The Board of Visitors’ Audit, Compliance and Risk Committee heard Friday from the Auditor of Public Accounts of the Commonwealth of Virginia about changes to the auditing process, following the recent start of the 2024 fiscal year’s audit — an annual occurrence where financial statements from the past fiscal year are reviewed both for compliance with accounting standards and to understand potential financial risks. The Committee spent a majority of its allotted time in a closed session, where, according to Board documents, they discussed legal issues related to financial reporting, as well as proprietary information regarding the University Health System.
After comments from Committee Chair Thomas DePasquale, the Board heard an update from Augie Maurelli, vice president for finance and chief financial officer. Maurelli said that the University has been working with the APA and that there have been some changes in the auditing process and format of financial statements that have been implemented for the 2024 fiscal year.
These changes include increased segmentation within divisions of the University so that readers can see more specific financial information concerning different divisions, as well as the integration of Medical Center statements into University ones so as to avoid redundancy. Previously, Medical Center financial statements were done separately to University ones, which created more work for the auditing department and less concentrated financial information.
According to Maurelli and Board documents, the first meeting for the 2024 fiscal year audit is set to take place June 14, with the Board aiming to release financial statements in November and the audit expected to be finished December.
The Committee then heard from David Rasnic, director of higher education for the APA, who introduced himself and his team, before discussing changes and challenges pertaining to the auditing process. Rasnic said that accounting standards across the country have become more extensive, meaning that universities have had to reassess financial statements to avoid material weaknesses — deficiencies or problems in financial reporting.
“Many higher education institutions are having this same issue with financial reporting,” Rasnic said. “Accounting standards have really become more robust, which has really raised the risk level, not just here but across all higher education and state agencies as well.”
University President Jim Ryan asked Rasnic about the trend of financial reporting requirements becoming more strict, specifically inquiring as to whether he has seen more material weaknesses in financial statements at other universities. Rasnic said that material weaknesses have become more common after the government introduced new accounting standards and policies in 2022 and 2023, but that possible weaknesses in the University’s financial reporting is more than just new accounting standards — something he would hope to address in the forthcoming audit.
According to Rasnic, the primary goal of the University-wide audit is to assess the quality of financial statements and the statements’ compliance with regulations, as well as providing an opinion on if statements act in accordance with Generally Accepted Auditing Principles.
Rasnic said that his team’s audit is not designed to detect error or fraud within statements, but that if they find any, they will look into it. He also discussed standards for how the APA will work with the University in the coming months, which will include meetings with personnel and biweekly status updates to management.
The results of the audit will be brought to the Board at its December meeting.
After Rasnic’s presentation and a brief question and answer period, the Committee went into closed session to discuss legal matters pertaining to financial reporting, as well as conversations around the University Health System of which disclosure could adversely affect its competitive position.
According to DePasquale, the Committee had "hard decisions" to discuss in a “super executive” closed session — a meeting only voting Board members could attend, meaning the student and faculty representatives were excluded along with University employees. DePasquale did not disclose what the topics would be discussed during this closed session.
The Committee also voted with public objection to approve the auditing plans for the 2025 and 2026 fiscal years. The plans — divided between U.Va. Health and the University Academic Division — include evaluations of risk mitigation plans for cybersecurity risks and financial processes.
The Audit, Compliance and Risk Committee is scheduled to reconvene during the next Board meeting in September.
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