-Maritime Industry and
Coastal Construction Impacts and Fishing, Diving, and Other Uses
Florida Department of Environmental Protection-Land-Based Sources
of Pollution Poject 8: Acoustical Ground Trusting to Discriminate
Florida Department of Environmental Protection-A Study to Minimize
or Eliminate Hard Bottom and Reef Inpacts from Anchoring Activities
Florida Department of Environmental Protection-A Study to Evaluate
Reef Recovery Following Injury and Mitigation Structures Offshore
Subtotal for CFDA # 11.419
New England Aquarium-Evaluation of Variable Strength Hooks to
Reduce Serious Injury Pilot Whale Interactions
New England Aquarium-Hawaii and Atlantic Shark Bycatch reduction
Research
Subtotal for CFDA # 11.452
Subtotal Pass-Through Projects
Pass-Through
Entity Identifying
Number
Federal
Expenditures
11.419
24037013
692
11.419
RM094
29,339
11.419
RM098
81,897
11.419
RM083
276
11.419
RM084
122,042
234,246
11.452
2571
130,245
11.452
2592
26,186
156,431
591,777
Total Department of Commerce
2,166,095
Department of Health and Human Services:
Diabetes Literacy and Self-Efficacy Screening and
Training Project
Health Care and Other Facilities
Expanding Health Information Technology in Osteopathic Medical
Education for Students and Practicing Professionals
National Institutes of Health
Diversion of Antiretroviral Medications to Street
Markets
Case Management Alternatives for African American Women at
High Risk for HIV
Understanding the Slope and Magnitude of Prescription
Diversion
Risk Reduction for Urban Substance Using MSM
A Self Assessment Intervention for Young Adult Polydrug
Users at Risk for HIV
Subtotal for CFDA # 93.279
Development and Validation of a Computer-Administered
Health Literacy Assessment
Zirconia Surface Modification for Adhesion to Biological and
Synthetic Substrates
Preclinical Effectiveness of Cytotoxicity Assays
Thin Film Surface Coatings for Toughened Dental Ceramics-FY08
Subtotal for CFDA # 93.121
93.779
20,509
93.887
93.888
184,920
209,831
93.279
87,565
93.279
93.279
25,178
2010-BARDCRUSHH-01
93.279
93.279
64,637
94,582
83,029
354,991
93.837
147,686
93.121
84,781
93.121
93.121
58,203
482,629
625,613
The accompanying notes are an integral part of this schedule.
31
Nova Southeastern University, Inc.
Schedule of Expenditures of Federal Awards and State Financial Assistance
Year Ended June 30, 2011
(Exhibit F-I continued)
Federal
CFDA
Number
Federal Grantor/Pass-Through
Grantor/Project or Cluster Title
Department of Health and Human Services (con't):
Cardiovascular Risk in Relation to Posttraumatic Stress Disorder
in Young Women
Young Hispanic Men "Entre Culturas" Navigating Culture,
Identity, and HIV Risk
Promoting Self-Change from Alcohol Problems
ARRA: An Automated, Tailored Information Application for Medication
Health Literacy
ARRA: Brain-Specific Non-AT1, Non AT2 Angiotensin Binding site
Subtotal for CFDA # 93.701
Center for Disease Control
Project POWER: A Health Promotion and HIV Risk
Reduction Intervention for Black Men
Proyecto SOL: A Risk Reduction Intervention for Hispanic
MSM
Subtotal for CFDA # 93.941
Subtotal Direct Projects
Pass-Through Projects From:
University of Virginia-How does motivational interviewing work?
Mechanisms of Action in Project Choices
University of Alabama-Leadership Group for Adolescent Medicine
Trials Network
Pass-Through
Entity Identifying
Number
Federal
Expenditures
93.390
48,513
93.361
378,869
93.273
31,704
93.701
183,335
93.701
228,690
412,025
93.941
271,596
93.941
34,095
305,691
2,720,352
93.273
R01AA015930
8,780
93.865
000388010-005
31,448
River Region Human Services, Inc.-Special Project: Sister Rise
AIDS Project Los Angeles, Inc.-AIDS Project Los Angeles, Inc
Subtotal for CFDA # 93.243
93.243
93.243
U79SP015073
16-36-02
69,942
19,474
89,416
University of Alabama-Leadership Group for Adolescent Medicine
Trials Network
American Psychological Association-Cyber Mentors: A Sustainable
Model for Developing Minority HIV Researchers
Subtotal for CFDA # 93.242
93.242
5U01HD040533-08
55,598
93.242
R25MH083635
63,430
University of Tennessee Health Science Center-The Biocompatibilty
Screening of Dental Treatments
University of Miami-HIV Testing in Dental Care Settings
Subtotal for CFDA # 93.121
Center for Disease Control
Christopher and Dana Reeve Foundation-Maximizing Inclusion,Participation,
Engagement and Overall Quality of Life of persons with Spinal cord Issues
119,028
93.121
R073401081
93.121
66593M
93.184
Subtotal Pass-Through Projects
5,297
29,024
34,321
8,748
291,741
Total Department of Health and Human Services
The accompanying notes are an integral part of this schedule.
3,012,093
32
Nova Southeastern University, Inc.
Schedule of Expenditures of Federal Awards and State Financial Assistance
Year Ended June 30, 2011
(Exhibit F-I continued)
Federal
CFDA
Number
Federal Grantor/Pass-Through
Grantor/Project or Cluster Title
Department of Defense:
Facilitating Smoking Cessation and Preventing Release in Primary
Care: Minimizing Weight Gain by Reducing Alcohol Consumption
Pass-Through
Entity Identifying
Number
12.420
Federal
Expenditures
161,435
Total Department of Defense
161,435
Center Intelligence Agency:
Project STYX: Hydrodynamics and Remote
Sensing of Far Wakes of Ships, Year2
Project STYX: Year 5 and 6
13.UNKNOWN
28,841
13.UNKNOWN
179,426
Total Central Intelligence Agency
208,267
Department of Navy:
Pass-Through Projects From:
Seaward Services, Inc-South Florida Ocean Measurement Facility
Deep Water Benthic Habitat Characterization
Seaward Services, Inc-SFOMF Survey Evaluations to Support the SFOMF
Restricted OPAREA Benthic Habitat Characterization Cable
HDR Environmental, Operations and Construction, Inc.-Processing
Coral Samples
TEC, Inc.-Marine Resource Survey Services in Support of
EIS/OEIS Relocation of USMC to Guam
TEC, Inc.-Coral Resource Surveys for Apra Harbor
and Four Watersheds in SW Guam-Task 3 and 4
TEC, Inc.-Coral Resource Surveys for Apra Harbor
and Four Watersheds in SW Guam-Task 5
12.UNKNOWN
48-20578
30,536
12.UNKNOWN
48-20834
75,472
12.UNKNOWN
00000099708
12.UNKNOWN
8806-24803
10,479
12.UNKNOWN
8845-25575
136,299
12.UNKNOWN
8845-25575
39,617
2,455
Subtotal Pass-Through Projects
294,858
Total Department of Navy
294,858
Department of the Interior:
The Establishment of the US Geological Survey
Developing a South Florida Fish and Invertebrate
Assessment Network
Subtotal for CFDA #15.808
15.808
15.808
Total Department of the Interior
132,159
38,682
170,841
170,841
The accompanying notes are an integral part of this schedule.
33
Nova Southeastern University, Inc.
Schedule of Expenditures of Federal Awards and State Financial Assistance
Year Ended June 30, 2011
(Exhibit F-I continued)
Federal
CFDA
Number
Federal Grantor/Pass-Through
Grantor/Project or Cluster Title
Pass-Through
Entity Identifying
Number
Federal
Expenditures
US Fish and Wildlife Service:
Pass-Through Projects From:
The Florida Aquarium, Inc-Use of Aquacultured Acropora
Cervicornis Fragments for Restoration
Florida Fish and Wildlife Conservation CommissionCharacterizing and Determining the Extent of Coral
Reefs and Associated Resources In Southeast FL
The Nature Conservancy-Coral Bleaching Surveys
in the Lower Florida Keys FRRP Sub-Region
Subtotal for CFDA #15.634
15.634
10,554
15.634
FWC-08014
87,496
15.634
FCO-070908-NOVA
10,196
108,246
Total US Fish and Wildlife Service
108,246
US Department Housing & Urban Development
Center for Collaborative Biomedical Research
14.251
17,575
Total US Department of Housing & Urban Development
17,575
US Environmental Protection Agency
Pass-Through Projects From:
Florida International University-Water Quality Monitoring
for the Florida Keys National Marine Sanctuary
Florida International University-Water Quality Monitoring
for the Florida Keys National Marine Sanctuary
Subtotal for CFDA #66.436
66.436
205002527-02
2,848
66.436
205002527-03
35,395
38,243
Total US Environmental Protection Agency
38,243
National Aeronatical and Space Administration
Pass-Through Projects From:
Jet Propulsion Laboratory, California Institute of TechnologyHysplRl Sun Glint Sub-Group
43.UNKNOWN
1399067
Total National Aeronatical and Space Administration
The accompanying notes are an integral part of this schedule.
9,477
9,477
34
Nova Southeastern University, Inc.
Schedule of Expenditures of Federal Awards and State Financial Assistance
Year Ended June 30, 2011
(Exhibit F-I continued)
Federal
CFDA
Number
Federal Grantor/Pass-Through
Grantor/Project or Cluster Title
Office of Naval Research
Characterization of Impact of Oceanographic Features on the
Electromagnetic Fields in Coastal Waters
Pass-Through
Entity Identifying
Number
Federal
Expenditures
12.300
441,769
Subtotal Direct Projects
441,769
Pass-Through Projects From:
University of Rhode Island-Advanced Coupled Atmosphere-WaveOcean Modeling for Improving Tropical Cyclone Prediction Models
12.300
021710/0002437
28,781
Subtotal Pass-Through Projects
28,781
Total Office of Naval Research
470,550
Department of Energy
Pass-Through Projects From:
Dehlsen Associates, LLC-Sitting Study Approach and Survey Methodology
for Offshore Marine Hydrokinetic Energy Projects in Southeast, Florida
81.087
75,468
Total Department of Energy
75,468
US Agency for International Development
Pass-Through Projects From:
The Nature Conservancy-Collection of Data and Mapping Benthic
Habitats for Development of Marine Zoning Plan for Islands of St.Kitts
98.001
3,781
Total US Agency for International Development
3,781
US Department of Agriculture
Pass-Through Projects From:
Virginia Polytechnic Institute and State University-Integrated Management
of Oomycete Diseases of Soybean and Other Crop Plants
10.310
9,681
Total US Department of Agriculture
9,681
Total Research and Development
$
The accompanying notes are an integral part of this schedule.
6,858,594
35
Nova Southeastern University, Inc.
Schedule of Expenditures of Federal Awards and State Financial Assistance
Year Ended June 30, 2011
(Exhibit F-II)
Federal
CFDA
Number
Federal Grantor/Pass-Through
Grantor/Project or Cluster Title
Pass-Through Entity
Identifying Number
Federal
Expenditures
Student Financial Aid-Cluster:
Department of Education:
Federal Perkins Loans (Note 2)
Federal Work Study
Federal Stafford Loan
Federal Parent Loan for Students
Federal Pell Grant
Federal Supplemental Educational
Opportunity Grant
Academic Competitiveness Grant
National Science and Mathematics Access to Retain
Talent Grant
Teacher Education Assistance for College and Higher
Education Grants
84.038
84.033
84.032
84.032
84.063
84.007
$
616,866
2,544,244
473,457,160
107,045,479
13,053,600
1,662,657
84.375
84.376
175,188
204,000
84.379
609,500
Total Department of Education
599,368,694
Total Student Financial Aid
$ 599,368,694
The accompanying notes are an integral part of this schedule.
36
Nova Southeastern University, Inc.
Schedule of Expenditures of Federal Awards and State Financial Assistance
Year Ended June 30, 2011
(Exhibit F-III)
Federal
CFDA
Number
Federal Grantor/Pass-Through
Grantor/Project or Cluster Title
Federal
Expenditures
Pass-Through Entity
Identifying Number
Other Assistance:
Department of Education:
Rx-Prescription for Reading Excellence
84.359B
$
88,025
Connecting the Dots to Improve Hispanic and Other Underprepared
Diverse Student Outcomes
Connecting Increased Student Engagement with Improved Outcomes
to Shape Student Success
Subtotal for CFDA #84.031S
84.031S
533,885
84.031S
567,793
Expanding Postbacalaureate Educational Opportunities and Quality by
Creation Warm Connections with Hispanic 2nd Low-income Graduate
Expanding STEM Graduate Education Opportunities for Hispanic/
Latinos and Other Underrepresented Minorities and Low Income Students
Subtotal for CFDA #84.031M
84.031M
543,571
84.031M
125,522
1,101,678
669,093
Subtotal Direct Projects
1,858,796
Pass-Through Projects From:
Florida Department of Education-Support for Florida's Voluntary Public
School Choice Program and Parent Resource Center
School Board of Broward County- Early Reading First
84.361A
84.359B
155,944
School Board of Broward County-Florida Teacher Quality Grant-Cycle II
School Board of Broward County-Florida Teacher Quality Grant-Cycle III
Subtotal for CFDA#84.367B
84.367B
84.367B
15,776
25,307
41,083
ARRA - University of Miami- Center for Autism and Related Disabilities
ARRA - University of Miami- Center for Autism and Related Disabilities
Subtotal for CFDA#84.397A
84.397A
84.397A
ARRA- Florida Department of Education -State Fiscal Stabilization Fund
Program - Education Stabilization Fund and Government
Nevada Department of Education-Special Leveraging Educational
Assistance Partnership(SLEAP)
84.397
84.069
068-2998A-OP001
66578L
66695R
068-5920S-0PZ63
07260631
4,683
26
13,540
13,566
1,675,000
122
Subtotal Pass-Through Projects
1,890,398
Total Department of Education
3,749,194
The accompanying notes are an integral part of this schedule.
37
Nova Southeastern University, Inc.
Schedule of Expenditures of Federal Awards and State Financial Assistance
Year Ended June 30, 2011
(Exhibit F-III continued)
Federal
CFDA
Number
Federal Grantor/Pass-Through
Grantor/Project or Cluster Title
Department of Health and Human Services:
Area Health Education Center-Model Program-FY10
Area Health Education Center-Model Program-FY11
Subtotal for CFDA#93.107
Pass-Through Entity
Identifying Number
Federal
Expenditures
93.107
93.107
87,796
118,826
206,622
Geriatric Education Centers
Florida Coastal Geriatric Resources, Education, and Training Center
Subtotal for CFDA#93.969
93.969
93.969
115,763
229,542
345,305
A Primary Care Clerkship Targeting Homeless Populations and Rural
and Underserved Groups
Post-Doctoral Training in Pediatric Denistry Focusing on Autism
Spectrum Disorders
Residency Training in General and Pediatric Dentistry FY09
AEGD & Domestic Violence Project
Subtotal for CFDA#93.884
93.884
161,993
93.884
193,609
93.884
364,988
Expansion of Prevention Initiatives Off Campus (EPIC) Project
93.243
104,548
ARRA: Nova Southeastern University Interprofessional Joint Degree
Program DO and MPH
ARRA: Pre-Doctoral Training in General Dentistry Equipment
NSU Nurse Education Tuition Assistance
Community Based Dental Partnership Program
93.403
142,880
93.411
93.888
93.924
84,182
1,850
213,579
National Institutes of Health
Harzadous Material Worker Health and Safety Training
93.142
201,198
720,590
Subtotal Direct Projects
2,020,754
Pass-Through Projects From:
Florida Department of Children and Families-Child Care Training
Coordination Program 10
Broward County-Ryan White Part A FY11
Broward County-Ryan White Part A FY10
Subtotal for CFDA#93.914
Broward County-Collaborative Outreach, Assessment and
Treatment for Co-Occurring Homeless
Broward County-CRUSHH,Prevention of Substance Abuse,
HIV/AIDs and Hepatitis
Subtotal for CFDA#93.243
93.575
LC908
93.914
93.914
08HCS8228RW
08HCS8228RW
93.243
1H79T1018185-01
39,617
93.243
2010-BARDCRUSHH-01
37,719
The accompanying notes are an integral part of this schedule.
129,479
437,841
1,007,643
1,445,484
77,336
38
Nova Southeastern University, Inc.
Schedule of Expenditures of Federal Awards and State Financial Assistance
Year Ended June 30, 2011
(Exhibit F-III continued)
Federal
CFDA
Number
Federal Grantor/Pass-Through
Grantor/Project or Cluster Title
Department of Health and Human Services (con't):
Florida Developmental Disabilities Council-Dental Information Training
University of Washington- I-TECH CLASS Project
American Association of Public Health Dentistry- ARRA Predoctoral
Training in General, Pediatric, and Public Health Dentistry and Hygiene
93.630
93.145
93.403
Pass-Through Entity
Identifying Number
Federal
Expenditures
743HC09
695397
19,023
16,118
11,103
2011-000886
15,376
National Institutes of Health
Pass-Through Projects From:
University of Puerto Rico-Economic and Outcomes Evaluation
of Research Projects
93.UNKNOWN
Subtotal Pass-Through Projects
1,713,919
Total Department of Health and Human Services
3,734,673
National Endowment for The Arts
Pass-Through Projects From:
Broward County-ARRA: NEA Lifeline Grant Program
45.024
ARRA22-2010
Total National Endowment for The Arts
Department of Veterans Affairs
Yellow Ribbon Scholarships
18,681
64.130
Total Department of Veterans Affairs
Department of Commerce:
ARRA-Design and Construction of the Center for Excellence for
Coral Reef Ecosystem Science Research Facility at NSU
18,681
519,381
519,381
11.618
Total Department of Commerce
5,765,308
5,765,308
Total Other Assistance
$ 13,787,237
The accompanying notes are an integral part of this schedule.
39
Nova Southeastern University, Inc.
Schedule of Expenditures of Federal Awards and State Financial Assistance
Year Ended June 30, 2011
(Exhibit S-I)
State Grantor/Pass-Through
Grantor/Project or Cluster Title
State CSFA
Number
Contract/Grant
Identifying
Number
State
Expenditures
Research and Develepment-Cluster:
Florida Fish and Wildlife Commission:
Artificial Reef Monitoring Project 2009-2010
77.007
FWC-09140
11,753
Total Florida Fish and Wildlife Commission
Florida Department of Environmental Protection:
Pass-Through Projects From:
St. Johns River Water Management DistrictMapping Macroalgae in the Indian River Lagoon
Water Management Lands Trust Fund
Ecosystems Management Trust
District Ad Valorem
11,753
37.022
37.039
37.UNKNOWN
SK49513
SK49513
SK49513
7,350
10,290
3,359
20,999
Total Florida Department of Environmental Protection
Florida Department of Children and Families
Pass-Through Projects From:
Henderson Mental Health Center, Inc- Freedom Project
60.115
30,030
Total Florida Department of Chilidren and Families
Florida Department of Highway Safety & Motor Vehicles:
Pass-Through Projects From:
Mote Marine Laboratory-Professional Workshop in Support of a
Practical Guide to the Shallow Water Marine Sponges of South FL
30,030
76.069
POR-2006-35
388
Total Florida Department of Highway Safety & Motor Vehicles
Total Research and Development
388
$
The accompanying notes are an integral part of this schedule.
63,170
40
Nova Southeastern University, Inc.
Schedule of Expenditures of Federal Awards and State Financial Assistance
Year Ended June 30, 2011
(Exhibit S-II)
State Grantor/Pass-Through
Grantor/Project or Cluster Title
State CSFA
Number
Contract/Grant
Indentifying
Number
State
Expenditures
Student Financial Aid:
Florida Department of Education:
MS in Speech Pathology
Florida Medical Student Capitation
Florida Optometry Student Capitation
Florida Pharmacy Student Capitation
Florida Nursing Student Capitation
Subtotal for CSFA # 48.042
Florida Minority Teacher Scholarship Program
Florida Student Assistance Grant
Florida Bright Futures Scholarship Program
Florida Resident Access Grant
Florida Robert Byrd Scholarship
Florida DOE Children Disabled Veteran Scholar
Florida Work Experience Program
48.002
94620
$
48.042
48.042
48.042
48.042
94690
94690
94690
94690
1,641,216
520,788
821,122
179,607
3,162,733
48.049
48.054
48.059
48.064
84.185A
48.055
48.054
90460
99970
97040
93420
54,000
1,927,685
2,970,197
7,454,381
3,000
4,272
27,125
99970
99970
15,650,639
Total Florida Department of Education
Florida Department of Health
FL DOH-BSN Entry Level Scholarship-FY '11
47,246
64.UNKNOWN
COMS6
194,159
Total Florida Department of Health
Total Student Financial Aid
194,159
$
The accompanying notes are an integral part of this schedule.
15,844,798
41
Nova Southeastern University, Inc.
Schedule of Expenditures of Federal Awards and State Financial Assistance
Year Ended June 30, 2011
(Exhibit S-III)
State CSFA
Number
Contract/ Grant
Identifying
Number
64.009
64.009
COTX3
COTDK
State Community Interventions Program-FY '09
State Community Interventions Program-FY '10
State Community Interventions Program-FY '11
Subtotal for CSFA# 64.112
64.112
64.112
64.112
CORBL
COTX7
COTDF
79,189
191,093
1,112,147
1,382,429
AHEC Cessation Program-FY'09
AHEC Cessation Program-FY'10
AHEC Cessation Program-FY'11
Subtotal for CSFA# 64.097
64.097
64.097
64.097
CORBL
COTX7
COTDF
52,792
127,395
741,431
921,618
State Grantor/Pass-Through
Grantor/Project or Cluster Title
State
Expenditures
Other Assistance:
Florida Department of Health
Area Health Education Centers - FY 10
Area Health Education Centers - FY 11
Subtotal for CSFA# 64.009
$
Total Florida Department of Health
1,498
962,563
964,061
3,268,108
Florida Department of Education:
Public Sector, Urban, Rural and Unmet Needs-FY'11
Subtotal Direct Project
48.042
Pass-Through Project From:
University of Miami-Center for Autism an Related Disabilities FY'11
Subtotal Pass-Through Projects
48.030
98,100
98,100
225,219
225,219
8749020401S001
Total Florida Department of Education
Florida Department of State:
Museum of Art-Fort Lauderdale 2010-2011 Season
323,319
99.UNKNOWN
7,186
11.6.0138
Total Florida Department of State
7,186
$
The accompanying notes are an integral part of this schedule.
3,598,613
42
Nova Southeastern University, Inc.
Notes to Schedule of Expenditures of
Federal Awards and State Financial Assistance
June 30, 2011
1. Basis of Presentation
The accompanying schedule of expenditures of federal awards and state financial assistance
(the Schedule) includes the federal and state grant activity of Nova Southeastern University, Inc.
(NSU) and is presented on the accrual basis of accounting. The information in this schedule is
presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local
Governments, and Non-Profit Organizations, Section 215.97 Florida Statutes, and Chapter
10.650 Rules of the Florida Auditor General. Therefore, some amounts presented in this schedule
may differ from amounts presented in, or used in the preparation of, the consolidated financial
statements. Because the schedule presents only a selected portion of the operations of NSU, it is
not intended to and does not present the consolidated financial position, changes in net assets or
cash flows of NSU.
2. Loan Programs
During the year ended June 30, 2011, NSU processed $616,866 and $0 of new loans under the
Federal Perkins Loan Program (CFDA number 84.038), and the Department of Health and
Human Services Loan Program (CFDA number 93.264), respectively, as reported in the
accompanying Schedule of Expenditures of Federal Awards and State Financial Assistance. As
there are continuing compliance requirements with respect to these programs, the amounts
reported for current year loan advances, plus the outstanding loan balances of approximately
$4.6 million and $1.5 million, respectively, are considered federal expenditures for the year
ended June 30, 2011.
During the year ended June 30, 2011, NSU issued new loans under the Federal Family Education
Loan Program (CFDA number 84.032) of $580,502,639 as reported in the accompanying
Schedule of Expenditures of Federal Awards and State Financial Assistance. New loans made
during the fiscal year are considered federal expenditures, whereas the outstanding loan balances
are not.
1201-1324764
43
Nova Southeastern University, Inc.
Notes to Schedule of Expenditures of
Federal Awards and State Financial Assistance (continued)
3. Subrecipients
Of the federal and state expenditures presented in the Schedule, NSU provided federal and state
awards to subrecipients as follows:
Federal Program Title
Geriatric Education Centers
Threatened Coral Reef Recovery in Florida and the
U.S. Virgin Islands
National Coral Reef Institute (NCRI) FY09
Proposal-Supplements
Maritime Industry and Coastal Construction Impacts and
Fishing, Diving, and Other Uses
Community Based Dental Partnership Program
Collaborative Research: AToL:PorToL-The Porifera Tree
of Life Project
Characterizing and Determining the Extent of Coral Reefs
and Associated Resources in Southeast Florida
Zirconia Surface Modification for Adhesion to Biological
and Synthetic Substrates
Preclinical Effectiveness of Cytotoxicity Assays
An Automated, Tailored Information Application for
Medication Health Literacy
Brain-Specific Non-AT1, Non-AT2 Angiotensin
Binding Site
Hazardous Material Worker Health and Safety Training
Thin Film Surface Coatings for Toughened Dental
Ceramics FY 08
Residency Training in General and Pediatric Dentistry
FY 09
Diabetes Literacy and Self-Efficacy Screening and
Training Project
Project POWER: A Health Promotion & HIV Risk
Reduction for Blac Men
1201-1324764
Federal
CFDA
93.969
Amount
Provided to
Subrecipients
$
18,730
11.463
17,296
11.426
15,292
11.419
93.924
10,895
58,914
47.074
32,469
15.634
44,700
93.121
93.121
36,865
27,755
93.701
26,477
93.701
93.142
36,762
51,193
93.121
269,862
93.884
31,267
93.779
15,917
93.941
190,497
44
Nova Southeastern University, Inc.
Notes to Schedule of Expenditures of
Federal Awards and State Financial Assistance (continued)
4. Contingency
The grant revenue amounts received are subject to audit and adjustment. If any expenditures are
disallowed by the grantor agencies as a result of such an audit, any claim for reimbursement to
the grantor agencies would become a liability of NSU. In the opinion of management, all grant
expenditures are in compliance with the terms of the respective grant agreements and applicable
federal and state laws and regulations.
1201-1324764
45
Ernst & Young LLP
Suite 500
5100 Town Center Circle
Boca Raton, FL 33486
Tel: +1 561 955 8000
Fax: +1 561 955 8200
www.ey.com
Report of Independent Certified Public Accountants 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
Management and the Board of Trustees
Nova Southeastern University, Inc.
We have audited the consolidated financial statements of Nova Southeastern University, Inc.
(the University) as of and for the year ended June 30, 2011, and have issued our report thereon
dated October 10, 2011. We conducted our audit in accordance with auditing standards generally
accepted in the United States and the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the University’s internal control over
financial reporting as a basis for designing our auditing procedures for the purpose of expressing
our opinion on the consolidated financial statements, but not for the purpose of expressing an
opinion on the effectiveness of the University’s internal control over financial reporting.
Accordingly, we do not express an opinion on the effectiveness of the University’s internal
control over financial reporting.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to
prevent, or detect and correct misstatements on a timely basis. A material weakness is a
deficiency, or combination of deficiencies, in internal control, such that there is a reasonable
possibility that a material misstatement of the entity’s financial statements will not be prevented,
or detected and corrected on a timely basis.
Our consideration of internal control over financial reporting was for the limited purpose
described in the first paragraph of this section and was not designed to identify all deficiencies in
internal control that might be deficiencies, significant deficiencies or material weaknesses. We
did not identify any deficiencies in internal control over financial reporting that we consider to
be material weaknesses, as defined above.
46
1201-1324764
A member firm of Ernst & Young Global Limited
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the University’s financial statements
are free of material misstatement, we performed tests of its compliance with certain provisions
of laws, regulations, contracts and grant agreements, noncompliance with which could have a
direct and material effect on the determination of financial statement amounts. However,
providing an opinion on compliance with those provisions was not an objective of our audit
and, accordingly, we do not express such an opinion. The results of our tests disclosed no
instances of noncompliance or other matters that are required to be reported under Government
Auditing Standards.
This report is intended solely for the information and use of management, the Finance and Audit
Committee, the Board of Trustees, others within the entity, federal awarding agencies and passthrough entities and is not intended to be, and should not be, used by anyone other than these
specified parties.

October 10, 2011
47
1201-1324764
A member firm of Ernst & Young Global Limited
Ernst & Young LLP
Suite 500
5100 Town Center Circle
Boca Raton, FL 33486
Tel: +1 561 955 8000
Fax: +1 561 955 8200
www.ey.com
Report of Independent Certified Public Accountants on Compliance With
Requirements That Could Have a Direct and Material Effect on Each Major
Program and on Internal Control Over Compliance in Accordance With OMB
Circular A-133, Section 215.97, Florida Statutes, and Chapter 10.650,
Rules of the Florida Auditor General
Management and the Board of Trustees
Nova Southeastern University, Inc.
Compliance
We have audited Nova Southeastern University, Inc.’s (the University’s) compliance with the
types of compliance requirements described in the US Office of Management and Budget
(OMB) Circular A-133 Compliance Supplement, and the requirements described in the State of
Florida’s State Projects Compliance Supplement, that could have a direct and material effect on
each of the University’s major federal programs and major state financial assistance projects for
the year ended June 30, 2011. The University’s major federal programs and major state financial
assistance projects are identified in the summary of auditor’s results section of the accompanying
schedule of findings and questioned costs. Compliance with the requirements of laws,
regulations, contracts and grants applicable to each of its major federal programs and major state
financial assistance projects is the responsibility of the University’s management. Our
responsibility is to express an opinion on University’s compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted
in the United States; the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular
A-133, Audits of States, Local Governments, and Non-Profit Organizations, Section 215.97
Florida Statutes, and Chapter 10.650 Rules of the Florida Auditor General. Those standards,
OMB Circular A-133, Florida Statues (Section 215.97), and Rules of the Florida Auditor General
(Chapter 10.650), require that we plan and perform the audit to obtain reasonable assurance
about whether noncompliance with the types of compliance requirements referred to above that
could have a direct and material effect on a major federal program or major state financial
assistance project occurred. An audit includes examining, on a test basis, evidence about the
University’s compliance with those requirements and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis
for our opinion. Our audit does not provide a legal determination of the University’s compliance
with those requirements.
In our opinion, the University complied, in all material respects, with the compliance
requirements referred to above that could have a direct and material effect on each of its major
federal programs and state financial assistance projects for the year ended June 30, 2011.
48
1201-1324764
A member firm of Ernst & Young Global Limited
We have reissued our Report on Compliance with Requirements That Could Have a Direct and
Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance
with OMB Circular A-133, Section 215.97, Florida Statues, and Chapter 10.650, Rules of the
Florida Auditor General. We have removed 84.031M from the listing of major federal programs
audited in the Summary of Auditor’s results section of the Schedule of Findings and Questioned
Costs. This report replaces our previously issued report.
Internal Control Over Compliance
The management of the University is responsible for establishing and maintaining effective
internal control over compliance with the requirements of laws, regulations, contracts and grants
applicable to federal programs and state financial assistance projects. In planning and performing
our audit, we considered the University’s internal control over compliance with the requirements
that could have a direct and material effect on a major federal program to determine the auditing
procedures for the purpose of expressing our opinion on compliance and to test and report on
internal control over compliance in accordance with OMB Circular A-133, Section 215.97, or
Chapter 10.650, but not for the purpose of expressing an opinion on the effectiveness of internal
control over compliance. Accordingly, we do not express an opinion on the effectiveness of the
University’s internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control
over compliance does not allow management or employees, in the normal course of performing
their assigned functions, to prevent, or detect and correct, noncompliance with a type of
compliance requirement of a federal program or state financial assistance project on a timely
basis. A material weakness in internal control over compliance is a deficiency, or combination of
deficiencies, in internal control over compliance, such that there is a reasonable possibility that
material noncompliance with a type of compliance requirement of a federal program or state
financial assistance project will not be prevented, or detected and corrected, on a timely basis.
Our consideration of internal control over compliance was for the limited purpose described in
the first paragraph of this section and was not designed to identify all deficiencies in internal
control that might be deficiencies, significant deficiencies or material weaknesses. We did not
identify any deficiencies in internal control over compliance that we consider to be material
weaknesses, as defined above.
This report is intended solely for the information and use of management, the Finance and Audit
Committee, the Board of Trustees, others within the entity, and federal and state awarding
agencies and pass-through entities and is not intended to be, and should not be, used by anyone
other than these specified parties.

December 5, 2011
49
1201-1324764
A member firm of Ernst & Young Global Limited
Nova Southeastern University, Inc.
Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2011
Part I – Summary of Auditor’s Results
Financial Statements Section
Type of auditor’s report issued
Unqualified
Internal control over financial reporting:
Material weakness(es) identified?
Yes
X
No
Significant deficiency(ies)
Yes
X
None reported
Noncompliance material to financial statements
noted?
Yes
X
No
Material weakness(es) identified?
Yes
X
No
Significant deficiency(ies)
Yes
X
None reported
Federal Awards and State Projects Section
Internal control over major programs:
Type of auditor’s report issued on compliance for
major programs:
Unqualified
Any audit findings disclosed that are required to be
reported in accordance with section .510(a) of
OMB Circular A-133 and/or Section 215.97,
Florida Statutes?
Yes
X
No
Any items related to state financial assistance
disclosed in the management letter that are required
to be reported in accordance with Chapter 10.656
Rules of the Auditor General
Yes
X
No
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Nova Southeastern University, Inc.
Schedule of Findings and Questioned Costs (continued)
Part I – Summary of Auditor’s Results (continued)
Identification of major federal programs and state projects:
Federal Programs:
CFDA Numbers
Name of Federal Program or Cluster
84.038, 84.033, 84.032, 84.063, 84.007,
84.375, 84.376, 84.379
Student Financial Assistance Cluster
47.074, 11.426,11.UNKNOWN, 11.454, 11.478,
11.460, 11.432, 11.463, 11.472, 11.473, 11.419,
11.452, 93.779, 93.887, 93.888, 93.279, 93.837,
93.121, 93.39, 93.361, 93.273, 93.701, 93.941,
93.273, 93.865, 93.243, 93.242, 93.121, 93.184,
12.42, 13.UNKNOWN, 12.UNKNOWN, 15.808,
15.634, 14.251, 66.436, 43.UNKNOWN, 12.3,
81.087, 98.001, 10.31
Research and Development Cluster
84.397
ARRA- Florida Department of Education –
State Fiscal Stabilization Fund Program –
Education Stabilization Fund and
Government
11.618
ARRA-Design and Construction of the
Center for Excellence for Coral Reef
Ecosystem Science Research Facility at
NSU
64.130
Yellow Ribbon Scholarships
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Nova Southeastern University, Inc.
Schedule of Findings and Questioned Costs (continued)
Part I – Summary of Auditor’s Results (continued)
State Projects:
CSFA Numbers
64.097
64.112
64.009
48.059
48.049
48.064
48.055
Name of State Project
AHEC Cessation Program
State Community Intervention Program
Area Health Education Centers
Florida Bright Futures Scholarship
Program
Florida Minority Teacher Scholarship
Program
Florida Resident Access Grant
FL DOE Children Disabled Veteran
Dollar threshold used to distinguish between
Type A and Type B programs:
•
Federal Programs
$
619,375
•
State Projects
$
585,197
Auditee qualified as low-risk auditee?
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X Yes
No
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Nova Southeastern University, Inc.
Schedule of Findings and Questioned Costs (continued)
Part II – Financial Statement Findings Section
This section identifies the significant deficiencies, material weaknesses, fraud, illegal acts,
violations of provisions of contracts and grant agreements, and abuse related to the financial
statements for which Government Auditing Standards require to be reported.
No matters were identified.
Part III – Federal Awards and State Projects Findings and Questioned
Costs Section
This section identifies the audit findings required to be reported by Circular A-133
Section .510(a), Section 215.97 Florida Statutes, and Chapter 10.650 of the Rules of the Florida
Auditor General, such as significant deficiencies, material weaknesses, and material instances of
noncompliance, including questioned costs as well as any abuse findings involving federal
awards or state projects that are material to a major program or major state project.
There were no findings required to be reported.
State Financial Assistance Findings and Questioned Costs
There were no findings required to be reported.
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Nova Southeastern University, Inc.
Summary Schedule of Prior Year Findings (continued)
I. Summary of Findings for the Year Ended June 30, 2010
Federal Award and State Financial Assistance Findings and Questioned Costs
Finding No. 10-1: Return of Title IV Funds – Federal Family Education Loans (FFEL)
Condition/Context: During our testing of other current liabilities and accounts receivable we
noted $ 1,340,967 of checks issued to students in 2004/2005 that remained unclaimed of which
$272,412 relates to unclaimed checks issued prior to June 30, 2005 and is thus subject to the
Florida escheat laws. The University is currently in the process of voiding all the unclaimed
checks, updating student contact information and reissuing the checks. In the event that the
correct student contact information cannot be obtained, the unclaimed funds will be returned to
the lender.
Recommendation: The University should implement adequate procedures to monitor and
review unclaimed checks, particularly those related to Title IV funds. On a monthly basis the
University should identify all outstanding uncashed checks containing SFA funds. Prior to the
240th day (effective for checks issued July 1, 2008 and subsequent) or prior to the date the funds
would otherwise escheat, but no later than a few days after a check to the student would cease to
be negotiable, the University should void the uncashed checks and restore the funds back to the
applicable SFA program. Additionally, the University should ensure that all unclaimed checks
containing Title IV funds issued prior to June 30, 2005 are returned to the lender as soon
as possible.
Status: Enrollment and Student Services, Office of the University Bursar has implemented
policies and procedures to manage unclaimed checks containing Title IV funds using the
outstanding check file provided by Finance. In accordance with regulation, payment is stopped
after 180 days from the issue date. These checks are voided and funds returned to the appropriate
Federal Student Aid (FSA) program prior to the 240th day.
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Nova Southeastern University, Inc.
Summary Schedule of Prior Year Findings (continued)
II. Summary of Findings for the Year Ended June 30, 2009
Federal Award and State Financial Assistance Findings and Questioned Costs
Finding No. 09-1: Special Tests and Provisions – Student Financial Assistance
Condition/Context: The University is required to report overpayments and student status
changes to the ED in a timely manner. During our procedures, we noted that for one of the three
students tested for overpayments, the University reported the student’s overpayment of Title IV
funds to the ED within 99 days instead of 90 days, as required. We also noted that for one out of
the twelve students tested for status changes, the University did not properly update the student’s
status and report the change to the Clearinghouse. The University entered the incorrect
information into the student status report which caused the report to be rejected by the
Clearinghouse. This error remained undetected.
Recommendation: The University should implement adequate procedures to monitor and review
student overpayments and status changes to ensure accurate and timely reporting to the ED.
Status: During the 09/10 fiscal year, the Systems Team worked on correcting the defect in the
OIT script. It was determined that the defect was related to a registration status that was not
considered in the selection criteria which did not pull the last day of attendance. The defect has
been resolved and a Policy and Procedure official document has been established that will
provide quality assurance in NSU Enrollment reporting.
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Nova Southeastern University, Inc.
State of Florida Student Financial Assistance Programs –
Schedule of Populations, Samples Tested, and Questioned Costs
Year Ended June 30, 2011
Award Population
Amount
Florida Gold Seal Vocational Scholarship
Florida Academic Scholarship
Florida Medallion Scholarship
Florida Resident Access Grant
Minority Teachers Program
Scholarships for Children/Spouses of Deceased or Disabled Veterans
See accompanying notes.
56
$
41,830
774,000
2,154,367
7,456,892
54,000
4,272
Recipients
19
218
921
3,691
19
1
Amount
$
12,690
73,625
48,692
60,632
20,000
2,136
Award Sample
% of
Population
Amount
Recipients
30.34%
9.51%
2.26%
0.81%
37.04%
50.00%
10
50
50
50
10
1
% of
Population
Recipients
52.63%
22.94%
5.43%
1.35%
52.63%
100.00%
Questioned Costs
% of
Sample
Amount
Recipients
Amount
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
% of
Sample
Recipients
–
–
–
–
–
–
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