Expenses or expenditures have been appropriately classified in or allocated to functions and programs in the statement of revenues, expenses and change in net assets, and allocations have been made on a reasonable basis.

Revenues are appropriately classified in the statements of revenues, expenses and change in net assets within program revenues, general revenues, contributions to term or permanent endowments, or contributions to permanent fund principal.

Capital assets, including infrastructure assets, are properly capitalized, reported, and depreciated.

In considering the disclosures that should be made about risks and uncertainties, we have concluded that the following are required:

The University is exposed to various risks of loss from torts; theft of, damage to, destruction of assets; business interruption; employee injuries and illnesses; natural disasters; and employee health and accident benefits. Commercial insurance coverage is purchased for claims arising from these risks. Settled claims have not exceeded this commercial coverage in any of the three preceding years. As a sovereign entity of the Commonwealth of Kentucky, the Kentucky Board of Claims handles tort claims on behalf of the University.

The Commonwealth of Kentucky operates a public entity risk pool operating as a common risk management and insurance program for its members. The University pays an annual premium to the pool for its workers' compensation insurance coverage. The pool's governing agreement specifies that the pool will be self-sustaining through member premiums and will reinsure through commercial carriers for claims in excess of specified stop loss amounts.

We agree with the restatement of the previously issued financial statements discussed in Note 1. In that regard:

The restatement corrects an error in those financial statements.

We were not aware of the error when those financial statements were issued.

We are not aware of any other errors in those financial statements.

We do not believe it is necessary to recall those financial statements and all users of those financial statements will receive a copy of the current year's financial statements and independent auditor's report.

Management believes that the effects of the uncorrected misstatement related to the estimate of the allowance for doubtful accounts related to student accounts receivable is immaterial, both individually and in the aggregate to the basic financial statements. For purposes of this representation, we consider items to be material, regardless of their size, if they involve the misstatement or omission of accounting information that, in light of surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would be changed or influenced by the omission or misstatement.

We have provided you with:

Access to all information, of which we are aware that is relevant to the preparation and fair presentation of the financial statements such as records, documentation, and other matters;