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Independent auditor’s report

To: the Executive Board and Supervisory Board of Stichting Radboud Universiteit

Auditor’s report on the 2021 financial statements included in the annual report

Our opinion

We have audited the 2021 financial statements of Stichting Radboud Universiteit in Nijmegen, the Netherlands. In our opinion:

  • the financial statements included in this annual report give a true and fair representation of the size and composition of the capital of Stichting Radboud University as of 31 December 2021 and of its result for the year 2021 in accordance with the Regeling jaarverslaggeving onderwijs (Reporting Guidelines for Educational Institutions);

  • the income and expenses and the balance sheet transactions for 2021 in these financial statements were recognised legitimately in all material aspects, in accordance with the provisions in the relevant laws and regulations, such as included in Section 2.3.1 Frame of Reference of the Onderwijsaccountantsprotocol OCW 2021 (OCW Education Audit Protocol 2021).

The financial statements consist of:

  • the consolidated and company balance sheet as of 31 December 2021;

  • the consolidated and company profit and loss statement for 2021; and

  • the explanatory notes comprising a summary of the accounting principles and other explanatory information.

The basis for our opinion

Our audit was conducted in accordance with Dutch law, including the Dutch auditing standards and the OCW Education Audit Protocol 2021. Our responsibilities under those standards are further described in the ‘Our responsibilities regarding the audit of the financial statements’ section of our report.

We are independent of Stichting Radboud University, as is required in accordance with the Auditor Independence (Assurance Engagements) Regulation [Verordening inzake de onafhankelijkheid van accountants bij assuranceopdrachten] (ViO) and other rules governing independence in the Netherlands which are relevant to our engagement. Furthermore, we have complied with the Verordening gedrags- en beroepsregels accountants (VGBA, regulation on professional conduct for accountants).

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

Materiality

Based on our professional judgement, we determined that the materiality for the correctness of the financial statements as a whole is €6.7 million. The materiality is based on 1% of the total income. The materiality for the financial accuracy has been determined at €16.9 million, based on 3% of the total public funds, in accordance with Section 2.1.3 ‘Materiality table’ of the OCW Education Audit Protocol 2021. This section of the OCW Education Audit Protocol 2021 also includes a specific materiality and specific reporting limit for various items/topics, which we have applied.

In doing so, the materiality requirements, as laid down in the WNT Audit Protocol 2021, were applied to the audit of the WNT information included in the financial statements. We have also taken misstatements and/or possible misstatements into account that, in our opinion, are material for the users of the financial statements for qualitative reasons.

We agreed with the Supervisory Board that misstatements identified during the audit in excess of €0.5 million will be reported to them along with smaller misstatements which we consider to be of significance for qualitative or WNT reasons.

Scope of the group audit

Stichting Radboud Universiteit heads a group of organisations whose financial information is included in the consolidated financial statements of Stichting Radboud Universiteit.

The group audit focused on two significant entities: Radboud University Nijmegen (the educational institution) and the Faculty of Medical Sciences (part of Radboud university medical center). We performed our own audit of the Radboud University entity. We used the services of other auditors for the audit of the Faculty of Medical Sciences entity. For other entities, we conducted review procedures or specific auditing procedures.

The abovementioned procedures performed for (group) entities, combined with additional procedures at the group level, allowed us to obtain sufficient and appropriate audit evidence about the group’s financial information to provide an opinion about the financial statements.

Our key audit matters

In our key audit matters, we describe matters which, in our professional judgement, were of the most significance in our audit of the financial statements. The key audit matters have been communicated to the Supervisory Board but are not a comprehensive reflection of all matters discussed.

The audit procedures relevant to these key audit matters were determined in the context of the audit of the financial statements as a whole. Our findings with respect to the individual key audit matters should be considered in that context and not as individual opinions on these matters.

Key audit matters

Value of provisions for asbestos removal.
The notes on buildings and grounds and the provision are included in the accounting principles and references 5.1 and 5.7, respectively.

At the end of 2021, Stichting Radboud Universiteit recognised a €6.2 million provision for the removal of asbestos from buildings being demolished or renovated. The real estate policy of Stichting Radboud Universiteit is anchored in the 2016 multi-year investment plan (2016­–2025) approved by the Executive Board and the Foundation Board. In 2021, this plan included the latest real estate developments, on the basis of which concrete decisions are taken about new building, renovation and demolition.

Stichting Radboud Universiteit’s policy is to establish a provision for the necessary removal of asbestos in buildings containing asbestos for which a concrete management decision has been taken to renovate or demolish. The expected costs for asbestos removal from buildings for which no decision has been taken are explained in the ‘off-balance sheet arrangements’ (reference 5.10).

The board has made an estimate of the expected expenditures for asbestos removal and related demolition costs for the purpose of determining the relevant provision. In making this estimate, the board used valuations provided by external experts as well as data from recently completed asbestos removals.

The assumptions such as the number of square metres and the expected costs were updated when the financial statements were prepared. These were based on the most recent assessments and costs of asbestos removal in 2021, also incorporating the management decisions taken.

Given the size of the provision, the extent of the changes in the current financial year and the inherent uncertainty of estimates, we consider the valuation of this provision to be a key matter in our audit.

Our related audit activities

Based on the multi-year investment plan, we have examined the plans, analyses and financial substantiation for asbestos-related demolition and removal activities. In doing so, we verified whether a concrete management decision to renovate or demolish is present for all buildings included in the provision, and whether all buildings for which concrete management decisions are present are included in the asbestos removal provision.

We reconciled the expected costs for asbestos removal in the provision with the underlying external valuations and recent asbestos removals. We assessed the expertise and independence of the external experts to confirm that the appraisals are useful as substantiation. We also gained an understanding of the work performed by the external experts to confirm that the valuations are adequate for the purpose of establishing the provision.

We compared the actual costs for asbestos removal in 2021 based on invoices with the estimates from the previous year to assess the reasonableness of the management’s estimates. We then assessed whether the price from updated expert appraisals and recent asbestos transactions are in line with the estimates of the expected costs for future asbestos removal.

In performing the above procedures, we found no material differences.

Key audit matters

Allocation of contract research income

The notes on contract research as part of the income from Education and Research (R&D) work commissioned by third parties are included in the accounting principles and references 5.9 and 6.4. 

The income from contract research amounted to €172.5 million and was generated by multi-year research projects. Stichting Radboud Universiteit receives grants in advance for these multi-year research projects. The balance of projects in progress – €72.0 million at the end of 2021 – is recognised under current liabilities.

The faculties are responsible for conducting and managing the research projects. This means that the procedures regarding contract research are decentralised, including the periodic reassessment of the total expected execution costs and the related allocation of income. The monitoring of timely completion of projects and analysis of project status is carried out decentrally, on a quarterly basis, by project administrators using signal lists. The project results are processed in the financial administration. Stichting Radboud Universiteit uses internal guidelines for the creation of the provision for onerous projects.

The research projects often have a duration of several years and various grant schemes apply. The income is allocated to years in line with the development of the (expected) execution costs. Most of these execution costs relate to personnel costs.

Stichting Radboud Universiteit uses the number of staff members employed on projects to allocate these costs.

Research is inherently unpredictable. It requires periodic reassessment of the expected execution costs, particularly with regard to the use of staff and the related allocation of income.

Given the amount of contract research income, its decentralised nature, the diversity of grant schemes and the estimate of execution costs yet to be incurred, we considered this a key matter in our audit.

Our related audit activities

As part of our audit activities, we gained an understanding of and assessed the internal control over the system for allocating personnel costs, overhead and other costs to research projects. As part of this, we assessed the reliability of the signal lists used by project controllers to identify risks, and the appropriate follow-up of the signals by the project controllers at year-end.

For the projects completed in 2021, we compared the previous financial estimates with the actual figures to determine the quality of the management estimates, with the aim of establishing the nature and scope of the work.

We performed a sampling and verified the correctness and completeness of the allocated personnel and other costs for the selected projects based on employment contracts, salary data, submitted project budgets, invoices and, for the surcharge of indirect personnel costs, the consistent application of the overhead rates used and compliance with the grant conditions.

In performing our procedures, we found no material differences.

Key audit matters

Valuation of the Unemployment Scheme for Dutch Universities (WNU) provision

The notes on this provision (formerly known as tide-over allowance) are included in the accounting principles and reference 5.7.

At the end of 2021, Stichting Radboud Universiteit recognised a €5.8 million WNU provision, intended to cover future labour law obligations based on accrued tide-over entitlements as of the balance sheet date.

The provision is built up at the individual level based on UWV statements (for the statutory part) and RAET statements (for the non-statutory part). The size of the provision is also influenced by management estimates regarding the duration of the expected obligations under the unemployment scheme and the Non-statutory Unemployment Regulations for Dutch Universities (BWNU).

Given the size of the provision and the estimation element, we consider this to be a key matter in our audit.

Our related audit activities

As part of our audit work, we familiarised ourselves with the Collective Labour Agreement and statutory and non-statutory provisions.

We assessed the internal control regarding the correctness of the data included in the payroll administration. Based on our audit activities, we concluded that we could rely on this internal control in the context of the financial statements audit.

In addition, we assessed whether the salary data used in the calculation of the provision were consistent with the payroll records. We tested the reasonableness and consistency of the processing of the assumptions regarding the (non-statutory) unemployment scheme using UWV statements (statutory) and RAET statements (non-statutory) at the individual level.

In addition, we assessed the realisation percentage by comparing the assumptions used with actual figures from experience. Based on the work performed, we concluded that the realisation rate is appropriate.

Finally, we performed a sampling to assess whether the expenditure from the individual dismissal schemes had been correctly accounted for. We found no discrepancies based on this work.

Appointment

We were appointed by the Supervisory Board on 11 November 2015 as the auditors of Stichting Radboud Universiteit from the audit of the 2016 financial year onwards, and we have been the external auditors since that financial year.

Compliance with the WNT overlapping rule not audited

In accordance with the WNT Auditing Protocol 2021, we did not assess the ban on parallel income referred to in Article 1.6a of the WNT and Article 5(1)(n,o) of the WNT Implementing Regulations [Uitvoeringsregeling WNT]. This means that we did not check to see whether or not the norm has been exceeded by a managing top-level executive due to possible employment as a managing top-level executive at other institutions governed by the WNT, as well as whether or not this is accurately reflected in the required explanatory notes.

Statement on the other information included in the annual report

The annual report also contains other information. This refers to all information in the annual report other than the financial statements and our auditor’s report thereon.

Based on the work described below, we are of the opinion that the other information:

  • is consistent with the financial statements and does not contain any material misstatements;

  • contains all information that is required for the management report and the other data pursuant to the Reporting Guidelines for Educational Institutions and based on the provisions of the relevant legislation and regulations, as included in Section 2.2.2 ‘Management Report’ of the OCW Education Audit Protocol 2021.

We have read the other information and, based on our knowledge and the understanding gained from the audit of the annual financial statements and elsewhere, considered whether the other information contains material misstatements.

Through our work activities, we have met the requirements set out in the Reporting Guidelines for Educational Institutions, Section 2.2.2 ‘Management Report’ of the OCW Education Audit Protocol 2021 and Dutch Standard 720. These activities are not as extensive as our auditing activities relating to the annual financial statements.

The Executive Board is responsible for the preparation of the other information, including the Management Report and other data, in accordance with the Reporting Guidelines for Educational Institutions and based on the provisions of the relevant legislation and regulations, as included in Section 2.2.2 ‘Management Report’ of the OCW Education Audit Protocol 2021.

Description of responsibilities in relation to the financial statements

Responsibilities of the Executive Board and the Supervisory Board regarding the financial statements

The Executive Board is responsible for the preparation and fair presentation of the financial statements in accordance with the Reporting Guidelines for Educational Institutions. The Executive Board is also responsible for the lawful recognition of the income and expenses and the balance sheet transactions in the financial statements, in accordance with the provisions of the relevant laws and regulations, as included in Section 2.3.1 ‘Frame of Reference’ of the OCW Education Audit Protocol 2021.

Furthermore, the Executive Board is responsible for such internal control as the Executive Board deems necessary to ensure that the financial statements are prepared in compliance with the relevant laws and regulations and are free of material misstatement, whether due to fraud or error.

In drawing up the financial statements, the Executive Board must consider whether the educational institution is able to pursue its activities as a persistent concern. Based on the aforementioned reporting system, the Executive Board must draw up the financial statements based on the persistent concern assumption, unless the Executive Board intends to liquidate the educational institution or terminate the activities, or if termination is the only realistic alternative. The Executive Board should disclose events and circumstances in the financial statements that may cast significant doubt on the institution’s ability to maintain continuity in its activities.

The Supervisory Board is responsible for supervising the educational institution’s financial reporting process.

Our responsibilities regarding the audit of the financial statements

We are responsible for planning and performing the audit assignment in a manner that allows us to obtain sufficient and appropriate audit evidence on which to base our opinion.

Our audit was performed with a high, but not absolute, degree of certainty, which means it is possible that we have not detected all material errors or fraud during our audit.

Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence users’ economic decisions that are made on the basis of these financial statements. The materiality affects the nature, timing and extent of our audit procedures and the evaluation of the effect of identified misstatements on our opinion.

A more detailed description of our responsibilities is included in the appendix to our auditor’s report.

Eindhoven, 29 April 2022

PricewaterhouseCoopers Accountants N.V. Original signed by:

E.M.A. van Heugten, RA