The University of New Mexico

1 The University of New MexicoAudit Report 2015 For the iscal year ended June 30, 2015 THE University OF NEW Mexico June 30, 2015 1 TABLE OF CONTENTS FINANCIAL STATEMENTS Exhibit Page Board of Regents and Principal Officers 3 Independent Auditors Report 4 - 6 Management s Discussion and Analysis (unaudited) 8 - 29 BASIC FINANCIAL STATEMENTS Statements of Net Position A 30 - 31 Statements of Revenues, Expenses, and Changes in Net Position B 32 - 33 Statements of Cash Flows C 34 - 35 Statements of Fiduciary Net Position University of New Mexico Retiree Welfare Benefit Trust D 36 Statements of Changes in Fiduciary Net Position University of New Mexico Retiree Welfare Benefit Trust E 37 Notes to the Basic Financial Statements 38 - 89 REQUIRED SUPPLEMENTAL INFORMATION (unaudited)

2 Schedule Schedule of Proportionate Share of Net Pension Liability and Employer Contributions - Pension 1 90 Schedule of Funding Progress and Employer Contributions Other Postemployment Benefits 2 91 SUPPLEMENTAL INFORMATION Combining Statement of Net Position Discretely Presented Component Units 2015 3 92 - 93 Combining Statement of Net Position Discretely Presented Component Units 2014 4 94 - 95 Combining Statement of Revenues, Expenses, and Changes in Net Position Discretely Presented Component Units 2015 5 96 - 97 Combining Statement of Revenues, Expenses, and Changes in Net Position Discretely Presented Component Units 2014 6 98 - 99 Budget Comparison 7 - 9 100 - 103 Schedule of Pledged Collateral 10 104 - 107 Schedule of Individual Deposit and Investment Accounts 11 108 - 111 SINGLE AUDIT INFORMATION Schedule of Expenditures of Federal Awards 12 112 - 125 Independent Auditors Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Basic Financial Statements Performed in Accordance with Government Auditing Standards 126 - 127 Independent Auditors Report on Compliance for Each Major Program and on Internal Control over

3 Compliance in Accordance with OMB Circular A-133 128 129 Summary Schedule of Prior Audit Findings 131 Schedule of Findings and Questioned Costs 132 - 135 OTHER UNAUDITED INFORMATION Schedule of Pledged Revenues University Only 13 136 - 137 Schedule of Vendor Information 14 138 - 145 Exit Conference 146 THE University OF NEW Mexico 2 (THIS PAGE INTENTIONALLY LEFT BLANK) THE University OF NEW Mexico June 30, 2015 3 BOARD OF REGENTS AND PRINCIPAL OFFICERS Board of Regents Appointed Members Title: Term Expires: Jack L. Fortner President 12/20/2016 Robert M. Doughty Vice President 12/31/2020 Bradley C. Hosmer Secretary/Treasurer 12/20/2016 James H.

4 Koch Member 12/31/2018 Marron Lee Member Recess Appointment Suzanne Quillen Member 12/31/2018 Ryan Berryman Student Member 12/31/2016 Ex officio Members The Honorable Susana Martinez Governor of the State of New Mexico Dr. Barbara Damron Secretary of Higher Education Advisors Stefan Posse President, Faculty Senate Jenna Hagengruber President, Associated Students of the University of New Mexico Texanna Martin President, Graduate & Professional Student Association Crystal Davis President, Staff Council Ann Rhoades President, UNM Alumni Association Carol Stephens President, UNM Retiree Association Catherine Cullen President, UNM Parent Association Michelle Coons Chair, UNM Foundation Principal Administrative Officials University Robert G.

5 Frank President David W. Harris Executive Vice President for Administration, COO and CFO Chaouki Abdallah Provost and Executive Vice President for Academic Affairs Dr. Paul Roth Chancellor for Health Sciences UNM Hospitals Stephen W. McKernan Chief Executive Officer & Vice President for Hospital Operations Principal Financial Officials Main Campus Andrew Cullen Associate Vice President of Budget, Planning and Analysis Elizabeth Metzger University Controller Health Sciences Center Ava J. Lovell Senior Executive Officer for Finance & Administration, HSC UNM Hospitals Ella B. Watt Chief Financial Officer KPMG LLPTwo Park Square, Suite 7006565 Americas Parkway, , NM 87110-8179 KPMG LLP is a Delaware limited liability partnership, the member firm of KPMG International Cooperative ( KPMG International ), a Swiss Independent Auditors Report The Board of Regents University of New Mexico and Mr.

6 Timothy Keller New Mexico State Auditor: Report on the Financial Statements We have audited the accompanying financial statements of the business-type activities, fiduciary activities, and the aggregate discretely presented component units of the University of New Mexico (the University or UNM), as of and for the years ended June 30, 2015 and 2014, and the related notes to the financial statements, which collectively comprise the University s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

7 Auditors Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the departmental financial statements of the UNM Hospital and the UNM Behavioral Operations, collectively known as the clinical operations of the University (clinical operations), which constitutes 25 percent, 40 percent, and 55 percent (including all clinical and patient revenues), respectively, of the assets, net position, and revenues of the primary institution total as of and for the year ended June 30, 2015 and which constitutes 25 percent, 19 percent, and 44 percent, respectively, of the assets, net position, and revenues of the primary institution totals as of and for the year ended June 30, 2014.

8 In addition, we did not audit the financial statements of certain discretely presented component units, the UNM Medical Group, Inc., and Sandoval Regional Medical Center (SRMC), which constitutes 43 percent, 23 percent, and 84 percent, respectively, of the assets, net position, and revenues of the discretely presented component units total as of and for the year ended June 30, 2015 and which constitutes 46 percent, 23 percent, and 73 percent, respectively, of the assets, net position, and revenues of the discretely presented component units total as of and for the year ended June 30, 2014. Those statements were audited by other auditors, whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for such clinical operations (including all clinical and patient revenues) and component units, is based solely on the reports of the other auditors.

9 We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

10 In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes 5 evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained and the report of other auditors is sufficient and appropriate to provide a basis for our audit opinions.