Institutional Audits

The financial statement opinion included in the most recent Independent Auditor’s Report, dated January 21, 2022, is that Auburn University’s basic financial statements “present fairly, in all material respects, the respective financial position of the business-type activities and the aggregate discretely presented component units of Auburn University as of September 30, 2021 and 2020, and the respective changes in financial position and, where applicable, cash flows thereof for the years then ended in conformity with accounting principles generally accepted in the United States of America.” Auburn University received an unqualified opinion for all audits in the accreditation period and has not received a Report to Management since 2009,,,. If the auditors had identified management letter comments, material weaknesses or significant deficiencies in internal controls, they would have documented the issues in their required communications to the Audit Committee of the Auburn University Board of Trustees.

Auburn University will provide the Commission with the Independent Auditor's Report for Fiscal Year 2022 as soon as it becomes available, likely in late January 2023.

Definition of Scope: Auburn University Structure

As described in Section 14-5.a, as a legal entity, Auburn University is composed of four divisions: two separately accredited institutions and two units related to its land-grant mission. This includes Auburn University, Alabama Agricultural Experiment Station, Alabama Cooperative Extension System, and Auburn University at Montgomery (AUM). AUM is separately accredited; therefore, for fiscal purposes and discussion throughout this narrative, the three divisions—Auburn University, AAES, and ACES—will be referred to as “Auburn University.”

Statement of Unrestricted Net Position

Auburn University’s unrestricted net position decreased between 2018 and 2020 due to implementation of two statements from the Governmental Accounting Standards Board: GASB Statement No. 68, Accounting and Financial Reporting of Pensions—An Amendment of GASB Statement No. 27, and GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits other than Pensions. However, during fiscal year 2021, the university experienced unprecedented unrealized market value gains in the Endowment Investment portfolio (27.4%), increasing total Unrestricted Net Position by 93.5% from 2020 to 2021, as shown in the UNPEP Table 13.2-1.

Table 13.2-1. Statement of Financial Position of Unrestricted Net Position

Exclusive of Plant Assets and Plant-Related Debt (UNPEP) (without AUM)

 (Source: Summarized Unaudited Divisional Information for Auburn University, AAES, and ACES in the “Divisional Financial Statements (Unaudited)” section of the Annual Financial Report) 

Table 13.2-2. Statement of Financial Position of Unrestricted Net Position,

Exclusive of Plant Assets and Plant-Related Debt (UNPEP) (with AUM)

(Source: Annual Financial Report)

Budget and Planning Processes

Budget and Planning Services is responsible for collecting, analyzing, and summarizing the information received from each division along with other financial analysis relevant to the development of the operating budget. Budget and Planning Services is also responsible for developing revenue projections to finalize the estimated total funds available for operations.

Budget Model, 2017-Present

In 2017, Auburn University transitioned its budget allocation process away from an historical model to an incentive-based model commonly called Responsibility Center Management. This new method employs an approach in which all revenues flow where the activities occur and institutional support costs, such as facility operations, academic support administration, and central administration, are allocated based on certain metrics. Auburn University’s annual budget process begins with Budget and Planning Services working closely with the Office of Governmental Affairs and the Vice President for Enrollment Management to estimate its revenue growth in its two largest sources of funding: state appropriations and tuition. In addition, the office provides cost estimates on salary and employee benefit increases as well as other mandatory costs, such as utilities, debt service, and software licensing agreements. The budget is always balanced to ensure there are enough continuing revenues to cover continuing expenses. It does include budgeted contingencies that would guard against a shortfall in tuition or allow for other mid-year strategic opportunities. In rare circumstances, the university has had budget revisions due to proration of state appropriations, but the last time that occurred was in 2011. The likelihood of that occurring in the future is very small due to legislative change in how funds are appropriated for education.   

Shared Governance in Budget Planning

As a part of the allocation model change, Auburn University implemented a new shared governance structure, which makes the process more collaborative. The governance structure includes a revised Budget Advisory Committee that is made up of 16 members of the campus community.That committee has oversight of the other two committees: the Central Unit Allocation Committee, and the Space Management and Repair and Renovation Committee. The Central Unit Allocation Committee exists to assess the appropriate size and scope of administrative budgets based on Auburn’s strategic objectives. The Space Management and Repair and Renovation Committee is designed to verify space allocations included in the model and advise on the appropriate level of funding for repair and renovation projects on campus.  The latter two committees operate independently and present reports to the Budget Advisory Committee for consideration in the overall budget. 

All revenue and cost estimates are provided to the Budget Advisory Committee, which takes all of the information from those estimates as well as the other committee reports and advises the President and senior leadership on budget preparation guidance. During budget development, the budget guidelines are presented to the Board of Trustees for informational purposes. Upon completion, the proposed annual budget is presented by the President to and approved by the Board of Trustees. Budget planning and prioritization is a continuous process, with work beginning in November of every fiscal year and concluding with the Board of Trustees’ approval in September. Presented in evidence are the FY 2022 budgets for Auburn University (the institution), the Alabama Agricultural Experiment Station, and the Alabama Cooperative Extension System, as they were approved by the Auburn University Board of Trustees,.

On a quarterly basis, Budget and Planning Services analyzes spending against the same periods in the prior year as well as compares budget to actual spending. That analysis is shared with the senior management of Business & Finance and includes comments about future forecasts and caution areas and is taken into consideration as a part of future budget discussions.