THE BRIDGEWATER STATE UNIVERSITY FOUNDATION (a component unit of Bridgewater State University) CONSOLIDATED FINANCIAL STATEMENTS

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1 THE BRIDGEWATER STATE UNIVERSITY CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2016

2 Consolidated Financial Statements C O N T E N T S Independent Auditors Report 1-2 Consolidated Financial Statements: Consolidated Statements of Financial Position 3 Consolidated Statements of Activities and Changes in Net Assets 4-5 Consolidated Statements of Cash Flows 6 Notes to the Consolidated Financial Statements 7-21 Additional Report: Independent Auditors' Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Consolidated Financial Statements Performed in Accordance with Government Auditing Standards 22-23

3 INDEPENDENT AUDITORS' REPORT To the Board of Trustees of The Bridgewater State University Foundation Bridgewater, Massachusetts Report on the Financial Statements We have audited the accompanying consolidated financial statements of The Bridgewater State University Foundation which comprise the consolidated statements of financial position as of, and the related consolidated statements of activities and changes in net assets and cash flows for the years then ended, and the related notes to the financial statements. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in 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. 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 includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 25 Braintree Hill Office Park Suite 102 Braintree, MA P: F: Church Street Winchester, MA P: F:

4 Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of The Bridgewater State University Foundation as of, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated September 7, 2016, on our consideration of The Bridgewater State University Foundation'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 testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering The Bridgewater State University Foundation's internal control over financial reporting and compliance. Certified Public Accountants Braintree, Massachusetts September 7, 2016

5 THE BRIDGEWATER STATE UNIVERSITY Consolidated Statements of Financial Position June 30, Assets Current Assets: Cash and equivalents $ 2,340,153 $ 598,531 Marketable securities 28,703,876 28,846,979 Contributions receivable, net 3, ,555 Prepaid expenses 19,160 18,600 Due from affiliate Total Current Assets 31,067,159 29,809,355 Property and Equipment, net 1,114,015 1,146,994 Other Asset: Contributions receivable, net of current portion 559, ,979 Construction-in-progress 296, ,597 Total Other Assets 855,503 1,136,576 Total Assets $ 33,036,677 $ 32,092,925 Liabilities and Net Assets Liabilities: Accounts payable and accrued expenses $ 368,725 $ 78,424 Due to affiliate 2,680 - Annuities payable 178, ,209 Total Liabilities 549, ,633 Net Assets: Unrestricted 12,316,883 13,396,619 Temporarily restricted 3,965,789 4,773,024 Permanently restricted 16,204,269 13,654,649 Total Net Assets 32,486,941 31,824,292 Total Liabilities and Net Assets $ 33,036,677 $ 32,092,925 The accompanying notes are an integral part of the consolidated financial statements

6 Temporarily Permanently Unrestricted Restricted Restricted Total Revenues, Gains and Other Support: Contributions and gifts $ 324,370 $ 558,378 $ 2,549,620 $ 3,432,368 Investment income, net (369,282) (445,276) - (814,558) In-kind revenue 967, ,243 Rental income 36, ,000 Net assets released from restrictions 920,337 (920,337) - - Total Revenues, Gains and Other Support 1,878,668 (807,235) 2,549,620 3,621,053 Expenses: THE BRIDGEWATER STATE UNIVERSITY Consolidated Statements of Activities and Changes in Net Assets For the Year Ended June 30, 2016 Program Services: University support 1,469, ,469,549 Support Services: Operating costs 1,077, ,077,561 Fundraising costs 81, ,309 Total Support Services 1,158, ,158,870 Depreciation 32, ,979 Total Expenses 2,661, ,661,398 Changes in Net Assets Before Other Items (782,730) (807,235) 2,549, ,655 Loss on sale of property 261, ,508 Impairment loss 17, ,000 Change in split interest annuity payable 18, ,498 Changes in Net Assets (1,079,736) (807,235) 2,549, ,649 Net Assets, Beginning of Year 13,396,619 4,773,024 13,654,649 31,824,292 Net Assets, End of Year $ 12,316,883 $ 3,965,789 $ 16,204,269 $ 32,486,941 The accompanying notes are an integral part of the consolidated financial statements

7 THE BRIDGEWATER STATE UNIVERSITY Consolidated Statements of Activities and Changes in Net Assets For the Year Ended June 30, 2015 Temporarily Permanently Unrestricted Restricted Restricted Total Revenues, Gains and Other Support: Contributions and gifts $ 422,790 $ 630,306 $ 3,341,946 $ 4,395,042 Investment income, net (293,965) (584,385) - (878,350) In-kind revenue 1,133, ,133,993 Rental income 36, ,000 Net assets released from restrictions 718,245 (718,245) - - Total Revenues, Gains and Other Support 2,017,063 (672,324) 3,341,946 4,686,685 Expenses: Program Services: University support 1,261, ,261,137 Support Services: Operating costs 1,193, ,193,870 Fundraising costs 111, ,431 Total Support Services 1,305, ,305,301 Depreciation 32, ,979 Total Expenses 2,599, ,599,417 Changes in Net Assets Before Other Items (582,354) (672,324) 3,341,946 2,087,268 Change in split interest annuity payable 26, ,177 Changes in Net Assets (608,531) (672,324) 3,341,946 2,061,091 Net Assets, Beginning of Year 14,005,150 5,445,348 10,312,703 29,763,201 Net Assets, End of Year $ 13,396,619 $ 4,773,024 $ 13,654,649 $ 31,824,292 The accompanying notes are an integral part of the consolidated financial statements

8 THE BRIDGEWATER STATE UNIVERSITY Consolidated Statements of Cash Flows For the Years Ended June 30, Cash Flows from Operating Activities: Changes in net assets $ 662,649 $ 2,061,091 Adjustments to reconcile changes in net assets to net cash provided by operating activities: Bad debts 3,020 6,784 Depreciation 32,979 32,979 Impairment loss 17,000 - Loss on sale of property 261,508 - Net unrealized and realized losses on marketable securities 1,355,473 1,452,843 Change in split interest annuity payable 18,498 26,177 Changes in assets and liabilities: Contributions receivable 228,089 (108,026) Due to/from affiliate 3,370 (1,720) Prepaid expenses (560) (18,099) Accounts payable and accrued expenses 290,301 (14,999) Net Adjustments 2,209,678 1,375,939 Net Cash Provided by Operating Activities 2,872,327 3,437,030 Cash Flows from Investing Activities: Expenditures for construction in progress (950) (261,340) Proceeds from sale of property 112,991 - Payments on split interest annuity payable (30,376) (34,119) Proceeds from sale of marketable securities 3,752,525 3,958,730 Purchases of marketable securities (4,964,895) (7,972,751) Net Cash Applied to Investing Activities (1,130,705) (4,309,480) Net Increase (Decrease) in Cash and Equivalents 1,741,622 (872,450) Cash and Equivalents, Beginning of Year 598,531 1,470,981 Cash and Equivalents, End of Year $ 2,340,153 $ 598,531 The accompanying notes are an integral part of the consolidated financial statements

9 Notes to the Consolidated Financial Statements Note 1 - Summary of Significant Accounting Policies Organization The Bridgewater State University Foundation (the Foundation ) is a nonprofit corporation, whose purpose is to raise funds and to aid and participate in the development and improvements of Bridgewater State University (the University ). The purposes of the Foundation are promoted through educational and research programs, faculty support, scholarships and equipment for the University community. The Foundation operates primarily in Massachusetts and receives most of its revenues from corporate and individual donations. Basis of Consolidation The consolidated financial statements of the Foundation include the activity from the Bridgewater Foundation Summer Street Trust. The Bridgewater Foundation Summer Street Trust holds in trust, property located at 180 Summer Street, Bridgewater, MA for the sole benefit of The Bridgewater State University Foundation. Management Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. The actual outcome of the estimates could differ from the estimates made in the preparation of the consolidated financial statements. Financial Instruments Financial instruments that potentially subject the Foundation to concentrations of credit risk consist of cash and equivalents, investments, and contributions receivable. The Foundation maintains its cash and equivalents in bank deposit accounts, the balances of which, at times, may exceed Federally insured limits. Management monitors the financial conditions of the banking institution, along with its cash balances and tries to keep this potential risk to a minimum. In order to minimize excessive risk in geographical, industry and market sectors, the Board of Trustees meets periodically with its investment advisors and reviews the portfolio for such concentrations and other matters. The carrying amounts of certain financial instruments, including cash and equivalents and contributions receivable, approximate fair value because of the relatively short maturity of these instruments

10 Note 1 - Summary of Significant Accounting Policies - Continued Method of Accounting The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles. Consolidated Financial Statement Presentation Assets and revenues, expenses, gains, and losses are classified based on the existence or absence of donor-imposed restrictions. Accordingly, net assets of the Foundation and changes therein are classified and reported as follows: Unrestricted net assets - Net assets that are not subject to donor-imposed stipulations. Temporarily restricted net assets - Net assets subject to donor-imposed stipulations that may or will be met, either by actions of the Foundation and/or the passage of time. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets in the statement of activities as net assets are released from restrictions. Permanently restricted net assets - Net assets subject to donor-imposed stipulations that will be maintained permanently. Cash and Equivalents The Foundation considers all highly liquid instruments with an original maturity of three months or less to be cash and equivalents. Marketable Securities The Foundation carries investments in marketable securities with readily determinable fair values and all investments in debt securities at their fair values in the statements of financial position. Unrealized gains and losses are included in the changes of net assets in the accompanying statements of activities

11 Note 1 - Summary of Significant Accounting Policies - Continued Contributions All contributions are considered to be available for unrestricted use unless specifically restricted by the donor. Amounts received that are designated for future periods or restricted by the donor for specific purposes are reported as temporarily restricted or permanently restricted contributions. Temporarily restricted contributions received during the year, meeting donor-imposed stipulations, are recorded as unrestricted contributions. Promises to Give Unconditional promises to give are recognized as revenues or gains in the period received. Conditional promises to give are recognized only when the conditions on which they depend are substantially met and the promises become unconditional. Property and Equipment Property and equipment are stated at cost at the date of acquisition or in the case of gifts, at fair market value at the date of donation and are depreciated on a straight-line basis over their estimated useful lives, which is ten years for furniture and equipment and forty years for buildings. Artwork is not depreciated and carried at its estimated fair market value. Fair Value Measurements Promulgations of the Financial Accounting Standards Board have established a framework for measuring fair value which provides a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements)

12 Note 1 - Summary of Significant Accounting Policies - Continued Fair Value Measurements Continued The three levels of the fair value hierarchy are described as follows: Level 1 Level 2 Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Foundation has the ability to access. Inputs to the valuation methodology include: Quoted prices for similar assets or liabilities in active markets; Quoted prices for similar assets or liabilities in inactive markets; Inputs other than quoted prices that are observable for the asset or liability; Inputs that are derived principally from, or corroborated by, observable market data by correlation or other means. If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability. Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value measurement. The asset or liability's fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. Annuities Payable The annuities payable represent agreements between the Foundation and various donors. In exchange for the donors contributions, the Foundation agrees to make fixed payments for the life of the respective donors. A liability has been recognized at the present value of future cash flows expected to be paid to the donor based upon the life expectancy of the respective donors

13 Note 1 - Summary of Significant Accounting Policies - Continued Donated Services Donated services are recorded as contributions at their estimated fair market values in the period received. Certain donated services have not been recognized in the statements of activities as the value of these services is not practicable to determine. Advertising The Foundation charges the cost of advertising to expense as incurred. Income Taxes The Foundation has been notified by the Internal Revenue Service that it meets the qualifications to be classified as a tax exempt entity under section 501 (c)(3) of the Internal Revenue Code. As a not-for-profit entity exempt from income taxes, the Foundation may, however, be subject to tax on unrelated business income. Accounting principles generally accepted in the United States require an entity to assess the probability that a tax position has a "more likely than not" sustainability after review by tax authorities. If a tax position is deemed not to meet this threshold, any unrecognized tax benefits and costs are estimated and recognized. Tax returns are routinely open for review by the tax authorities for three years from their due date. In certain circumstances, the statute of limitations may remain open indefinitely. Endowment Funds Massachusetts law requires not-for-profit organizations and other entities that receive donor contributions to operate in conformity with its enacted version of the Uniform Prudent Management of Institutional Funds Act (UPMIFA). In the absences of overriding explicit donor stipulations, UPMIFA prescribes guidelines for expenditures of donor restricted funds and focuses on the prudent spending of the entire donor restricted fund, including accumulated earnings, rather than the historical dollar concept. UPMIFA's requirement that amounts may be appropriated for expenditure only after careful consideration of the seven factors outlined in its spending guidelines is bolstered by its intent to have the governing board of the organization make its decisions in light of the donor's intended purpose of the endowment fund, stipulated or otherwise

14 Note 1 - Summary of Significant Accounting Policies - Continued Endowment Funds - Continued UPMIFA requires donor restricted funds to be classified in accordance with their restrictions. Gains on endowment funds and other amounts permitted to be disbursed in accordance with the donors' stipulations must be classified as temporarily restricted net assets until approved for expenditure by the organization. Earnings on endowment funds that have not yet been specifically approved for expenditure, but will be, must be classified as temporarily restricted net assets until approved for expenditure by the organization. Management of the Foundation has evaluated the terms of the existing donor restricted fund agreements and adjusted temporary and permanently restricted net assets accordingly. The Foundation's board classifies donor restricted funds and earnings thereon in accordance with applicable state law as interpreted by the Attorney General. Endowment fund assets are appropriated for expenditure in accordance with the directions and/or intent of the donor. Unrealized losses that reduce fair value to an amount below the donated value are charged to unrestricted net assets. Unrealized gains will be classified as unrestricted net assets to the extent fair value again equals donated cost, at which time unrealized gains will be classified in accordance with the Foundation's spending policy. The Foundation's investment policy for endowment funds is intended to preserve capital to the extent possible and provide a reasonable predictable stream of revenue to provide appropriate funding to the programs supported by endowment funds

15 Note 1 - Summary of Significant Accounting Policies Continued New Accounting Pronouncements ASU , Presentation of Financial Statements of Not-for-Profit Entities, an amendment to Topic 958, Not-for-Profit Entities, was issued by the Financial Accounting Standards Board in June 2016 with an effective date for fiscal years beginning after December 17, The purpose of this amendment is to improve the transparency and utility of information contained in the financial statements of such entities. Net assets will be presented in two categories, net assets with donor restrictions and net assets without donor restrictions, as opposed to the current three categories. Additional information and disclosures will be required to enable a reader to more readily understand liquidity limitations due to restrictions on net assets. Early application is permitted. Management has not begun its review of the standard, but does not expect implementation to have a material effect on financial position or results of operations. Reclassifications Certain amounts in the 2015 financial statements have been reclassified to conform to the 2016 presentation. Note 2 - Marketable Securities The Foundation invests in bond, alternative, and equity mutual funds managed by several institutional managers of funds. The investments are overseen by the investment committee of the Board Net Unrealized Cost Market Value Gain (Loss) Corporate equity securities $ 18,152,096 $ 18,475,858 $ 323,762 Corporate bonds 685, ,691 38,574 Government bonds 1,134,898 1,172,080 37,182 Mutual funds 8,208,227 8,332, ,020 Total Investments $ 28,180,338 $ 28,703,876 $ 523,

16 Note 2 - Marketable Securities - Continued Net Unrealized Cost Market Value Gain (Loss) Equity mutual funds $ 20,299,307 $ 23,336,576 $ 3,037,269 Bond mutual funds 5,591,044 5,510,403 (80,641) 2015 Total Investments $ 25,890,351 $ 28,846,979 $ 2,956,628 The following schedule summarizes the investment return and its classification in the consolidated statements of activities for the years ended June 30: 2016 Temporarily Permanently Unrestricted Restricted Restricted Total Interest and dividends $ 603,335 $ 82,605 $ - $ 685,940 Investment fees (134,900) (10,125) - (145,025) Net unrealized losses (387,938) (517,756) - (905,694) Net realized losses on investments (449,779) - - (449,779) Investment income, net $ (369,282) $ (445,276) $ - $ (814,558) 2015 Temporarily Permanently Unrestricted Restricted Restricted Total Interest and dividends $ 258,744 $ 373,837 $ - $ 632,581 Investment fees (26,961) (31,127) (58,088) Net unrealized losses (400,317) (756,323) - (1,156,640) Net realized losses on investments (125,431) (170,772) - (296,203) Investment income, net $ (293,965) $ (584,385) $ - $ (878,350)

17 Note 3 - Contributions Receivable Contributions receivable consist of unconditional promises to give from individuals. Management has recorded these contributions at their estimated fair value and has set up an allowance for doubtful accounts. Discount rates have been used to reflect the present value of the non-current portion of the unconditional promises to give equal to the U.S. Treasury yield rates on for the years ended June 30, 2016 and 2015, respectively. Contributions receivable are as follows at June 30: Individual contributions $ 629,047 $ 862,650 Less: allowance for doubtful accounts (50,000) (50,000) Less: unamortized discount (15,622) (18,116) Net unconditional promises to give $ 563,425 $ 794,534 A schedule of the anticipated future minimum receipts of individual contributions is as follows: 2016 Less than Due in 1 Year 1-5 Years Total Individual contributions $ 9,000 $ 620,047 $ 629,047 Less: Unamortized discount (30) (15,592) (15,622) Allowance for uncollectible accounts (5,000) (45,000) (50,000) Net unconditional promises to give $ 3,970 $ 559,455 $ 563,

18 Note 3 - Contributions Receivable Continued 2015 Less than Due in 1 Year 1-5 Years Total Individual contributions $ 350,150 $ 512,500 $ 862,650 Less: Unamortized discount (595) (17,521) (18,116) Allowance for uncollectible accounts (5,000) (45,000) (50,000) Net unconditional promises to give $ 344,555 $ 449,979 $ 794,534 Note 4 - Fair Value Measurement The following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at June 30, Mutual Funds: Valued at the net asset value ("NAV ) of the shares held at fiscal year end. Mutual funds consist of open-ended mutual funds that strike a NAV at the close of every day that financial markets are open and are available to purchase by the general public through brokerage houses. Corporate Equity Securities: Valued at quoted market value of the shares held at fiscal year-end. Corporate and Government Bonds: Valued at the closing price reported on the active market on which the individual securities are traded. The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Although the Foundation believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date

19 Note 4 - Fair Value Measurement - Continued The following tables set forth, by level, within the fair value hierarchy, the Foundation's assets and liabilities measured at fair value on a recurring basis as of June 30: Level 1 Level 2 Level 3 Total Corporate equities $ 18,475,858 $ - $ - $ 18,475,858 Corporate bonds 723, ,691 Government bonds 1,172, ,172,080 Mutual funds 5,597,327 2,734,920-8,332,247 Annuities payable - - (178,331) (178,331) Total assets and liabilities at fair value $ 25,968,956 $ 2,734,920 $ (178,331) $ 28,525, Level 1 Level 2 Level 3 Total Equity mutual funds $ 23,336,576 $ - $ - $ 23,336,576 Bond mutual funds 5,510, ,510,403 Annuities payable - - (190,209) (190,209) Total assets and liabilities at fair value $ 28,846,979 $ - $ (190,209) $ 28,656,

20 Note 5 - Property and Equipment A summary of the major components of property and equipment at June 30, is as follows: Land $ 327,145 $ 327,145 Building 1,281,464 1,281,464 Equipment and fixtures 56,505 56,505 1,665,114 1,665,114 Less: accumulated depreciation (551,099) (518,120) Property and Equipment $ 1,114,015 $ 1,146,994 During 2016, the Foundation sold property that was previously classified as construction-in-progress at a loss of approximately $262,000. Note 6 - During 2016, the Foundation recognized $17,000 of an impairment loss for amounts classified in construction-in-progress. Restrictions on Assets Permanently Restricted Net Assets Income generated by permanently restricted net assets is designated exclusively for scholarship. Temporarily Restricted Net Assets Temporarily restricted net assets consist of $2,984,537 and $3,577,200 for scholarships and $981,252 and $1,195,824 for programs at, respectively. Net Assets Released From Donor Restrictions Net assets released from donor restrictions satisfying the restricted purposes or by occurrence of other events specified by the donor for the years ended June 30, are as follows: Scholarships and grants $ 618,716 $ 430,397 Program expenses 301, ,848 $ 920,337 $ 718,

21 Note 7 - Endowment Net Assets All endowment funds consist of donor-restricted funds. The Foundation has no board-designated endowment funds. Changes in endowment net assets for the years ended are as follows: Endowment Net Assets Temporarily Permanently Unrestricted Restricted Restricted Total Endowment net assets, at June 30, 2014 $ - $ 5,445,348 $ 10,312,703 $ 15,758,051 Investment return - (584,385) - (584,385) Contributions - 630,306 3,341,946 3,972,252 Amounts appropriated for expenditure - (718,245) - (718,245) Endowment net assets, at June 30, ,773,024 13,654,649 18,427,673 Investment return - (445,276) - (445,276) Contributions - 558,378 2,549,620 3,107,998 Amounts appropriated for expenditure - (920,337) - (920,337) Endowment net assets, at June 30, 2016 $ - $ 3,965,789 $ 16,204,269 $ 20,170,058 Note 8 - Donated Goods and Services The value of certain donated goods and services are recorded at their estimated fair value as of the date of receipt. For the years ended, the Foundation received $75,992 and $93,600, respectively, for fundraising events

22 Note 9 - Related Party Transactions The Foundation is affiliated with The Bridgewater Alumni Association ("The Alumni Association") by common management. Each organization, however, has its own independent Board of Trustees. The Foundation shares certain costs with The Alumni Association. Typically, any amounts owed to or from The Alumni Association do not bear interest and are liquidated as cash flow permits. Rental Income The Foundation has an operating rental agreement with the University for certain facilities. Annual rent under these agreements is $1 per year through July 31, 2016 and is included, along with its in-kind donation as rental income in the statement of activities. At this time, the Foundation does not anticipate entering into a subsequent lease with the University for use of the facilities. The University is responsible for all occupancy costs of these properties. Contributed Services Received from Personnel of an Affiliate The University provided accounting and development personnel along with budget support for various expenses, including publications to the Foundation without charge. During the years ended, the Foundation recognized revenue and related expense of $891,251 and $1,040,393, respectively, for contributed services received from the University based on the fair value of comparable services provided by third parties. Note 10 - Risks, Uncertainties and Concentrations Concentrations During the year ended June 30, 2016, the Foundation received a $1,950,000 permanently restricted contribution, which constituted approximately 57% of total contributions and gifts included in the statements of activities. Contributions The Foundation is dependent upon continued donor contributions. There is a risk to the extent these contributions are not renewed each year

23 Note 10 - Risks, Uncertainties and Concentrations - Continued Investment Risk The Foundation s marketable securities are exposed to various risks such as interest rate, market, and credit risks. Due to the level of risk associated with certain securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the Foundation s financial position. At June 30, 2016, the Foundation's investment balance is insured up to $500,000 by Securities Investor Protection Corporation, "SIPC". Cash From time to time, the Foundation's cash balances fluctuate and may exceed the federally insured limits. Management monitors the financial condition of the banking institution along with its cash balances and tries to keep the potential risk to a minimum. As of June 30, 2016, the Foundation s uninsured cash balance approximates $1,222,000. Note 11 - Management s Acceptance of Financial Statements Management has evaluated subsequent events through September 7, 2016, the date for which the financial statements were available for issuance. Management accepted the financial statements and did not identify any events subsequent to June 30, 2016 requiring disclosure in these financial statements

24 Independent Auditors Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Consolidated Financial Statements Performed in Accordance with Government Auditing Standards

25 Independent Auditors' Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Consolidated Financial Statements Performed in Accordance with Government Auditing Standards To the Board of Trustees of The Bridgewater State University Foundation Bridgewater, Massachusetts We have audited, in accordance with the 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, the financial statements of The Bridgewater State University Foundation (a component unit of Bridgewater State University) (the "Foundation), which comprise the statements of financial position as of, and the related statements of activities and changes in net assets and cash flows for the years then ended, and the related notes to the financial statements, and have issued our report thereon dated September 7, Internal Control Over Financial Reporting In planning and performing our audits of the financial statements, we considered The Bridgewater State University Foundation's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Foundation's internal control. Accordingly, we do not express an opinion on the effectiveness of the Foundation's internal control. 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 a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the Foundation's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. 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 over financial reporting that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 25 Braintree Hill Office Park Suite 102 Braintree, MA P: F: Church Street Winchester, MA P: F:

26 Compliance and Other Matters As part of obtaining reasonable assurance about whether The Bridgewater State University Foundation s financial statements are free from 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. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Foundation's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Foundation's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Certified Public Accountants Braintree, Massachusetts September 7, 2016