Notes to Consolidated Financial Statements June 30, 2024 and 2023 19. Related Parties The university has transactions with related parties including members of senior management, NSU’s Board of Trustees, and their immediate family members. Affiliated entities may include organizations that employ a related party, that the related party owns or has an ownership interest in, or that the related party may have a governing role in. When such relationships exist, the university has policies governing annual disclosure and management of any actual or perceived conflict in the best interest of NSU. During the years ended June 30, 2024 and 2023, the university incurred expenditures for goods and services provided by entities affiliated with related parties totaling $17.4 million and $7.9 million, respectively. These business transactions primarily included legal and consulting services (fiscal 2024) and an operating lease for instructional space (fiscal 2024 and 2023). The lease extends through fiscal 2029 with optional renewals thereafter. The operating lease liability was $38.3 million and $45.2 million, as of June 30, 2024 and 2023, respectively. Contribution revenues from related parties approximated $4.3 million and $6.4 million for the years ended June 30, 2024 and 2023, respectively. As of June 30, 2024 and 2023, pledges receivable from these parties totaled $28.2 million and $36.3 million, net of discount, respectively. 20. Litigation and Contingencies In its normal operations, NSU is a defendant in various legal actions, some of which are covered by insurance. Additionally, NSU has contracts and grants with various governmental agencies subject to audit or review, which could result in adjustment or disallowance of certain expenditures or indirect costs. While final outcomes of pending matters cannot be determined at this time, per consultation with legal counsel, management is of the opinion that, based on currently known facts and circumstances, the outcome of these matters will not have a material effect on NSU’s consolidated financial position or consolidated operating results. The university is subject to various complex federal and state regulations, such as those governing healthcare and student financial assistance programs which are significant to the university’s operations. Compliance with such regulations can be subject to future government review and interpretation, and certain violations could result in the imposition of significant fines, penalties, and exclusion from applicable programs. In the normal course of activities pertaining to compliance oversight, there may be internal or external reviews ongoing at any time. Subsequent to June 30, 2024, NSU identified a potential concern pertaining to compliance with a federal student financial assistance regulation and commenced a review which is ongoing and not yet complete. Consistent with the university’s commitment to regulatory compliance and close cooperation with oversight agencies, the university voluntarily notified the United States Department of Education on October 16, 2024, of the concern while the university’s review is ongoing. The university cannot reasonably estimate at this time the likelihood or extent of any potential adverse financial impact that could result from this matter. 21. Subsequent Events Pursuant to ASC 855, Subsequent Events, the university has reviewed all subsequent events through November 1, 2024, the date the consolidated financial statements were available to be issued. See Note 7 regarding a property sale and Note 20 regarding a contingency matter, both of which occurred after June 30, 2024. 42
RkJQdWJsaXNoZXIy NDE4MDg=