WAKE FOREST UNIVERSITY .aws.wfu.edu

WAKE FOREST UNIVERSITY

Independent Auditors' Reports as Required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost

Principles, and Audit Requirements for Federal Awards (Uniform Guidance) and Government Auditing Standards and Related Information

Year Ended June 30, 2018

WAKE FOREST UNIVERSITY

Table of Contents

Independent Auditors' Report Basic Consolidated Financial Statements ? Year ended June 30, 2018 Schedule of Expenditures of Federal Awards ? Year ended June 30, 2018 Schedule of Expenditures of State Awards ? Year ended June 30, 2018 Notes to Schedule of Expenditures of Federal Awards and Schedule of Expenditures of State

Awards Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance

and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Independent Auditors' Report on Compliance for Each Major Federal Program; Report on Internal Control over Compliance; and Report on Schedule of Expenditures of Federal Awards Required by Uniform Guidance and the Schedule of Expenditures of State Awards Schedule of Findings and Questioned Costs

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KPMG LLP Suite 400 300 North Greene Street Greensboro, NC 27401

Independent Auditors' Report

The Board of Trustees Wake Forest University:

Report on the Consolidated Financial Statements We have audited the accompanying consolidated financial statements of Wake Forest University (the University), which comprise the consolidated balance sheet as of June 30, 2018, and the related consolidated statements of activities and cash flows for the year then ended, and the related notes to the consolidated 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 U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal controls 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 consolidated 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 consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the consolidated 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 consolidated 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 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 consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Wake Forest University as of June 30, 2018, and the changes in its net assets and its cash flows for the year then ended in accordance with U.S. generally accepted accounting principles.

KPMG LLP is a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.

Report on Summarized Comparative Information We have previously audited the 2017 consolidated financial statements, and we expressed an unmodified audit opinion on those audited consolidated financial statements in our report dated October 23, 2017. In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2017 is consistent, in all material respects, with the audited consolidated financial statements from which it has been derived. Other Matter Our audit was conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The supplementary information included in the consolidated balance sheet, statement of activities, statement of cash flows, and the accompanying notes related to the College of Arts and Sciences, Schools of Law, Business, and Divinity, and Reynolda House, Inc. (collectively, Reynolda Campus); and Wake Forest University Health Sciences (WFUHS) is presented for purposes of additional analysis and is not a required part of the consolidated financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the consolidated financial statements. The information has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the consolidated financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 23, 2018 on our consideration of Wake Forest 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 solely 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 the effectiveness of Wake Forest University's 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 Wake Forest University's internal control over financial reporting and compliance.

Greensboro, North Carolina October 23, 2018

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WAKE FOREST UNIVERSITY Consolidated Balance Sheet June 30, 2018

(with summarized comparative financial information as of June 30, 2017) (Dollars in thousands)

Assets

Cash and cash equivalents

$

Accounts receivable, net

Patient receivables, net

Contributions receivable, net

Notes receivable, net

Investments

Direct investments in real estate

Other assets

Deposit with bond trustee

Land, buildings, and equipment, net

Total assets

$

Liabilities and Net Assets

Liabilities:

Accounts payable and accruals

$

Other liabilities and deferrals

Annuities payable

Notes payable and capital leases

Bonds payable

Postretirement benefits

Government grants refundable

Total liabilities

Net assets: Unrestricted Temporarily restricted Permanently restricted

Total net assets

Total liabilities and net assets $

Supplementary information

Reynolda

Campus

WFUHS

67,300 11,876

-- 106,564

21,319 1,113,566

16,903 8,369 176

638,074

16,242 97,226 69,359

8,716 775

796,425 --

27,263 --

355,893

1,984,147

1,371,899

43,320 68,487 16,742 97,106 314,631 12,967

8,222

561,475

653,840 354,041 414,791

1,422,672

1,984,147

177,229 145,369

2,715 111,581 105,863

34,397 --

577,154

560,020 58,346

176,379

794,745

1,371,899

2018

83,542 109,102

69,359 115,280

22,094 1,909,991

16,903 35,632

176 993,967

3,356,046

220,549 213,856

19,457 208,687 420,494

47,364 8,222

1,138,629

1,213,860 412,387 591,170

2,217,417

3,356,046

See accompanying notes to consolidated financial statements.

2017

65,143 120,603

62,155 195,246

22,667 1,748,224

18,529 31,143 13,462 924,297

3,201,469

203,905 222,772

27,572 114,314 482,497

50,928 9,361

1,111,349

1,129,683 413,074 547,363

2,090,120

3,201,469

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