Audit 5946

Title: Note 1. Nature of Activities Accounting Policies: Note 2. Summary of Significant Accounting Policies Basis of Accounting The financial statements of the University have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Basis of Presentation For reporting purposes, the University’s financial statements have been prepared to focus on the organization as a whole. Resources are classified into two net asset categories based on the existence or absence of donor-imposed restrictions. Accordingly, the net assets of the University and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions - Net assets that are not subject to donor imposed restrictions and may be expended for any purpose in performing the mission and primary objectives of the University. These net assets may be used at the discretion of the University’s management and those charged with governance. Net Assets with Donor Restrictions - Net assets subject to stipulations imposed by donors and grantors. Some donor restrictions are temporary in nature; those restrictions will be met by actions of the University or by the passage of time. Other donor restrictions are perpetual in nature, whereby the donor has stipulated the funds be maintained in perpetuity. Contributions received with donor-imposed restrictions that are met in the same year as received are reported as revenues of the unrestricted net asset class. Expiration of restrictions on net assets as the result of the passage of time and/or fulfilling donor-imposed stipulations are reported as net assets released from restrictions between the applicable classes of net assets in the statement of activities. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents For the purposes of reporting cash flows, cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less, except for investments purchased with endowment and annuity assets, which are classified as long-term investments. Investments Investments in marketable securities are stated at fair value. Real estate investments are stated primarily at current appraised value. Securities not publicly traded are stated at estimated market value. Unrealized gains and losses are included in the changes in net assets. The estimated fair value of certain alternative investments, such as private equity interests, is determined by reference to the net asset values allocated to the University at the measurement date. The University believes the carrying amount of these financial instruments is a reasonable estimate of fair value. Because alternative investments are not readily marketable, their estimated value is subject to uncertainty and, therefore, may differ from the value that would have been used had a ready market for such investments existed. Such difference could be material. Net appreciation on endowment funds, whose income is unrestricted as to use, is required to be reported as net assets without donor restrictions unless such net appreciation has been restricted in perpetuity by the donor or by law. Accordingly, market appreciation on endowment funds without donor restrictions is classified in the accompanying financial statements as a part of net assets without donor restrictions. In those cases, where a donor has placed restrictions on the use of endowment income, any related net appreciation is also subject to the same restriction and is reported as part of net assets with donor restrictions until such time as the restriction has been met. See Note 6 for discussion of the University’s endowment spending policy. Accounts Receivable Student accounts receivable represent amounts due for tuition, fees, and room and board from currently enrolled and former students. The University extends unsecured credit to students and parents of dependent students in connection with their studies. Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a provision for bad debt expense and an adjustment to a valuation allowance based on its assessment of the current status of individual accounts and estimated collectability. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and a credit to accounts receivable. The allowance for doubtful accounts was $253,197 and $252,439 at May 31, 2023 and 2022, respectively. Charge-offs, net of recoveries, totaled $269,270 and $49,243 for the years ended May 31, 2023 and 2022, respectively. Provision for bad debt was $270,028 and $95,631 for years ended May 31, 2023 and 2022, respectively. Loans to Students Loans receivable are carried at unpaid principal balances, less an allowance for uncollectible loans. The allowance for uncollectible loans is increased by charges to income and decreased by charge-offs (net of recoveries). Management’s periodic evaluation of the adequacy of the allowance is based on Perkins loan program requirements, the University’s historical loan loss experience, specific impaired loans, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and current economic conditions. Loans are considered impaired if full principal or interest payments are not anticipated in accordance with the contractual terms. The University’s practice is to charge off any loan or portion of a loan when the loan is determined by management to be uncollectible due to the borrower’s failure to meet repayment terms, the borrower’s deteriorating or deteriorated financial condition, the depreciation of the underlying collateral, or for other reasons. Loans are placed on nonaccrual when management believes, after considering economic conditions, business conditions, and collection efforts that the loans are impaired or collection of interest is doubtful. Uncollected interest previously accrued is charged off or an allowance is established by a charge to interest income. Interest income on nonaccrual loans is recognized only to the extent cash payments are received. The amount of loans past due 90 days or more and still accruing interest as of May 31, 2023 and 2022 totaled $89,922 and $94,283, respectively. Interest on loans is recognized over the term of the loan and is calculated using the simple-interest method on principal amounts outstanding. Land, Buildings and Equipment Land, buildings and equipment are stated at cost at date of acquisition or fair value at date of donation in the case of gifts, less accumulated depreciation, computed on a straight-line basis over the estimated useful lives ranging from 5 to 75 years. Items having a useful life longer than one year and costing more than $5,000 are capitalized. Depreciation expense for fiscal years ended May 31, 2023 and 2022 was $2,418,466 and $2,143,214 respectively. Inventory Inventory is valued at the lower of cost on the first-in, first-out basis, and net realizable value. Inventory consists mainly of books, Bible class materials, and gift items sold by the Christian Store as well as goods to be sold from dining services. Income Taxes The University is exempt from federal income taxes under Section 501(c) (3) of the Internal Revenue Code; accordingly, no provision for income taxes is made in the financial statements. The University is current on filing its tax form 990 and form 990T. If interest and penalties are incurred such amounts are recognized in income tax expense. FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109, codified in ASC Topic 740 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attribute for tax positions taken or expected to be taken on a tax return including the entity’s status as a tax-exempt not-for-profit entity. Additionally, ASC 740 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosure. The University had no significant uncertain tax positions at May 31, 2023 or 2022. Endowment and Similar Funds The endowment and similar funds are subdivided into appropriate classifications. Endowment funds have been received from benefactors who, by the terms of their conveying instruments, have stipulated that the principal of their gifts may not be expended. Quasi-endowment funds are funds which the Board of Trustees of the University has determined are to be retained and invested until the Board, at its discretion, authorizes their expenditure. The principal of such funds may be either designated or undesignated as to use. Income derived from investments of endowment and similar funds is accounted for in the fund to which it is restricted, or if unrestricted, as revenues in unrestricted current funds. The Board of Trustees has established that, in the absence of further restrictions, 50 percent of the corpus of endowment gifts is to be recorded as net assets with donor restrictions held in perpetuity, since the University’s agreements did not explicitly state the amount of the gift that should be held in perpetuity. The remaining 50 percent is recorded as net assets with donor restrictions that are temporary in nature until those amounts are appropriated for expenditure for their donor restricted purpose, and is available to absorb market fluctuations and to award scholarships if the return on investment in any given year is not sufficient. Management has confirmed with donors the University’s interpretation of their endowment agreement. This correspondence effectively confirmed the donor’s intent for the amount of the gift that must be held in perpetuity. Subsequent to this confirmation, 50 percent of the corpus of these endowments was reclassified from net assets with donor restrictions held in perpetuity to net assets with donor restrictions that have purpose restrictions in accordance with the Board’s resolution. Tuition, Fees and Auxiliary Enterprises The University’s primary source of revenues from contracts with customers are from tuition, fees and sales and services of auxiliary enterprises. In accordance with the adoption of Accounting Standards Update (“ASU”) 2014-09, Revenues from Contracts with Customers, the University identifies a contract for revenue recognition when there is approval and commitment from both parties, the rights of the parties and payment terms are identified, the contract has commercial substance and the collectability of the consideration is probable. The University evaluates each contract to determine the number of distinct performance obligations in the contract, which requires the use of judgment. Performance obligations are determined based on the nature of the services provided by the University. Tuition and fees are derived from academic services rendered by the University on campus and online, as well as from related educational resources that the University provides to its students, such as access to courses and online materials. The University recognizes revenue for academic services pro-rata over the applicable academic term. Scholarships provided to students by the University are reflected as a reduction of gross tuition and fees. Tuition and fees received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. Sales and services of auxiliary enterprises include housing services, food services, a bookstore, camps, and events. The University recognizes revenue for housing and certain food services proportionately over the applicable academic term. Fees related to housing and food received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. The University typically recognized revenue from other sales and services of auxiliary enterprises at the point in time sales occur or as services are rendered. The University’s accounts receivable represents unconditional rights to consideration from its contracts with customers. Typically, once a customer is invoiced for tuition, fees, and auxiliary services, payment is due immediately. Accounts receivable, net of allowance for doubtful accounts as of the years ended May 31, 2023 and May 31, 2022, were $759,231 and $757,318, respectively. The University does not present information about outstanding performance obligations as of year-end because its contracts with students all had original terms of less than one year. The University does not have any contract assets. The University had no costs that were capitalized to obtain or to fulfill a contract with a student. The University maintains an institutional tuition refund policy, which provides for all or a portion of tuition and fees to be refunded if a student withdraws during the stated refund period. The University does not record revenue for amounts that may be refunded. Contributions and Private Gifts Contributions and private gifts, including unconditional promises to give, are recognized as revenues in the period received. Conditional promises to give are not recognized until they become unconditional; that is, when the conditions on which they depend are substantially met. Contributions of assets other than cash are recorded at their estimated fair value. Contributions to be received after one year are discounted at an appropriate discount rate commensurate with the risks involved. Amortization of discounts is recorded as additional contribution revenue in accordance with donor-imposed restrictions, if any, on the contributions. As of May 31, 2023 and 2022, there were $15,000 and $18,000 unconditional promises to give respectively. Functional Expenses Costs of providing the University’s programs are reported in the statements of activities on a functional basis. Program expenses include costs directly associated with the program and other indirect costs determined to benefit that program. These costs have been allocated between functional categories program and supporting services based on estimates made by management. Impairment of Long-Lived Assets The University evaluates the recoverability of its long-lived assets for possible impairment when events or circumstances indicate that the carrying amounts may not be recoverable. Long-lived assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are independent of the cash flows of other groups of assets. If it is determined that the carrying amounts of such long-lived assets are not recoverable, the assets are written down to their fair value. See Note 8. Leases The University adopted FASB Topic 842, Leases, using the modified retrospective approach with June 1, 2022, as the date of initial adoption. The University elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the University to carry forward the historical lease classification. Adoption of the new standard did not impact the University’s changes in net assets and had no impact on beginning net assets or cash flows. The University determines whether an arrangement is or contains a lease at lease inception. Under ASC 842, a contract is (or contains) a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined under the standard as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. On the commencement date, operating leases are recorded as operating lease right-of-use (“ROU”) assets and operating lease liabilities in the statements of financial position. Finance leases are recorded as equipment and finance lease liabilities in the statements of financial position. ROU assets represent the University’s right to use an underlying asset for the lease term, and lease liabilities represent the University’s contractual obligation to make lease payments. The lease liability is measured as the present value of the lease payments over the lease term using either the rate implicit in the lease, if it is determinable, or the University’s incremental borrowing rate if the implicit rate is not determinable. ROU assets are calculated as the present value of the remaining lease payments plus unamortized initial direct costs and prepayments of rent, less any unamortized lease incentives received. Lease terms may include renewal or extension options to the extent they are reasonably certain to be exercised. For operating leases, lease expense is recognized on a straight-line basis over the lease term. For finance leases, amortization of the asset is recognized on a straight-line basis over the useful life of the underlying asset and interest on the lease liability is recognized over the lease term. The University has elected not to recognize a ROU asset and lease liability for leases with an initial term of 12 months or less but includes the expense associated with short-term leases in lease expense in the statements of activities. ROU assets are assessed for impairment in accordance with the University’s long-lived asset policy. Management reassesses lease classification and remeasures ROU assets and lease liabilities when a lease is modified and that modification is not accounted for as a separate new lease or upon certain other events that require reassessment in accordance with ASC 842. Reclassifications Certain reclassifications have been made to the fiscal 2022 financial statements to conform to the fiscal 2023 presentation. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. Freed-Hardeman University (the “University”) was established November 30, 1869, and is located in Henderson, Tennessee. The University is a not-for-profit organization and fully accredited institution of higher education providing both undergraduate and graduate degrees. Enrollment is approximately 2,283 with students from across the United States and several other countries. The University is primarily supported by student tuition and fees, contributions from alumni and churches of Christ, and earnings on investments.

Title: Note 3. Liquidity and Availability of Resources Accounting Policies: Note 2. Summary of Significant Accounting Policies Basis of Accounting The financial statements of the University have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Basis of Presentation For reporting purposes, the University’s financial statements have been prepared to focus on the organization as a whole. Resources are classified into two net asset categories based on the existence or absence of donor-imposed restrictions. Accordingly, the net assets of the University and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions - Net assets that are not subject to donor imposed restrictions and may be expended for any purpose in performing the mission and primary objectives of the University. These net assets may be used at the discretion of the University’s management and those charged with governance. Net Assets with Donor Restrictions - Net assets subject to stipulations imposed by donors and grantors. Some donor restrictions are temporary in nature; those restrictions will be met by actions of the University or by the passage of time. Other donor restrictions are perpetual in nature, whereby the donor has stipulated the funds be maintained in perpetuity. Contributions received with donor-imposed restrictions that are met in the same year as received are reported as revenues of the unrestricted net asset class. Expiration of restrictions on net assets as the result of the passage of time and/or fulfilling donor-imposed stipulations are reported as net assets released from restrictions between the applicable classes of net assets in the statement of activities. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents For the purposes of reporting cash flows, cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less, except for investments purchased with endowment and annuity assets, which are classified as long-term investments. Investments Investments in marketable securities are stated at fair value. Real estate investments are stated primarily at current appraised value. Securities not publicly traded are stated at estimated market value. Unrealized gains and losses are included in the changes in net assets. The estimated fair value of certain alternative investments, such as private equity interests, is determined by reference to the net asset values allocated to the University at the measurement date. The University believes the carrying amount of these financial instruments is a reasonable estimate of fair value. Because alternative investments are not readily marketable, their estimated value is subject to uncertainty and, therefore, may differ from the value that would have been used had a ready market for such investments existed. Such difference could be material. Net appreciation on endowment funds, whose income is unrestricted as to use, is required to be reported as net assets without donor restrictions unless such net appreciation has been restricted in perpetuity by the donor or by law. Accordingly, market appreciation on endowment funds without donor restrictions is classified in the accompanying financial statements as a part of net assets without donor restrictions. In those cases, where a donor has placed restrictions on the use of endowment income, any related net appreciation is also subject to the same restriction and is reported as part of net assets with donor restrictions until such time as the restriction has been met. See Note 6 for discussion of the University’s endowment spending policy. Accounts Receivable Student accounts receivable represent amounts due for tuition, fees, and room and board from currently enrolled and former students. The University extends unsecured credit to students and parents of dependent students in connection with their studies. Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a provision for bad debt expense and an adjustment to a valuation allowance based on its assessment of the current status of individual accounts and estimated collectability. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and a credit to accounts receivable. The allowance for doubtful accounts was $253,197 and $252,439 at May 31, 2023 and 2022, respectively. Charge-offs, net of recoveries, totaled $269,270 and $49,243 for the years ended May 31, 2023 and 2022, respectively. Provision for bad debt was $270,028 and $95,631 for years ended May 31, 2023 and 2022, respectively. Loans to Students Loans receivable are carried at unpaid principal balances, less an allowance for uncollectible loans. The allowance for uncollectible loans is increased by charges to income and decreased by charge-offs (net of recoveries). Management’s periodic evaluation of the adequacy of the allowance is based on Perkins loan program requirements, the University’s historical loan loss experience, specific impaired loans, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and current economic conditions. Loans are considered impaired if full principal or interest payments are not anticipated in accordance with the contractual terms. The University’s practice is to charge off any loan or portion of a loan when the loan is determined by management to be uncollectible due to the borrower’s failure to meet repayment terms, the borrower’s deteriorating or deteriorated financial condition, the depreciation of the underlying collateral, or for other reasons. Loans are placed on nonaccrual when management believes, after considering economic conditions, business conditions, and collection efforts that the loans are impaired or collection of interest is doubtful. Uncollected interest previously accrued is charged off or an allowance is established by a charge to interest income. Interest income on nonaccrual loans is recognized only to the extent cash payments are received. The amount of loans past due 90 days or more and still accruing interest as of May 31, 2023 and 2022 totaled $89,922 and $94,283, respectively. Interest on loans is recognized over the term of the loan and is calculated using the simple-interest method on principal amounts outstanding. Land, Buildings and Equipment Land, buildings and equipment are stated at cost at date of acquisition or fair value at date of donation in the case of gifts, less accumulated depreciation, computed on a straight-line basis over the estimated useful lives ranging from 5 to 75 years. Items having a useful life longer than one year and costing more than $5,000 are capitalized. Depreciation expense for fiscal years ended May 31, 2023 and 2022 was $2,418,466 and $2,143,214 respectively. Inventory Inventory is valued at the lower of cost on the first-in, first-out basis, and net realizable value. Inventory consists mainly of books, Bible class materials, and gift items sold by the Christian Store as well as goods to be sold from dining services. Income Taxes The University is exempt from federal income taxes under Section 501(c) (3) of the Internal Revenue Code; accordingly, no provision for income taxes is made in the financial statements. The University is current on filing its tax form 990 and form 990T. If interest and penalties are incurred such amounts are recognized in income tax expense. FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109, codified in ASC Topic 740 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attribute for tax positions taken or expected to be taken on a tax return including the entity’s status as a tax-exempt not-for-profit entity. Additionally, ASC 740 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosure. The University had no significant uncertain tax positions at May 31, 2023 or 2022. Endowment and Similar Funds The endowment and similar funds are subdivided into appropriate classifications. Endowment funds have been received from benefactors who, by the terms of their conveying instruments, have stipulated that the principal of their gifts may not be expended. Quasi-endowment funds are funds which the Board of Trustees of the University has determined are to be retained and invested until the Board, at its discretion, authorizes their expenditure. The principal of such funds may be either designated or undesignated as to use. Income derived from investments of endowment and similar funds is accounted for in the fund to which it is restricted, or if unrestricted, as revenues in unrestricted current funds. The Board of Trustees has established that, in the absence of further restrictions, 50 percent of the corpus of endowment gifts is to be recorded as net assets with donor restrictions held in perpetuity, since the University’s agreements did not explicitly state the amount of the gift that should be held in perpetuity. The remaining 50 percent is recorded as net assets with donor restrictions that are temporary in nature until those amounts are appropriated for expenditure for their donor restricted purpose, and is available to absorb market fluctuations and to award scholarships if the return on investment in any given year is not sufficient. Management has confirmed with donors the University’s interpretation of their endowment agreement. This correspondence effectively confirmed the donor’s intent for the amount of the gift that must be held in perpetuity. Subsequent to this confirmation, 50 percent of the corpus of these endowments was reclassified from net assets with donor restrictions held in perpetuity to net assets with donor restrictions that have purpose restrictions in accordance with the Board’s resolution. Tuition, Fees and Auxiliary Enterprises The University’s primary source of revenues from contracts with customers are from tuition, fees and sales and services of auxiliary enterprises. In accordance with the adoption of Accounting Standards Update (“ASU”) 2014-09, Revenues from Contracts with Customers, the University identifies a contract for revenue recognition when there is approval and commitment from both parties, the rights of the parties and payment terms are identified, the contract has commercial substance and the collectability of the consideration is probable. The University evaluates each contract to determine the number of distinct performance obligations in the contract, which requires the use of judgment. Performance obligations are determined based on the nature of the services provided by the University. Tuition and fees are derived from academic services rendered by the University on campus and online, as well as from related educational resources that the University provides to its students, such as access to courses and online materials. The University recognizes revenue for academic services pro-rata over the applicable academic term. Scholarships provided to students by the University are reflected as a reduction of gross tuition and fees. Tuition and fees received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. Sales and services of auxiliary enterprises include housing services, food services, a bookstore, camps, and events. The University recognizes revenue for housing and certain food services proportionately over the applicable academic term. Fees related to housing and food received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. The University typically recognized revenue from other sales and services of auxiliary enterprises at the point in time sales occur or as services are rendered. The University’s accounts receivable represents unconditional rights to consideration from its contracts with customers. Typically, once a customer is invoiced for tuition, fees, and auxiliary services, payment is due immediately. Accounts receivable, net of allowance for doubtful accounts as of the years ended May 31, 2023 and May 31, 2022, were $759,231 and $757,318, respectively. The University does not present information about outstanding performance obligations as of year-end because its contracts with students all had original terms of less than one year. The University does not have any contract assets. The University had no costs that were capitalized to obtain or to fulfill a contract with a student. The University maintains an institutional tuition refund policy, which provides for all or a portion of tuition and fees to be refunded if a student withdraws during the stated refund period. The University does not record revenue for amounts that may be refunded. Contributions and Private Gifts Contributions and private gifts, including unconditional promises to give, are recognized as revenues in the period received. Conditional promises to give are not recognized until they become unconditional; that is, when the conditions on which they depend are substantially met. Contributions of assets other than cash are recorded at their estimated fair value. Contributions to be received after one year are discounted at an appropriate discount rate commensurate with the risks involved. Amortization of discounts is recorded as additional contribution revenue in accordance with donor-imposed restrictions, if any, on the contributions. As of May 31, 2023 and 2022, there were $15,000 and $18,000 unconditional promises to give respectively. Functional Expenses Costs of providing the University’s programs are reported in the statements of activities on a functional basis. Program expenses include costs directly associated with the program and other indirect costs determined to benefit that program. These costs have been allocated between functional categories program and supporting services based on estimates made by management. Impairment of Long-Lived Assets The University evaluates the recoverability of its long-lived assets for possible impairment when events or circumstances indicate that the carrying amounts may not be recoverable. Long-lived assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are independent of the cash flows of other groups of assets. If it is determined that the carrying amounts of such long-lived assets are not recoverable, the assets are written down to their fair value. See Note 8. Leases The University adopted FASB Topic 842, Leases, using the modified retrospective approach with June 1, 2022, as the date of initial adoption. The University elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the University to carry forward the historical lease classification. Adoption of the new standard did not impact the University’s changes in net assets and had no impact on beginning net assets or cash flows. The University determines whether an arrangement is or contains a lease at lease inception. Under ASC 842, a contract is (or contains) a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined under the standard as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. On the commencement date, operating leases are recorded as operating lease right-of-use (“ROU”) assets and operating lease liabilities in the statements of financial position. Finance leases are recorded as equipment and finance lease liabilities in the statements of financial position. ROU assets represent the University’s right to use an underlying asset for the lease term, and lease liabilities represent the University’s contractual obligation to make lease payments. The lease liability is measured as the present value of the lease payments over the lease term using either the rate implicit in the lease, if it is determinable, or the University’s incremental borrowing rate if the implicit rate is not determinable. ROU assets are calculated as the present value of the remaining lease payments plus unamortized initial direct costs and prepayments of rent, less any unamortized lease incentives received. Lease terms may include renewal or extension options to the extent they are reasonably certain to be exercised. For operating leases, lease expense is recognized on a straight-line basis over the lease term. For finance leases, amortization of the asset is recognized on a straight-line basis over the useful life of the underlying asset and interest on the lease liability is recognized over the lease term. The University has elected not to recognize a ROU asset and lease liability for leases with an initial term of 12 months or less but includes the expense associated with short-term leases in lease expense in the statements of activities. ROU assets are assessed for impairment in accordance with the University’s long-lived asset policy. Management reassesses lease classification and remeasures ROU assets and lease liabilities when a lease is modified and that modification is not accounted for as a separate new lease or upon certain other events that require reassessment in accordance with ASC 842. Reclassifications Certain reclassifications have been made to the fiscal 2022 financial statements to conform to the fiscal 2023 presentation. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The table below represents financial assets available for general expenditures within one year at May 31, 2023 and 2022 The University regularly monitors liquidity required to meet its operating needs and other contractual commitments, while also striving to maximize the investment of its available funds. The university has various sources of liquidity at its disposal, including cash and cash equivalents, marketable debt and equity securities, as well as lines of credit. For purposes of analyzing resources available to meet general expenditures over a 12-month period, the University considers all expenditures related to its ongoing mission-related activities as well as the conduct of services undertaken to support those activities to be general expenditures. The University maintains certain board designated assets that are designated for specific purposes and certain net assets restricted by appropriation as disclosed in Note 13. Although the University does not expect to utilize board designated amounts and amounts restricted by appropriation in excess of the budgeted spending policy to meet general expenditures, they could be made available, if necessary, subject to further appropriation by the Board of Trustees. In addition to financial assets available to meet general expenditures over the next 12 months, the University operates with a balanced budget and anticipates collecting sufficient revenue to cover general expenditures not covered by donor-restricted resources. Refer to the statement of cash flow which identifies the sources and uses of the University's cash.

Title: Note 4. Concentration of Credit Risk Accounting Policies: Note 2. Summary of Significant Accounting Policies Basis of Accounting The financial statements of the University have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Basis of Presentation For reporting purposes, the University’s financial statements have been prepared to focus on the organization as a whole. Resources are classified into two net asset categories based on the existence or absence of donor-imposed restrictions. Accordingly, the net assets of the University and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions - Net assets that are not subject to donor imposed restrictions and may be expended for any purpose in performing the mission and primary objectives of the University. These net assets may be used at the discretion of the University’s management and those charged with governance. Net Assets with Donor Restrictions - Net assets subject to stipulations imposed by donors and grantors. Some donor restrictions are temporary in nature; those restrictions will be met by actions of the University or by the passage of time. Other donor restrictions are perpetual in nature, whereby the donor has stipulated the funds be maintained in perpetuity. Contributions received with donor-imposed restrictions that are met in the same year as received are reported as revenues of the unrestricted net asset class. Expiration of restrictions on net assets as the result of the passage of time and/or fulfilling donor-imposed stipulations are reported as net assets released from restrictions between the applicable classes of net assets in the statement of activities. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents For the purposes of reporting cash flows, cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less, except for investments purchased with endowment and annuity assets, which are classified as long-term investments. Investments Investments in marketable securities are stated at fair value. Real estate investments are stated primarily at current appraised value. Securities not publicly traded are stated at estimated market value. Unrealized gains and losses are included in the changes in net assets. The estimated fair value of certain alternative investments, such as private equity interests, is determined by reference to the net asset values allocated to the University at the measurement date. The University believes the carrying amount of these financial instruments is a reasonable estimate of fair value. Because alternative investments are not readily marketable, their estimated value is subject to uncertainty and, therefore, may differ from the value that would have been used had a ready market for such investments existed. Such difference could be material. Net appreciation on endowment funds, whose income is unrestricted as to use, is required to be reported as net assets without donor restrictions unless such net appreciation has been restricted in perpetuity by the donor or by law. Accordingly, market appreciation on endowment funds without donor restrictions is classified in the accompanying financial statements as a part of net assets without donor restrictions. In those cases, where a donor has placed restrictions on the use of endowment income, any related net appreciation is also subject to the same restriction and is reported as part of net assets with donor restrictions until such time as the restriction has been met. See Note 6 for discussion of the University’s endowment spending policy. Accounts Receivable Student accounts receivable represent amounts due for tuition, fees, and room and board from currently enrolled and former students. The University extends unsecured credit to students and parents of dependent students in connection with their studies. Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a provision for bad debt expense and an adjustment to a valuation allowance based on its assessment of the current status of individual accounts and estimated collectability. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and a credit to accounts receivable. The allowance for doubtful accounts was $253,197 and $252,439 at May 31, 2023 and 2022, respectively. Charge-offs, net of recoveries, totaled $269,270 and $49,243 for the years ended May 31, 2023 and 2022, respectively. Provision for bad debt was $270,028 and $95,631 for years ended May 31, 2023 and 2022, respectively. Loans to Students Loans receivable are carried at unpaid principal balances, less an allowance for uncollectible loans. The allowance for uncollectible loans is increased by charges to income and decreased by charge-offs (net of recoveries). Management’s periodic evaluation of the adequacy of the allowance is based on Perkins loan program requirements, the University’s historical loan loss experience, specific impaired loans, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and current economic conditions. Loans are considered impaired if full principal or interest payments are not anticipated in accordance with the contractual terms. The University’s practice is to charge off any loan or portion of a loan when the loan is determined by management to be uncollectible due to the borrower’s failure to meet repayment terms, the borrower’s deteriorating or deteriorated financial condition, the depreciation of the underlying collateral, or for other reasons. Loans are placed on nonaccrual when management believes, after considering economic conditions, business conditions, and collection efforts that the loans are impaired or collection of interest is doubtful. Uncollected interest previously accrued is charged off or an allowance is established by a charge to interest income. Interest income on nonaccrual loans is recognized only to the extent cash payments are received. The amount of loans past due 90 days or more and still accruing interest as of May 31, 2023 and 2022 totaled $89,922 and $94,283, respectively. Interest on loans is recognized over the term of the loan and is calculated using the simple-interest method on principal amounts outstanding. Land, Buildings and Equipment Land, buildings and equipment are stated at cost at date of acquisition or fair value at date of donation in the case of gifts, less accumulated depreciation, computed on a straight-line basis over the estimated useful lives ranging from 5 to 75 years. Items having a useful life longer than one year and costing more than $5,000 are capitalized. Depreciation expense for fiscal years ended May 31, 2023 and 2022 was $2,418,466 and $2,143,214 respectively. Inventory Inventory is valued at the lower of cost on the first-in, first-out basis, and net realizable value. Inventory consists mainly of books, Bible class materials, and gift items sold by the Christian Store as well as goods to be sold from dining services. Income Taxes The University is exempt from federal income taxes under Section 501(c) (3) of the Internal Revenue Code; accordingly, no provision for income taxes is made in the financial statements. The University is current on filing its tax form 990 and form 990T. If interest and penalties are incurred such amounts are recognized in income tax expense. FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109, codified in ASC Topic 740 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attribute for tax positions taken or expected to be taken on a tax return including the entity’s status as a tax-exempt not-for-profit entity. Additionally, ASC 740 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosure. The University had no significant uncertain tax positions at May 31, 2023 or 2022. Endowment and Similar Funds The endowment and similar funds are subdivided into appropriate classifications. Endowment funds have been received from benefactors who, by the terms of their conveying instruments, have stipulated that the principal of their gifts may not be expended. Quasi-endowment funds are funds which the Board of Trustees of the University has determined are to be retained and invested until the Board, at its discretion, authorizes their expenditure. The principal of such funds may be either designated or undesignated as to use. Income derived from investments of endowment and similar funds is accounted for in the fund to which it is restricted, or if unrestricted, as revenues in unrestricted current funds. The Board of Trustees has established that, in the absence of further restrictions, 50 percent of the corpus of endowment gifts is to be recorded as net assets with donor restrictions held in perpetuity, since the University’s agreements did not explicitly state the amount of the gift that should be held in perpetuity. The remaining 50 percent is recorded as net assets with donor restrictions that are temporary in nature until those amounts are appropriated for expenditure for their donor restricted purpose, and is available to absorb market fluctuations and to award scholarships if the return on investment in any given year is not sufficient. Management has confirmed with donors the University’s interpretation of their endowment agreement. This correspondence effectively confirmed the donor’s intent for the amount of the gift that must be held in perpetuity. Subsequent to this confirmation, 50 percent of the corpus of these endowments was reclassified from net assets with donor restrictions held in perpetuity to net assets with donor restrictions that have purpose restrictions in accordance with the Board’s resolution. Tuition, Fees and Auxiliary Enterprises The University’s primary source of revenues from contracts with customers are from tuition, fees and sales and services of auxiliary enterprises. In accordance with the adoption of Accounting Standards Update (“ASU”) 2014-09, Revenues from Contracts with Customers, the University identifies a contract for revenue recognition when there is approval and commitment from both parties, the rights of the parties and payment terms are identified, the contract has commercial substance and the collectability of the consideration is probable. The University evaluates each contract to determine the number of distinct performance obligations in the contract, which requires the use of judgment. Performance obligations are determined based on the nature of the services provided by the University. Tuition and fees are derived from academic services rendered by the University on campus and online, as well as from related educational resources that the University provides to its students, such as access to courses and online materials. The University recognizes revenue for academic services pro-rata over the applicable academic term. Scholarships provided to students by the University are reflected as a reduction of gross tuition and fees. Tuition and fees received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. Sales and services of auxiliary enterprises include housing services, food services, a bookstore, camps, and events. The University recognizes revenue for housing and certain food services proportionately over the applicable academic term. Fees related to housing and food received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. The University typically recognized revenue from other sales and services of auxiliary enterprises at the point in time sales occur or as services are rendered. The University’s accounts receivable represents unconditional rights to consideration from its contracts with customers. Typically, once a customer is invoiced for tuition, fees, and auxiliary services, payment is due immediately. Accounts receivable, net of allowance for doubtful accounts as of the years ended May 31, 2023 and May 31, 2022, were $759,231 and $757,318, respectively. The University does not present information about outstanding performance obligations as of year-end because its contracts with students all had original terms of less than one year. The University does not have any contract assets. The University had no costs that were capitalized to obtain or to fulfill a contract with a student. The University maintains an institutional tuition refund policy, which provides for all or a portion of tuition and fees to be refunded if a student withdraws during the stated refund period. The University does not record revenue for amounts that may be refunded. Contributions and Private Gifts Contributions and private gifts, including unconditional promises to give, are recognized as revenues in the period received. Conditional promises to give are not recognized until they become unconditional; that is, when the conditions on which they depend are substantially met. Contributions of assets other than cash are recorded at their estimated fair value. Contributions to be received after one year are discounted at an appropriate discount rate commensurate with the risks involved. Amortization of discounts is recorded as additional contribution revenue in accordance with donor-imposed restrictions, if any, on the contributions. As of May 31, 2023 and 2022, there were $15,000 and $18,000 unconditional promises to give respectively. Functional Expenses Costs of providing the University’s programs are reported in the statements of activities on a functional basis. Program expenses include costs directly associated with the program and other indirect costs determined to benefit that program. These costs have been allocated between functional categories program and supporting services based on estimates made by management. Impairment of Long-Lived Assets The University evaluates the recoverability of its long-lived assets for possible impairment when events or circumstances indicate that the carrying amounts may not be recoverable. Long-lived assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are independent of the cash flows of other groups of assets. If it is determined that the carrying amounts of such long-lived assets are not recoverable, the assets are written down to their fair value. See Note 8. Leases The University adopted FASB Topic 842, Leases, using the modified retrospective approach with June 1, 2022, as the date of initial adoption. The University elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the University to carry forward the historical lease classification. Adoption of the new standard did not impact the University’s changes in net assets and had no impact on beginning net assets or cash flows. The University determines whether an arrangement is or contains a lease at lease inception. Under ASC 842, a contract is (or contains) a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined under the standard as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. On the commencement date, operating leases are recorded as operating lease right-of-use (“ROU”) assets and operating lease liabilities in the statements of financial position. Finance leases are recorded as equipment and finance lease liabilities in the statements of financial position. ROU assets represent the University’s right to use an underlying asset for the lease term, and lease liabilities represent the University’s contractual obligation to make lease payments. The lease liability is measured as the present value of the lease payments over the lease term using either the rate implicit in the lease, if it is determinable, or the University’s incremental borrowing rate if the implicit rate is not determinable. ROU assets are calculated as the present value of the remaining lease payments plus unamortized initial direct costs and prepayments of rent, less any unamortized lease incentives received. Lease terms may include renewal or extension options to the extent they are reasonably certain to be exercised. For operating leases, lease expense is recognized on a straight-line basis over the lease term. For finance leases, amortization of the asset is recognized on a straight-line basis over the useful life of the underlying asset and interest on the lease liability is recognized over the lease term. The University has elected not to recognize a ROU asset and lease liability for leases with an initial term of 12 months or less but includes the expense associated with short-term leases in lease expense in the statements of activities. ROU assets are assessed for impairment in accordance with the University’s long-lived asset policy. Management reassesses lease classification and remeasures ROU assets and lease liabilities when a lease is modified and that modification is not accounted for as a separate new lease or upon certain other events that require reassessment in accordance with ASC 842. Reclassifications Certain reclassifications have been made to the fiscal 2022 financial statements to conform to the fiscal 2023 presentation. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. Financial instruments that potentially subject the University to concentrations of credit risk consist primarily of temporary cash investments and notes and accounts receivable. The University may, at times throughout the year, maintain cash balances in excess of federally insured amounts. Concentrations of credit risk with respect to notes and accounts receivable are limited due to the large number of accounts and their dispersion across geographic areas. As of May 31, 2023 and 2022, the University had funds in excess of federally insured amounts of $10,569,723 and $16,928,421, respectively, in four separate institutions.

Title: Note 5. Investments Accounting Policies: Note 2. Summary of Significant Accounting Policies Basis of Accounting The financial statements of the University have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Basis of Presentation For reporting purposes, the University’s financial statements have been prepared to focus on the organization as a whole. Resources are classified into two net asset categories based on the existence or absence of donor-imposed restrictions. Accordingly, the net assets of the University and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions - Net assets that are not subject to donor imposed restrictions and may be expended for any purpose in performing the mission and primary objectives of the University. These net assets may be used at the discretion of the University’s management and those charged with governance. Net Assets with Donor Restrictions - Net assets subject to stipulations imposed by donors and grantors. Some donor restrictions are temporary in nature; those restrictions will be met by actions of the University or by the passage of time. Other donor restrictions are perpetual in nature, whereby the donor has stipulated the funds be maintained in perpetuity. Contributions received with donor-imposed restrictions that are met in the same year as received are reported as revenues of the unrestricted net asset class. Expiration of restrictions on net assets as the result of the passage of time and/or fulfilling donor-imposed stipulations are reported as net assets released from restrictions between the applicable classes of net assets in the statement of activities. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents For the purposes of reporting cash flows, cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less, except for investments purchased with endowment and annuity assets, which are classified as long-term investments. Investments Investments in marketable securities are stated at fair value. Real estate investments are stated primarily at current appraised value. Securities not publicly traded are stated at estimated market value. Unrealized gains and losses are included in the changes in net assets. The estimated fair value of certain alternative investments, such as private equity interests, is determined by reference to the net asset values allocated to the University at the measurement date. The University believes the carrying amount of these financial instruments is a reasonable estimate of fair value. Because alternative investments are not readily marketable, their estimated value is subject to uncertainty and, therefore, may differ from the value that would have been used had a ready market for such investments existed. Such difference could be material. Net appreciation on endowment funds, whose income is unrestricted as to use, is required to be reported as net assets without donor restrictions unless such net appreciation has been restricted in perpetuity by the donor or by law. Accordingly, market appreciation on endowment funds without donor restrictions is classified in the accompanying financial statements as a part of net assets without donor restrictions. In those cases, where a donor has placed restrictions on the use of endowment income, any related net appreciation is also subject to the same restriction and is reported as part of net assets with donor restrictions until such time as the restriction has been met. See Note 6 for discussion of the University’s endowment spending policy. Accounts Receivable Student accounts receivable represent amounts due for tuition, fees, and room and board from currently enrolled and former students. The University extends unsecured credit to students and parents of dependent students in connection with their studies. Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a provision for bad debt expense and an adjustment to a valuation allowance based on its assessment of the current status of individual accounts and estimated collectability. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and a credit to accounts receivable. The allowance for doubtful accounts was $253,197 and $252,439 at May 31, 2023 and 2022, respectively. Charge-offs, net of recoveries, totaled $269,270 and $49,243 for the years ended May 31, 2023 and 2022, respectively. Provision for bad debt was $270,028 and $95,631 for years ended May 31, 2023 and 2022, respectively. Loans to Students Loans receivable are carried at unpaid principal balances, less an allowance for uncollectible loans. The allowance for uncollectible loans is increased by charges to income and decreased by charge-offs (net of recoveries). Management’s periodic evaluation of the adequacy of the allowance is based on Perkins loan program requirements, the University’s historical loan loss experience, specific impaired loans, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and current economic conditions. Loans are considered impaired if full principal or interest payments are not anticipated in accordance with the contractual terms. The University’s practice is to charge off any loan or portion of a loan when the loan is determined by management to be uncollectible due to the borrower’s failure to meet repayment terms, the borrower’s deteriorating or deteriorated financial condition, the depreciation of the underlying collateral, or for other reasons. Loans are placed on nonaccrual when management believes, after considering economic conditions, business conditions, and collection efforts that the loans are impaired or collection of interest is doubtful. Uncollected interest previously accrued is charged off or an allowance is established by a charge to interest income. Interest income on nonaccrual loans is recognized only to the extent cash payments are received. The amount of loans past due 90 days or more and still accruing interest as of May 31, 2023 and 2022 totaled $89,922 and $94,283, respectively. Interest on loans is recognized over the term of the loan and is calculated using the simple-interest method on principal amounts outstanding. Land, Buildings and Equipment Land, buildings and equipment are stated at cost at date of acquisition or fair value at date of donation in the case of gifts, less accumulated depreciation, computed on a straight-line basis over the estimated useful lives ranging from 5 to 75 years. Items having a useful life longer than one year and costing more than $5,000 are capitalized. Depreciation expense for fiscal years ended May 31, 2023 and 2022 was $2,418,466 and $2,143,214 respectively. Inventory Inventory is valued at the lower of cost on the first-in, first-out basis, and net realizable value. Inventory consists mainly of books, Bible class materials, and gift items sold by the Christian Store as well as goods to be sold from dining services. Income Taxes The University is exempt from federal income taxes under Section 501(c) (3) of the Internal Revenue Code; accordingly, no provision for income taxes is made in the financial statements. The University is current on filing its tax form 990 and form 990T. If interest and penalties are incurred such amounts are recognized in income tax expense. FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109, codified in ASC Topic 740 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attribute for tax positions taken or expected to be taken on a tax return including the entity’s status as a tax-exempt not-for-profit entity. Additionally, ASC 740 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosure. The University had no significant uncertain tax positions at May 31, 2023 or 2022. Endowment and Similar Funds The endowment and similar funds are subdivided into appropriate classifications. Endowment funds have been received from benefactors who, by the terms of their conveying instruments, have stipulated that the principal of their gifts may not be expended. Quasi-endowment funds are funds which the Board of Trustees of the University has determined are to be retained and invested until the Board, at its discretion, authorizes their expenditure. The principal of such funds may be either designated or undesignated as to use. Income derived from investments of endowment and similar funds is accounted for in the fund to which it is restricted, or if unrestricted, as revenues in unrestricted current funds. The Board of Trustees has established that, in the absence of further restrictions, 50 percent of the corpus of endowment gifts is to be recorded as net assets with donor restrictions held in perpetuity, since the University’s agreements did not explicitly state the amount of the gift that should be held in perpetuity. The remaining 50 percent is recorded as net assets with donor restrictions that are temporary in nature until those amounts are appropriated for expenditure for their donor restricted purpose, and is available to absorb market fluctuations and to award scholarships if the return on investment in any given year is not sufficient. Management has confirmed with donors the University’s interpretation of their endowment agreement. This correspondence effectively confirmed the donor’s intent for the amount of the gift that must be held in perpetuity. Subsequent to this confirmation, 50 percent of the corpus of these endowments was reclassified from net assets with donor restrictions held in perpetuity to net assets with donor restrictions that have purpose restrictions in accordance with the Board’s resolution. Tuition, Fees and Auxiliary Enterprises The University’s primary source of revenues from contracts with customers are from tuition, fees and sales and services of auxiliary enterprises. In accordance with the adoption of Accounting Standards Update (“ASU”) 2014-09, Revenues from Contracts with Customers, the University identifies a contract for revenue recognition when there is approval and commitment from both parties, the rights of the parties and payment terms are identified, the contract has commercial substance and the collectability of the consideration is probable. The University evaluates each contract to determine the number of distinct performance obligations in the contract, which requires the use of judgment. Performance obligations are determined based on the nature of the services provided by the University. Tuition and fees are derived from academic services rendered by the University on campus and online, as well as from related educational resources that the University provides to its students, such as access to courses and online materials. The University recognizes revenue for academic services pro-rata over the applicable academic term. Scholarships provided to students by the University are reflected as a reduction of gross tuition and fees. Tuition and fees received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. Sales and services of auxiliary enterprises include housing services, food services, a bookstore, camps, and events. The University recognizes revenue for housing and certain food services proportionately over the applicable academic term. Fees related to housing and food received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. The University typically recognized revenue from other sales and services of auxiliary enterprises at the point in time sales occur or as services are rendered. The University’s accounts receivable represents unconditional rights to consideration from its contracts with customers. Typically, once a customer is invoiced for tuition, fees, and auxiliary services, payment is due immediately. Accounts receivable, net of allowance for doubtful accounts as of the years ended May 31, 2023 and May 31, 2022, were $759,231 and $757,318, respectively. The University does not present information about outstanding performance obligations as of year-end because its contracts with students all had original terms of less than one year. The University does not have any contract assets. The University had no costs that were capitalized to obtain or to fulfill a contract with a student. The University maintains an institutional tuition refund policy, which provides for all or a portion of tuition and fees to be refunded if a student withdraws during the stated refund period. The University does not record revenue for amounts that may be refunded. Contributions and Private Gifts Contributions and private gifts, including unconditional promises to give, are recognized as revenues in the period received. Conditional promises to give are not recognized until they become unconditional; that is, when the conditions on which they depend are substantially met. Contributions of assets other than cash are recorded at their estimated fair value. Contributions to be received after one year are discounted at an appropriate discount rate commensurate with the risks involved. Amortization of discounts is recorded as additional contribution revenue in accordance with donor-imposed restrictions, if any, on the contributions. As of May 31, 2023 and 2022, there were $15,000 and $18,000 unconditional promises to give respectively. Functional Expenses Costs of providing the University’s programs are reported in the statements of activities on a functional basis. Program expenses include costs directly associated with the program and other indirect costs determined to benefit that program. These costs have been allocated between functional categories program and supporting services based on estimates made by management. Impairment of Long-Lived Assets The University evaluates the recoverability of its long-lived assets for possible impairment when events or circumstances indicate that the carrying amounts may not be recoverable. Long-lived assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are independent of the cash flows of other groups of assets. If it is determined that the carrying amounts of such long-lived assets are not recoverable, the assets are written down to their fair value. See Note 8. Leases The University adopted FASB Topic 842, Leases, using the modified retrospective approach with June 1, 2022, as the date of initial adoption. The University elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the University to carry forward the historical lease classification. Adoption of the new standard did not impact the University’s changes in net assets and had no impact on beginning net assets or cash flows. The University determines whether an arrangement is or contains a lease at lease inception. Under ASC 842, a contract is (or contains) a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined under the standard as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. On the commencement date, operating leases are recorded as operating lease right-of-use (“ROU”) assets and operating lease liabilities in the statements of financial position. Finance leases are recorded as equipment and finance lease liabilities in the statements of financial position. ROU assets represent the University’s right to use an underlying asset for the lease term, and lease liabilities represent the University’s contractual obligation to make lease payments. The lease liability is measured as the present value of the lease payments over the lease term using either the rate implicit in the lease, if it is determinable, or the University’s incremental borrowing rate if the implicit rate is not determinable. ROU assets are calculated as the present value of the remaining lease payments plus unamortized initial direct costs and prepayments of rent, less any unamortized lease incentives received. Lease terms may include renewal or extension options to the extent they are reasonably certain to be exercised. For operating leases, lease expense is recognized on a straight-line basis over the lease term. For finance leases, amortization of the asset is recognized on a straight-line basis over the useful life of the underlying asset and interest on the lease liability is recognized over the lease term. The University has elected not to recognize a ROU asset and lease liability for leases with an initial term of 12 months or less but includes the expense associated with short-term leases in lease expense in the statements of activities. ROU assets are assessed for impairment in accordance with the University’s long-lived asset policy. Management reassesses lease classification and remeasures ROU assets and lease liabilities when a lease is modified and that modification is not accounted for as a separate new lease or upon certain other events that require reassessment in accordance with ASC 842. Reclassifications Certain reclassifications have been made to the fiscal 2022 financial statements to conform to the fiscal 2023 presentation. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. Investments consist of the following as of May 31, 2023 and 2022: The total investment returns of all invested funds were as follows for the years ended May 31, 2023 and 2022: Investment income is reported net of custodial fees and advisory cost of $309,339 and $544,657 for the years ended May 31, 2023 and 2022, respectively. The total investment returns are recorded in the statements of activities as follows for the years ended May 31, 2023 and 2022: For all the above investments collectively, the change in value for the years ended May 31, 2023 and 2022 were 0.70% and (7.95%), respectively, on average cost. On average market, the change in value for the years ended May 31, 2023 and 2022 were 0.63% and (6.73%) respectively.

Title: Note 6. Endowment Accounting Policies: Note 2. Summary of Significant Accounting Policies Basis of Accounting The financial statements of the University have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Basis of Presentation For reporting purposes, the University’s financial statements have been prepared to focus on the organization as a whole. Resources are classified into two net asset categories based on the existence or absence of donor-imposed restrictions. Accordingly, the net assets of the University and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions - Net assets that are not subject to donor imposed restrictions and may be expended for any purpose in performing the mission and primary objectives of the University. These net assets may be used at the discretion of the University’s management and those charged with governance. Net Assets with Donor Restrictions - Net assets subject to stipulations imposed by donors and grantors. Some donor restrictions are temporary in nature; those restrictions will be met by actions of the University or by the passage of time. Other donor restrictions are perpetual in nature, whereby the donor has stipulated the funds be maintained in perpetuity. Contributions received with donor-imposed restrictions that are met in the same year as received are reported as revenues of the unrestricted net asset class. Expiration of restrictions on net assets as the result of the passage of time and/or fulfilling donor-imposed stipulations are reported as net assets released from restrictions between the applicable classes of net assets in the statement of activities. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents For the purposes of reporting cash flows, cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less, except for investments purchased with endowment and annuity assets, which are classified as long-term investments. Investments Investments in marketable securities are stated at fair value. Real estate investments are stated primarily at current appraised value. Securities not publicly traded are stated at estimated market value. Unrealized gains and losses are included in the changes in net assets. The estimated fair value of certain alternative investments, such as private equity interests, is determined by reference to the net asset values allocated to the University at the measurement date. The University believes the carrying amount of these financial instruments is a reasonable estimate of fair value. Because alternative investments are not readily marketable, their estimated value is subject to uncertainty and, therefore, may differ from the value that would have been used had a ready market for such investments existed. Such difference could be material. Net appreciation on endowment funds, whose income is unrestricted as to use, is required to be reported as net assets without donor restrictions unless such net appreciation has been restricted in perpetuity by the donor or by law. Accordingly, market appreciation on endowment funds without donor restrictions is classified in the accompanying financial statements as a part of net assets without donor restrictions. In those cases, where a donor has placed restrictions on the use of endowment income, any related net appreciation is also subject to the same restriction and is reported as part of net assets with donor restrictions until such time as the restriction has been met. See Note 6 for discussion of the University’s endowment spending policy. Accounts Receivable Student accounts receivable represent amounts due for tuition, fees, and room and board from currently enrolled and former students. The University extends unsecured credit to students and parents of dependent students in connection with their studies. Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a provision for bad debt expense and an adjustment to a valuation allowance based on its assessment of the current status of individual accounts and estimated collectability. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and a credit to accounts receivable. The allowance for doubtful accounts was $253,197 and $252,439 at May 31, 2023 and 2022, respectively. Charge-offs, net of recoveries, totaled $269,270 and $49,243 for the years ended May 31, 2023 and 2022, respectively. Provision for bad debt was $270,028 and $95,631 for years ended May 31, 2023 and 2022, respectively. Loans to Students Loans receivable are carried at unpaid principal balances, less an allowance for uncollectible loans. The allowance for uncollectible loans is increased by charges to income and decreased by charge-offs (net of recoveries). Management’s periodic evaluation of the adequacy of the allowance is based on Perkins loan program requirements, the University’s historical loan loss experience, specific impaired loans, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and current economic conditions. Loans are considered impaired if full principal or interest payments are not anticipated in accordance with the contractual terms. The University’s practice is to charge off any loan or portion of a loan when the loan is determined by management to be uncollectible due to the borrower’s failure to meet repayment terms, the borrower’s deteriorating or deteriorated financial condition, the depreciation of the underlying collateral, or for other reasons. Loans are placed on nonaccrual when management believes, after considering economic conditions, business conditions, and collection efforts that the loans are impaired or collection of interest is doubtful. Uncollected interest previously accrued is charged off or an allowance is established by a charge to interest income. Interest income on nonaccrual loans is recognized only to the extent cash payments are received. The amount of loans past due 90 days or more and still accruing interest as of May 31, 2023 and 2022 totaled $89,922 and $94,283, respectively. Interest on loans is recognized over the term of the loan and is calculated using the simple-interest method on principal amounts outstanding. Land, Buildings and Equipment Land, buildings and equipment are stated at cost at date of acquisition or fair value at date of donation in the case of gifts, less accumulated depreciation, computed on a straight-line basis over the estimated useful lives ranging from 5 to 75 years. Items having a useful life longer than one year and costing more than $5,000 are capitalized. Depreciation expense for fiscal years ended May 31, 2023 and 2022 was $2,418,466 and $2,143,214 respectively. Inventory Inventory is valued at the lower of cost on the first-in, first-out basis, and net realizable value. Inventory consists mainly of books, Bible class materials, and gift items sold by the Christian Store as well as goods to be sold from dining services. Income Taxes The University is exempt from federal income taxes under Section 501(c) (3) of the Internal Revenue Code; accordingly, no provision for income taxes is made in the financial statements. The University is current on filing its tax form 990 and form 990T. If interest and penalties are incurred such amounts are recognized in income tax expense. FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109, codified in ASC Topic 740 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attribute for tax positions taken or expected to be taken on a tax return including the entity’s status as a tax-exempt not-for-profit entity. Additionally, ASC 740 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosure. The University had no significant uncertain tax positions at May 31, 2023 or 2022. Endowment and Similar Funds The endowment and similar funds are subdivided into appropriate classifications. Endowment funds have been received from benefactors who, by the terms of their conveying instruments, have stipulated that the principal of their gifts may not be expended. Quasi-endowment funds are funds which the Board of Trustees of the University has determined are to be retained and invested until the Board, at its discretion, authorizes their expenditure. The principal of such funds may be either designated or undesignated as to use. Income derived from investments of endowment and similar funds is accounted for in the fund to which it is restricted, or if unrestricted, as revenues in unrestricted current funds. The Board of Trustees has established that, in the absence of further restrictions, 50 percent of the corpus of endowment gifts is to be recorded as net assets with donor restrictions held in perpetuity, since the University’s agreements did not explicitly state the amount of the gift that should be held in perpetuity. The remaining 50 percent is recorded as net assets with donor restrictions that are temporary in nature until those amounts are appropriated for expenditure for their donor restricted purpose, and is available to absorb market fluctuations and to award scholarships if the return on investment in any given year is not sufficient. Management has confirmed with donors the University’s interpretation of their endowment agreement. This correspondence effectively confirmed the donor’s intent for the amount of the gift that must be held in perpetuity. Subsequent to this confirmation, 50 percent of the corpus of these endowments was reclassified from net assets with donor restrictions held in perpetuity to net assets with donor restrictions that have purpose restrictions in accordance with the Board’s resolution. Tuition, Fees and Auxiliary Enterprises The University’s primary source of revenues from contracts with customers are from tuition, fees and sales and services of auxiliary enterprises. In accordance with the adoption of Accounting Standards Update (“ASU”) 2014-09, Revenues from Contracts with Customers, the University identifies a contract for revenue recognition when there is approval and commitment from both parties, the rights of the parties and payment terms are identified, the contract has commercial substance and the collectability of the consideration is probable. The University evaluates each contract to determine the number of distinct performance obligations in the contract, which requires the use of judgment. Performance obligations are determined based on the nature of the services provided by the University. Tuition and fees are derived from academic services rendered by the University on campus and online, as well as from related educational resources that the University provides to its students, such as access to courses and online materials. The University recognizes revenue for academic services pro-rata over the applicable academic term. Scholarships provided to students by the University are reflected as a reduction of gross tuition and fees. Tuition and fees received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. Sales and services of auxiliary enterprises include housing services, food services, a bookstore, camps, and events. The University recognizes revenue for housing and certain food services proportionately over the applicable academic term. Fees related to housing and food received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. The University typically recognized revenue from other sales and services of auxiliary enterprises at the point in time sales occur or as services are rendered. The University’s accounts receivable represents unconditional rights to consideration from its contracts with customers. Typically, once a customer is invoiced for tuition, fees, and auxiliary services, payment is due immediately. Accounts receivable, net of allowance for doubtful accounts as of the years ended May 31, 2023 and May 31, 2022, were $759,231 and $757,318, respectively. The University does not present information about outstanding performance obligations as of year-end because its contracts with students all had original terms of less than one year. The University does not have any contract assets. The University had no costs that were capitalized to obtain or to fulfill a contract with a student. The University maintains an institutional tuition refund policy, which provides for all or a portion of tuition and fees to be refunded if a student withdraws during the stated refund period. The University does not record revenue for amounts that may be refunded. Contributions and Private Gifts Contributions and private gifts, including unconditional promises to give, are recognized as revenues in the period received. Conditional promises to give are not recognized until they become unconditional; that is, when the conditions on which they depend are substantially met. Contributions of assets other than cash are recorded at their estimated fair value. Contributions to be received after one year are discounted at an appropriate discount rate commensurate with the risks involved. Amortization of discounts is recorded as additional contribution revenue in accordance with donor-imposed restrictions, if any, on the contributions. As of May 31, 2023 and 2022, there were $15,000 and $18,000 unconditional promises to give respectively. Functional Expenses Costs of providing the University’s programs are reported in the statements of activities on a functional basis. Program expenses include costs directly associated with the program and other indirect costs determined to benefit that program. These costs have been allocated between functional categories program and supporting services based on estimates made by management. Impairment of Long-Lived Assets The University evaluates the recoverability of its long-lived assets for possible impairment when events or circumstances indicate that the carrying amounts may not be recoverable. Long-lived assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are independent of the cash flows of other groups of assets. If it is determined that the carrying amounts of such long-lived assets are not recoverable, the assets are written down to their fair value. See Note 8. Leases The University adopted FASB Topic 842, Leases, using the modified retrospective approach with June 1, 2022, as the date of initial adoption. The University elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the University to carry forward the historical lease classification. Adoption of the new standard did not impact the University’s changes in net assets and had no impact on beginning net assets or cash flows. The University determines whether an arrangement is or contains a lease at lease inception. Under ASC 842, a contract is (or contains) a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined under the standard as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. On the commencement date, operating leases are recorded as operating lease right-of-use (“ROU”) assets and operating lease liabilities in the statements of financial position. Finance leases are recorded as equipment and finance lease liabilities in the statements of financial position. ROU assets represent the University’s right to use an underlying asset for the lease term, and lease liabilities represent the University’s contractual obligation to make lease payments. The lease liability is measured as the present value of the lease payments over the lease term using either the rate implicit in the lease, if it is determinable, or the University’s incremental borrowing rate if the implicit rate is not determinable. ROU assets are calculated as the present value of the remaining lease payments plus unamortized initial direct costs and prepayments of rent, less any unamortized lease incentives received. Lease terms may include renewal or extension options to the extent they are reasonably certain to be exercised. For operating leases, lease expense is recognized on a straight-line basis over the lease term. For finance leases, amortization of the asset is recognized on a straight-line basis over the useful life of the underlying asset and interest on the lease liability is recognized over the lease term. The University has elected not to recognize a ROU asset and lease liability for leases with an initial term of 12 months or less but includes the expense associated with short-term leases in lease expense in the statements of activities. ROU assets are assessed for impairment in accordance with the University’s long-lived asset policy. Management reassesses lease classification and remeasures ROU assets and lease liabilities when a lease is modified and that modification is not accounted for as a separate new lease or upon certain other events that require reassessment in accordance with ASC 842. Reclassifications Certain reclassifications have been made to the fiscal 2022 financial statements to conform to the fiscal 2023 presentation. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The investment objective of the University is “to earn the highest possible total return (capital appreciation and current return) consistent with prudent levels of risk and to maintain in real dollar terms the purchasing power of fund assets.” In connection with this investment objective, the Board of Trustees has adopted a spending rate for determining that part of total return which can be expended annually. The University utilizes the “total return” approach for its endowment funds management, which emphasizes that all dividends, interest, and net gains (realized and unrealized) on investments may be appropriated for expenses. The University has established a target spending policy of 5 percent. Each individual endowment fund will spend 80% of the previous year’s distribution, adjusted for inflation, plus 20% of the targeted long-term spending rate applied to the market value of the entire endowment fund for the previous three years (as of 5/31). This strategy is designed to mitigate the impact of short-term market volatility on the flow of funds to support the purposes of the endowment fund. Endowment income distributed for the years ended May 31, 2023 and 2022 under the total return concept amounted to $3,544,580 and $3,460,743, respectively. The total return of the University’s endowment investments that were actively managed for the years ended May 31, 2023 and 2022 were 0.2% and (6.9%), respectively. The fair value of endowment assets exceeded the corpus of gifts by $39,192,017 at May 31, 2023, and exceeded the corpus of gifts by $41,293,285 at May 31, 2022. The Board of Trustees of the University has interpreted the State of Tennessee Uniform Prudent Management of Institutional Funds Act (“UPMIFA”) as allowing the University, absent donor stipulations to the contrary as stated in the gift instrument, to appropriate for expenditure a portion of a donor-restricted endowment fund that the University determines is prudent for the uses, benefits, purposes, and duration for which the endowment is established. In accordance with UPMIFA, the University considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds: (1) The duration and preservation of the fund; (2) The purposes of the organization and the donor-restricted endowment fund; (3) General economic conditions; (4) The possible effect of inflation and deflation; (5) The expected total return from income and the appreciation of investments; (6) Other resources of the organization; and (7) The investment policies of the organization. The University classifies, with the permission of donors, (a) one-half (50%) of the value of gifts donated to net assets with donor restrictions to be held in perpetuity (b) one-half (50%) of the value of the gift to net assets with donor restrictions to be appropriated for use in accordance with their purpose restriction, and (c) accumulations to the endowment held in perpetuity made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The portion allocated to net assets with donor purpose restrictions are held, with all investment performance allocated to this portion of the fund, until those amounts are appropriated for expenditure by the University in a manner consistent with the standard of prudence prescribed by UPMIFA. The composition of endowment net assets by type of fund, as of May 31, 2023 and 2022, are listed below. The changes in endowment net assets, for the years ended May 31, 2023 and 2022, are listed below. During the year ended May 31, 2023, the Board in approving the operating budget agreed to transfer over $52,500 and disburse $95,162, respectively to and from quasi endowment funds to the general operating account.

Title: Note 7. Split-Interest Agreements Accounting Policies: Note 2. Summary of Significant Accounting Policies Basis of Accounting The financial statements of the University have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Basis of Presentation For reporting purposes, the University’s financial statements have been prepared to focus on the organization as a whole. Resources are classified into two net asset categories based on the existence or absence of donor-imposed restrictions. Accordingly, the net assets of the University and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions - Net assets that are not subject to donor imposed restrictions and may be expended for any purpose in performing the mission and primary objectives of the University. These net assets may be used at the discretion of the University’s management and those charged with governance. Net Assets with Donor Restrictions - Net assets subject to stipulations imposed by donors and grantors. Some donor restrictions are temporary in nature; those restrictions will be met by actions of the University or by the passage of time. Other donor restrictions are perpetual in nature, whereby the donor has stipulated the funds be maintained in perpetuity. Contributions received with donor-imposed restrictions that are met in the same year as received are reported as revenues of the unrestricted net asset class. Expiration of restrictions on net assets as the result of the passage of time and/or fulfilling donor-imposed stipulations are reported as net assets released from restrictions between the applicable classes of net assets in the statement of activities. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents For the purposes of reporting cash flows, cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less, except for investments purchased with endowment and annuity assets, which are classified as long-term investments. Investments Investments in marketable securities are stated at fair value. Real estate investments are stated primarily at current appraised value. Securities not publicly traded are stated at estimated market value. Unrealized gains and losses are included in the changes in net assets. The estimated fair value of certain alternative investments, such as private equity interests, is determined by reference to the net asset values allocated to the University at the measurement date. The University believes the carrying amount of these financial instruments is a reasonable estimate of fair value. Because alternative investments are not readily marketable, their estimated value is subject to uncertainty and, therefore, may differ from the value that would have been used had a ready market for such investments existed. Such difference could be material. Net appreciation on endowment funds, whose income is unrestricted as to use, is required to be reported as net assets without donor restrictions unless such net appreciation has been restricted in perpetuity by the donor or by law. Accordingly, market appreciation on endowment funds without donor restrictions is classified in the accompanying financial statements as a part of net assets without donor restrictions. In those cases, where a donor has placed restrictions on the use of endowment income, any related net appreciation is also subject to the same restriction and is reported as part of net assets with donor restrictions until such time as the restriction has been met. See Note 6 for discussion of the University’s endowment spending policy. Accounts Receivable Student accounts receivable represent amounts due for tuition, fees, and room and board from currently enrolled and former students. The University extends unsecured credit to students and parents of dependent students in connection with their studies. Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a provision for bad debt expense and an adjustment to a valuation allowance based on its assessment of the current status of individual accounts and estimated collectability. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and a credit to accounts receivable. The allowance for doubtful accounts was $253,197 and $252,439 at May 31, 2023 and 2022, respectively. Charge-offs, net of recoveries, totaled $269,270 and $49,243 for the years ended May 31, 2023 and 2022, respectively. Provision for bad debt was $270,028 and $95,631 for years ended May 31, 2023 and 2022, respectively. Loans to Students Loans receivable are carried at unpaid principal balances, less an allowance for uncollectible loans. The allowance for uncollectible loans is increased by charges to income and decreased by charge-offs (net of recoveries). Management’s periodic evaluation of the adequacy of the allowance is based on Perkins loan program requirements, the University’s historical loan loss experience, specific impaired loans, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and current economic conditions. Loans are considered impaired if full principal or interest payments are not anticipated in accordance with the contractual terms. The University’s practice is to charge off any loan or portion of a loan when the loan is determined by management to be uncollectible due to the borrower’s failure to meet repayment terms, the borrower’s deteriorating or deteriorated financial condition, the depreciation of the underlying collateral, or for other reasons. Loans are placed on nonaccrual when management believes, after considering economic conditions, business conditions, and collection efforts that the loans are impaired or collection of interest is doubtful. Uncollected interest previously accrued is charged off or an allowance is established by a charge to interest income. Interest income on nonaccrual loans is recognized only to the extent cash payments are received. The amount of loans past due 90 days or more and still accruing interest as of May 31, 2023 and 2022 totaled $89,922 and $94,283, respectively. Interest on loans is recognized over the term of the loan and is calculated using the simple-interest method on principal amounts outstanding. Land, Buildings and Equipment Land, buildings and equipment are stated at cost at date of acquisition or fair value at date of donation in the case of gifts, less accumulated depreciation, computed on a straight-line basis over the estimated useful lives ranging from 5 to 75 years. Items having a useful life longer than one year and costing more than $5,000 are capitalized. Depreciation expense for fiscal years ended May 31, 2023 and 2022 was $2,418,466 and $2,143,214 respectively. Inventory Inventory is valued at the lower of cost on the first-in, first-out basis, and net realizable value. Inventory consists mainly of books, Bible class materials, and gift items sold by the Christian Store as well as goods to be sold from dining services. Income Taxes The University is exempt from federal income taxes under Section 501(c) (3) of the Internal Revenue Code; accordingly, no provision for income taxes is made in the financial statements. The University is current on filing its tax form 990 and form 990T. If interest and penalties are incurred such amounts are recognized in income tax expense. FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109, codified in ASC Topic 740 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attribute for tax positions taken or expected to be taken on a tax return including the entity’s status as a tax-exempt not-for-profit entity. Additionally, ASC 740 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosure. The University had no significant uncertain tax positions at May 31, 2023 or 2022. Endowment and Similar Funds The endowment and similar funds are subdivided into appropriate classifications. Endowment funds have been received from benefactors who, by the terms of their conveying instruments, have stipulated that the principal of their gifts may not be expended. Quasi-endowment funds are funds which the Board of Trustees of the University has determined are to be retained and invested until the Board, at its discretion, authorizes their expenditure. The principal of such funds may be either designated or undesignated as to use. Income derived from investments of endowment and similar funds is accounted for in the fund to which it is restricted, or if unrestricted, as revenues in unrestricted current funds. The Board of Trustees has established that, in the absence of further restrictions, 50 percent of the corpus of endowment gifts is to be recorded as net assets with donor restrictions held in perpetuity, since the University’s agreements did not explicitly state the amount of the gift that should be held in perpetuity. The remaining 50 percent is recorded as net assets with donor restrictions that are temporary in nature until those amounts are appropriated for expenditure for their donor restricted purpose, and is available to absorb market fluctuations and to award scholarships if the return on investment in any given year is not sufficient. Management has confirmed with donors the University’s interpretation of their endowment agreement. This correspondence effectively confirmed the donor’s intent for the amount of the gift that must be held in perpetuity. Subsequent to this confirmation, 50 percent of the corpus of these endowments was reclassified from net assets with donor restrictions held in perpetuity to net assets with donor restrictions that have purpose restrictions in accordance with the Board’s resolution. Tuition, Fees and Auxiliary Enterprises The University’s primary source of revenues from contracts with customers are from tuition, fees and sales and services of auxiliary enterprises. In accordance with the adoption of Accounting Standards Update (“ASU”) 2014-09, Revenues from Contracts with Customers, the University identifies a contract for revenue recognition when there is approval and commitment from both parties, the rights of the parties and payment terms are identified, the contract has commercial substance and the collectability of the consideration is probable. The University evaluates each contract to determine the number of distinct performance obligations in the contract, which requires the use of judgment. Performance obligations are determined based on the nature of the services provided by the University. Tuition and fees are derived from academic services rendered by the University on campus and online, as well as from related educational resources that the University provides to its students, such as access to courses and online materials. The University recognizes revenue for academic services pro-rata over the applicable academic term. Scholarships provided to students by the University are reflected as a reduction of gross tuition and fees. Tuition and fees received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. Sales and services of auxiliary enterprises include housing services, food services, a bookstore, camps, and events. The University recognizes revenue for housing and certain food services proportionately over the applicable academic term. Fees related to housing and food received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. The University typically recognized revenue from other sales and services of auxiliary enterprises at the point in time sales occur or as services are rendered. The University’s accounts receivable represents unconditional rights to consideration from its contracts with customers. Typically, once a customer is invoiced for tuition, fees, and auxiliary services, payment is due immediately. Accounts receivable, net of allowance for doubtful accounts as of the years ended May 31, 2023 and May 31, 2022, were $759,231 and $757,318, respectively. The University does not present information about outstanding performance obligations as of year-end because its contracts with students all had original terms of less than one year. The University does not have any contract assets. The University had no costs that were capitalized to obtain or to fulfill a contract with a student. The University maintains an institutional tuition refund policy, which provides for all or a portion of tuition and fees to be refunded if a student withdraws during the stated refund period. The University does not record revenue for amounts that may be refunded. Contributions and Private Gifts Contributions and private gifts, including unconditional promises to give, are recognized as revenues in the period received. Conditional promises to give are not recognized until they become unconditional; that is, when the conditions on which they depend are substantially met. Contributions of assets other than cash are recorded at their estimated fair value. Contributions to be received after one year are discounted at an appropriate discount rate commensurate with the risks involved. Amortization of discounts is recorded as additional contribution revenue in accordance with donor-imposed restrictions, if any, on the contributions. As of May 31, 2023 and 2022, there were $15,000 and $18,000 unconditional promises to give respectively. Functional Expenses Costs of providing the University’s programs are reported in the statements of activities on a functional basis. Program expenses include costs directly associated with the program and other indirect costs determined to benefit that program. These costs have been allocated between functional categories program and supporting services based on estimates made by management. Impairment of Long-Lived Assets The University evaluates the recoverability of its long-lived assets for possible impairment when events or circumstances indicate that the carrying amounts may not be recoverable. Long-lived assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are independent of the cash flows of other groups of assets. If it is determined that the carrying amounts of such long-lived assets are not recoverable, the assets are written down to their fair value. See Note 8. Leases The University adopted FASB Topic 842, Leases, using the modified retrospective approach with June 1, 2022, as the date of initial adoption. The University elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the University to carry forward the historical lease classification. Adoption of the new standard did not impact the University’s changes in net assets and had no impact on beginning net assets or cash flows. The University determines whether an arrangement is or contains a lease at lease inception. Under ASC 842, a contract is (or contains) a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined under the standard as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. On the commencement date, operating leases are recorded as operating lease right-of-use (“ROU”) assets and operating lease liabilities in the statements of financial position. Finance leases are recorded as equipment and finance lease liabilities in the statements of financial position. ROU assets represent the University’s right to use an underlying asset for the lease term, and lease liabilities represent the University’s contractual obligation to make lease payments. The lease liability is measured as the present value of the lease payments over the lease term using either the rate implicit in the lease, if it is determinable, or the University’s incremental borrowing rate if the implicit rate is not determinable. ROU assets are calculated as the present value of the remaining lease payments plus unamortized initial direct costs and prepayments of rent, less any unamortized lease incentives received. Lease terms may include renewal or extension options to the extent they are reasonably certain to be exercised. For operating leases, lease expense is recognized on a straight-line basis over the lease term. For finance leases, amortization of the asset is recognized on a straight-line basis over the useful life of the underlying asset and interest on the lease liability is recognized over the lease term. The University has elected not to recognize a ROU asset and lease liability for leases with an initial term of 12 months or less but includes the expense associated with short-term leases in lease expense in the statements of activities. ROU assets are assessed for impairment in accordance with the University’s long-lived asset policy. Management reassesses lease classification and remeasures ROU assets and lease liabilities when a lease is modified and that modification is not accounted for as a separate new lease or upon certain other events that require reassessment in accordance with ASC 842. Reclassifications Certain reclassifications have been made to the fiscal 2022 financial statements to conform to the fiscal 2023 presentation. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. Charitable Remainder Trusts-University as Trustee The University administers various charitable remainder trusts. A charitable remainder trust is an arrangement in which a donor establishes and funds a trust with specified distributions to be made to a designated beneficiary over the trust’s terms. Upon termination of the trust, the University receives the assets remaining in the trust. The University may ultimately have unrestricted use of those assets or the donor may place permanent or temporary restrictions on their use. The portion of the trust attributable to the present value of the future benefits to be received by the University is recorded in the Statement of Activities as a contribution in the period the trust is established. The contribution may be recorded as temporarily restricted or permanently restricted depending on stipulations placed on the gift by the donor. There was one new trust established during the year ended May 31, 2023. Assets held in charitable remainder trusts totaled $3,152,736 and $1,016,799 at May 31, 2023 and 2022, while the related liability to donors totaled $1,732,113 and $177,837 and the related liability to third-party charities totaled $44,430 and $53,150 at May 31, 2023 and 2022 respectively, and are reported at fair value in the University’s statements of financial position.Charitable Remainder Trusts - Third-Party Trustee Donors have established trusts with third parties naming the University as the beneficiary of charitable remainder trusts. At the time of the donors’ death, the trusts are to terminate, and the remaining trust assets are to be distributed to the University. There were no new trusts managed by third parties established during the year ended May 31, 2023 or 2022. Total estimated present value of future remainder for the University as of May 31, 2023 and 2022 in third-party charitable remainder trusts was $1,781,425 and $2,070,205, respectively. Charitable Gift Annuity The University administers various charitable gift annuities. A charitable gift annuity provides for the payment of distributions to the grantor or other beneficiary over the annuity term (usually the designated beneficiary’s lifetime). At the end of the annuity’s term, the remaining assets are available for the University’s use. The portion of the annuity attributable to the present value of the future benefits to be received by the University is recorded in the statement of activities as unrestricted contributions. The portion of the annuity attributable to the present value of the future payments to be made is recorded as a liability on the statement of financial position. There were no new annuity gifts in the year ending May 31, 2023 or 2022. However, two annuities were retired during the year ending May 31, 2023. Assets held that are designated for charitable gift annuities totaled $329,544 and $586,649 while the related liability totaled $215,149 and $454,752 for the years ended May 31, 2023 and 2022, respectively, and are reported at fair value in the University’s statements of financial position. Tennessee Code Annotated section 56-52-104 (a) (2) requires reserve requirements of 110% of the liability available as a reserve in the event of non-payment to annuity holders. The University has sufficient net cash assets available to meet this reserve requirement of the Board of Trustees. All new gift annuities issued by the University are reinsured with third parties; therefore, this liability will reduce over time with applicable mortality tables.

Title: Note 8. Land, Buildings, Equipment, and Asset Held for Sale Accounting Policies: Note 2. Summary of Significant Accounting Policies Basis of Accounting The financial statements of the University have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Basis of Presentation For reporting purposes, the University’s financial statements have been prepared to focus on the organization as a whole. Resources are classified into two net asset categories based on the existence or absence of donor-imposed restrictions. Accordingly, the net assets of the University and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions - Net assets that are not subject to donor imposed restrictions and may be expended for any purpose in performing the mission and primary objectives of the University. These net assets may be used at the discretion of the University’s management and those charged with governance. Net Assets with Donor Restrictions - Net assets subject to stipulations imposed by donors and grantors. Some donor restrictions are temporary in nature; those restrictions will be met by actions of the University or by the passage of time. Other donor restrictions are perpetual in nature, whereby the donor has stipulated the funds be maintained in perpetuity. Contributions received with donor-imposed restrictions that are met in the same year as received are reported as revenues of the unrestricted net asset class. Expiration of restrictions on net assets as the result of the passage of time and/or fulfilling donor-imposed stipulations are reported as net assets released from restrictions between the applicable classes of net assets in the statement of activities. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents For the purposes of reporting cash flows, cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less, except for investments purchased with endowment and annuity assets, which are classified as long-term investments. Investments Investments in marketable securities are stated at fair value. Real estate investments are stated primarily at current appraised value. Securities not publicly traded are stated at estimated market value. Unrealized gains and losses are included in the changes in net assets. The estimated fair value of certain alternative investments, such as private equity interests, is determined by reference to the net asset values allocated to the University at the measurement date. The University believes the carrying amount of these financial instruments is a reasonable estimate of fair value. Because alternative investments are not readily marketable, their estimated value is subject to uncertainty and, therefore, may differ from the value that would have been used had a ready market for such investments existed. Such difference could be material. Net appreciation on endowment funds, whose income is unrestricted as to use, is required to be reported as net assets without donor restrictions unless such net appreciation has been restricted in perpetuity by the donor or by law. Accordingly, market appreciation on endowment funds without donor restrictions is classified in the accompanying financial statements as a part of net assets without donor restrictions. In those cases, where a donor has placed restrictions on the use of endowment income, any related net appreciation is also subject to the same restriction and is reported as part of net assets with donor restrictions until such time as the restriction has been met. See Note 6 for discussion of the University’s endowment spending policy. Accounts Receivable Student accounts receivable represent amounts due for tuition, fees, and room and board from currently enrolled and former students. The University extends unsecured credit to students and parents of dependent students in connection with their studies. Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a provision for bad debt expense and an adjustment to a valuation allowance based on its assessment of the current status of individual accounts and estimated collectability. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and a credit to accounts receivable. The allowance for doubtful accounts was $253,197 and $252,439 at May 31, 2023 and 2022, respectively. Charge-offs, net of recoveries, totaled $269,270 and $49,243 for the years ended May 31, 2023 and 2022, respectively. Provision for bad debt was $270,028 and $95,631 for years ended May 31, 2023 and 2022, respectively. Loans to Students Loans receivable are carried at unpaid principal balances, less an allowance for uncollectible loans. The allowance for uncollectible loans is increased by charges to income and decreased by charge-offs (net of recoveries). Management’s periodic evaluation of the adequacy of the allowance is based on Perkins loan program requirements, the University’s historical loan loss experience, specific impaired loans, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and current economic conditions. Loans are considered impaired if full principal or interest payments are not anticipated in accordance with the contractual terms. The University’s practice is to charge off any loan or portion of a loan when the loan is determined by management to be uncollectible due to the borrower’s failure to meet repayment terms, the borrower’s deteriorating or deteriorated financial condition, the depreciation of the underlying collateral, or for other reasons. Loans are placed on nonaccrual when management believes, after considering economic conditions, business conditions, and collection efforts that the loans are impaired or collection of interest is doubtful. Uncollected interest previously accrued is charged off or an allowance is established by a charge to interest income. Interest income on nonaccrual loans is recognized only to the extent cash payments are received. The amount of loans past due 90 days or more and still accruing interest as of May 31, 2023 and 2022 totaled $89,922 and $94,283, respectively. Interest on loans is recognized over the term of the loan and is calculated using the simple-interest method on principal amounts outstanding. Land, Buildings and Equipment Land, buildings and equipment are stated at cost at date of acquisition or fair value at date of donation in the case of gifts, less accumulated depreciation, computed on a straight-line basis over the estimated useful lives ranging from 5 to 75 years. Items having a useful life longer than one year and costing more than $5,000 are capitalized. Depreciation expense for fiscal years ended May 31, 2023 and 2022 was $2,418,466 and $2,143,214 respectively. Inventory Inventory is valued at the lower of cost on the first-in, first-out basis, and net realizable value. Inventory consists mainly of books, Bible class materials, and gift items sold by the Christian Store as well as goods to be sold from dining services. Income Taxes The University is exempt from federal income taxes under Section 501(c) (3) of the Internal Revenue Code; accordingly, no provision for income taxes is made in the financial statements. The University is current on filing its tax form 990 and form 990T. If interest and penalties are incurred such amounts are recognized in income tax expense. FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109, codified in ASC Topic 740 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attribute for tax positions taken or expected to be taken on a tax return including the entity’s status as a tax-exempt not-for-profit entity. Additionally, ASC 740 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosure. The University had no significant uncertain tax positions at May 31, 2023 or 2022. Endowment and Similar Funds The endowment and similar funds are subdivided into appropriate classifications. Endowment funds have been received from benefactors who, by the terms of their conveying instruments, have stipulated that the principal of their gifts may not be expended. Quasi-endowment funds are funds which the Board of Trustees of the University has determined are to be retained and invested until the Board, at its discretion, authorizes their expenditure. The principal of such funds may be either designated or undesignated as to use. Income derived from investments of endowment and similar funds is accounted for in the fund to which it is restricted, or if unrestricted, as revenues in unrestricted current funds. The Board of Trustees has established that, in the absence of further restrictions, 50 percent of the corpus of endowment gifts is to be recorded as net assets with donor restrictions held in perpetuity, since the University’s agreements did not explicitly state the amount of the gift that should be held in perpetuity. The remaining 50 percent is recorded as net assets with donor restrictions that are temporary in nature until those amounts are appropriated for expenditure for their donor restricted purpose, and is available to absorb market fluctuations and to award scholarships if the return on investment in any given year is not sufficient. Management has confirmed with donors the University’s interpretation of their endowment agreement. This correspondence effectively confirmed the donor’s intent for the amount of the gift that must be held in perpetuity. Subsequent to this confirmation, 50 percent of the corpus of these endowments was reclassified from net assets with donor restrictions held in perpetuity to net assets with donor restrictions that have purpose restrictions in accordance with the Board’s resolution. Tuition, Fees and Auxiliary Enterprises The University’s primary source of revenues from contracts with customers are from tuition, fees and sales and services of auxiliary enterprises. In accordance with the adoption of Accounting Standards Update (“ASU”) 2014-09, Revenues from Contracts with Customers, the University identifies a contract for revenue recognition when there is approval and commitment from both parties, the rights of the parties and payment terms are identified, the contract has commercial substance and the collectability of the consideration is probable. The University evaluates each contract to determine the number of distinct performance obligations in the contract, which requires the use of judgment. Performance obligations are determined based on the nature of the services provided by the University. Tuition and fees are derived from academic services rendered by the University on campus and online, as well as from related educational resources that the University provides to its students, such as access to courses and online materials. The University recognizes revenue for academic services pro-rata over the applicable academic term. Scholarships provided to students by the University are reflected as a reduction of gross tuition and fees. Tuition and fees received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. Sales and services of auxiliary enterprises include housing services, food services, a bookstore, camps, and events. The University recognizes revenue for housing and certain food services proportionately over the applicable academic term. Fees related to housing and food received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. The University typically recognized revenue from other sales and services of auxiliary enterprises at the point in time sales occur or as services are rendered. The University’s accounts receivable represents unconditional rights to consideration from its contracts with customers. Typically, once a customer is invoiced for tuition, fees, and auxiliary services, payment is due immediately. Accounts receivable, net of allowance for doubtful accounts as of the years ended May 31, 2023 and May 31, 2022, were $759,231 and $757,318, respectively. The University does not present information about outstanding performance obligations as of year-end because its contracts with students all had original terms of less than one year. The University does not have any contract assets. The University had no costs that were capitalized to obtain or to fulfill a contract with a student. The University maintains an institutional tuition refund policy, which provides for all or a portion of tuition and fees to be refunded if a student withdraws during the stated refund period. The University does not record revenue for amounts that may be refunded. Contributions and Private Gifts Contributions and private gifts, including unconditional promises to give, are recognized as revenues in the period received. Conditional promises to give are not recognized until they become unconditional; that is, when the conditions on which they depend are substantially met. Contributions of assets other than cash are recorded at their estimated fair value. Contributions to be received after one year are discounted at an appropriate discount rate commensurate with the risks involved. Amortization of discounts is recorded as additional contribution revenue in accordance with donor-imposed restrictions, if any, on the contributions. As of May 31, 2023 and 2022, there were $15,000 and $18,000 unconditional promises to give respectively. Functional Expenses Costs of providing the University’s programs are reported in the statements of activities on a functional basis. Program expenses include costs directly associated with the program and other indirect costs determined to benefit that program. These costs have been allocated between functional categories program and supporting services based on estimates made by management. Impairment of Long-Lived Assets The University evaluates the recoverability of its long-lived assets for possible impairment when events or circumstances indicate that the carrying amounts may not be recoverable. Long-lived assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are independent of the cash flows of other groups of assets. If it is determined that the carrying amounts of such long-lived assets are not recoverable, the assets are written down to their fair value. See Note 8. Leases The University adopted FASB Topic 842, Leases, using the modified retrospective approach with June 1, 2022, as the date of initial adoption. The University elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the University to carry forward the historical lease classification. Adoption of the new standard did not impact the University’s changes in net assets and had no impact on beginning net assets or cash flows. The University determines whether an arrangement is or contains a lease at lease inception. Under ASC 842, a contract is (or contains) a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined under the standard as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. On the commencement date, operating leases are recorded as operating lease right-of-use (“ROU”) assets and operating lease liabilities in the statements of financial position. Finance leases are recorded as equipment and finance lease liabilities in the statements of financial position. ROU assets represent the University’s right to use an underlying asset for the lease term, and lease liabilities represent the University’s contractual obligation to make lease payments. The lease liability is measured as the present value of the lease payments over the lease term using either the rate implicit in the lease, if it is determinable, or the University’s incremental borrowing rate if the implicit rate is not determinable. ROU assets are calculated as the present value of the remaining lease payments plus unamortized initial direct costs and prepayments of rent, less any unamortized lease incentives received. Lease terms may include renewal or extension options to the extent they are reasonably certain to be exercised. For operating leases, lease expense is recognized on a straight-line basis over the lease term. For finance leases, amortization of the asset is recognized on a straight-line basis over the useful life of the underlying asset and interest on the lease liability is recognized over the lease term. The University has elected not to recognize a ROU asset and lease liability for leases with an initial term of 12 months or less but includes the expense associated with short-term leases in lease expense in the statements of activities. ROU assets are assessed for impairment in accordance with the University’s long-lived asset policy. Management reassesses lease classification and remeasures ROU assets and lease liabilities when a lease is modified and that modification is not accounted for as a separate new lease or upon certain other events that require reassessment in accordance with ASC 842. Reclassifications Certain reclassifications have been made to the fiscal 2022 financial statements to conform to the fiscal 2023 presentation. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. Land, buildings, and equipment consisted of the following at May 31, 2023 and 2022: Estimated costs to complete construction in progress at May 31, 2023 is $34,551,128, and is related to the renovation of various campus facilities. During fiscal year 2014, a 110,000 square foot building in Dickson, Tennessee, was donated to the University. The asset has operated as an off-campus instructional site and rental property while in the University’s possession. In July 2020, the Board of Trustees voted to sell the property due to its operating at a net loss for the past several years. The property was listed for sale with an international commercial realty company with a sale price of approximately $7.25 million. Accordingly, an impairment loss was recorded, and the University reclassified the property as an asset held-for-sale during fiscal 2021. During fiscal 2022, the property incurred storm damage for which the University received insurance proceeds, and recognized gains of $3,289,493 and $3,067,671 during fiscal 2023 and 2022, respectively, which have been reported as non-operating activity in the statement of activities. An additional impairment loss was recorded in fiscal 2022 to report the carrying value at the agreed upon sales price as of May 31, 2022. In June of 2022, the University sold the property for $6,000,000.

Title: Note 9. Lines of Credit Accounting Policies: Note 2. Summary of Significant Accounting Policies Basis of Accounting The financial statements of the University have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Basis of Presentation For reporting purposes, the University’s financial statements have been prepared to focus on the organization as a whole. Resources are classified into two net asset categories based on the existence or absence of donor-imposed restrictions. Accordingly, the net assets of the University and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions - Net assets that are not subject to donor imposed restrictions and may be expended for any purpose in performing the mission and primary objectives of the University. These net assets may be used at the discretion of the University’s management and those charged with governance. Net Assets with Donor Restrictions - Net assets subject to stipulations imposed by donors and grantors. Some donor restrictions are temporary in nature; those restrictions will be met by actions of the University or by the passage of time. Other donor restrictions are perpetual in nature, whereby the donor has stipulated the funds be maintained in perpetuity. Contributions received with donor-imposed restrictions that are met in the same year as received are reported as revenues of the unrestricted net asset class. Expiration of restrictions on net assets as the result of the passage of time and/or fulfilling donor-imposed stipulations are reported as net assets released from restrictions between the applicable classes of net assets in the statement of activities. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents For the purposes of reporting cash flows, cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less, except for investments purchased with endowment and annuity assets, which are classified as long-term investments. Investments Investments in marketable securities are stated at fair value. Real estate investments are stated primarily at current appraised value. Securities not publicly traded are stated at estimated market value. Unrealized gains and losses are included in the changes in net assets. The estimated fair value of certain alternative investments, such as private equity interests, is determined by reference to the net asset values allocated to the University at the measurement date. The University believes the carrying amount of these financial instruments is a reasonable estimate of fair value. Because alternative investments are not readily marketable, their estimated value is subject to uncertainty and, therefore, may differ from the value that would have been used had a ready market for such investments existed. Such difference could be material. Net appreciation on endowment funds, whose income is unrestricted as to use, is required to be reported as net assets without donor restrictions unless such net appreciation has been restricted in perpetuity by the donor or by law. Accordingly, market appreciation on endowment funds without donor restrictions is classified in the accompanying financial statements as a part of net assets without donor restrictions. In those cases, where a donor has placed restrictions on the use of endowment income, any related net appreciation is also subject to the same restriction and is reported as part of net assets with donor restrictions until such time as the restriction has been met. See Note 6 for discussion of the University’s endowment spending policy. Accounts Receivable Student accounts receivable represent amounts due for tuition, fees, and room and board from currently enrolled and former students. The University extends unsecured credit to students and parents of dependent students in connection with their studies. Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a provision for bad debt expense and an adjustment to a valuation allowance based on its assessment of the current status of individual accounts and estimated collectability. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and a credit to accounts receivable. The allowance for doubtful accounts was $253,197 and $252,439 at May 31, 2023 and 2022, respectively. Charge-offs, net of recoveries, totaled $269,270 and $49,243 for the years ended May 31, 2023 and 2022, respectively. Provision for bad debt was $270,028 and $95,631 for years ended May 31, 2023 and 2022, respectively. Loans to Students Loans receivable are carried at unpaid principal balances, less an allowance for uncollectible loans. The allowance for uncollectible loans is increased by charges to income and decreased by charge-offs (net of recoveries). Management’s periodic evaluation of the adequacy of the allowance is based on Perkins loan program requirements, the University’s historical loan loss experience, specific impaired loans, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and current economic conditions. Loans are considered impaired if full principal or interest payments are not anticipated in accordance with the contractual terms. The University’s practice is to charge off any loan or portion of a loan when the loan is determined by management to be uncollectible due to the borrower’s failure to meet repayment terms, the borrower’s deteriorating or deteriorated financial condition, the depreciation of the underlying collateral, or for other reasons. Loans are placed on nonaccrual when management believes, after considering economic conditions, business conditions, and collection efforts that the loans are impaired or collection of interest is doubtful. Uncollected interest previously accrued is charged off or an allowance is established by a charge to interest income. Interest income on nonaccrual loans is recognized only to the extent cash payments are received. The amount of loans past due 90 days or more and still accruing interest as of May 31, 2023 and 2022 totaled $89,922 and $94,283, respectively. Interest on loans is recognized over the term of the loan and is calculated using the simple-interest method on principal amounts outstanding. Land, Buildings and Equipment Land, buildings and equipment are stated at cost at date of acquisition or fair value at date of donation in the case of gifts, less accumulated depreciation, computed on a straight-line basis over the estimated useful lives ranging from 5 to 75 years. Items having a useful life longer than one year and costing more than $5,000 are capitalized. Depreciation expense for fiscal years ended May 31, 2023 and 2022 was $2,418,466 and $2,143,214 respectively. Inventory Inventory is valued at the lower of cost on the first-in, first-out basis, and net realizable value. Inventory consists mainly of books, Bible class materials, and gift items sold by the Christian Store as well as goods to be sold from dining services. Income Taxes The University is exempt from federal income taxes under Section 501(c) (3) of the Internal Revenue Code; accordingly, no provision for income taxes is made in the financial statements. The University is current on filing its tax form 990 and form 990T. If interest and penalties are incurred such amounts are recognized in income tax expense. FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109, codified in ASC Topic 740 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attribute for tax positions taken or expected to be taken on a tax return including the entity’s status as a tax-exempt not-for-profit entity. Additionally, ASC 740 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosure. The University had no significant uncertain tax positions at May 31, 2023 or 2022. Endowment and Similar Funds The endowment and similar funds are subdivided into appropriate classifications. Endowment funds have been received from benefactors who, by the terms of their conveying instruments, have stipulated that the principal of their gifts may not be expended. Quasi-endowment funds are funds which the Board of Trustees of the University has determined are to be retained and invested until the Board, at its discretion, authorizes their expenditure. The principal of such funds may be either designated or undesignated as to use. Income derived from investments of endowment and similar funds is accounted for in the fund to which it is restricted, or if unrestricted, as revenues in unrestricted current funds. The Board of Trustees has established that, in the absence of further restrictions, 50 percent of the corpus of endowment gifts is to be recorded as net assets with donor restrictions held in perpetuity, since the University’s agreements did not explicitly state the amount of the gift that should be held in perpetuity. The remaining 50 percent is recorded as net assets with donor restrictions that are temporary in nature until those amounts are appropriated for expenditure for their donor restricted purpose, and is available to absorb market fluctuations and to award scholarships if the return on investment in any given year is not sufficient. Management has confirmed with donors the University’s interpretation of their endowment agreement. This correspondence effectively confirmed the donor’s intent for the amount of the gift that must be held in perpetuity. Subsequent to this confirmation, 50 percent of the corpus of these endowments was reclassified from net assets with donor restrictions held in perpetuity to net assets with donor restrictions that have purpose restrictions in accordance with the Board’s resolution. Tuition, Fees and Auxiliary Enterprises The University’s primary source of revenues from contracts with customers are from tuition, fees and sales and services of auxiliary enterprises. In accordance with the adoption of Accounting Standards Update (“ASU”) 2014-09, Revenues from Contracts with Customers, the University identifies a contract for revenue recognition when there is approval and commitment from both parties, the rights of the parties and payment terms are identified, the contract has commercial substance and the collectability of the consideration is probable. The University evaluates each contract to determine the number of distinct performance obligations in the contract, which requires the use of judgment. Performance obligations are determined based on the nature of the services provided by the University. Tuition and fees are derived from academic services rendered by the University on campus and online, as well as from related educational resources that the University provides to its students, such as access to courses and online materials. The University recognizes revenue for academic services pro-rata over the applicable academic term. Scholarships provided to students by the University are reflected as a reduction of gross tuition and fees. Tuition and fees received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. Sales and services of auxiliary enterprises include housing services, food services, a bookstore, camps, and events. The University recognizes revenue for housing and certain food services proportionately over the applicable academic term. Fees related to housing and food received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. The University typically recognized revenue from other sales and services of auxiliary enterprises at the point in time sales occur or as services are rendered. The University’s accounts receivable represents unconditional rights to consideration from its contracts with customers. Typically, once a customer is invoiced for tuition, fees, and auxiliary services, payment is due immediately. Accounts receivable, net of allowance for doubtful accounts as of the years ended May 31, 2023 and May 31, 2022, were $759,231 and $757,318, respectively. The University does not present information about outstanding performance obligations as of year-end because its contracts with students all had original terms of less than one year. The University does not have any contract assets. The University had no costs that were capitalized to obtain or to fulfill a contract with a student. The University maintains an institutional tuition refund policy, which provides for all or a portion of tuition and fees to be refunded if a student withdraws during the stated refund period. The University does not record revenue for amounts that may be refunded. Contributions and Private Gifts Contributions and private gifts, including unconditional promises to give, are recognized as revenues in the period received. Conditional promises to give are not recognized until they become unconditional; that is, when the conditions on which they depend are substantially met. Contributions of assets other than cash are recorded at their estimated fair value. Contributions to be received after one year are discounted at an appropriate discount rate commensurate with the risks involved. Amortization of discounts is recorded as additional contribution revenue in accordance with donor-imposed restrictions, if any, on the contributions. As of May 31, 2023 and 2022, there were $15,000 and $18,000 unconditional promises to give respectively. Functional Expenses Costs of providing the University’s programs are reported in the statements of activities on a functional basis. Program expenses include costs directly associated with the program and other indirect costs determined to benefit that program. These costs have been allocated between functional categories program and supporting services based on estimates made by management. Impairment of Long-Lived Assets The University evaluates the recoverability of its long-lived assets for possible impairment when events or circumstances indicate that the carrying amounts may not be recoverable. Long-lived assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are independent of the cash flows of other groups of assets. If it is determined that the carrying amounts of such long-lived assets are not recoverable, the assets are written down to their fair value. See Note 8. Leases The University adopted FASB Topic 842, Leases, using the modified retrospective approach with June 1, 2022, as the date of initial adoption. The University elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the University to carry forward the historical lease classification. Adoption of the new standard did not impact the University’s changes in net assets and had no impact on beginning net assets or cash flows. The University determines whether an arrangement is or contains a lease at lease inception. Under ASC 842, a contract is (or contains) a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined under the standard as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. On the commencement date, operating leases are recorded as operating lease right-of-use (“ROU”) assets and operating lease liabilities in the statements of financial position. Finance leases are recorded as equipment and finance lease liabilities in the statements of financial position. ROU assets represent the University’s right to use an underlying asset for the lease term, and lease liabilities represent the University’s contractual obligation to make lease payments. The lease liability is measured as the present value of the lease payments over the lease term using either the rate implicit in the lease, if it is determinable, or the University’s incremental borrowing rate if the implicit rate is not determinable. ROU assets are calculated as the present value of the remaining lease payments plus unamortized initial direct costs and prepayments of rent, less any unamortized lease incentives received. Lease terms may include renewal or extension options to the extent they are reasonably certain to be exercised. For operating leases, lease expense is recognized on a straight-line basis over the lease term. For finance leases, amortization of the asset is recognized on a straight-line basis over the useful life of the underlying asset and interest on the lease liability is recognized over the lease term. The University has elected not to recognize a ROU asset and lease liability for leases with an initial term of 12 months or less but includes the expense associated with short-term leases in lease expense in the statements of activities. ROU assets are assessed for impairment in accordance with the University’s long-lived asset policy. Management reassesses lease classification and remeasures ROU assets and lease liabilities when a lease is modified and that modification is not accounted for as a separate new lease or upon certain other events that require reassessment in accordance with ASC 842. Reclassifications Certain reclassifications have been made to the fiscal 2022 financial statements to conform to the fiscal 2023 presentation. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. On December 15, 2021 the University entered into a $5,000,000 operating line of credit with First Horizon Bank. The terms of the note state that interest shall be accrued on any outstanding balance at 67% of the lender's base commercial rate (Prime Rate). The agreement on this line of credit was renewed in March of 2023 and will mature on December 31, 2023. The operating line of credit had no outstanding balance as of May 31, 2023 and 2022.

Title: Note 10. Long-term Debt Accounting Policies: Note 2. Summary of Significant Accounting Policies Basis of Accounting The financial statements of the University have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Basis of Presentation For reporting purposes, the University’s financial statements have been prepared to focus on the organization as a whole. Resources are classified into two net asset categories based on the existence or absence of donor-imposed restrictions. Accordingly, the net assets of the University and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions - Net assets that are not subject to donor imposed restrictions and may be expended for any purpose in performing the mission and primary objectives of the University. These net assets may be used at the discretion of the University’s management and those charged with governance. Net Assets with Donor Restrictions - Net assets subject to stipulations imposed by donors and grantors. Some donor restrictions are temporary in nature; those restrictions will be met by actions of the University or by the passage of time. Other donor restrictions are perpetual in nature, whereby the donor has stipulated the funds be maintained in perpetuity. Contributions received with donor-imposed restrictions that are met in the same year as received are reported as revenues of the unrestricted net asset class. Expiration of restrictions on net assets as the result of the passage of time and/or fulfilling donor-imposed stipulations are reported as net assets released from restrictions between the applicable classes of net assets in the statement of activities. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents For the purposes of reporting cash flows, cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less, except for investments purchased with endowment and annuity assets, which are classified as long-term investments. Investments Investments in marketable securities are stated at fair value. Real estate investments are stated primarily at current appraised value. Securities not publicly traded are stated at estimated market value. Unrealized gains and losses are included in the changes in net assets. The estimated fair value of certain alternative investments, such as private equity interests, is determined by reference to the net asset values allocated to the University at the measurement date. The University believes the carrying amount of these financial instruments is a reasonable estimate of fair value. Because alternative investments are not readily marketable, their estimated value is subject to uncertainty and, therefore, may differ from the value that would have been used had a ready market for such investments existed. Such difference could be material. Net appreciation on endowment funds, whose income is unrestricted as to use, is required to be reported as net assets without donor restrictions unless such net appreciation has been restricted in perpetuity by the donor or by law. Accordingly, market appreciation on endowment funds without donor restrictions is classified in the accompanying financial statements as a part of net assets without donor restrictions. In those cases, where a donor has placed restrictions on the use of endowment income, any related net appreciation is also subject to the same restriction and is reported as part of net assets with donor restrictions until such time as the restriction has been met. See Note 6 for discussion of the University’s endowment spending policy. Accounts Receivable Student accounts receivable represent amounts due for tuition, fees, and room and board from currently enrolled and former students. The University extends unsecured credit to students and parents of dependent students in connection with their studies. Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a provision for bad debt expense and an adjustment to a valuation allowance based on its assessment of the current status of individual accounts and estimated collectability. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and a credit to accounts receivable. The allowance for doubtful accounts was $253,197 and $252,439 at May 31, 2023 and 2022, respectively. Charge-offs, net of recoveries, totaled $269,270 and $49,243 for the years ended May 31, 2023 and 2022, respectively. Provision for bad debt was $270,028 and $95,631 for years ended May 31, 2023 and 2022, respectively. Loans to Students Loans receivable are carried at unpaid principal balances, less an allowance for uncollectible loans. The allowance for uncollectible loans is increased by charges to income and decreased by charge-offs (net of recoveries). Management’s periodic evaluation of the adequacy of the allowance is based on Perkins loan program requirements, the University’s historical loan loss experience, specific impaired loans, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and current economic conditions. Loans are considered impaired if full principal or interest payments are not anticipated in accordance with the contractual terms. The University’s practice is to charge off any loan or portion of a loan when the loan is determined by management to be uncollectible due to the borrower’s failure to meet repayment terms, the borrower’s deteriorating or deteriorated financial condition, the depreciation of the underlying collateral, or for other reasons. Loans are placed on nonaccrual when management believes, after considering economic conditions, business conditions, and collection efforts that the loans are impaired or collection of interest is doubtful. Uncollected interest previously accrued is charged off or an allowance is established by a charge to interest income. Interest income on nonaccrual loans is recognized only to the extent cash payments are received. The amount of loans past due 90 days or more and still accruing interest as of May 31, 2023 and 2022 totaled $89,922 and $94,283, respectively. Interest on loans is recognized over the term of the loan and is calculated using the simple-interest method on principal amounts outstanding. Land, Buildings and Equipment Land, buildings and equipment are stated at cost at date of acquisition or fair value at date of donation in the case of gifts, less accumulated depreciation, computed on a straight-line basis over the estimated useful lives ranging from 5 to 75 years. Items having a useful life longer than one year and costing more than $5,000 are capitalized. Depreciation expense for fiscal years ended May 31, 2023 and 2022 was $2,418,466 and $2,143,214 respectively. Inventory Inventory is valued at the lower of cost on the first-in, first-out basis, and net realizable value. Inventory consists mainly of books, Bible class materials, and gift items sold by the Christian Store as well as goods to be sold from dining services. Income Taxes The University is exempt from federal income taxes under Section 501(c) (3) of the Internal Revenue Code; accordingly, no provision for income taxes is made in the financial statements. The University is current on filing its tax form 990 and form 990T. If interest and penalties are incurred such amounts are recognized in income tax expense. FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109, codified in ASC Topic 740 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attribute for tax positions taken or expected to be taken on a tax return including the entity’s status as a tax-exempt not-for-profit entity. Additionally, ASC 740 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosure. The University had no significant uncertain tax positions at May 31, 2023 or 2022. Endowment and Similar Funds The endowment and similar funds are subdivided into appropriate classifications. Endowment funds have been received from benefactors who, by the terms of their conveying instruments, have stipulated that the principal of their gifts may not be expended. Quasi-endowment funds are funds which the Board of Trustees of the University has determined are to be retained and invested until the Board, at its discretion, authorizes their expenditure. The principal of such funds may be either designated or undesignated as to use. Income derived from investments of endowment and similar funds is accounted for in the fund to which it is restricted, or if unrestricted, as revenues in unrestricted current funds. The Board of Trustees has established that, in the absence of further restrictions, 50 percent of the corpus of endowment gifts is to be recorded as net assets with donor restrictions held in perpetuity, since the University’s agreements did not explicitly state the amount of the gift that should be held in perpetuity. The remaining 50 percent is recorded as net assets with donor restrictions that are temporary in nature until those amounts are appropriated for expenditure for their donor restricted purpose, and is available to absorb market fluctuations and to award scholarships if the return on investment in any given year is not sufficient. Management has confirmed with donors the University’s interpretation of their endowment agreement. This correspondence effectively confirmed the donor’s intent for the amount of the gift that must be held in perpetuity. Subsequent to this confirmation, 50 percent of the corpus of these endowments was reclassified from net assets with donor restrictions held in perpetuity to net assets with donor restrictions that have purpose restrictions in accordance with the Board’s resolution. Tuition, Fees and Auxiliary Enterprises The University’s primary source of revenues from contracts with customers are from tuition, fees and sales and services of auxiliary enterprises. In accordance with the adoption of Accounting Standards Update (“ASU”) 2014-09, Revenues from Contracts with Customers, the University identifies a contract for revenue recognition when there is approval and commitment from both parties, the rights of the parties and payment terms are identified, the contract has commercial substance and the collectability of the consideration is probable. The University evaluates each contract to determine the number of distinct performance obligations in the contract, which requires the use of judgment. Performance obligations are determined based on the nature of the services provided by the University. Tuition and fees are derived from academic services rendered by the University on campus and online, as well as from related educational resources that the University provides to its students, such as access to courses and online materials. The University recognizes revenue for academic services pro-rata over the applicable academic term. Scholarships provided to students by the University are reflected as a reduction of gross tuition and fees. Tuition and fees received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. Sales and services of auxiliary enterprises include housing services, food services, a bookstore, camps, and events. The University recognizes revenue for housing and certain food services proportionately over the applicable academic term. Fees related to housing and food received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. The University typically recognized revenue from other sales and services of auxiliary enterprises at the point in time sales occur or as services are rendered. The University’s accounts receivable represents unconditional rights to consideration from its contracts with customers. Typically, once a customer is invoiced for tuition, fees, and auxiliary services, payment is due immediately. Accounts receivable, net of allowance for doubtful accounts as of the years ended May 31, 2023 and May 31, 2022, were $759,231 and $757,318, respectively. The University does not present information about outstanding performance obligations as of year-end because its contracts with students all had original terms of less than one year. The University does not have any contract assets. The University had no costs that were capitalized to obtain or to fulfill a contract with a student. The University maintains an institutional tuition refund policy, which provides for all or a portion of tuition and fees to be refunded if a student withdraws during the stated refund period. The University does not record revenue for amounts that may be refunded. Contributions and Private Gifts Contributions and private gifts, including unconditional promises to give, are recognized as revenues in the period received. Conditional promises to give are not recognized until they become unconditional; that is, when the conditions on which they depend are substantially met. Contributions of assets other than cash are recorded at their estimated fair value. Contributions to be received after one year are discounted at an appropriate discount rate commensurate with the risks involved. Amortization of discounts is recorded as additional contribution revenue in accordance with donor-imposed restrictions, if any, on the contributions. As of May 31, 2023 and 2022, there were $15,000 and $18,000 unconditional promises to give respectively. Functional Expenses Costs of providing the University’s programs are reported in the statements of activities on a functional basis. Program expenses include costs directly associated with the program and other indirect costs determined to benefit that program. These costs have been allocated between functional categories program and supporting services based on estimates made by management. Impairment of Long-Lived Assets The University evaluates the recoverability of its long-lived assets for possible impairment when events or circumstances indicate that the carrying amounts may not be recoverable. Long-lived assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are independent of the cash flows of other groups of assets. If it is determined that the carrying amounts of such long-lived assets are not recoverable, the assets are written down to their fair value. See Note 8. Leases The University adopted FASB Topic 842, Leases, using the modified retrospective approach with June 1, 2022, as the date of initial adoption. The University elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the University to carry forward the historical lease classification. Adoption of the new standard did not impact the University’s changes in net assets and had no impact on beginning net assets or cash flows. The University determines whether an arrangement is or contains a lease at lease inception. Under ASC 842, a contract is (or contains) a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined under the standard as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. On the commencement date, operating leases are recorded as operating lease right-of-use (“ROU”) assets and operating lease liabilities in the statements of financial position. Finance leases are recorded as equipment and finance lease liabilities in the statements of financial position. ROU assets represent the University’s right to use an underlying asset for the lease term, and lease liabilities represent the University’s contractual obligation to make lease payments. The lease liability is measured as the present value of the lease payments over the lease term using either the rate implicit in the lease, if it is determinable, or the University’s incremental borrowing rate if the implicit rate is not determinable. ROU assets are calculated as the present value of the remaining lease payments plus unamortized initial direct costs and prepayments of rent, less any unamortized lease incentives received. Lease terms may include renewal or extension options to the extent they are reasonably certain to be exercised. For operating leases, lease expense is recognized on a straight-line basis over the lease term. For finance leases, amortization of the asset is recognized on a straight-line basis over the useful life of the underlying asset and interest on the lease liability is recognized over the lease term. The University has elected not to recognize a ROU asset and lease liability for leases with an initial term of 12 months or less but includes the expense associated with short-term leases in lease expense in the statements of activities. ROU assets are assessed for impairment in accordance with the University’s long-lived asset policy. Management reassesses lease classification and remeasures ROU assets and lease liabilities when a lease is modified and that modification is not accounted for as a separate new lease or upon certain other events that require reassessment in accordance with ASC 842. Reclassifications Certain reclassifications have been made to the fiscal 2022 financial statements to conform to the fiscal 2023 presentation. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. Long-term debt consisted of the following: Scheduled debt maturities are as follows for the years ending May 31:

Title: Note 11. Pledges Receivable Accounting Policies: Note 2. Summary of Significant Accounting Policies Basis of Accounting The financial statements of the University have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Basis of Presentation For reporting purposes, the University’s financial statements have been prepared to focus on the organization as a whole. Resources are classified into two net asset categories based on the existence or absence of donor-imposed restrictions. Accordingly, the net assets of the University and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions - Net assets that are not subject to donor imposed restrictions and may be expended for any purpose in performing the mission and primary objectives of the University. These net assets may be used at the discretion of the University’s management and those charged with governance. Net Assets with Donor Restrictions - Net assets subject to stipulations imposed by donors and grantors. Some donor restrictions are temporary in nature; those restrictions will be met by actions of the University or by the passage of time. Other donor restrictions are perpetual in nature, whereby the donor has stipulated the funds be maintained in perpetuity. Contributions received with donor-imposed restrictions that are met in the same year as received are reported as revenues of the unrestricted net asset class. Expiration of restrictions on net assets as the result of the passage of time and/or fulfilling donor-imposed stipulations are reported as net assets released from restrictions between the applicable classes of net assets in the statement of activities. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents For the purposes of reporting cash flows, cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less, except for investments purchased with endowment and annuity assets, which are classified as long-term investments. Investments Investments in marketable securities are stated at fair value. Real estate investments are stated primarily at current appraised value. Securities not publicly traded are stated at estimated market value. Unrealized gains and losses are included in the changes in net assets. The estimated fair value of certain alternative investments, such as private equity interests, is determined by reference to the net asset values allocated to the University at the measurement date. The University believes the carrying amount of these financial instruments is a reasonable estimate of fair value. Because alternative investments are not readily marketable, their estimated value is subject to uncertainty and, therefore, may differ from the value that would have been used had a ready market for such investments existed. Such difference could be material. Net appreciation on endowment funds, whose income is unrestricted as to use, is required to be reported as net assets without donor restrictions unless such net appreciation has been restricted in perpetuity by the donor or by law. Accordingly, market appreciation on endowment funds without donor restrictions is classified in the accompanying financial statements as a part of net assets without donor restrictions. In those cases, where a donor has placed restrictions on the use of endowment income, any related net appreciation is also subject to the same restriction and is reported as part of net assets with donor restrictions until such time as the restriction has been met. See Note 6 for discussion of the University’s endowment spending policy. Accounts Receivable Student accounts receivable represent amounts due for tuition, fees, and room and board from currently enrolled and former students. The University extends unsecured credit to students and parents of dependent students in connection with their studies. Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a provision for bad debt expense and an adjustment to a valuation allowance based on its assessment of the current status of individual accounts and estimated collectability. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and a credit to accounts receivable. The allowance for doubtful accounts was $253,197 and $252,439 at May 31, 2023 and 2022, respectively. Charge-offs, net of recoveries, totaled $269,270 and $49,243 for the years ended May 31, 2023 and 2022, respectively. Provision for bad debt was $270,028 and $95,631 for years ended May 31, 2023 and 2022, respectively. Loans to Students Loans receivable are carried at unpaid principal balances, less an allowance for uncollectible loans. The allowance for uncollectible loans is increased by charges to income and decreased by charge-offs (net of recoveries). Management’s periodic evaluation of the adequacy of the allowance is based on Perkins loan program requirements, the University’s historical loan loss experience, specific impaired loans, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and current economic conditions. Loans are considered impaired if full principal or interest payments are not anticipated in accordance with the contractual terms. The University’s practice is to charge off any loan or portion of a loan when the loan is determined by management to be uncollectible due to the borrower’s failure to meet repayment terms, the borrower’s deteriorating or deteriorated financial condition, the depreciation of the underlying collateral, or for other reasons. Loans are placed on nonaccrual when management believes, after considering economic conditions, business conditions, and collection efforts that the loans are impaired or collection of interest is doubtful. Uncollected interest previously accrued is charged off or an allowance is established by a charge to interest income. Interest income on nonaccrual loans is recognized only to the extent cash payments are received. The amount of loans past due 90 days or more and still accruing interest as of May 31, 2023 and 2022 totaled $89,922 and $94,283, respectively. Interest on loans is recognized over the term of the loan and is calculated using the simple-interest method on principal amounts outstanding. Land, Buildings and Equipment Land, buildings and equipment are stated at cost at date of acquisition or fair value at date of donation in the case of gifts, less accumulated depreciation, computed on a straight-line basis over the estimated useful lives ranging from 5 to 75 years. Items having a useful life longer than one year and costing more than $5,000 are capitalized. Depreciation expense for fiscal years ended May 31, 2023 and 2022 was $2,418,466 and $2,143,214 respectively. Inventory Inventory is valued at the lower of cost on the first-in, first-out basis, and net realizable value. Inventory consists mainly of books, Bible class materials, and gift items sold by the Christian Store as well as goods to be sold from dining services. Income Taxes The University is exempt from federal income taxes under Section 501(c) (3) of the Internal Revenue Code; accordingly, no provision for income taxes is made in the financial statements. The University is current on filing its tax form 990 and form 990T. If interest and penalties are incurred such amounts are recognized in income tax expense. FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109, codified in ASC Topic 740 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attribute for tax positions taken or expected to be taken on a tax return including the entity’s status as a tax-exempt not-for-profit entity. Additionally, ASC 740 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosure. The University had no significant uncertain tax positions at May 31, 2023 or 2022. Endowment and Similar Funds The endowment and similar funds are subdivided into appropriate classifications. Endowment funds have been received from benefactors who, by the terms of their conveying instruments, have stipulated that the principal of their gifts may not be expended. Quasi-endowment funds are funds which the Board of Trustees of the University has determined are to be retained and invested until the Board, at its discretion, authorizes their expenditure. The principal of such funds may be either designated or undesignated as to use. Income derived from investments of endowment and similar funds is accounted for in the fund to which it is restricted, or if unrestricted, as revenues in unrestricted current funds. The Board of Trustees has established that, in the absence of further restrictions, 50 percent of the corpus of endowment gifts is to be recorded as net assets with donor restrictions held in perpetuity, since the University’s agreements did not explicitly state the amount of the gift that should be held in perpetuity. The remaining 50 percent is recorded as net assets with donor restrictions that are temporary in nature until those amounts are appropriated for expenditure for their donor restricted purpose, and is available to absorb market fluctuations and to award scholarships if the return on investment in any given year is not sufficient. Management has confirmed with donors the University’s interpretation of their endowment agreement. This correspondence effectively confirmed the donor’s intent for the amount of the gift that must be held in perpetuity. Subsequent to this confirmation, 50 percent of the corpus of these endowments was reclassified from net assets with donor restrictions held in perpetuity to net assets with donor restrictions that have purpose restrictions in accordance with the Board’s resolution. Tuition, Fees and Auxiliary Enterprises The University’s primary source of revenues from contracts with customers are from tuition, fees and sales and services of auxiliary enterprises. In accordance with the adoption of Accounting Standards Update (“ASU”) 2014-09, Revenues from Contracts with Customers, the University identifies a contract for revenue recognition when there is approval and commitment from both parties, the rights of the parties and payment terms are identified, the contract has commercial substance and the collectability of the consideration is probable. The University evaluates each contract to determine the number of distinct performance obligations in the contract, which requires the use of judgment. Performance obligations are determined based on the nature of the services provided by the University. Tuition and fees are derived from academic services rendered by the University on campus and online, as well as from related educational resources that the University provides to its students, such as access to courses and online materials. The University recognizes revenue for academic services pro-rata over the applicable academic term. Scholarships provided to students by the University are reflected as a reduction of gross tuition and fees. Tuition and fees received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. Sales and services of auxiliary enterprises include housing services, food services, a bookstore, camps, and events. The University recognizes revenue for housing and certain food services proportionately over the applicable academic term. Fees related to housing and food received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. The University typically recognized revenue from other sales and services of auxiliary enterprises at the point in time sales occur or as services are rendered. The University’s accounts receivable represents unconditional rights to consideration from its contracts with customers. Typically, once a customer is invoiced for tuition, fees, and auxiliary services, payment is due immediately. Accounts receivable, net of allowance for doubtful accounts as of the years ended May 31, 2023 and May 31, 2022, were $759,231 and $757,318, respectively. The University does not present information about outstanding performance obligations as of year-end because its contracts with students all had original terms of less than one year. The University does not have any contract assets. The University had no costs that were capitalized to obtain or to fulfill a contract with a student. The University maintains an institutional tuition refund policy, which provides for all or a portion of tuition and fees to be refunded if a student withdraws during the stated refund period. The University does not record revenue for amounts that may be refunded. Contributions and Private Gifts Contributions and private gifts, including unconditional promises to give, are recognized as revenues in the period received. Conditional promises to give are not recognized until they become unconditional; that is, when the conditions on which they depend are substantially met. Contributions of assets other than cash are recorded at their estimated fair value. Contributions to be received after one year are discounted at an appropriate discount rate commensurate with the risks involved. Amortization of discounts is recorded as additional contribution revenue in accordance with donor-imposed restrictions, if any, on the contributions. As of May 31, 2023 and 2022, there were $15,000 and $18,000 unconditional promises to give respectively. Functional Expenses Costs of providing the University’s programs are reported in the statements of activities on a functional basis. Program expenses include costs directly associated with the program and other indirect costs determined to benefit that program. These costs have been allocated between functional categories program and supporting services based on estimates made by management. Impairment of Long-Lived Assets The University evaluates the recoverability of its long-lived assets for possible impairment when events or circumstances indicate that the carrying amounts may not be recoverable. Long-lived assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are independent of the cash flows of other groups of assets. If it is determined that the carrying amounts of such long-lived assets are not recoverable, the assets are written down to their fair value. See Note 8. Leases The University adopted FASB Topic 842, Leases, using the modified retrospective approach with June 1, 2022, as the date of initial adoption. The University elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the University to carry forward the historical lease classification. Adoption of the new standard did not impact the University’s changes in net assets and had no impact on beginning net assets or cash flows. The University determines whether an arrangement is or contains a lease at lease inception. Under ASC 842, a contract is (or contains) a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined under the standard as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. On the commencement date, operating leases are recorded as operating lease right-of-use (“ROU”) assets and operating lease liabilities in the statements of financial position. Finance leases are recorded as equipment and finance lease liabilities in the statements of financial position. ROU assets represent the University’s right to use an underlying asset for the lease term, and lease liabilities represent the University’s contractual obligation to make lease payments. The lease liability is measured as the present value of the lease payments over the lease term using either the rate implicit in the lease, if it is determinable, or the University’s incremental borrowing rate if the implicit rate is not determinable. ROU assets are calculated as the present value of the remaining lease payments plus unamortized initial direct costs and prepayments of rent, less any unamortized lease incentives received. Lease terms may include renewal or extension options to the extent they are reasonably certain to be exercised. For operating leases, lease expense is recognized on a straight-line basis over the lease term. For finance leases, amortization of the asset is recognized on a straight-line basis over the useful life of the underlying asset and interest on the lease liability is recognized over the lease term. The University has elected not to recognize a ROU asset and lease liability for leases with an initial term of 12 months or less but includes the expense associated with short-term leases in lease expense in the statements of activities. ROU assets are assessed for impairment in accordance with the University’s long-lived asset policy. Management reassesses lease classification and remeasures ROU assets and lease liabilities when a lease is modified and that modification is not accounted for as a separate new lease or upon certain other events that require reassessment in accordance with ASC 842. Reclassifications Certain reclassifications have been made to the fiscal 2022 financial statements to conform to the fiscal 2023 presentation. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. During the fiscal year ended May 31, 2020, the University received an unconditional promise to give in the amount of $24,000. The donor restricted funds for the purpose of funding soccer shelters that were constructed in the same fiscal year. Because of the immaterial nature of the pledge, it was not recorded at a discounted value. The following table provides more information surrounding the maturity of the pledges as of May 31, 2023.

Title: Note 12. Derivative Financial Instrument Accounting Policies: Note 2. Summary of Significant Accounting Policies Basis of Accounting The financial statements of the University have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Basis of Presentation For reporting purposes, the University’s financial statements have been prepared to focus on the organization as a whole. Resources are classified into two net asset categories based on the existence or absence of donor-imposed restrictions. Accordingly, the net assets of the University and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions - Net assets that are not subject to donor imposed restrictions and may be expended for any purpose in performing the mission and primary objectives of the University. These net assets may be used at the discretion of the University’s management and those charged with governance. Net Assets with Donor Restrictions - Net assets subject to stipulations imposed by donors and grantors. Some donor restrictions are temporary in nature; those restrictions will be met by actions of the University or by the passage of time. Other donor restrictions are perpetual in nature, whereby the donor has stipulated the funds be maintained in perpetuity. Contributions received with donor-imposed restrictions that are met in the same year as received are reported as revenues of the unrestricted net asset class. Expiration of restrictions on net assets as the result of the passage of time and/or fulfilling donor-imposed stipulations are reported as net assets released from restrictions between the applicable classes of net assets in the statement of activities. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents For the purposes of reporting cash flows, cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less, except for investments purchased with endowment and annuity assets, which are classified as long-term investments. Investments Investments in marketable securities are stated at fair value. Real estate investments are stated primarily at current appraised value. Securities not publicly traded are stated at estimated market value. Unrealized gains and losses are included in the changes in net assets. The estimated fair value of certain alternative investments, such as private equity interests, is determined by reference to the net asset values allocated to the University at the measurement date. The University believes the carrying amount of these financial instruments is a reasonable estimate of fair value. Because alternative investments are not readily marketable, their estimated value is subject to uncertainty and, therefore, may differ from the value that would have been used had a ready market for such investments existed. Such difference could be material. Net appreciation on endowment funds, whose income is unrestricted as to use, is required to be reported as net assets without donor restrictions unless such net appreciation has been restricted in perpetuity by the donor or by law. Accordingly, market appreciation on endowment funds without donor restrictions is classified in the accompanying financial statements as a part of net assets without donor restrictions. In those cases, where a donor has placed restrictions on the use of endowment income, any related net appreciation is also subject to the same restriction and is reported as part of net assets with donor restrictions until such time as the restriction has been met. See Note 6 for discussion of the University’s endowment spending policy. Accounts Receivable Student accounts receivable represent amounts due for tuition, fees, and room and board from currently enrolled and former students. The University extends unsecured credit to students and parents of dependent students in connection with their studies. Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a provision for bad debt expense and an adjustment to a valuation allowance based on its assessment of the current status of individual accounts and estimated collectability. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and a credit to accounts receivable. The allowance for doubtful accounts was $253,197 and $252,439 at May 31, 2023 and 2022, respectively. Charge-offs, net of recoveries, totaled $269,270 and $49,243 for the years ended May 31, 2023 and 2022, respectively. Provision for bad debt was $270,028 and $95,631 for years ended May 31, 2023 and 2022, respectively. Loans to Students Loans receivable are carried at unpaid principal balances, less an allowance for uncollectible loans. The allowance for uncollectible loans is increased by charges to income and decreased by charge-offs (net of recoveries). Management’s periodic evaluation of the adequacy of the allowance is based on Perkins loan program requirements, the University’s historical loan loss experience, specific impaired loans, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and current economic conditions. Loans are considered impaired if full principal or interest payments are not anticipated in accordance with the contractual terms. The University’s practice is to charge off any loan or portion of a loan when the loan is determined by management to be uncollectible due to the borrower’s failure to meet repayment terms, the borrower’s deteriorating or deteriorated financial condition, the depreciation of the underlying collateral, or for other reasons. Loans are placed on nonaccrual when management believes, after considering economic conditions, business conditions, and collection efforts that the loans are impaired or collection of interest is doubtful. Uncollected interest previously accrued is charged off or an allowance is established by a charge to interest income. Interest income on nonaccrual loans is recognized only to the extent cash payments are received. The amount of loans past due 90 days or more and still accruing interest as of May 31, 2023 and 2022 totaled $89,922 and $94,283, respectively. Interest on loans is recognized over the term of the loan and is calculated using the simple-interest method on principal amounts outstanding. Land, Buildings and Equipment Land, buildings and equipment are stated at cost at date of acquisition or fair value at date of donation in the case of gifts, less accumulated depreciation, computed on a straight-line basis over the estimated useful lives ranging from 5 to 75 years. Items having a useful life longer than one year and costing more than $5,000 are capitalized. Depreciation expense for fiscal years ended May 31, 2023 and 2022 was $2,418,466 and $2,143,214 respectively. Inventory Inventory is valued at the lower of cost on the first-in, first-out basis, and net realizable value. Inventory consists mainly of books, Bible class materials, and gift items sold by the Christian Store as well as goods to be sold from dining services. Income Taxes The University is exempt from federal income taxes under Section 501(c) (3) of the Internal Revenue Code; accordingly, no provision for income taxes is made in the financial statements. The University is current on filing its tax form 990 and form 990T. If interest and penalties are incurred such amounts are recognized in income tax expense. FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109, codified in ASC Topic 740 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attribute for tax positions taken or expected to be taken on a tax return including the entity’s status as a tax-exempt not-for-profit entity. Additionally, ASC 740 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosure. The University had no significant uncertain tax positions at May 31, 2023 or 2022. Endowment and Similar Funds The endowment and similar funds are subdivided into appropriate classifications. Endowment funds have been received from benefactors who, by the terms of their conveying instruments, have stipulated that the principal of their gifts may not be expended. Quasi-endowment funds are funds which the Board of Trustees of the University has determined are to be retained and invested until the Board, at its discretion, authorizes their expenditure. The principal of such funds may be either designated or undesignated as to use. Income derived from investments of endowment and similar funds is accounted for in the fund to which it is restricted, or if unrestricted, as revenues in unrestricted current funds. The Board of Trustees has established that, in the absence of further restrictions, 50 percent of the corpus of endowment gifts is to be recorded as net assets with donor restrictions held in perpetuity, since the University’s agreements did not explicitly state the amount of the gift that should be held in perpetuity. The remaining 50 percent is recorded as net assets with donor restrictions that are temporary in nature until those amounts are appropriated for expenditure for their donor restricted purpose, and is available to absorb market fluctuations and to award scholarships if the return on investment in any given year is not sufficient. Management has confirmed with donors the University’s interpretation of their endowment agreement. This correspondence effectively confirmed the donor’s intent for the amount of the gift that must be held in perpetuity. Subsequent to this confirmation, 50 percent of the corpus of these endowments was reclassified from net assets with donor restrictions held in perpetuity to net assets with donor restrictions that have purpose restrictions in accordance with the Board’s resolution. Tuition, Fees and Auxiliary Enterprises The University’s primary source of revenues from contracts with customers are from tuition, fees and sales and services of auxiliary enterprises. In accordance with the adoption of Accounting Standards Update (“ASU”) 2014-09, Revenues from Contracts with Customers, the University identifies a contract for revenue recognition when there is approval and commitment from both parties, the rights of the parties and payment terms are identified, the contract has commercial substance and the collectability of the consideration is probable. The University evaluates each contract to determine the number of distinct performance obligations in the contract, which requires the use of judgment. Performance obligations are determined based on the nature of the services provided by the University. Tuition and fees are derived from academic services rendered by the University on campus and online, as well as from related educational resources that the University provides to its students, such as access to courses and online materials. The University recognizes revenue for academic services pro-rata over the applicable academic term. Scholarships provided to students by the University are reflected as a reduction of gross tuition and fees. Tuition and fees received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. Sales and services of auxiliary enterprises include housing services, food services, a bookstore, camps, and events. The University recognizes revenue for housing and certain food services proportionately over the applicable academic term. Fees related to housing and food received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. The University typically recognized revenue from other sales and services of auxiliary enterprises at the point in time sales occur or as services are rendered. The University’s accounts receivable represents unconditional rights to consideration from its contracts with customers. Typically, once a customer is invoiced for tuition, fees, and auxiliary services, payment is due immediately. Accounts receivable, net of allowance for doubtful accounts as of the years ended May 31, 2023 and May 31, 2022, were $759,231 and $757,318, respectively. The University does not present information about outstanding performance obligations as of year-end because its contracts with students all had original terms of less than one year. The University does not have any contract assets. The University had no costs that were capitalized to obtain or to fulfill a contract with a student. The University maintains an institutional tuition refund policy, which provides for all or a portion of tuition and fees to be refunded if a student withdraws during the stated refund period. The University does not record revenue for amounts that may be refunded. Contributions and Private Gifts Contributions and private gifts, including unconditional promises to give, are recognized as revenues in the period received. Conditional promises to give are not recognized until they become unconditional; that is, when the conditions on which they depend are substantially met. Contributions of assets other than cash are recorded at their estimated fair value. Contributions to be received after one year are discounted at an appropriate discount rate commensurate with the risks involved. Amortization of discounts is recorded as additional contribution revenue in accordance with donor-imposed restrictions, if any, on the contributions. As of May 31, 2023 and 2022, there were $15,000 and $18,000 unconditional promises to give respectively. Functional Expenses Costs of providing the University’s programs are reported in the statements of activities on a functional basis. Program expenses include costs directly associated with the program and other indirect costs determined to benefit that program. These costs have been allocated between functional categories program and supporting services based on estimates made by management. Impairment of Long-Lived Assets The University evaluates the recoverability of its long-lived assets for possible impairment when events or circumstances indicate that the carrying amounts may not be recoverable. Long-lived assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are independent of the cash flows of other groups of assets. If it is determined that the carrying amounts of such long-lived assets are not recoverable, the assets are written down to their fair value. See Note 8. Leases The University adopted FASB Topic 842, Leases, using the modified retrospective approach with June 1, 2022, as the date of initial adoption. The University elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the University to carry forward the historical lease classification. Adoption of the new standard did not impact the University’s changes in net assets and had no impact on beginning net assets or cash flows. The University determines whether an arrangement is or contains a lease at lease inception. Under ASC 842, a contract is (or contains) a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined under the standard as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. On the commencement date, operating leases are recorded as operating lease right-of-use (“ROU”) assets and operating lease liabilities in the statements of financial position. Finance leases are recorded as equipment and finance lease liabilities in the statements of financial position. ROU assets represent the University’s right to use an underlying asset for the lease term, and lease liabilities represent the University’s contractual obligation to make lease payments. The lease liability is measured as the present value of the lease payments over the lease term using either the rate implicit in the lease, if it is determinable, or the University’s incremental borrowing rate if the implicit rate is not determinable. ROU assets are calculated as the present value of the remaining lease payments plus unamortized initial direct costs and prepayments of rent, less any unamortized lease incentives received. Lease terms may include renewal or extension options to the extent they are reasonably certain to be exercised. For operating leases, lease expense is recognized on a straight-line basis over the lease term. For finance leases, amortization of the asset is recognized on a straight-line basis over the useful life of the underlying asset and interest on the lease liability is recognized over the lease term. The University has elected not to recognize a ROU asset and lease liability for leases with an initial term of 12 months or less but includes the expense associated with short-term leases in lease expense in the statements of activities. ROU assets are assessed for impairment in accordance with the University’s long-lived asset policy. Management reassesses lease classification and remeasures ROU assets and lease liabilities when a lease is modified and that modification is not accounted for as a separate new lease or upon certain other events that require reassessment in accordance with ASC 842. Reclassifications Certain reclassifications have been made to the fiscal 2022 financial statements to conform to the fiscal 2023 presentation. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The University has a bank loan agreement with variable interest rates based on a function of LIBOR. On May 31, 2019, the University entered an interest rate swap arrangement that effectively fixed the otherwise variable LIBOR based component of the debt instrument. The University’s swap arrangement in effect at May 31, 2023 is as follows: The University’s purpose in entering this swap arrangement is to hedge against the risk of interest rate increases on the portion of the related variable rate debt that is covered by the swap arrangement. The derivative financial instrument is not held for trading purposes. The notional amount of the swap arrangement at May 31, 2023 and 2022 was $11,664,350 and $12,421,595, respectively. The fair value of the derivative financial instrument resulted in an asset totaling $861,939 and $343,662 on May 31, 2023 and 2022 respectively. The estimated fair value of the University’s interest rate swap is reported on the face of the statement of financial position as fair value of derivative instrument. The change in the fair value of derivative is disclosed on the face of the statement of activities.

Title: Note 13. Net Asset Designation Accounting Policies: Note 2. Summary of Significant Accounting Policies Basis of Accounting The financial statements of the University have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Basis of Presentation For reporting purposes, the University’s financial statements have been prepared to focus on the organization as a whole. Resources are classified into two net asset categories based on the existence or absence of donor-imposed restrictions. Accordingly, the net assets of the University and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions - Net assets that are not subject to donor imposed restrictions and may be expended for any purpose in performing the mission and primary objectives of the University. These net assets may be used at the discretion of the University’s management and those charged with governance. Net Assets with Donor Restrictions - Net assets subject to stipulations imposed by donors and grantors. Some donor restrictions are temporary in nature; those restrictions will be met by actions of the University or by the passage of time. Other donor restrictions are perpetual in nature, whereby the donor has stipulated the funds be maintained in perpetuity. Contributions received with donor-imposed restrictions that are met in the same year as received are reported as revenues of the unrestricted net asset class. Expiration of restrictions on net assets as the result of the passage of time and/or fulfilling donor-imposed stipulations are reported as net assets released from restrictions between the applicable classes of net assets in the statement of activities. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents For the purposes of reporting cash flows, cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less, except for investments purchased with endowment and annuity assets, which are classified as long-term investments. Investments Investments in marketable securities are stated at fair value. Real estate investments are stated primarily at current appraised value. Securities not publicly traded are stated at estimated market value. Unrealized gains and losses are included in the changes in net assets. The estimated fair value of certain alternative investments, such as private equity interests, is determined by reference to the net asset values allocated to the University at the measurement date. The University believes the carrying amount of these financial instruments is a reasonable estimate of fair value. Because alternative investments are not readily marketable, their estimated value is subject to uncertainty and, therefore, may differ from the value that would have been used had a ready market for such investments existed. Such difference could be material. Net appreciation on endowment funds, whose income is unrestricted as to use, is required to be reported as net assets without donor restrictions unless such net appreciation has been restricted in perpetuity by the donor or by law. Accordingly, market appreciation on endowment funds without donor restrictions is classified in the accompanying financial statements as a part of net assets without donor restrictions. In those cases, where a donor has placed restrictions on the use of endowment income, any related net appreciation is also subject to the same restriction and is reported as part of net assets with donor restrictions until such time as the restriction has been met. See Note 6 for discussion of the University’s endowment spending policy. Accounts Receivable Student accounts receivable represent amounts due for tuition, fees, and room and board from currently enrolled and former students. The University extends unsecured credit to students and parents of dependent students in connection with their studies. Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a provision for bad debt expense and an adjustment to a valuation allowance based on its assessment of the current status of individual accounts and estimated collectability. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and a credit to accounts receivable. The allowance for doubtful accounts was $253,197 and $252,439 at May 31, 2023 and 2022, respectively. Charge-offs, net of recoveries, totaled $269,270 and $49,243 for the years ended May 31, 2023 and 2022, respectively. Provision for bad debt was $270,028 and $95,631 for years ended May 31, 2023 and 2022, respectively. Loans to Students Loans receivable are carried at unpaid principal balances, less an allowance for uncollectible loans. The allowance for uncollectible loans is increased by charges to income and decreased by charge-offs (net of recoveries). Management’s periodic evaluation of the adequacy of the allowance is based on Perkins loan program requirements, the University’s historical loan loss experience, specific impaired loans, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and current economic conditions. Loans are considered impaired if full principal or interest payments are not anticipated in accordance with the contractual terms. The University’s practice is to charge off any loan or portion of a loan when the loan is determined by management to be uncollectible due to the borrower’s failure to meet repayment terms, the borrower’s deteriorating or deteriorated financial condition, the depreciation of the underlying collateral, or for other reasons. Loans are placed on nonaccrual when management believes, after considering economic conditions, business conditions, and collection efforts that the loans are impaired or collection of interest is doubtful. Uncollected interest previously accrued is charged off or an allowance is established by a charge to interest income. Interest income on nonaccrual loans is recognized only to the extent cash payments are received. The amount of loans past due 90 days or more and still accruing interest as of May 31, 2023 and 2022 totaled $89,922 and $94,283, respectively. Interest on loans is recognized over the term of the loan and is calculated using the simple-interest method on principal amounts outstanding. Land, Buildings and Equipment Land, buildings and equipment are stated at cost at date of acquisition or fair value at date of donation in the case of gifts, less accumulated depreciation, computed on a straight-line basis over the estimated useful lives ranging from 5 to 75 years. Items having a useful life longer than one year and costing more than $5,000 are capitalized. Depreciation expense for fiscal years ended May 31, 2023 and 2022 was $2,418,466 and $2,143,214 respectively. Inventory Inventory is valued at the lower of cost on the first-in, first-out basis, and net realizable value. Inventory consists mainly of books, Bible class materials, and gift items sold by the Christian Store as well as goods to be sold from dining services. Income Taxes The University is exempt from federal income taxes under Section 501(c) (3) of the Internal Revenue Code; accordingly, no provision for income taxes is made in the financial statements. The University is current on filing its tax form 990 and form 990T. If interest and penalties are incurred such amounts are recognized in income tax expense. FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109, codified in ASC Topic 740 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attribute for tax positions taken or expected to be taken on a tax return including the entity’s status as a tax-exempt not-for-profit entity. Additionally, ASC 740 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosure. The University had no significant uncertain tax positions at May 31, 2023 or 2022. Endowment and Similar Funds The endowment and similar funds are subdivided into appropriate classifications. Endowment funds have been received from benefactors who, by the terms of their conveying instruments, have stipulated that the principal of their gifts may not be expended. Quasi-endowment funds are funds which the Board of Trustees of the University has determined are to be retained and invested until the Board, at its discretion, authorizes their expenditure. The principal of such funds may be either designated or undesignated as to use. Income derived from investments of endowment and similar funds is accounted for in the fund to which it is restricted, or if unrestricted, as revenues in unrestricted current funds. The Board of Trustees has established that, in the absence of further restrictions, 50 percent of the corpus of endowment gifts is to be recorded as net assets with donor restrictions held in perpetuity, since the University’s agreements did not explicitly state the amount of the gift that should be held in perpetuity. The remaining 50 percent is recorded as net assets with donor restrictions that are temporary in nature until those amounts are appropriated for expenditure for their donor restricted purpose, and is available to absorb market fluctuations and to award scholarships if the return on investment in any given year is not sufficient. Management has confirmed with donors the University’s interpretation of their endowment agreement. This correspondence effectively confirmed the donor’s intent for the amount of the gift that must be held in perpetuity. Subsequent to this confirmation, 50 percent of the corpus of these endowments was reclassified from net assets with donor restrictions held in perpetuity to net assets with donor restrictions that have purpose restrictions in accordance with the Board’s resolution. Tuition, Fees and Auxiliary Enterprises The University’s primary source of revenues from contracts with customers are from tuition, fees and sales and services of auxiliary enterprises. In accordance with the adoption of Accounting Standards Update (“ASU”) 2014-09, Revenues from Contracts with Customers, the University identifies a contract for revenue recognition when there is approval and commitment from both parties, the rights of the parties and payment terms are identified, the contract has commercial substance and the collectability of the consideration is probable. The University evaluates each contract to determine the number of distinct performance obligations in the contract, which requires the use of judgment. Performance obligations are determined based on the nature of the services provided by the University. Tuition and fees are derived from academic services rendered by the University on campus and online, as well as from related educational resources that the University provides to its students, such as access to courses and online materials. The University recognizes revenue for academic services pro-rata over the applicable academic term. Scholarships provided to students by the University are reflected as a reduction of gross tuition and fees. Tuition and fees received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. Sales and services of auxiliary enterprises include housing services, food services, a bookstore, camps, and events. The University recognizes revenue for housing and certain food services proportionately over the applicable academic term. Fees related to housing and food received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. The University typically recognized revenue from other sales and services of auxiliary enterprises at the point in time sales occur or as services are rendered. The University’s accounts receivable represents unconditional rights to consideration from its contracts with customers. Typically, once a customer is invoiced for tuition, fees, and auxiliary services, payment is due immediately. Accounts receivable, net of allowance for doubtful accounts as of the years ended May 31, 2023 and May 31, 2022, were $759,231 and $757,318, respectively. The University does not present information about outstanding performance obligations as of year-end because its contracts with students all had original terms of less than one year. The University does not have any contract assets. The University had no costs that were capitalized to obtain or to fulfill a contract with a student. The University maintains an institutional tuition refund policy, which provides for all or a portion of tuition and fees to be refunded if a student withdraws during the stated refund period. The University does not record revenue for amounts that may be refunded. Contributions and Private Gifts Contributions and private gifts, including unconditional promises to give, are recognized as revenues in the period received. Conditional promises to give are not recognized until they become unconditional; that is, when the conditions on which they depend are substantially met. Contributions of assets other than cash are recorded at their estimated fair value. Contributions to be received after one year are discounted at an appropriate discount rate commensurate with the risks involved. Amortization of discounts is recorded as additional contribution revenue in accordance with donor-imposed restrictions, if any, on the contributions. As of May 31, 2023 and 2022, there were $15,000 and $18,000 unconditional promises to give respectively. Functional Expenses Costs of providing the University’s programs are reported in the statements of activities on a functional basis. Program expenses include costs directly associated with the program and other indirect costs determined to benefit that program. These costs have been allocated between functional categories program and supporting services based on estimates made by management. Impairment of Long-Lived Assets The University evaluates the recoverability of its long-lived assets for possible impairment when events or circumstances indicate that the carrying amounts may not be recoverable. Long-lived assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are independent of the cash flows of other groups of assets. If it is determined that the carrying amounts of such long-lived assets are not recoverable, the assets are written down to their fair value. See Note 8. Leases The University adopted FASB Topic 842, Leases, using the modified retrospective approach with June 1, 2022, as the date of initial adoption. The University elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the University to carry forward the historical lease classification. Adoption of the new standard did not impact the University’s changes in net assets and had no impact on beginning net assets or cash flows. The University determines whether an arrangement is or contains a lease at lease inception. Under ASC 842, a contract is (or contains) a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined under the standard as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. On the commencement date, operating leases are recorded as operating lease right-of-use (“ROU”) assets and operating lease liabilities in the statements of financial position. Finance leases are recorded as equipment and finance lease liabilities in the statements of financial position. ROU assets represent the University’s right to use an underlying asset for the lease term, and lease liabilities represent the University’s contractual obligation to make lease payments. The lease liability is measured as the present value of the lease payments over the lease term using either the rate implicit in the lease, if it is determinable, or the University’s incremental borrowing rate if the implicit rate is not determinable. ROU assets are calculated as the present value of the remaining lease payments plus unamortized initial direct costs and prepayments of rent, less any unamortized lease incentives received. Lease terms may include renewal or extension options to the extent they are reasonably certain to be exercised. For operating leases, lease expense is recognized on a straight-line basis over the lease term. For finance leases, amortization of the asset is recognized on a straight-line basis over the useful life of the underlying asset and interest on the lease liability is recognized over the lease term. The University has elected not to recognize a ROU asset and lease liability for leases with an initial term of 12 months or less but includes the expense associated with short-term leases in lease expense in the statements of activities. ROU assets are assessed for impairment in accordance with the University’s long-lived asset policy. Management reassesses lease classification and remeasures ROU assets and lease liabilities when a lease is modified and that modification is not accounted for as a separate new lease or upon certain other events that require reassessment in accordance with ASC 842. Reclassifications Certain reclassifications have been made to the fiscal 2022 financial statements to conform to the fiscal 2023 presentation. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. Net assets without donor restrictions are as follows for the years ended May 31, 2023 and 2022: Net assets with donor restrictions are as follows for the years ended May 31, 2023 and 2022:

Title: Note 14. Private Gifts and Grants Accounting Policies: Note 2. Summary of Significant Accounting Policies Basis of Accounting The financial statements of the University have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Basis of Presentation For reporting purposes, the University’s financial statements have been prepared to focus on the organization as a whole. Resources are classified into two net asset categories based on the existence or absence of donor-imposed restrictions. Accordingly, the net assets of the University and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions - Net assets that are not subject to donor imposed restrictions and may be expended for any purpose in performing the mission and primary objectives of the University. These net assets may be used at the discretion of the University’s management and those charged with governance. Net Assets with Donor Restrictions - Net assets subject to stipulations imposed by donors and grantors. Some donor restrictions are temporary in nature; those restrictions will be met by actions of the University or by the passage of time. Other donor restrictions are perpetual in nature, whereby the donor has stipulated the funds be maintained in perpetuity. Contributions received with donor-imposed restrictions that are met in the same year as received are reported as revenues of the unrestricted net asset class. Expiration of restrictions on net assets as the result of the passage of time and/or fulfilling donor-imposed stipulations are reported as net assets released from restrictions between the applicable classes of net assets in the statement of activities. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents For the purposes of reporting cash flows, cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less, except for investments purchased with endowment and annuity assets, which are classified as long-term investments. Investments Investments in marketable securities are stated at fair value. Real estate investments are stated primarily at current appraised value. Securities not publicly traded are stated at estimated market value. Unrealized gains and losses are included in the changes in net assets. The estimated fair value of certain alternative investments, such as private equity interests, is determined by reference to the net asset values allocated to the University at the measurement date. The University believes the carrying amount of these financial instruments is a reasonable estimate of fair value. Because alternative investments are not readily marketable, their estimated value is subject to uncertainty and, therefore, may differ from the value that would have been used had a ready market for such investments existed. Such difference could be material. Net appreciation on endowment funds, whose income is unrestricted as to use, is required to be reported as net assets without donor restrictions unless such net appreciation has been restricted in perpetuity by the donor or by law. Accordingly, market appreciation on endowment funds without donor restrictions is classified in the accompanying financial statements as a part of net assets without donor restrictions. In those cases, where a donor has placed restrictions on the use of endowment income, any related net appreciation is also subject to the same restriction and is reported as part of net assets with donor restrictions until such time as the restriction has been met. See Note 6 for discussion of the University’s endowment spending policy. Accounts Receivable Student accounts receivable represent amounts due for tuition, fees, and room and board from currently enrolled and former students. The University extends unsecured credit to students and parents of dependent students in connection with their studies. Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a provision for bad debt expense and an adjustment to a valuation allowance based on its assessment of the current status of individual accounts and estimated collectability. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and a credit to accounts receivable. The allowance for doubtful accounts was $253,197 and $252,439 at May 31, 2023 and 2022, respectively. Charge-offs, net of recoveries, totaled $269,270 and $49,243 for the years ended May 31, 2023 and 2022, respectively. Provision for bad debt was $270,028 and $95,631 for years ended May 31, 2023 and 2022, respectively. Loans to Students Loans receivable are carried at unpaid principal balances, less an allowance for uncollectible loans. The allowance for uncollectible loans is increased by charges to income and decreased by charge-offs (net of recoveries). Management’s periodic evaluation of the adequacy of the allowance is based on Perkins loan program requirements, the University’s historical loan loss experience, specific impaired loans, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and current economic conditions. Loans are considered impaired if full principal or interest payments are not anticipated in accordance with the contractual terms. The University’s practice is to charge off any loan or portion of a loan when the loan is determined by management to be uncollectible due to the borrower’s failure to meet repayment terms, the borrower’s deteriorating or deteriorated financial condition, the depreciation of the underlying collateral, or for other reasons. Loans are placed on nonaccrual when management believes, after considering economic conditions, business conditions, and collection efforts that the loans are impaired or collection of interest is doubtful. Uncollected interest previously accrued is charged off or an allowance is established by a charge to interest income. Interest income on nonaccrual loans is recognized only to the extent cash payments are received. The amount of loans past due 90 days or more and still accruing interest as of May 31, 2023 and 2022 totaled $89,922 and $94,283, respectively. Interest on loans is recognized over the term of the loan and is calculated using the simple-interest method on principal amounts outstanding. Land, Buildings and Equipment Land, buildings and equipment are stated at cost at date of acquisition or fair value at date of donation in the case of gifts, less accumulated depreciation, computed on a straight-line basis over the estimated useful lives ranging from 5 to 75 years. Items having a useful life longer than one year and costing more than $5,000 are capitalized. Depreciation expense for fiscal years ended May 31, 2023 and 2022 was $2,418,466 and $2,143,214 respectively. Inventory Inventory is valued at the lower of cost on the first-in, first-out basis, and net realizable value. Inventory consists mainly of books, Bible class materials, and gift items sold by the Christian Store as well as goods to be sold from dining services. Income Taxes The University is exempt from federal income taxes under Section 501(c) (3) of the Internal Revenue Code; accordingly, no provision for income taxes is made in the financial statements. The University is current on filing its tax form 990 and form 990T. If interest and penalties are incurred such amounts are recognized in income tax expense. FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109, codified in ASC Topic 740 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attribute for tax positions taken or expected to be taken on a tax return including the entity’s status as a tax-exempt not-for-profit entity. Additionally, ASC 740 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosure. The University had no significant uncertain tax positions at May 31, 2023 or 2022. Endowment and Similar Funds The endowment and similar funds are subdivided into appropriate classifications. Endowment funds have been received from benefactors who, by the terms of their conveying instruments, have stipulated that the principal of their gifts may not be expended. Quasi-endowment funds are funds which the Board of Trustees of the University has determined are to be retained and invested until the Board, at its discretion, authorizes their expenditure. The principal of such funds may be either designated or undesignated as to use. Income derived from investments of endowment and similar funds is accounted for in the fund to which it is restricted, or if unrestricted, as revenues in unrestricted current funds. The Board of Trustees has established that, in the absence of further restrictions, 50 percent of the corpus of endowment gifts is to be recorded as net assets with donor restrictions held in perpetuity, since the University’s agreements did not explicitly state the amount of the gift that should be held in perpetuity. The remaining 50 percent is recorded as net assets with donor restrictions that are temporary in nature until those amounts are appropriated for expenditure for their donor restricted purpose, and is available to absorb market fluctuations and to award scholarships if the return on investment in any given year is not sufficient. Management has confirmed with donors the University’s interpretation of their endowment agreement. This correspondence effectively confirmed the donor’s intent for the amount of the gift that must be held in perpetuity. Subsequent to this confirmation, 50 percent of the corpus of these endowments was reclassified from net assets with donor restrictions held in perpetuity to net assets with donor restrictions that have purpose restrictions in accordance with the Board’s resolution. Tuition, Fees and Auxiliary Enterprises The University’s primary source of revenues from contracts with customers are from tuition, fees and sales and services of auxiliary enterprises. In accordance with the adoption of Accounting Standards Update (“ASU”) 2014-09, Revenues from Contracts with Customers, the University identifies a contract for revenue recognition when there is approval and commitment from both parties, the rights of the parties and payment terms are identified, the contract has commercial substance and the collectability of the consideration is probable. The University evaluates each contract to determine the number of distinct performance obligations in the contract, which requires the use of judgment. Performance obligations are determined based on the nature of the services provided by the University. Tuition and fees are derived from academic services rendered by the University on campus and online, as well as from related educational resources that the University provides to its students, such as access to courses and online materials. The University recognizes revenue for academic services pro-rata over the applicable academic term. Scholarships provided to students by the University are reflected as a reduction of gross tuition and fees. Tuition and fees received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. Sales and services of auxiliary enterprises include housing services, food services, a bookstore, camps, and events. The University recognizes revenue for housing and certain food services proportionately over the applicable academic term. Fees related to housing and food received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. The University typically recognized revenue from other sales and services of auxiliary enterprises at the point in time sales occur or as services are rendered. The University’s accounts receivable represents unconditional rights to consideration from its contracts with customers. Typically, once a customer is invoiced for tuition, fees, and auxiliary services, payment is due immediately. Accounts receivable, net of allowance for doubtful accounts as of the years ended May 31, 2023 and May 31, 2022, were $759,231 and $757,318, respectively. The University does not present information about outstanding performance obligations as of year-end because its contracts with students all had original terms of less than one year. The University does not have any contract assets. The University had no costs that were capitalized to obtain or to fulfill a contract with a student. The University maintains an institutional tuition refund policy, which provides for all or a portion of tuition and fees to be refunded if a student withdraws during the stated refund period. The University does not record revenue for amounts that may be refunded. Contributions and Private Gifts Contributions and private gifts, including unconditional promises to give, are recognized as revenues in the period received. Conditional promises to give are not recognized until they become unconditional; that is, when the conditions on which they depend are substantially met. Contributions of assets other than cash are recorded at their estimated fair value. Contributions to be received after one year are discounted at an appropriate discount rate commensurate with the risks involved. Amortization of discounts is recorded as additional contribution revenue in accordance with donor-imposed restrictions, if any, on the contributions. As of May 31, 2023 and 2022, there were $15,000 and $18,000 unconditional promises to give respectively. Functional Expenses Costs of providing the University’s programs are reported in the statements of activities on a functional basis. Program expenses include costs directly associated with the program and other indirect costs determined to benefit that program. These costs have been allocated between functional categories program and supporting services based on estimates made by management. Impairment of Long-Lived Assets The University evaluates the recoverability of its long-lived assets for possible impairment when events or circumstances indicate that the carrying amounts may not be recoverable. Long-lived assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are independent of the cash flows of other groups of assets. If it is determined that the carrying amounts of such long-lived assets are not recoverable, the assets are written down to their fair value. See Note 8. Leases The University adopted FASB Topic 842, Leases, using the modified retrospective approach with June 1, 2022, as the date of initial adoption. The University elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the University to carry forward the historical lease classification. Adoption of the new standard did not impact the University’s changes in net assets and had no impact on beginning net assets or cash flows. The University determines whether an arrangement is or contains a lease at lease inception. Under ASC 842, a contract is (or contains) a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined under the standard as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. On the commencement date, operating leases are recorded as operating lease right-of-use (“ROU”) assets and operating lease liabilities in the statements of financial position. Finance leases are recorded as equipment and finance lease liabilities in the statements of financial position. ROU assets represent the University’s right to use an underlying asset for the lease term, and lease liabilities represent the University’s contractual obligation to make lease payments. The lease liability is measured as the present value of the lease payments over the lease term using either the rate implicit in the lease, if it is determinable, or the University’s incremental borrowing rate if the implicit rate is not determinable. ROU assets are calculated as the present value of the remaining lease payments plus unamortized initial direct costs and prepayments of rent, less any unamortized lease incentives received. Lease terms may include renewal or extension options to the extent they are reasonably certain to be exercised. For operating leases, lease expense is recognized on a straight-line basis over the lease term. For finance leases, amortization of the asset is recognized on a straight-line basis over the useful life of the underlying asset and interest on the lease liability is recognized over the lease term. The University has elected not to recognize a ROU asset and lease liability for leases with an initial term of 12 months or less but includes the expense associated with short-term leases in lease expense in the statements of activities. ROU assets are assessed for impairment in accordance with the University’s long-lived asset policy. Management reassesses lease classification and remeasures ROU assets and lease liabilities when a lease is modified and that modification is not accounted for as a separate new lease or upon certain other events that require reassessment in accordance with ASC 842. Reclassifications Certain reclassifications have been made to the fiscal 2022 financial statements to conform to the fiscal 2023 presentation. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The University had total private gifts and contributions of $14,964,877 and $18,777,537 for the years ended May 31, 2023 and 2022, respectively. Operating private gifts and grants consist of the following for the years ended May 31, 2023 and 2022:

Title: Note 15. Net Assets Released from Restrictions Accounting Policies: Note 2. Summary of Significant Accounting Policies Basis of Accounting The financial statements of the University have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Basis of Presentation For reporting purposes, the University’s financial statements have been prepared to focus on the organization as a whole. Resources are classified into two net asset categories based on the existence or absence of donor-imposed restrictions. Accordingly, the net assets of the University and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions - Net assets that are not subject to donor imposed restrictions and may be expended for any purpose in performing the mission and primary objectives of the University. These net assets may be used at the discretion of the University’s management and those charged with governance. Net Assets with Donor Restrictions - Net assets subject to stipulations imposed by donors and grantors. Some donor restrictions are temporary in nature; those restrictions will be met by actions of the University or by the passage of time. Other donor restrictions are perpetual in nature, whereby the donor has stipulated the funds be maintained in perpetuity. Contributions received with donor-imposed restrictions that are met in the same year as received are reported as revenues of the unrestricted net asset class. Expiration of restrictions on net assets as the result of the passage of time and/or fulfilling donor-imposed stipulations are reported as net assets released from restrictions between the applicable classes of net assets in the statement of activities. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents For the purposes of reporting cash flows, cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less, except for investments purchased with endowment and annuity assets, which are classified as long-term investments. Investments Investments in marketable securities are stated at fair value. Real estate investments are stated primarily at current appraised value. Securities not publicly traded are stated at estimated market value. Unrealized gains and losses are included in the changes in net assets. The estimated fair value of certain alternative investments, such as private equity interests, is determined by reference to the net asset values allocated to the University at the measurement date. The University believes the carrying amount of these financial instruments is a reasonable estimate of fair value. Because alternative investments are not readily marketable, their estimated value is subject to uncertainty and, therefore, may differ from the value that would have been used had a ready market for such investments existed. Such difference could be material. Net appreciation on endowment funds, whose income is unrestricted as to use, is required to be reported as net assets without donor restrictions unless such net appreciation has been restricted in perpetuity by the donor or by law. Accordingly, market appreciation on endowment funds without donor restrictions is classified in the accompanying financial statements as a part of net assets without donor restrictions. In those cases, where a donor has placed restrictions on the use of endowment income, any related net appreciation is also subject to the same restriction and is reported as part of net assets with donor restrictions until such time as the restriction has been met. See Note 6 for discussion of the University’s endowment spending policy. Accounts Receivable Student accounts receivable represent amounts due for tuition, fees, and room and board from currently enrolled and former students. The University extends unsecured credit to students and parents of dependent students in connection with their studies. Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a provision for bad debt expense and an adjustment to a valuation allowance based on its assessment of the current status of individual accounts and estimated collectability. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and a credit to accounts receivable. The allowance for doubtful accounts was $253,197 and $252,439 at May 31, 2023 and 2022, respectively. Charge-offs, net of recoveries, totaled $269,270 and $49,243 for the years ended May 31, 2023 and 2022, respectively. Provision for bad debt was $270,028 and $95,631 for years ended May 31, 2023 and 2022, respectively. Loans to Students Loans receivable are carried at unpaid principal balances, less an allowance for uncollectible loans. The allowance for uncollectible loans is increased by charges to income and decreased by charge-offs (net of recoveries). Management’s periodic evaluation of the adequacy of the allowance is based on Perkins loan program requirements, the University’s historical loan loss experience, specific impaired loans, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and current economic conditions. Loans are considered impaired if full principal or interest payments are not anticipated in accordance with the contractual terms. The University’s practice is to charge off any loan or portion of a loan when the loan is determined by management to be uncollectible due to the borrower’s failure to meet repayment terms, the borrower’s deteriorating or deteriorated financial condition, the depreciation of the underlying collateral, or for other reasons. Loans are placed on nonaccrual when management believes, after considering economic conditions, business conditions, and collection efforts that the loans are impaired or collection of interest is doubtful. Uncollected interest previously accrued is charged off or an allowance is established by a charge to interest income. Interest income on nonaccrual loans is recognized only to the extent cash payments are received. The amount of loans past due 90 days or more and still accruing interest as of May 31, 2023 and 2022 totaled $89,922 and $94,283, respectively. Interest on loans is recognized over the term of the loan and is calculated using the simple-interest method on principal amounts outstanding. Land, Buildings and Equipment Land, buildings and equipment are stated at cost at date of acquisition or fair value at date of donation in the case of gifts, less accumulated depreciation, computed on a straight-line basis over the estimated useful lives ranging from 5 to 75 years. Items having a useful life longer than one year and costing more than $5,000 are capitalized. Depreciation expense for fiscal years ended May 31, 2023 and 2022 was $2,418,466 and $2,143,214 respectively. Inventory Inventory is valued at the lower of cost on the first-in, first-out basis, and net realizable value. Inventory consists mainly of books, Bible class materials, and gift items sold by the Christian Store as well as goods to be sold from dining services. Income Taxes The University is exempt from federal income taxes under Section 501(c) (3) of the Internal Revenue Code; accordingly, no provision for income taxes is made in the financial statements. The University is current on filing its tax form 990 and form 990T. If interest and penalties are incurred such amounts are recognized in income tax expense. FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109, codified in ASC Topic 740 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attribute for tax positions taken or expected to be taken on a tax return including the entity’s status as a tax-exempt not-for-profit entity. Additionally, ASC 740 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosure. The University had no significant uncertain tax positions at May 31, 2023 or 2022. Endowment and Similar Funds The endowment and similar funds are subdivided into appropriate classifications. Endowment funds have been received from benefactors who, by the terms of their conveying instruments, have stipulated that the principal of their gifts may not be expended. Quasi-endowment funds are funds which the Board of Trustees of the University has determined are to be retained and invested until the Board, at its discretion, authorizes their expenditure. The principal of such funds may be either designated or undesignated as to use. Income derived from investments of endowment and similar funds is accounted for in the fund to which it is restricted, or if unrestricted, as revenues in unrestricted current funds. The Board of Trustees has established that, in the absence of further restrictions, 50 percent of the corpus of endowment gifts is to be recorded as net assets with donor restrictions held in perpetuity, since the University’s agreements did not explicitly state the amount of the gift that should be held in perpetuity. The remaining 50 percent is recorded as net assets with donor restrictions that are temporary in nature until those amounts are appropriated for expenditure for their donor restricted purpose, and is available to absorb market fluctuations and to award scholarships if the return on investment in any given year is not sufficient. Management has confirmed with donors the University’s interpretation of their endowment agreement. This correspondence effectively confirmed the donor’s intent for the amount of the gift that must be held in perpetuity. Subsequent to this confirmation, 50 percent of the corpus of these endowments was reclassified from net assets with donor restrictions held in perpetuity to net assets with donor restrictions that have purpose restrictions in accordance with the Board’s resolution. Tuition, Fees and Auxiliary Enterprises The University’s primary source of revenues from contracts with customers are from tuition, fees and sales and services of auxiliary enterprises. In accordance with the adoption of Accounting Standards Update (“ASU”) 2014-09, Revenues from Contracts with Customers, the University identifies a contract for revenue recognition when there is approval and commitment from both parties, the rights of the parties and payment terms are identified, the contract has commercial substance and the collectability of the consideration is probable. The University evaluates each contract to determine the number of distinct performance obligations in the contract, which requires the use of judgment. Performance obligations are determined based on the nature of the services provided by the University. Tuition and fees are derived from academic services rendered by the University on campus and online, as well as from related educational resources that the University provides to its students, such as access to courses and online materials. The University recognizes revenue for academic services pro-rata over the applicable academic term. Scholarships provided to students by the University are reflected as a reduction of gross tuition and fees. Tuition and fees received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. Sales and services of auxiliary enterprises include housing services, food services, a bookstore, camps, and events. The University recognizes revenue for housing and certain food services proportionately over the applicable academic term. Fees related to housing and food received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. The University typically recognized revenue from other sales and services of auxiliary enterprises at the point in time sales occur or as services are rendered. The University’s accounts receivable represents unconditional rights to consideration from its contracts with customers. Typically, once a customer is invoiced for tuition, fees, and auxiliary services, payment is due immediately. Accounts receivable, net of allowance for doubtful accounts as of the years ended May 31, 2023 and May 31, 2022, were $759,231 and $757,318, respectively. The University does not present information about outstanding performance obligations as of year-end because its contracts with students all had original terms of less than one year. The University does not have any contract assets. The University had no costs that were capitalized to obtain or to fulfill a contract with a student. The University maintains an institutional tuition refund policy, which provides for all or a portion of tuition and fees to be refunded if a student withdraws during the stated refund period. The University does not record revenue for amounts that may be refunded. Contributions and Private Gifts Contributions and private gifts, including unconditional promises to give, are recognized as revenues in the period received. Conditional promises to give are not recognized until they become unconditional; that is, when the conditions on which they depend are substantially met. Contributions of assets other than cash are recorded at their estimated fair value. Contributions to be received after one year are discounted at an appropriate discount rate commensurate with the risks involved. Amortization of discounts is recorded as additional contribution revenue in accordance with donor-imposed restrictions, if any, on the contributions. As of May 31, 2023 and 2022, there were $15,000 and $18,000 unconditional promises to give respectively. Functional Expenses Costs of providing the University’s programs are reported in the statements of activities on a functional basis. Program expenses include costs directly associated with the program and other indirect costs determined to benefit that program. These costs have been allocated between functional categories program and supporting services based on estimates made by management. Impairment of Long-Lived Assets The University evaluates the recoverability of its long-lived assets for possible impairment when events or circumstances indicate that the carrying amounts may not be recoverable. Long-lived assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are independent of the cash flows of other groups of assets. If it is determined that the carrying amounts of such long-lived assets are not recoverable, the assets are written down to their fair value. See Note 8. Leases The University adopted FASB Topic 842, Leases, using the modified retrospective approach with June 1, 2022, as the date of initial adoption. The University elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the University to carry forward the historical lease classification. Adoption of the new standard did not impact the University’s changes in net assets and had no impact on beginning net assets or cash flows. The University determines whether an arrangement is or contains a lease at lease inception. Under ASC 842, a contract is (or contains) a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined under the standard as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. On the commencement date, operating leases are recorded as operating lease right-of-use (“ROU”) assets and operating lease liabilities in the statements of financial position. Finance leases are recorded as equipment and finance lease liabilities in the statements of financial position. ROU assets represent the University’s right to use an underlying asset for the lease term, and lease liabilities represent the University’s contractual obligation to make lease payments. The lease liability is measured as the present value of the lease payments over the lease term using either the rate implicit in the lease, if it is determinable, or the University’s incremental borrowing rate if the implicit rate is not determinable. ROU assets are calculated as the present value of the remaining lease payments plus unamortized initial direct costs and prepayments of rent, less any unamortized lease incentives received. Lease terms may include renewal or extension options to the extent they are reasonably certain to be exercised. For operating leases, lease expense is recognized on a straight-line basis over the lease term. For finance leases, amortization of the asset is recognized on a straight-line basis over the useful life of the underlying asset and interest on the lease liability is recognized over the lease term. The University has elected not to recognize a ROU asset and lease liability for leases with an initial term of 12 months or less but includes the expense associated with short-term leases in lease expense in the statements of activities. ROU assets are assessed for impairment in accordance with the University’s long-lived asset policy. Management reassesses lease classification and remeasures ROU assets and lease liabilities when a lease is modified and that modification is not accounted for as a separate new lease or upon certain other events that require reassessment in accordance with ASC 842. Reclassifications Certain reclassifications have been made to the fiscal 2022 financial statements to conform to the fiscal 2023 presentation. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. Donor imposed restrictions expired on net assets with donor restrictions that are temporary in nature are as follows for the years ended May 31, 2023 and 2022:

Title: Note 16. Functional Allocation of Expenses Accounting Policies: Note 2. Summary of Significant Accounting Policies Basis of Accounting The financial statements of the University have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Basis of Presentation For reporting purposes, the University’s financial statements have been prepared to focus on the organization as a whole. Resources are classified into two net asset categories based on the existence or absence of donor-imposed restrictions. Accordingly, the net assets of the University and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions - Net assets that are not subject to donor imposed restrictions and may be expended for any purpose in performing the mission and primary objectives of the University. These net assets may be used at the discretion of the University’s management and those charged with governance. Net Assets with Donor Restrictions - Net assets subject to stipulations imposed by donors and grantors. Some donor restrictions are temporary in nature; those restrictions will be met by actions of the University or by the passage of time. Other donor restrictions are perpetual in nature, whereby the donor has stipulated the funds be maintained in perpetuity. Contributions received with donor-imposed restrictions that are met in the same year as received are reported as revenues of the unrestricted net asset class. Expiration of restrictions on net assets as the result of the passage of time and/or fulfilling donor-imposed stipulations are reported as net assets released from restrictions between the applicable classes of net assets in the statement of activities. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents For the purposes of reporting cash flows, cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less, except for investments purchased with endowment and annuity assets, which are classified as long-term investments. Investments Investments in marketable securities are stated at fair value. Real estate investments are stated primarily at current appraised value. Securities not publicly traded are stated at estimated market value. Unrealized gains and losses are included in the changes in net assets. The estimated fair value of certain alternative investments, such as private equity interests, is determined by reference to the net asset values allocated to the University at the measurement date. The University believes the carrying amount of these financial instruments is a reasonable estimate of fair value. Because alternative investments are not readily marketable, their estimated value is subject to uncertainty and, therefore, may differ from the value that would have been used had a ready market for such investments existed. Such difference could be material. Net appreciation on endowment funds, whose income is unrestricted as to use, is required to be reported as net assets without donor restrictions unless such net appreciation has been restricted in perpetuity by the donor or by law. Accordingly, market appreciation on endowment funds without donor restrictions is classified in the accompanying financial statements as a part of net assets without donor restrictions. In those cases, where a donor has placed restrictions on the use of endowment income, any related net appreciation is also subject to the same restriction and is reported as part of net assets with donor restrictions until such time as the restriction has been met. See Note 6 for discussion of the University’s endowment spending policy. Accounts Receivable Student accounts receivable represent amounts due for tuition, fees, and room and board from currently enrolled and former students. The University extends unsecured credit to students and parents of dependent students in connection with their studies. Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a provision for bad debt expense and an adjustment to a valuation allowance based on its assessment of the current status of individual accounts and estimated collectability. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and a credit to accounts receivable. The allowance for doubtful accounts was $253,197 and $252,439 at May 31, 2023 and 2022, respectively. Charge-offs, net of recoveries, totaled $269,270 and $49,243 for the years ended May 31, 2023 and 2022, respectively. Provision for bad debt was $270,028 and $95,631 for years ended May 31, 2023 and 2022, respectively. Loans to Students Loans receivable are carried at unpaid principal balances, less an allowance for uncollectible loans. The allowance for uncollectible loans is increased by charges to income and decreased by charge-offs (net of recoveries). Management’s periodic evaluation of the adequacy of the allowance is based on Perkins loan program requirements, the University’s historical loan loss experience, specific impaired loans, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and current economic conditions. Loans are considered impaired if full principal or interest payments are not anticipated in accordance with the contractual terms. The University’s practice is to charge off any loan or portion of a loan when the loan is determined by management to be uncollectible due to the borrower’s failure to meet repayment terms, the borrower’s deteriorating or deteriorated financial condition, the depreciation of the underlying collateral, or for other reasons. Loans are placed on nonaccrual when management believes, after considering economic conditions, business conditions, and collection efforts that the loans are impaired or collection of interest is doubtful. Uncollected interest previously accrued is charged off or an allowance is established by a charge to interest income. Interest income on nonaccrual loans is recognized only to the extent cash payments are received. The amount of loans past due 90 days or more and still accruing interest as of May 31, 2023 and 2022 totaled $89,922 and $94,283, respectively. Interest on loans is recognized over the term of the loan and is calculated using the simple-interest method on principal amounts outstanding. Land, Buildings and Equipment Land, buildings and equipment are stated at cost at date of acquisition or fair value at date of donation in the case of gifts, less accumulated depreciation, computed on a straight-line basis over the estimated useful lives ranging from 5 to 75 years. Items having a useful life longer than one year and costing more than $5,000 are capitalized. Depreciation expense for fiscal years ended May 31, 2023 and 2022 was $2,418,466 and $2,143,214 respectively. Inventory Inventory is valued at the lower of cost on the first-in, first-out basis, and net realizable value. Inventory consists mainly of books, Bible class materials, and gift items sold by the Christian Store as well as goods to be sold from dining services. Income Taxes The University is exempt from federal income taxes under Section 501(c) (3) of the Internal Revenue Code; accordingly, no provision for income taxes is made in the financial statements. The University is current on filing its tax form 990 and form 990T. If interest and penalties are incurred such amounts are recognized in income tax expense. FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109, codified in ASC Topic 740 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attribute for tax positions taken or expected to be taken on a tax return including the entity’s status as a tax-exempt not-for-profit entity. Additionally, ASC 740 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosure. The University had no significant uncertain tax positions at May 31, 2023 or 2022. Endowment and Similar Funds The endowment and similar funds are subdivided into appropriate classifications. Endowment funds have been received from benefactors who, by the terms of their conveying instruments, have stipulated that the principal of their gifts may not be expended. Quasi-endowment funds are funds which the Board of Trustees of the University has determined are to be retained and invested until the Board, at its discretion, authorizes their expenditure. The principal of such funds may be either designated or undesignated as to use. Income derived from investments of endowment and similar funds is accounted for in the fund to which it is restricted, or if unrestricted, as revenues in unrestricted current funds. The Board of Trustees has established that, in the absence of further restrictions, 50 percent of the corpus of endowment gifts is to be recorded as net assets with donor restrictions held in perpetuity, since the University’s agreements did not explicitly state the amount of the gift that should be held in perpetuity. The remaining 50 percent is recorded as net assets with donor restrictions that are temporary in nature until those amounts are appropriated for expenditure for their donor restricted purpose, and is available to absorb market fluctuations and to award scholarships if the return on investment in any given year is not sufficient. Management has confirmed with donors the University’s interpretation of their endowment agreement. This correspondence effectively confirmed the donor’s intent for the amount of the gift that must be held in perpetuity. Subsequent to this confirmation, 50 percent of the corpus of these endowments was reclassified from net assets with donor restrictions held in perpetuity to net assets with donor restrictions that have purpose restrictions in accordance with the Board’s resolution. Tuition, Fees and Auxiliary Enterprises The University’s primary source of revenues from contracts with customers are from tuition, fees and sales and services of auxiliary enterprises. In accordance with the adoption of Accounting Standards Update (“ASU”) 2014-09, Revenues from Contracts with Customers, the University identifies a contract for revenue recognition when there is approval and commitment from both parties, the rights of the parties and payment terms are identified, the contract has commercial substance and the collectability of the consideration is probable. The University evaluates each contract to determine the number of distinct performance obligations in the contract, which requires the use of judgment. Performance obligations are determined based on the nature of the services provided by the University. Tuition and fees are derived from academic services rendered by the University on campus and online, as well as from related educational resources that the University provides to its students, such as access to courses and online materials. The University recognizes revenue for academic services pro-rata over the applicable academic term. Scholarships provided to students by the University are reflected as a reduction of gross tuition and fees. Tuition and fees received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. Sales and services of auxiliary enterprises include housing services, food services, a bookstore, camps, and events. The University recognizes revenue for housing and certain food services proportionately over the applicable academic term. Fees related to housing and food received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. The University typically recognized revenue from other sales and services of auxiliary enterprises at the point in time sales occur or as services are rendered. The University’s accounts receivable represents unconditional rights to consideration from its contracts with customers. Typically, once a customer is invoiced for tuition, fees, and auxiliary services, payment is due immediately. Accounts receivable, net of allowance for doubtful accounts as of the years ended May 31, 2023 and May 31, 2022, were $759,231 and $757,318, respectively. The University does not present information about outstanding performance obligations as of year-end because its contracts with students all had original terms of less than one year. The University does not have any contract assets. The University had no costs that were capitalized to obtain or to fulfill a contract with a student. The University maintains an institutional tuition refund policy, which provides for all or a portion of tuition and fees to be refunded if a student withdraws during the stated refund period. The University does not record revenue for amounts that may be refunded. Contributions and Private Gifts Contributions and private gifts, including unconditional promises to give, are recognized as revenues in the period received. Conditional promises to give are not recognized until they become unconditional; that is, when the conditions on which they depend are substantially met. Contributions of assets other than cash are recorded at their estimated fair value. Contributions to be received after one year are discounted at an appropriate discount rate commensurate with the risks involved. Amortization of discounts is recorded as additional contribution revenue in accordance with donor-imposed restrictions, if any, on the contributions. As of May 31, 2023 and 2022, there were $15,000 and $18,000 unconditional promises to give respectively. Functional Expenses Costs of providing the University’s programs are reported in the statements of activities on a functional basis. Program expenses include costs directly associated with the program and other indirect costs determined to benefit that program. These costs have been allocated between functional categories program and supporting services based on estimates made by management. Impairment of Long-Lived Assets The University evaluates the recoverability of its long-lived assets for possible impairment when events or circumstances indicate that the carrying amounts may not be recoverable. Long-lived assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are independent of the cash flows of other groups of assets. If it is determined that the carrying amounts of such long-lived assets are not recoverable, the assets are written down to their fair value. See Note 8. Leases The University adopted FASB Topic 842, Leases, using the modified retrospective approach with June 1, 2022, as the date of initial adoption. The University elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the University to carry forward the historical lease classification. Adoption of the new standard did not impact the University’s changes in net assets and had no impact on beginning net assets or cash flows. The University determines whether an arrangement is or contains a lease at lease inception. Under ASC 842, a contract is (or contains) a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined under the standard as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. On the commencement date, operating leases are recorded as operating lease right-of-use (“ROU”) assets and operating lease liabilities in the statements of financial position. Finance leases are recorded as equipment and finance lease liabilities in the statements of financial position. ROU assets represent the University’s right to use an underlying asset for the lease term, and lease liabilities represent the University’s contractual obligation to make lease payments. The lease liability is measured as the present value of the lease payments over the lease term using either the rate implicit in the lease, if it is determinable, or the University’s incremental borrowing rate if the implicit rate is not determinable. ROU assets are calculated as the present value of the remaining lease payments plus unamortized initial direct costs and prepayments of rent, less any unamortized lease incentives received. Lease terms may include renewal or extension options to the extent they are reasonably certain to be exercised. For operating leases, lease expense is recognized on a straight-line basis over the lease term. For finance leases, amortization of the asset is recognized on a straight-line basis over the useful life of the underlying asset and interest on the lease liability is recognized over the lease term. The University has elected not to recognize a ROU asset and lease liability for leases with an initial term of 12 months or less but includes the expense associated with short-term leases in lease expense in the statements of activities. ROU assets are assessed for impairment in accordance with the University’s long-lived asset policy. Management reassesses lease classification and remeasures ROU assets and lease liabilities when a lease is modified and that modification is not accounted for as a separate new lease or upon certain other events that require reassessment in accordance with ASC 842. Reclassifications Certain reclassifications have been made to the fiscal 2022 financial statements to conform to the fiscal 2023 presentation. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. Expenses by function and nature consist of the following for the year ended May 31, 2023: Expenses by function and nature consist of the following for the year ended May 31, 2022:

Title: Note 17. Retirement Plans Accounting Policies: Note 2. Summary of Significant Accounting Policies Basis of Accounting The financial statements of the University have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Basis of Presentation For reporting purposes, the University’s financial statements have been prepared to focus on the organization as a whole. Resources are classified into two net asset categories based on the existence or absence of donor-imposed restrictions. Accordingly, the net assets of the University and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions - Net assets that are not subject to donor imposed restrictions and may be expended for any purpose in performing the mission and primary objectives of the University. These net assets may be used at the discretion of the University’s management and those charged with governance. Net Assets with Donor Restrictions - Net assets subject to stipulations imposed by donors and grantors. Some donor restrictions are temporary in nature; those restrictions will be met by actions of the University or by the passage of time. Other donor restrictions are perpetual in nature, whereby the donor has stipulated the funds be maintained in perpetuity. Contributions received with donor-imposed restrictions that are met in the same year as received are reported as revenues of the unrestricted net asset class. Expiration of restrictions on net assets as the result of the passage of time and/or fulfilling donor-imposed stipulations are reported as net assets released from restrictions between the applicable classes of net assets in the statement of activities. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents For the purposes of reporting cash flows, cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less, except for investments purchased with endowment and annuity assets, which are classified as long-term investments. Investments Investments in marketable securities are stated at fair value. Real estate investments are stated primarily at current appraised value. Securities not publicly traded are stated at estimated market value. Unrealized gains and losses are included in the changes in net assets. The estimated fair value of certain alternative investments, such as private equity interests, is determined by reference to the net asset values allocated to the University at the measurement date. The University believes the carrying amount of these financial instruments is a reasonable estimate of fair value. Because alternative investments are not readily marketable, their estimated value is subject to uncertainty and, therefore, may differ from the value that would have been used had a ready market for such investments existed. Such difference could be material. Net appreciation on endowment funds, whose income is unrestricted as to use, is required to be reported as net assets without donor restrictions unless such net appreciation has been restricted in perpetuity by the donor or by law. Accordingly, market appreciation on endowment funds without donor restrictions is classified in the accompanying financial statements as a part of net assets without donor restrictions. In those cases, where a donor has placed restrictions on the use of endowment income, any related net appreciation is also subject to the same restriction and is reported as part of net assets with donor restrictions until such time as the restriction has been met. See Note 6 for discussion of the University’s endowment spending policy. Accounts Receivable Student accounts receivable represent amounts due for tuition, fees, and room and board from currently enrolled and former students. The University extends unsecured credit to students and parents of dependent students in connection with their studies. Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a provision for bad debt expense and an adjustment to a valuation allowance based on its assessment of the current status of individual accounts and estimated collectability. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and a credit to accounts receivable. The allowance for doubtful accounts was $253,197 and $252,439 at May 31, 2023 and 2022, respectively. Charge-offs, net of recoveries, totaled $269,270 and $49,243 for the years ended May 31, 2023 and 2022, respectively. Provision for bad debt was $270,028 and $95,631 for years ended May 31, 2023 and 2022, respectively. Loans to Students Loans receivable are carried at unpaid principal balances, less an allowance for uncollectible loans. The allowance for uncollectible loans is increased by charges to income and decreased by charge-offs (net of recoveries). Management’s periodic evaluation of the adequacy of the allowance is based on Perkins loan program requirements, the University’s historical loan loss experience, specific impaired loans, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and current economic conditions. Loans are considered impaired if full principal or interest payments are not anticipated in accordance with the contractual terms. The University’s practice is to charge off any loan or portion of a loan when the loan is determined by management to be uncollectible due to the borrower’s failure to meet repayment terms, the borrower’s deteriorating or deteriorated financial condition, the depreciation of the underlying collateral, or for other reasons. Loans are placed on nonaccrual when management believes, after considering economic conditions, business conditions, and collection efforts that the loans are impaired or collection of interest is doubtful. Uncollected interest previously accrued is charged off or an allowance is established by a charge to interest income. Interest income on nonaccrual loans is recognized only to the extent cash payments are received. The amount of loans past due 90 days or more and still accruing interest as of May 31, 2023 and 2022 totaled $89,922 and $94,283, respectively. Interest on loans is recognized over the term of the loan and is calculated using the simple-interest method on principal amounts outstanding. Land, Buildings and Equipment Land, buildings and equipment are stated at cost at date of acquisition or fair value at date of donation in the case of gifts, less accumulated depreciation, computed on a straight-line basis over the estimated useful lives ranging from 5 to 75 years. Items having a useful life longer than one year and costing more than $5,000 are capitalized. Depreciation expense for fiscal years ended May 31, 2023 and 2022 was $2,418,466 and $2,143,214 respectively. Inventory Inventory is valued at the lower of cost on the first-in, first-out basis, and net realizable value. Inventory consists mainly of books, Bible class materials, and gift items sold by the Christian Store as well as goods to be sold from dining services. Income Taxes The University is exempt from federal income taxes under Section 501(c) (3) of the Internal Revenue Code; accordingly, no provision for income taxes is made in the financial statements. The University is current on filing its tax form 990 and form 990T. If interest and penalties are incurred such amounts are recognized in income tax expense. FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109, codified in ASC Topic 740 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attribute for tax positions taken or expected to be taken on a tax return including the entity’s status as a tax-exempt not-for-profit entity. Additionally, ASC 740 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosure. The University had no significant uncertain tax positions at May 31, 2023 or 2022. Endowment and Similar Funds The endowment and similar funds are subdivided into appropriate classifications. Endowment funds have been received from benefactors who, by the terms of their conveying instruments, have stipulated that the principal of their gifts may not be expended. Quasi-endowment funds are funds which the Board of Trustees of the University has determined are to be retained and invested until the Board, at its discretion, authorizes their expenditure. The principal of such funds may be either designated or undesignated as to use. Income derived from investments of endowment and similar funds is accounted for in the fund to which it is restricted, or if unrestricted, as revenues in unrestricted current funds. The Board of Trustees has established that, in the absence of further restrictions, 50 percent of the corpus of endowment gifts is to be recorded as net assets with donor restrictions held in perpetuity, since the University’s agreements did not explicitly state the amount of the gift that should be held in perpetuity. The remaining 50 percent is recorded as net assets with donor restrictions that are temporary in nature until those amounts are appropriated for expenditure for their donor restricted purpose, and is available to absorb market fluctuations and to award scholarships if the return on investment in any given year is not sufficient. Management has confirmed with donors the University’s interpretation of their endowment agreement. This correspondence effectively confirmed the donor’s intent for the amount of the gift that must be held in perpetuity. Subsequent to this confirmation, 50 percent of the corpus of these endowments was reclassified from net assets with donor restrictions held in perpetuity to net assets with donor restrictions that have purpose restrictions in accordance with the Board’s resolution. Tuition, Fees and Auxiliary Enterprises The University’s primary source of revenues from contracts with customers are from tuition, fees and sales and services of auxiliary enterprises. In accordance with the adoption of Accounting Standards Update (“ASU”) 2014-09, Revenues from Contracts with Customers, the University identifies a contract for revenue recognition when there is approval and commitment from both parties, the rights of the parties and payment terms are identified, the contract has commercial substance and the collectability of the consideration is probable. The University evaluates each contract to determine the number of distinct performance obligations in the contract, which requires the use of judgment. Performance obligations are determined based on the nature of the services provided by the University. Tuition and fees are derived from academic services rendered by the University on campus and online, as well as from related educational resources that the University provides to its students, such as access to courses and online materials. The University recognizes revenue for academic services pro-rata over the applicable academic term. Scholarships provided to students by the University are reflected as a reduction of gross tuition and fees. Tuition and fees received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. Sales and services of auxiliary enterprises include housing services, food services, a bookstore, camps, and events. The University recognizes revenue for housing and certain food services proportionately over the applicable academic term. Fees related to housing and food received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. The University typically recognized revenue from other sales and services of auxiliary enterprises at the point in time sales occur or as services are rendered. The University’s accounts receivable represents unconditional rights to consideration from its contracts with customers. Typically, once a customer is invoiced for tuition, fees, and auxiliary services, payment is due immediately. Accounts receivable, net of allowance for doubtful accounts as of the years ended May 31, 2023 and May 31, 2022, were $759,231 and $757,318, respectively. The University does not present information about outstanding performance obligations as of year-end because its contracts with students all had original terms of less than one year. The University does not have any contract assets. The University had no costs that were capitalized to obtain or to fulfill a contract with a student. The University maintains an institutional tuition refund policy, which provides for all or a portion of tuition and fees to be refunded if a student withdraws during the stated refund period. The University does not record revenue for amounts that may be refunded. Contributions and Private Gifts Contributions and private gifts, including unconditional promises to give, are recognized as revenues in the period received. Conditional promises to give are not recognized until they become unconditional; that is, when the conditions on which they depend are substantially met. Contributions of assets other than cash are recorded at their estimated fair value. Contributions to be received after one year are discounted at an appropriate discount rate commensurate with the risks involved. Amortization of discounts is recorded as additional contribution revenue in accordance with donor-imposed restrictions, if any, on the contributions. As of May 31, 2023 and 2022, there were $15,000 and $18,000 unconditional promises to give respectively. Functional Expenses Costs of providing the University’s programs are reported in the statements of activities on a functional basis. Program expenses include costs directly associated with the program and other indirect costs determined to benefit that program. These costs have been allocated between functional categories program and supporting services based on estimates made by management. Impairment of Long-Lived Assets The University evaluates the recoverability of its long-lived assets for possible impairment when events or circumstances indicate that the carrying amounts may not be recoverable. Long-lived assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are independent of the cash flows of other groups of assets. If it is determined that the carrying amounts of such long-lived assets are not recoverable, the assets are written down to their fair value. See Note 8. Leases The University adopted FASB Topic 842, Leases, using the modified retrospective approach with June 1, 2022, as the date of initial adoption. The University elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the University to carry forward the historical lease classification. Adoption of the new standard did not impact the University’s changes in net assets and had no impact on beginning net assets or cash flows. The University determines whether an arrangement is or contains a lease at lease inception. Under ASC 842, a contract is (or contains) a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined under the standard as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. On the commencement date, operating leases are recorded as operating lease right-of-use (“ROU”) assets and operating lease liabilities in the statements of financial position. Finance leases are recorded as equipment and finance lease liabilities in the statements of financial position. ROU assets represent the University’s right to use an underlying asset for the lease term, and lease liabilities represent the University’s contractual obligation to make lease payments. The lease liability is measured as the present value of the lease payments over the lease term using either the rate implicit in the lease, if it is determinable, or the University’s incremental borrowing rate if the implicit rate is not determinable. ROU assets are calculated as the present value of the remaining lease payments plus unamortized initial direct costs and prepayments of rent, less any unamortized lease incentives received. Lease terms may include renewal or extension options to the extent they are reasonably certain to be exercised. For operating leases, lease expense is recognized on a straight-line basis over the lease term. For finance leases, amortization of the asset is recognized on a straight-line basis over the useful life of the underlying asset and interest on the lease liability is recognized over the lease term. The University has elected not to recognize a ROU asset and lease liability for leases with an initial term of 12 months or less but includes the expense associated with short-term leases in lease expense in the statements of activities. ROU assets are assessed for impairment in accordance with the University’s long-lived asset policy. Management reassesses lease classification and remeasures ROU assets and lease liabilities when a lease is modified and that modification is not accounted for as a separate new lease or upon certain other events that require reassessment in accordance with ASC 842. Reclassifications Certain reclassifications have been made to the fiscal 2022 financial statements to conform to the fiscal 2023 presentation. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The University participates in the program of Voya (formerly ING) and previously participated in the program of the Teachers Insurance and Annuity Association (“TIAA”) and University Retirement Equities Fund (“CREF”). The pension expense amounted to $416,038 and $389,260 for the years ended May 31, 2023 and 2022, respectively. Since November 1, 2019, full-time employees are eligible upon hiring for the 403(b) retirement plan with Voya, but are not required to contribute to the plan. For employees that choose to contribute, FHU will match $0.50 on every $1.00 contributed up to 6.0 percent. In fiscal year 2022, the University agreed to increase the match to 7.0 percent.

Title: Note 18. Fund Raising Expense Accounting Policies: Note 2. Summary of Significant Accounting Policies Basis of Accounting The financial statements of the University have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Basis of Presentation For reporting purposes, the University’s financial statements have been prepared to focus on the organization as a whole. Resources are classified into two net asset categories based on the existence or absence of donor-imposed restrictions. Accordingly, the net assets of the University and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions - Net assets that are not subject to donor imposed restrictions and may be expended for any purpose in performing the mission and primary objectives of the University. These net assets may be used at the discretion of the University’s management and those charged with governance. Net Assets with Donor Restrictions - Net assets subject to stipulations imposed by donors and grantors. Some donor restrictions are temporary in nature; those restrictions will be met by actions of the University or by the passage of time. Other donor restrictions are perpetual in nature, whereby the donor has stipulated the funds be maintained in perpetuity. Contributions received with donor-imposed restrictions that are met in the same year as received are reported as revenues of the unrestricted net asset class. Expiration of restrictions on net assets as the result of the passage of time and/or fulfilling donor-imposed stipulations are reported as net assets released from restrictions between the applicable classes of net assets in the statement of activities. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents For the purposes of reporting cash flows, cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less, except for investments purchased with endowment and annuity assets, which are classified as long-term investments. Investments Investments in marketable securities are stated at fair value. Real estate investments are stated primarily at current appraised value. Securities not publicly traded are stated at estimated market value. Unrealized gains and losses are included in the changes in net assets. The estimated fair value of certain alternative investments, such as private equity interests, is determined by reference to the net asset values allocated to the University at the measurement date. The University believes the carrying amount of these financial instruments is a reasonable estimate of fair value. Because alternative investments are not readily marketable, their estimated value is subject to uncertainty and, therefore, may differ from the value that would have been used had a ready market for such investments existed. Such difference could be material. Net appreciation on endowment funds, whose income is unrestricted as to use, is required to be reported as net assets without donor restrictions unless such net appreciation has been restricted in perpetuity by the donor or by law. Accordingly, market appreciation on endowment funds without donor restrictions is classified in the accompanying financial statements as a part of net assets without donor restrictions. In those cases, where a donor has placed restrictions on the use of endowment income, any related net appreciation is also subject to the same restriction and is reported as part of net assets with donor restrictions until such time as the restriction has been met. See Note 6 for discussion of the University’s endowment spending policy. Accounts Receivable Student accounts receivable represent amounts due for tuition, fees, and room and board from currently enrolled and former students. The University extends unsecured credit to students and parents of dependent students in connection with their studies. Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a provision for bad debt expense and an adjustment to a valuation allowance based on its assessment of the current status of individual accounts and estimated collectability. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and a credit to accounts receivable. The allowance for doubtful accounts was $253,197 and $252,439 at May 31, 2023 and 2022, respectively. Charge-offs, net of recoveries, totaled $269,270 and $49,243 for the years ended May 31, 2023 and 2022, respectively. Provision for bad debt was $270,028 and $95,631 for years ended May 31, 2023 and 2022, respectively. Loans to Students Loans receivable are carried at unpaid principal balances, less an allowance for uncollectible loans. The allowance for uncollectible loans is increased by charges to income and decreased by charge-offs (net of recoveries). Management’s periodic evaluation of the adequacy of the allowance is based on Perkins loan program requirements, the University’s historical loan loss experience, specific impaired loans, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and current economic conditions. Loans are considered impaired if full principal or interest payments are not anticipated in accordance with the contractual terms. The University’s practice is to charge off any loan or portion of a loan when the loan is determined by management to be uncollectible due to the borrower’s failure to meet repayment terms, the borrower’s deteriorating or deteriorated financial condition, the depreciation of the underlying collateral, or for other reasons. Loans are placed on nonaccrual when management believes, after considering economic conditions, business conditions, and collection efforts that the loans are impaired or collection of interest is doubtful. Uncollected interest previously accrued is charged off or an allowance is established by a charge to interest income. Interest income on nonaccrual loans is recognized only to the extent cash payments are received. The amount of loans past due 90 days or more and still accruing interest as of May 31, 2023 and 2022 totaled $89,922 and $94,283, respectively. Interest on loans is recognized over the term of the loan and is calculated using the simple-interest method on principal amounts outstanding. Land, Buildings and Equipment Land, buildings and equipment are stated at cost at date of acquisition or fair value at date of donation in the case of gifts, less accumulated depreciation, computed on a straight-line basis over the estimated useful lives ranging from 5 to 75 years. Items having a useful life longer than one year and costing more than $5,000 are capitalized. Depreciation expense for fiscal years ended May 31, 2023 and 2022 was $2,418,466 and $2,143,214 respectively. Inventory Inventory is valued at the lower of cost on the first-in, first-out basis, and net realizable value. Inventory consists mainly of books, Bible class materials, and gift items sold by the Christian Store as well as goods to be sold from dining services. Income Taxes The University is exempt from federal income taxes under Section 501(c) (3) of the Internal Revenue Code; accordingly, no provision for income taxes is made in the financial statements. The University is current on filing its tax form 990 and form 990T. If interest and penalties are incurred such amounts are recognized in income tax expense. FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109, codified in ASC Topic 740 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attribute for tax positions taken or expected to be taken on a tax return including the entity’s status as a tax-exempt not-for-profit entity. Additionally, ASC 740 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosure. The University had no significant uncertain tax positions at May 31, 2023 or 2022. Endowment and Similar Funds The endowment and similar funds are subdivided into appropriate classifications. Endowment funds have been received from benefactors who, by the terms of their conveying instruments, have stipulated that the principal of their gifts may not be expended. Quasi-endowment funds are funds which the Board of Trustees of the University has determined are to be retained and invested until the Board, at its discretion, authorizes their expenditure. The principal of such funds may be either designated or undesignated as to use. Income derived from investments of endowment and similar funds is accounted for in the fund to which it is restricted, or if unrestricted, as revenues in unrestricted current funds. The Board of Trustees has established that, in the absence of further restrictions, 50 percent of the corpus of endowment gifts is to be recorded as net assets with donor restrictions held in perpetuity, since the University’s agreements did not explicitly state the amount of the gift that should be held in perpetuity. The remaining 50 percent is recorded as net assets with donor restrictions that are temporary in nature until those amounts are appropriated for expenditure for their donor restricted purpose, and is available to absorb market fluctuations and to award scholarships if the return on investment in any given year is not sufficient. Management has confirmed with donors the University’s interpretation of their endowment agreement. This correspondence effectively confirmed the donor’s intent for the amount of the gift that must be held in perpetuity. Subsequent to this confirmation, 50 percent of the corpus of these endowments was reclassified from net assets with donor restrictions held in perpetuity to net assets with donor restrictions that have purpose restrictions in accordance with the Board’s resolution. Tuition, Fees and Auxiliary Enterprises The University’s primary source of revenues from contracts with customers are from tuition, fees and sales and services of auxiliary enterprises. In accordance with the adoption of Accounting Standards Update (“ASU”) 2014-09, Revenues from Contracts with Customers, the University identifies a contract for revenue recognition when there is approval and commitment from both parties, the rights of the parties and payment terms are identified, the contract has commercial substance and the collectability of the consideration is probable. The University evaluates each contract to determine the number of distinct performance obligations in the contract, which requires the use of judgment. Performance obligations are determined based on the nature of the services provided by the University. Tuition and fees are derived from academic services rendered by the University on campus and online, as well as from related educational resources that the University provides to its students, such as access to courses and online materials. The University recognizes revenue for academic services pro-rata over the applicable academic term. Scholarships provided to students by the University are reflected as a reduction of gross tuition and fees. Tuition and fees received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. Sales and services of auxiliary enterprises include housing services, food services, a bookstore, camps, and events. The University recognizes revenue for housing and certain food services proportionately over the applicable academic term. Fees related to housing and food received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. The University typically recognized revenue from other sales and services of auxiliary enterprises at the point in time sales occur or as services are rendered. The University’s accounts receivable represents unconditional rights to consideration from its contracts with customers. Typically, once a customer is invoiced for tuition, fees, and auxiliary services, payment is due immediately. Accounts receivable, net of allowance for doubtful accounts as of the years ended May 31, 2023 and May 31, 2022, were $759,231 and $757,318, respectively. The University does not present information about outstanding performance obligations as of year-end because its contracts with students all had original terms of less than one year. The University does not have any contract assets. The University had no costs that were capitalized to obtain or to fulfill a contract with a student. The University maintains an institutional tuition refund policy, which provides for all or a portion of tuition and fees to be refunded if a student withdraws during the stated refund period. The University does not record revenue for amounts that may be refunded. Contributions and Private Gifts Contributions and private gifts, including unconditional promises to give, are recognized as revenues in the period received. Conditional promises to give are not recognized until they become unconditional; that is, when the conditions on which they depend are substantially met. Contributions of assets other than cash are recorded at their estimated fair value. Contributions to be received after one year are discounted at an appropriate discount rate commensurate with the risks involved. Amortization of discounts is recorded as additional contribution revenue in accordance with donor-imposed restrictions, if any, on the contributions. As of May 31, 2023 and 2022, there were $15,000 and $18,000 unconditional promises to give respectively. Functional Expenses Costs of providing the University’s programs are reported in the statements of activities on a functional basis. Program expenses include costs directly associated with the program and other indirect costs determined to benefit that program. These costs have been allocated between functional categories program and supporting services based on estimates made by management. Impairment of Long-Lived Assets The University evaluates the recoverability of its long-lived assets for possible impairment when events or circumstances indicate that the carrying amounts may not be recoverable. Long-lived assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are independent of the cash flows of other groups of assets. If it is determined that the carrying amounts of such long-lived assets are not recoverable, the assets are written down to their fair value. See Note 8. Leases The University adopted FASB Topic 842, Leases, using the modified retrospective approach with June 1, 2022, as the date of initial adoption. The University elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the University to carry forward the historical lease classification. Adoption of the new standard did not impact the University’s changes in net assets and had no impact on beginning net assets or cash flows. The University determines whether an arrangement is or contains a lease at lease inception. Under ASC 842, a contract is (or contains) a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined under the standard as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. On the commencement date, operating leases are recorded as operating lease right-of-use (“ROU”) assets and operating lease liabilities in the statements of financial position. Finance leases are recorded as equipment and finance lease liabilities in the statements of financial position. ROU assets represent the University’s right to use an underlying asset for the lease term, and lease liabilities represent the University’s contractual obligation to make lease payments. The lease liability is measured as the present value of the lease payments over the lease term using either the rate implicit in the lease, if it is determinable, or the University’s incremental borrowing rate if the implicit rate is not determinable. ROU assets are calculated as the present value of the remaining lease payments plus unamortized initial direct costs and prepayments of rent, less any unamortized lease incentives received. Lease terms may include renewal or extension options to the extent they are reasonably certain to be exercised. For operating leases, lease expense is recognized on a straight-line basis over the lease term. For finance leases, amortization of the asset is recognized on a straight-line basis over the useful life of the underlying asset and interest on the lease liability is recognized over the lease term. The University has elected not to recognize a ROU asset and lease liability for leases with an initial term of 12 months or less but includes the expense associated with short-term leases in lease expense in the statements of activities. ROU assets are assessed for impairment in accordance with the University’s long-lived asset policy. Management reassesses lease classification and remeasures ROU assets and lease liabilities when a lease is modified and that modification is not accounted for as a separate new lease or upon certain other events that require reassessment in accordance with ASC 842. Reclassifications Certain reclassifications have been made to the fiscal 2022 financial statements to conform to the fiscal 2023 presentation. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. Total fund-raising expense for the years ended May 31, 2023 and 2022 was $2,087,429 and $2,086,239, respectively. Such amounts are included in Institutional support expenses in the accompanying statements of activities.

Title: Note 19. Intentions to Give Accounting Policies: Note 2. Summary of Significant Accounting Policies Basis of Accounting The financial statements of the University have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Basis of Presentation For reporting purposes, the University’s financial statements have been prepared to focus on the organization as a whole. Resources are classified into two net asset categories based on the existence or absence of donor-imposed restrictions. Accordingly, the net assets of the University and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions - Net assets that are not subject to donor imposed restrictions and may be expended for any purpose in performing the mission and primary objectives of the University. These net assets may be used at the discretion of the University’s management and those charged with governance. Net Assets with Donor Restrictions - Net assets subject to stipulations imposed by donors and grantors. Some donor restrictions are temporary in nature; those restrictions will be met by actions of the University or by the passage of time. Other donor restrictions are perpetual in nature, whereby the donor has stipulated the funds be maintained in perpetuity. Contributions received with donor-imposed restrictions that are met in the same year as received are reported as revenues of the unrestricted net asset class. Expiration of restrictions on net assets as the result of the passage of time and/or fulfilling donor-imposed stipulations are reported as net assets released from restrictions between the applicable classes of net assets in the statement of activities. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents For the purposes of reporting cash flows, cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less, except for investments purchased with endowment and annuity assets, which are classified as long-term investments. Investments Investments in marketable securities are stated at fair value. Real estate investments are stated primarily at current appraised value. Securities not publicly traded are stated at estimated market value. Unrealized gains and losses are included in the changes in net assets. The estimated fair value of certain alternative investments, such as private equity interests, is determined by reference to the net asset values allocated to the University at the measurement date. The University believes the carrying amount of these financial instruments is a reasonable estimate of fair value. Because alternative investments are not readily marketable, their estimated value is subject to uncertainty and, therefore, may differ from the value that would have been used had a ready market for such investments existed. Such difference could be material. Net appreciation on endowment funds, whose income is unrestricted as to use, is required to be reported as net assets without donor restrictions unless such net appreciation has been restricted in perpetuity by the donor or by law. Accordingly, market appreciation on endowment funds without donor restrictions is classified in the accompanying financial statements as a part of net assets without donor restrictions. In those cases, where a donor has placed restrictions on the use of endowment income, any related net appreciation is also subject to the same restriction and is reported as part of net assets with donor restrictions until such time as the restriction has been met. See Note 6 for discussion of the University’s endowment spending policy. Accounts Receivable Student accounts receivable represent amounts due for tuition, fees, and room and board from currently enrolled and former students. The University extends unsecured credit to students and parents of dependent students in connection with their studies. Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a provision for bad debt expense and an adjustment to a valuation allowance based on its assessment of the current status of individual accounts and estimated collectability. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and a credit to accounts receivable. The allowance for doubtful accounts was $253,197 and $252,439 at May 31, 2023 and 2022, respectively. Charge-offs, net of recoveries, totaled $269,270 and $49,243 for the years ended May 31, 2023 and 2022, respectively. Provision for bad debt was $270,028 and $95,631 for years ended May 31, 2023 and 2022, respectively. Loans to Students Loans receivable are carried at unpaid principal balances, less an allowance for uncollectible loans. The allowance for uncollectible loans is increased by charges to income and decreased by charge-offs (net of recoveries). Management’s periodic evaluation of the adequacy of the allowance is based on Perkins loan program requirements, the University’s historical loan loss experience, specific impaired loans, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and current economic conditions. Loans are considered impaired if full principal or interest payments are not anticipated in accordance with the contractual terms. The University’s practice is to charge off any loan or portion of a loan when the loan is determined by management to be uncollectible due to the borrower’s failure to meet repayment terms, the borrower’s deteriorating or deteriorated financial condition, the depreciation of the underlying collateral, or for other reasons. Loans are placed on nonaccrual when management believes, after considering economic conditions, business conditions, and collection efforts that the loans are impaired or collection of interest is doubtful. Uncollected interest previously accrued is charged off or an allowance is established by a charge to interest income. Interest income on nonaccrual loans is recognized only to the extent cash payments are received. The amount of loans past due 90 days or more and still accruing interest as of May 31, 2023 and 2022 totaled $89,922 and $94,283, respectively. Interest on loans is recognized over the term of the loan and is calculated using the simple-interest method on principal amounts outstanding. Land, Buildings and Equipment Land, buildings and equipment are stated at cost at date of acquisition or fair value at date of donation in the case of gifts, less accumulated depreciation, computed on a straight-line basis over the estimated useful lives ranging from 5 to 75 years. Items having a useful life longer than one year and costing more than $5,000 are capitalized. Depreciation expense for fiscal years ended May 31, 2023 and 2022 was $2,418,466 and $2,143,214 respectively. Inventory Inventory is valued at the lower of cost on the first-in, first-out basis, and net realizable value. Inventory consists mainly of books, Bible class materials, and gift items sold by the Christian Store as well as goods to be sold from dining services. Income Taxes The University is exempt from federal income taxes under Section 501(c) (3) of the Internal Revenue Code; accordingly, no provision for income taxes is made in the financial statements. The University is current on filing its tax form 990 and form 990T. If interest and penalties are incurred such amounts are recognized in income tax expense. FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109, codified in ASC Topic 740 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attribute for tax positions taken or expected to be taken on a tax return including the entity’s status as a tax-exempt not-for-profit entity. Additionally, ASC 740 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosure. The University had no significant uncertain tax positions at May 31, 2023 or 2022. Endowment and Similar Funds The endowment and similar funds are subdivided into appropriate classifications. Endowment funds have been received from benefactors who, by the terms of their conveying instruments, have stipulated that the principal of their gifts may not be expended. Quasi-endowment funds are funds which the Board of Trustees of the University has determined are to be retained and invested until the Board, at its discretion, authorizes their expenditure. The principal of such funds may be either designated or undesignated as to use. Income derived from investments of endowment and similar funds is accounted for in the fund to which it is restricted, or if unrestricted, as revenues in unrestricted current funds. The Board of Trustees has established that, in the absence of further restrictions, 50 percent of the corpus of endowment gifts is to be recorded as net assets with donor restrictions held in perpetuity, since the University’s agreements did not explicitly state the amount of the gift that should be held in perpetuity. The remaining 50 percent is recorded as net assets with donor restrictions that are temporary in nature until those amounts are appropriated for expenditure for their donor restricted purpose, and is available to absorb market fluctuations and to award scholarships if the return on investment in any given year is not sufficient. Management has confirmed with donors the University’s interpretation of their endowment agreement. This correspondence effectively confirmed the donor’s intent for the amount of the gift that must be held in perpetuity. Subsequent to this confirmation, 50 percent of the corpus of these endowments was reclassified from net assets with donor restrictions held in perpetuity to net assets with donor restrictions that have purpose restrictions in accordance with the Board’s resolution. Tuition, Fees and Auxiliary Enterprises The University’s primary source of revenues from contracts with customers are from tuition, fees and sales and services of auxiliary enterprises. In accordance with the adoption of Accounting Standards Update (“ASU”) 2014-09, Revenues from Contracts with Customers, the University identifies a contract for revenue recognition when there is approval and commitment from both parties, the rights of the parties and payment terms are identified, the contract has commercial substance and the collectability of the consideration is probable. The University evaluates each contract to determine the number of distinct performance obligations in the contract, which requires the use of judgment. Performance obligations are determined based on the nature of the services provided by the University. Tuition and fees are derived from academic services rendered by the University on campus and online, as well as from related educational resources that the University provides to its students, such as access to courses and online materials. The University recognizes revenue for academic services pro-rata over the applicable academic term. Scholarships provided to students by the University are reflected as a reduction of gross tuition and fees. Tuition and fees received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. Sales and services of auxiliary enterprises include housing services, food services, a bookstore, camps, and events. The University recognizes revenue for housing and certain food services proportionately over the applicable academic term. Fees related to housing and food received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. The University typically recognized revenue from other sales and services of auxiliary enterprises at the point in time sales occur or as services are rendered. The University’s accounts receivable represents unconditional rights to consideration from its contracts with customers. Typically, once a customer is invoiced for tuition, fees, and auxiliary services, payment is due immediately. Accounts receivable, net of allowance for doubtful accounts as of the years ended May 31, 2023 and May 31, 2022, were $759,231 and $757,318, respectively. The University does not present information about outstanding performance obligations as of year-end because its contracts with students all had original terms of less than one year. The University does not have any contract assets. The University had no costs that were capitalized to obtain or to fulfill a contract with a student. The University maintains an institutional tuition refund policy, which provides for all or a portion of tuition and fees to be refunded if a student withdraws during the stated refund period. The University does not record revenue for amounts that may be refunded. Contributions and Private Gifts Contributions and private gifts, including unconditional promises to give, are recognized as revenues in the period received. Conditional promises to give are not recognized until they become unconditional; that is, when the conditions on which they depend are substantially met. Contributions of assets other than cash are recorded at their estimated fair value. Contributions to be received after one year are discounted at an appropriate discount rate commensurate with the risks involved. Amortization of discounts is recorded as additional contribution revenue in accordance with donor-imposed restrictions, if any, on the contributions. As of May 31, 2023 and 2022, there were $15,000 and $18,000 unconditional promises to give respectively. Functional Expenses Costs of providing the University’s programs are reported in the statements of activities on a functional basis. Program expenses include costs directly associated with the program and other indirect costs determined to benefit that program. These costs have been allocated between functional categories program and supporting services based on estimates made by management. Impairment of Long-Lived Assets The University evaluates the recoverability of its long-lived assets for possible impairment when events or circumstances indicate that the carrying amounts may not be recoverable. Long-lived assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are independent of the cash flows of other groups of assets. If it is determined that the carrying amounts of such long-lived assets are not recoverable, the assets are written down to their fair value. See Note 8. Leases The University adopted FASB Topic 842, Leases, using the modified retrospective approach with June 1, 2022, as the date of initial adoption. The University elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the University to carry forward the historical lease classification. Adoption of the new standard did not impact the University’s changes in net assets and had no impact on beginning net assets or cash flows. The University determines whether an arrangement is or contains a lease at lease inception. Under ASC 842, a contract is (or contains) a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined under the standard as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. On the commencement date, operating leases are recorded as operating lease right-of-use (“ROU”) assets and operating lease liabilities in the statements of financial position. Finance leases are recorded as equipment and finance lease liabilities in the statements of financial position. ROU assets represent the University’s right to use an underlying asset for the lease term, and lease liabilities represent the University’s contractual obligation to make lease payments. The lease liability is measured as the present value of the lease payments over the lease term using either the rate implicit in the lease, if it is determinable, or the University’s incremental borrowing rate if the implicit rate is not determinable. ROU assets are calculated as the present value of the remaining lease payments plus unamortized initial direct costs and prepayments of rent, less any unamortized lease incentives received. Lease terms may include renewal or extension options to the extent they are reasonably certain to be exercised. For operating leases, lease expense is recognized on a straight-line basis over the lease term. For finance leases, amortization of the asset is recognized on a straight-line basis over the useful life of the underlying asset and interest on the lease liability is recognized over the lease term. The University has elected not to recognize a ROU asset and lease liability for leases with an initial term of 12 months or less but includes the expense associated with short-term leases in lease expense in the statements of activities. ROU assets are assessed for impairment in accordance with the University’s long-lived asset policy. Management reassesses lease classification and remeasures ROU assets and lease liabilities when a lease is modified and that modification is not accounted for as a separate new lease or upon certain other events that require reassessment in accordance with ASC 842. Reclassifications Certain reclassifications have been made to the fiscal 2022 financial statements to conform to the fiscal 2023 presentation. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The University began a major capital campaign on June 1, 2020 entitled FHU Next. After celebrating 150 years of staying true to her mission, FHU has created this campaign which has a focus on infrastructure and endowments. The purpose of this campaign is to ensure that Freed-Hardeman can continue to fulfill her mission for another 150 years. Conditional promises to give to the campaign are intentions to give and are therefore not accrued by the University. These contributions are recorded as income at the time of receipt.

Title: Note 20. Contingencies Accounting Policies: Note 2. Summary of Significant Accounting Policies Basis of Accounting The financial statements of the University have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Basis of Presentation For reporting purposes, the University’s financial statements have been prepared to focus on the organization as a whole. Resources are classified into two net asset categories based on the existence or absence of donor-imposed restrictions. Accordingly, the net assets of the University and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions - Net assets that are not subject to donor imposed restrictions and may be expended for any purpose in performing the mission and primary objectives of the University. These net assets may be used at the discretion of the University’s management and those charged with governance. Net Assets with Donor Restrictions - Net assets subject to stipulations imposed by donors and grantors. Some donor restrictions are temporary in nature; those restrictions will be met by actions of the University or by the passage of time. Other donor restrictions are perpetual in nature, whereby the donor has stipulated the funds be maintained in perpetuity. Contributions received with donor-imposed restrictions that are met in the same year as received are reported as revenues of the unrestricted net asset class. Expiration of restrictions on net assets as the result of the passage of time and/or fulfilling donor-imposed stipulations are reported as net assets released from restrictions between the applicable classes of net assets in the statement of activities. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents For the purposes of reporting cash flows, cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less, except for investments purchased with endowment and annuity assets, which are classified as long-term investments. Investments Investments in marketable securities are stated at fair value. Real estate investments are stated primarily at current appraised value. Securities not publicly traded are stated at estimated market value. Unrealized gains and losses are included in the changes in net assets. The estimated fair value of certain alternative investments, such as private equity interests, is determined by reference to the net asset values allocated to the University at the measurement date. The University believes the carrying amount of these financial instruments is a reasonable estimate of fair value. Because alternative investments are not readily marketable, their estimated value is subject to uncertainty and, therefore, may differ from the value that would have been used had a ready market for such investments existed. Such difference could be material. Net appreciation on endowment funds, whose income is unrestricted as to use, is required to be reported as net assets without donor restrictions unless such net appreciation has been restricted in perpetuity by the donor or by law. Accordingly, market appreciation on endowment funds without donor restrictions is classified in the accompanying financial statements as a part of net assets without donor restrictions. In those cases, where a donor has placed restrictions on the use of endowment income, any related net appreciation is also subject to the same restriction and is reported as part of net assets with donor restrictions until such time as the restriction has been met. See Note 6 for discussion of the University’s endowment spending policy. Accounts Receivable Student accounts receivable represent amounts due for tuition, fees, and room and board from currently enrolled and former students. The University extends unsecured credit to students and parents of dependent students in connection with their studies. Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a provision for bad debt expense and an adjustment to a valuation allowance based on its assessment of the current status of individual accounts and estimated collectability. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and a credit to accounts receivable. The allowance for doubtful accounts was $253,197 and $252,439 at May 31, 2023 and 2022, respectively. Charge-offs, net of recoveries, totaled $269,270 and $49,243 for the years ended May 31, 2023 and 2022, respectively. Provision for bad debt was $270,028 and $95,631 for years ended May 31, 2023 and 2022, respectively. Loans to Students Loans receivable are carried at unpaid principal balances, less an allowance for uncollectible loans. The allowance for uncollectible loans is increased by charges to income and decreased by charge-offs (net of recoveries). Management’s periodic evaluation of the adequacy of the allowance is based on Perkins loan program requirements, the University’s historical loan loss experience, specific impaired loans, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and current economic conditions. Loans are considered impaired if full principal or interest payments are not anticipated in accordance with the contractual terms. The University’s practice is to charge off any loan or portion of a loan when the loan is determined by management to be uncollectible due to the borrower’s failure to meet repayment terms, the borrower’s deteriorating or deteriorated financial condition, the depreciation of the underlying collateral, or for other reasons. Loans are placed on nonaccrual when management believes, after considering economic conditions, business conditions, and collection efforts that the loans are impaired or collection of interest is doubtful. Uncollected interest previously accrued is charged off or an allowance is established by a charge to interest income. Interest income on nonaccrual loans is recognized only to the extent cash payments are received. The amount of loans past due 90 days or more and still accruing interest as of May 31, 2023 and 2022 totaled $89,922 and $94,283, respectively. Interest on loans is recognized over the term of the loan and is calculated using the simple-interest method on principal amounts outstanding. Land, Buildings and Equipment Land, buildings and equipment are stated at cost at date of acquisition or fair value at date of donation in the case of gifts, less accumulated depreciation, computed on a straight-line basis over the estimated useful lives ranging from 5 to 75 years. Items having a useful life longer than one year and costing more than $5,000 are capitalized. Depreciation expense for fiscal years ended May 31, 2023 and 2022 was $2,418,466 and $2,143,214 respectively. Inventory Inventory is valued at the lower of cost on the first-in, first-out basis, and net realizable value. Inventory consists mainly of books, Bible class materials, and gift items sold by the Christian Store as well as goods to be sold from dining services. Income Taxes The University is exempt from federal income taxes under Section 501(c) (3) of the Internal Revenue Code; accordingly, no provision for income taxes is made in the financial statements. The University is current on filing its tax form 990 and form 990T. If interest and penalties are incurred such amounts are recognized in income tax expense. FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109, codified in ASC Topic 740 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attribute for tax positions taken or expected to be taken on a tax return including the entity’s status as a tax-exempt not-for-profit entity. Additionally, ASC 740 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosure. The University had no significant uncertain tax positions at May 31, 2023 or 2022. Endowment and Similar Funds The endowment and similar funds are subdivided into appropriate classifications. Endowment funds have been received from benefactors who, by the terms of their conveying instruments, have stipulated that the principal of their gifts may not be expended. Quasi-endowment funds are funds which the Board of Trustees of the University has determined are to be retained and invested until the Board, at its discretion, authorizes their expenditure. The principal of such funds may be either designated or undesignated as to use. Income derived from investments of endowment and similar funds is accounted for in the fund to which it is restricted, or if unrestricted, as revenues in unrestricted current funds. The Board of Trustees has established that, in the absence of further restrictions, 50 percent of the corpus of endowment gifts is to be recorded as net assets with donor restrictions held in perpetuity, since the University’s agreements did not explicitly state the amount of the gift that should be held in perpetuity. The remaining 50 percent is recorded as net assets with donor restrictions that are temporary in nature until those amounts are appropriated for expenditure for their donor restricted purpose, and is available to absorb market fluctuations and to award scholarships if the return on investment in any given year is not sufficient. Management has confirmed with donors the University’s interpretation of their endowment agreement. This correspondence effectively confirmed the donor’s intent for the amount of the gift that must be held in perpetuity. Subsequent to this confirmation, 50 percent of the corpus of these endowments was reclassified from net assets with donor restrictions held in perpetuity to net assets with donor restrictions that have purpose restrictions in accordance with the Board’s resolution. Tuition, Fees and Auxiliary Enterprises The University’s primary source of revenues from contracts with customers are from tuition, fees and sales and services of auxiliary enterprises. In accordance with the adoption of Accounting Standards Update (“ASU”) 2014-09, Revenues from Contracts with Customers, the University identifies a contract for revenue recognition when there is approval and commitment from both parties, the rights of the parties and payment terms are identified, the contract has commercial substance and the collectability of the consideration is probable. The University evaluates each contract to determine the number of distinct performance obligations in the contract, which requires the use of judgment. Performance obligations are determined based on the nature of the services provided by the University. Tuition and fees are derived from academic services rendered by the University on campus and online, as well as from related educational resources that the University provides to its students, such as access to courses and online materials. The University recognizes revenue for academic services pro-rata over the applicable academic term. Scholarships provided to students by the University are reflected as a reduction of gross tuition and fees. Tuition and fees received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. Sales and services of auxiliary enterprises include housing services, food services, a bookstore, camps, and events. The University recognizes revenue for housing and certain food services proportionately over the applicable academic term. Fees related to housing and food received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. The University typically recognized revenue from other sales and services of auxiliary enterprises at the point in time sales occur or as services are rendered. The University’s accounts receivable represents unconditional rights to consideration from its contracts with customers. Typically, once a customer is invoiced for tuition, fees, and auxiliary services, payment is due immediately. Accounts receivable, net of allowance for doubtful accounts as of the years ended May 31, 2023 and May 31, 2022, were $759,231 and $757,318, respectively. The University does not present information about outstanding performance obligations as of year-end because its contracts with students all had original terms of less than one year. The University does not have any contract assets. The University had no costs that were capitalized to obtain or to fulfill a contract with a student. The University maintains an institutional tuition refund policy, which provides for all or a portion of tuition and fees to be refunded if a student withdraws during the stated refund period. The University does not record revenue for amounts that may be refunded. Contributions and Private Gifts Contributions and private gifts, including unconditional promises to give, are recognized as revenues in the period received. Conditional promises to give are not recognized until they become unconditional; that is, when the conditions on which they depend are substantially met. Contributions of assets other than cash are recorded at their estimated fair value. Contributions to be received after one year are discounted at an appropriate discount rate commensurate with the risks involved. Amortization of discounts is recorded as additional contribution revenue in accordance with donor-imposed restrictions, if any, on the contributions. As of May 31, 2023 and 2022, there were $15,000 and $18,000 unconditional promises to give respectively. Functional Expenses Costs of providing the University’s programs are reported in the statements of activities on a functional basis. Program expenses include costs directly associated with the program and other indirect costs determined to benefit that program. These costs have been allocated between functional categories program and supporting services based on estimates made by management. Impairment of Long-Lived Assets The University evaluates the recoverability of its long-lived assets for possible impairment when events or circumstances indicate that the carrying amounts may not be recoverable. Long-lived assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are independent of the cash flows of other groups of assets. If it is determined that the carrying amounts of such long-lived assets are not recoverable, the assets are written down to their fair value. See Note 8. Leases The University adopted FASB Topic 842, Leases, using the modified retrospective approach with June 1, 2022, as the date of initial adoption. The University elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the University to carry forward the historical lease classification. Adoption of the new standard did not impact the University’s changes in net assets and had no impact on beginning net assets or cash flows. The University determines whether an arrangement is or contains a lease at lease inception. Under ASC 842, a contract is (or contains) a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined under the standard as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. On the commencement date, operating leases are recorded as operating lease right-of-use (“ROU”) assets and operating lease liabilities in the statements of financial position. Finance leases are recorded as equipment and finance lease liabilities in the statements of financial position. ROU assets represent the University’s right to use an underlying asset for the lease term, and lease liabilities represent the University’s contractual obligation to make lease payments. The lease liability is measured as the present value of the lease payments over the lease term using either the rate implicit in the lease, if it is determinable, or the University’s incremental borrowing rate if the implicit rate is not determinable. ROU assets are calculated as the present value of the remaining lease payments plus unamortized initial direct costs and prepayments of rent, less any unamortized lease incentives received. Lease terms may include renewal or extension options to the extent they are reasonably certain to be exercised. For operating leases, lease expense is recognized on a straight-line basis over the lease term. For finance leases, amortization of the asset is recognized on a straight-line basis over the useful life of the underlying asset and interest on the lease liability is recognized over the lease term. The University has elected not to recognize a ROU asset and lease liability for leases with an initial term of 12 months or less but includes the expense associated with short-term leases in lease expense in the statements of activities. ROU assets are assessed for impairment in accordance with the University’s long-lived asset policy. Management reassesses lease classification and remeasures ROU assets and lease liabilities when a lease is modified and that modification is not accounted for as a separate new lease or upon certain other events that require reassessment in accordance with ASC 842. Reclassifications Certain reclassifications have been made to the fiscal 2022 financial statements to conform to the fiscal 2023 presentation. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. Federally funded financial aid programs are subject to special audit by the Department of Education. Such audits could result in claims against the resources of the University. Management believes that they have complied with all applicable regulations and no provision has been made for any liabilities that may arise from such audits since the amounts, if any, cannot be determined at this date.

Title: Note 21. Fair Value of Financial Instruments Accounting Policies: Note 2. Summary of Significant Accounting Policies Basis of Accounting The financial statements of the University have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Basis of Presentation For reporting purposes, the University’s financial statements have been prepared to focus on the organization as a whole. Resources are classified into two net asset categories based on the existence or absence of donor-imposed restrictions. Accordingly, the net assets of the University and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions - Net assets that are not subject to donor imposed restrictions and may be expended for any purpose in performing the mission and primary objectives of the University. These net assets may be used at the discretion of the University’s management and those charged with governance. Net Assets with Donor Restrictions - Net assets subject to stipulations imposed by donors and grantors. Some donor restrictions are temporary in nature; those restrictions will be met by actions of the University or by the passage of time. Other donor restrictions are perpetual in nature, whereby the donor has stipulated the funds be maintained in perpetuity. Contributions received with donor-imposed restrictions that are met in the same year as received are reported as revenues of the unrestricted net asset class. Expiration of restrictions on net assets as the result of the passage of time and/or fulfilling donor-imposed stipulations are reported as net assets released from restrictions between the applicable classes of net assets in the statement of activities. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents For the purposes of reporting cash flows, cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less, except for investments purchased with endowment and annuity assets, which are classified as long-term investments. Investments Investments in marketable securities are stated at fair value. Real estate investments are stated primarily at current appraised value. Securities not publicly traded are stated at estimated market value. Unrealized gains and losses are included in the changes in net assets. The estimated fair value of certain alternative investments, such as private equity interests, is determined by reference to the net asset values allocated to the University at the measurement date. The University believes the carrying amount of these financial instruments is a reasonable estimate of fair value. Because alternative investments are not readily marketable, their estimated value is subject to uncertainty and, therefore, may differ from the value that would have been used had a ready market for such investments existed. Such difference could be material. Net appreciation on endowment funds, whose income is unrestricted as to use, is required to be reported as net assets without donor restrictions unless such net appreciation has been restricted in perpetuity by the donor or by law. Accordingly, market appreciation on endowment funds without donor restrictions is classified in the accompanying financial statements as a part of net assets without donor restrictions. In those cases, where a donor has placed restrictions on the use of endowment income, any related net appreciation is also subject to the same restriction and is reported as part of net assets with donor restrictions until such time as the restriction has been met. See Note 6 for discussion of the University’s endowment spending policy. Accounts Receivable Student accounts receivable represent amounts due for tuition, fees, and room and board from currently enrolled and former students. The University extends unsecured credit to students and parents of dependent students in connection with their studies. Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a provision for bad debt expense and an adjustment to a valuation allowance based on its assessment of the current status of individual accounts and estimated collectability. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and a credit to accounts receivable. The allowance for doubtful accounts was $253,197 and $252,439 at May 31, 2023 and 2022, respectively. Charge-offs, net of recoveries, totaled $269,270 and $49,243 for the years ended May 31, 2023 and 2022, respectively. Provision for bad debt was $270,028 and $95,631 for years ended May 31, 2023 and 2022, respectively. Loans to Students Loans receivable are carried at unpaid principal balances, less an allowance for uncollectible loans. The allowance for uncollectible loans is increased by charges to income and decreased by charge-offs (net of recoveries). Management’s periodic evaluation of the adequacy of the allowance is based on Perkins loan program requirements, the University’s historical loan loss experience, specific impaired loans, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and current economic conditions. Loans are considered impaired if full principal or interest payments are not anticipated in accordance with the contractual terms. The University’s practice is to charge off any loan or portion of a loan when the loan is determined by management to be uncollectible due to the borrower’s failure to meet repayment terms, the borrower’s deteriorating or deteriorated financial condition, the depreciation of the underlying collateral, or for other reasons. Loans are placed on nonaccrual when management believes, after considering economic conditions, business conditions, and collection efforts that the loans are impaired or collection of interest is doubtful. Uncollected interest previously accrued is charged off or an allowance is established by a charge to interest income. Interest income on nonaccrual loans is recognized only to the extent cash payments are received. The amount of loans past due 90 days or more and still accruing interest as of May 31, 2023 and 2022 totaled $89,922 and $94,283, respectively. Interest on loans is recognized over the term of the loan and is calculated using the simple-interest method on principal amounts outstanding. Land, Buildings and Equipment Land, buildings and equipment are stated at cost at date of acquisition or fair value at date of donation in the case of gifts, less accumulated depreciation, computed on a straight-line basis over the estimated useful lives ranging from 5 to 75 years. Items having a useful life longer than one year and costing more than $5,000 are capitalized. Depreciation expense for fiscal years ended May 31, 2023 and 2022 was $2,418,466 and $2,143,214 respectively. Inventory Inventory is valued at the lower of cost on the first-in, first-out basis, and net realizable value. Inventory consists mainly of books, Bible class materials, and gift items sold by the Christian Store as well as goods to be sold from dining services. Income Taxes The University is exempt from federal income taxes under Section 501(c) (3) of the Internal Revenue Code; accordingly, no provision for income taxes is made in the financial statements. The University is current on filing its tax form 990 and form 990T. If interest and penalties are incurred such amounts are recognized in income tax expense. FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109, codified in ASC Topic 740 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attribute for tax positions taken or expected to be taken on a tax return including the entity’s status as a tax-exempt not-for-profit entity. Additionally, ASC 740 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosure. The University had no significant uncertain tax positions at May 31, 2023 or 2022. Endowment and Similar Funds The endowment and similar funds are subdivided into appropriate classifications. Endowment funds have been received from benefactors who, by the terms of their conveying instruments, have stipulated that the principal of their gifts may not be expended. Quasi-endowment funds are funds which the Board of Trustees of the University has determined are to be retained and invested until the Board, at its discretion, authorizes their expenditure. The principal of such funds may be either designated or undesignated as to use. Income derived from investments of endowment and similar funds is accounted for in the fund to which it is restricted, or if unrestricted, as revenues in unrestricted current funds. The Board of Trustees has established that, in the absence of further restrictions, 50 percent of the corpus of endowment gifts is to be recorded as net assets with donor restrictions held in perpetuity, since the University’s agreements did not explicitly state the amount of the gift that should be held in perpetuity. The remaining 50 percent is recorded as net assets with donor restrictions that are temporary in nature until those amounts are appropriated for expenditure for their donor restricted purpose, and is available to absorb market fluctuations and to award scholarships if the return on investment in any given year is not sufficient. Management has confirmed with donors the University’s interpretation of their endowment agreement. This correspondence effectively confirmed the donor’s intent for the amount of the gift that must be held in perpetuity. Subsequent to this confirmation, 50 percent of the corpus of these endowments was reclassified from net assets with donor restrictions held in perpetuity to net assets with donor restrictions that have purpose restrictions in accordance with the Board’s resolution. Tuition, Fees and Auxiliary Enterprises The University’s primary source of revenues from contracts with customers are from tuition, fees and sales and services of auxiliary enterprises. In accordance with the adoption of Accounting Standards Update (“ASU”) 2014-09, Revenues from Contracts with Customers, the University identifies a contract for revenue recognition when there is approval and commitment from both parties, the rights of the parties and payment terms are identified, the contract has commercial substance and the collectability of the consideration is probable. The University evaluates each contract to determine the number of distinct performance obligations in the contract, which requires the use of judgment. Performance obligations are determined based on the nature of the services provided by the University. Tuition and fees are derived from academic services rendered by the University on campus and online, as well as from related educational resources that the University provides to its students, such as access to courses and online materials. The University recognizes revenue for academic services pro-rata over the applicable academic term. Scholarships provided to students by the University are reflected as a reduction of gross tuition and fees. Tuition and fees received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. Sales and services of auxiliary enterprises include housing services, food services, a bookstore, camps, and events. The University recognizes revenue for housing and certain food services proportionately over the applicable academic term. Fees related to housing and food received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. The University typically recognized revenue from other sales and services of auxiliary enterprises at the point in time sales occur or as services are rendered. The University’s accounts receivable represents unconditional rights to consideration from its contracts with customers. Typically, once a customer is invoiced for tuition, fees, and auxiliary services, payment is due immediately. Accounts receivable, net of allowance for doubtful accounts as of the years ended May 31, 2023 and May 31, 2022, were $759,231 and $757,318, respectively. The University does not present information about outstanding performance obligations as of year-end because its contracts with students all had original terms of less than one year. The University does not have any contract assets. The University had no costs that were capitalized to obtain or to fulfill a contract with a student. The University maintains an institutional tuition refund policy, which provides for all or a portion of tuition and fees to be refunded if a student withdraws during the stated refund period. The University does not record revenue for amounts that may be refunded. Contributions and Private Gifts Contributions and private gifts, including unconditional promises to give, are recognized as revenues in the period received. Conditional promises to give are not recognized until they become unconditional; that is, when the conditions on which they depend are substantially met. Contributions of assets other than cash are recorded at their estimated fair value. Contributions to be received after one year are discounted at an appropriate discount rate commensurate with the risks involved. Amortization of discounts is recorded as additional contribution revenue in accordance with donor-imposed restrictions, if any, on the contributions. As of May 31, 2023 and 2022, there were $15,000 and $18,000 unconditional promises to give respectively. Functional Expenses Costs of providing the University’s programs are reported in the statements of activities on a functional basis. Program expenses include costs directly associated with the program and other indirect costs determined to benefit that program. These costs have been allocated between functional categories program and supporting services based on estimates made by management. Impairment of Long-Lived Assets The University evaluates the recoverability of its long-lived assets for possible impairment when events or circumstances indicate that the carrying amounts may not be recoverable. Long-lived assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are independent of the cash flows of other groups of assets. If it is determined that the carrying amounts of such long-lived assets are not recoverable, the assets are written down to their fair value. See Note 8. Leases The University adopted FASB Topic 842, Leases, using the modified retrospective approach with June 1, 2022, as the date of initial adoption. The University elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the University to carry forward the historical lease classification. Adoption of the new standard did not impact the University’s changes in net assets and had no impact on beginning net assets or cash flows. The University determines whether an arrangement is or contains a lease at lease inception. Under ASC 842, a contract is (or contains) a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined under the standard as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. On the commencement date, operating leases are recorded as operating lease right-of-use (“ROU”) assets and operating lease liabilities in the statements of financial position. Finance leases are recorded as equipment and finance lease liabilities in the statements of financial position. ROU assets represent the University’s right to use an underlying asset for the lease term, and lease liabilities represent the University’s contractual obligation to make lease payments. The lease liability is measured as the present value of the lease payments over the lease term using either the rate implicit in the lease, if it is determinable, or the University’s incremental borrowing rate if the implicit rate is not determinable. ROU assets are calculated as the present value of the remaining lease payments plus unamortized initial direct costs and prepayments of rent, less any unamortized lease incentives received. Lease terms may include renewal or extension options to the extent they are reasonably certain to be exercised. For operating leases, lease expense is recognized on a straight-line basis over the lease term. For finance leases, amortization of the asset is recognized on a straight-line basis over the useful life of the underlying asset and interest on the lease liability is recognized over the lease term. The University has elected not to recognize a ROU asset and lease liability for leases with an initial term of 12 months or less but includes the expense associated with short-term leases in lease expense in the statements of activities. ROU assets are assessed for impairment in accordance with the University’s long-lived asset policy. Management reassesses lease classification and remeasures ROU assets and lease liabilities when a lease is modified and that modification is not accounted for as a separate new lease or upon certain other events that require reassessment in accordance with ASC 842. Reclassifications Certain reclassifications have been made to the fiscal 2022 financial statements to conform to the fiscal 2023 presentation. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. The University’s financial instruments at May 31, 2023 are summarized as follows: The University’s financial instruments at May 31, 2022 are summarized as follows: The table below presents a reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the year ended May 31, 2023: During fiscal year 2023, investments valued at $225 were transferred from Level 1 to Level 3. The decrease of $43,757 in student loans receivable was due primarily to loan principle collected by the University. Investments valued at net asset value per share as of May 31, 2023 were private equity investments with an aggregate carrying value of $6,460,579 for which there were unfunded commitments totaling $1,465,989. The redemption notice period for unfunded commitments is for up to 10 years and the redemption frequency is at the general partners discretion pending approval of the University’s management. /The following methods and assumptions are used by the University to estimate the fair values of the University’s financial assets and liabilities on a recurring basis: Cash and cash equivalents, student deposits, and advance deposits The carrying amounts of cash and cash equivalents, student deposits and advance payments approximate fair value because of the short maturity of those financial instruments. Investments The fair value of investments is based on quoted market prices of identical or similar instruments, net asset value, or a discounted cash flow model (Level 1, 2 and 3 inputs). Investments carried at net asset value, as reported by the investment managers, are not required to be categorized within the fair value hierarchy. Included in investments of the University are the assets of charitable remainder trusts which the University administers. Under these trusts a donor establishes and funds a trust with specified distributions to be made to a designated beneficiary or the University over the trust’s terms, with the University receiving the remaining trust assets upon termination of the trust or the donors’ death. The fair value of the charitable remainder trust assets is based on quoted market prices of identical or similar instruments, or the discounted cash flow model (Level 1, 2 and 3 inputs). The fair value of charitable remainder trust liabilities is based on the discounted cash flow analysis of the expected income (Level 3 inputs). The University is the beneficiary of several charitable remainder trusts where there is a third-party trustee. The trust assets are to be distributed to the University upon the termination of the trust at the time of the donor’s death. The fair value of these charitable remainder trusts’ assets and liabilities is based on the discounted cash flow analysis of the expected income (Level 3 inputs). Also included in the University’s investments are charitable gift annuities the University administers providing for the payment of distribution to the grantor or other beneficiary over the annuity term, with the remaining assets available for the University’s use at the end of the term. The fair value of the charitable gift annuity assets is based on quoted market prices of identical or similar instruments (Level 1, 2 and 3 inputs). The fair value of charitable gift annuity liabilities is based on the discounted cash flow analysis of the expected income (Level 3 inputs). Student loans and note receivable The fair value of the loans to students under government loan programs and U.S. government loan funds approximates the carrying value because, the loans are not salable and can only be assigned to the U.S. government or its designees. The fair value of the note receivable issued by the University approximates the carrying value because the note is not salable. Long-term debt and lines-of-credit, federal advances for student loans, and annuities payable The fair value of notes payable was determined by using current market rates for notes with similar maturities and credit quality. The carrying amount of bonds payable, federal advances for student loans and annuity payable approximates fair value.

Title: Note 22. Revenue from contracts with customers Accounting Policies: Note 2. Summary of Significant Accounting Policies Basis of Accounting The financial statements of the University have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Basis of Presentation For reporting purposes, the University’s financial statements have been prepared to focus on the organization as a whole. Resources are classified into two net asset categories based on the existence or absence of donor-imposed restrictions. Accordingly, the net assets of the University and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions - Net assets that are not subject to donor imposed restrictions and may be expended for any purpose in performing the mission and primary objectives of the University. These net assets may be used at the discretion of the University’s management and those charged with governance. Net Assets with Donor Restrictions - Net assets subject to stipulations imposed by donors and grantors. Some donor restrictions are temporary in nature; those restrictions will be met by actions of the University or by the passage of time. Other donor restrictions are perpetual in nature, whereby the donor has stipulated the funds be maintained in perpetuity. Contributions received with donor-imposed restrictions that are met in the same year as received are reported as revenues of the unrestricted net asset class. Expiration of restrictions on net assets as the result of the passage of time and/or fulfilling donor-imposed stipulations are reported as net assets released from restrictions between the applicable classes of net assets in the statement of activities. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents For the purposes of reporting cash flows, cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less, except for investments purchased with endowment and annuity assets, which are classified as long-term investments. Investments Investments in marketable securities are stated at fair value. Real estate investments are stated primarily at current appraised value. Securities not publicly traded are stated at estimated market value. Unrealized gains and losses are included in the changes in net assets. The estimated fair value of certain alternative investments, such as private equity interests, is determined by reference to the net asset values allocated to the University at the measurement date. The University believes the carrying amount of these financial instruments is a reasonable estimate of fair value. Because alternative investments are not readily marketable, their estimated value is subject to uncertainty and, therefore, may differ from the value that would have been used had a ready market for such investments existed. Such difference could be material. Net appreciation on endowment funds, whose income is unrestricted as to use, is required to be reported as net assets without donor restrictions unless such net appreciation has been restricted in perpetuity by the donor or by law. Accordingly, market appreciation on endowment funds without donor restrictions is classified in the accompanying financial statements as a part of net assets without donor restrictions. In those cases, where a donor has placed restrictions on the use of endowment income, any related net appreciation is also subject to the same restriction and is reported as part of net assets with donor restrictions until such time as the restriction has been met. See Note 6 for discussion of the University’s endowment spending policy. Accounts Receivable Student accounts receivable represent amounts due for tuition, fees, and room and board from currently enrolled and former students. The University extends unsecured credit to students and parents of dependent students in connection with their studies. Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a provision for bad debt expense and an adjustment to a valuation allowance based on its assessment of the current status of individual accounts and estimated collectability. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and a credit to accounts receivable. The allowance for doubtful accounts was $253,197 and $252,439 at May 31, 2023 and 2022, respectively. Charge-offs, net of recoveries, totaled $269,270 and $49,243 for the years ended May 31, 2023 and 2022, respectively. Provision for bad debt was $270,028 and $95,631 for years ended May 31, 2023 and 2022, respectively. Loans to Students Loans receivable are carried at unpaid principal balances, less an allowance for uncollectible loans. The allowance for uncollectible loans is increased by charges to income and decreased by charge-offs (net of recoveries). Management’s periodic evaluation of the adequacy of the allowance is based on Perkins loan program requirements, the University’s historical loan loss experience, specific impaired loans, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and current economic conditions. Loans are considered impaired if full principal or interest payments are not anticipated in accordance with the contractual terms. The University’s practice is to charge off any loan or portion of a loan when the loan is determined by management to be uncollectible due to the borrower’s failure to meet repayment terms, the borrower’s deteriorating or deteriorated financial condition, the depreciation of the underlying collateral, or for other reasons. Loans are placed on nonaccrual when management believes, after considering economic conditions, business conditions, and collection efforts that the loans are impaired or collection of interest is doubtful. Uncollected interest previously accrued is charged off or an allowance is established by a charge to interest income. Interest income on nonaccrual loans is recognized only to the extent cash payments are received. The amount of loans past due 90 days or more and still accruing interest as of May 31, 2023 and 2022 totaled $89,922 and $94,283, respectively. Interest on loans is recognized over the term of the loan and is calculated using the simple-interest method on principal amounts outstanding. Land, Buildings and Equipment Land, buildings and equipment are stated at cost at date of acquisition or fair value at date of donation in the case of gifts, less accumulated depreciation, computed on a straight-line basis over the estimated useful lives ranging from 5 to 75 years. Items having a useful life longer than one year and costing more than $5,000 are capitalized. Depreciation expense for fiscal years ended May 31, 2023 and 2022 was $2,418,466 and $2,143,214 respectively. Inventory Inventory is valued at the lower of cost on the first-in, first-out basis, and net realizable value. Inventory consists mainly of books, Bible class materials, and gift items sold by the Christian Store as well as goods to be sold from dining services. Income Taxes The University is exempt from federal income taxes under Section 501(c) (3) of the Internal Revenue Code; accordingly, no provision for income taxes is made in the financial statements. The University is current on filing its tax form 990 and form 990T. If interest and penalties are incurred such amounts are recognized in income tax expense. FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109, codified in ASC Topic 740 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attribute for tax positions taken or expected to be taken on a tax return including the entity’s status as a tax-exempt not-for-profit entity. Additionally, ASC 740 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosure. The University had no significant uncertain tax positions at May 31, 2023 or 2022. Endowment and Similar Funds The endowment and similar funds are subdivided into appropriate classifications. Endowment funds have been received from benefactors who, by the terms of their conveying instruments, have stipulated that the principal of their gifts may not be expended. Quasi-endowment funds are funds which the Board of Trustees of the University has determined are to be retained and invested until the Board, at its discretion, authorizes their expenditure. The principal of such funds may be either designated or undesignated as to use. Income derived from investments of endowment and similar funds is accounted for in the fund to which it is restricted, or if unrestricted, as revenues in unrestricted current funds. The Board of Trustees has established that, in the absence of further restrictions, 50 percent of the corpus of endowment gifts is to be recorded as net assets with donor restrictions held in perpetuity, since the University’s agreements did not explicitly state the amount of the gift that should be held in perpetuity. The remaining 50 percent is recorded as net assets with donor restrictions that are temporary in nature until those amounts are appropriated for expenditure for their donor restricted purpose, and is available to absorb market fluctuations and to award scholarships if the return on investment in any given year is not sufficient. Management has confirmed with donors the University’s interpretation of their endowment agreement. This correspondence effectively confirmed the donor’s intent for the amount of the gift that must be held in perpetuity. Subsequent to this confirmation, 50 percent of the corpus of these endowments was reclassified from net assets with donor restrictions held in perpetuity to net assets with donor restrictions that have purpose restrictions in accordance with the Board’s resolution. Tuition, Fees and Auxiliary Enterprises The University’s primary source of revenues from contracts with customers are from tuition, fees and sales and services of auxiliary enterprises. In accordance with the adoption of Accounting Standards Update (“ASU”) 2014-09, Revenues from Contracts with Customers, the University identifies a contract for revenue recognition when there is approval and commitment from both parties, the rights of the parties and payment terms are identified, the contract has commercial substance and the collectability of the consideration is probable. The University evaluates each contract to determine the number of distinct performance obligations in the contract, which requires the use of judgment. Performance obligations are determined based on the nature of the services provided by the University. Tuition and fees are derived from academic services rendered by the University on campus and online, as well as from related educational resources that the University provides to its students, such as access to courses and online materials. The University recognizes revenue for academic services pro-rata over the applicable academic term. Scholarships provided to students by the University are reflected as a reduction of gross tuition and fees. Tuition and fees received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. Sales and services of auxiliary enterprises include housing services, food services, a bookstore, camps, and events. The University recognizes revenue for housing and certain food services proportionately over the applicable academic term. Fees related to housing and food received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. The University typically recognized revenue from other sales and services of auxiliary enterprises at the point in time sales occur or as services are rendered. The University’s accounts receivable represents unconditional rights to consideration from its contracts with customers. Typically, once a customer is invoiced for tuition, fees, and auxiliary services, payment is due immediately. Accounts receivable, net of allowance for doubtful accounts as of the years ended May 31, 2023 and May 31, 2022, were $759,231 and $757,318, respectively. The University does not present information about outstanding performance obligations as of year-end because its contracts with students all had original terms of less than one year. The University does not have any contract assets. The University had no costs that were capitalized to obtain or to fulfill a contract with a student. The University maintains an institutional tuition refund policy, which provides for all or a portion of tuition and fees to be refunded if a student withdraws during the stated refund period. The University does not record revenue for amounts that may be refunded. Contributions and Private Gifts Contributions and private gifts, including unconditional promises to give, are recognized as revenues in the period received. Conditional promises to give are not recognized until they become unconditional; that is, when the conditions on which they depend are substantially met. Contributions of assets other than cash are recorded at their estimated fair value. Contributions to be received after one year are discounted at an appropriate discount rate commensurate with the risks involved. Amortization of discounts is recorded as additional contribution revenue in accordance with donor-imposed restrictions, if any, on the contributions. As of May 31, 2023 and 2022, there were $15,000 and $18,000 unconditional promises to give respectively. Functional Expenses Costs of providing the University’s programs are reported in the statements of activities on a functional basis. Program expenses include costs directly associated with the program and other indirect costs determined to benefit that program. These costs have been allocated between functional categories program and supporting services based on estimates made by management. Impairment of Long-Lived Assets The University evaluates the recoverability of its long-lived assets for possible impairment when events or circumstances indicate that the carrying amounts may not be recoverable. Long-lived assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are independent of the cash flows of other groups of assets. If it is determined that the carrying amounts of such long-lived assets are not recoverable, the assets are written down to their fair value. See Note 8. Leases The University adopted FASB Topic 842, Leases, using the modified retrospective approach with June 1, 2022, as the date of initial adoption. The University elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the University to carry forward the historical lease classification. Adoption of the new standard did not impact the University’s changes in net assets and had no impact on beginning net assets or cash flows. The University determines whether an arrangement is or contains a lease at lease inception. Under ASC 842, a contract is (or contains) a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined under the standard as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. On the commencement date, operating leases are recorded as operating lease right-of-use (“ROU”) assets and operating lease liabilities in the statements of financial position. Finance leases are recorded as equipment and finance lease liabilities in the statements of financial position. ROU assets represent the University’s right to use an underlying asset for the lease term, and lease liabilities represent the University’s contractual obligation to make lease payments. The lease liability is measured as the present value of the lease payments over the lease term using either the rate implicit in the lease, if it is determinable, or the University’s incremental borrowing rate if the implicit rate is not determinable. ROU assets are calculated as the present value of the remaining lease payments plus unamortized initial direct costs and prepayments of rent, less any unamortized lease incentives received. Lease terms may include renewal or extension options to the extent they are reasonably certain to be exercised. For operating leases, lease expense is recognized on a straight-line basis over the lease term. For finance leases, amortization of the asset is recognized on a straight-line basis over the useful life of the underlying asset and interest on the lease liability is recognized over the lease term. The University has elected not to recognize a ROU asset and lease liability for leases with an initial term of 12 months or less but includes the expense associated with short-term leases in lease expense in the statements of activities. ROU assets are assessed for impairment in accordance with the University’s long-lived asset policy. Management reassesses lease classification and remeasures ROU assets and lease liabilities when a lease is modified and that modification is not accounted for as a separate new lease or upon certain other events that require reassessment in accordance with ASC 842. Reclassifications Certain reclassifications have been made to the fiscal 2022 financial statements to conform to the fiscal 2023 presentation. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. Revenues The University’s primary source of revenue from contracts with customers are from tuition and fees, and auxiliary enterprises revenue as presented in the statements of activities and changes in net assets. There were no impairment losses on receivables from contracts with customers during fiscal years ended May 31, 2023 and 2022. A summary of revenue from contracts with customers related to gross tuition and fees for the year ended May 31, 2023 and 2022 disaggregated by the major classification of student type is as follows: A summary of revenue from contracts with customers related to auxiliary enterprises revenue for the years ended May 31, 2023 and 2022 disaggregated by type is as follows:

Title: Note 23. COVID-19 Pandemic Accounting Policies: Note 2. Summary of Significant Accounting Policies Basis of Accounting The financial statements of the University have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Basis of Presentation For reporting purposes, the University’s financial statements have been prepared to focus on the organization as a whole. Resources are classified into two net asset categories based on the existence or absence of donor-imposed restrictions. Accordingly, the net assets of the University and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions - Net assets that are not subject to donor imposed restrictions and may be expended for any purpose in performing the mission and primary objectives of the University. These net assets may be used at the discretion of the University’s management and those charged with governance. Net Assets with Donor Restrictions - Net assets subject to stipulations imposed by donors and grantors. Some donor restrictions are temporary in nature; those restrictions will be met by actions of the University or by the passage of time. Other donor restrictions are perpetual in nature, whereby the donor has stipulated the funds be maintained in perpetuity. Contributions received with donor-imposed restrictions that are met in the same year as received are reported as revenues of the unrestricted net asset class. Expiration of restrictions on net assets as the result of the passage of time and/or fulfilling donor-imposed stipulations are reported as net assets released from restrictions between the applicable classes of net assets in the statement of activities. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents For the purposes of reporting cash flows, cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less, except for investments purchased with endowment and annuity assets, which are classified as long-term investments. Investments Investments in marketable securities are stated at fair value. Real estate investments are stated primarily at current appraised value. Securities not publicly traded are stated at estimated market value. Unrealized gains and losses are included in the changes in net assets. The estimated fair value of certain alternative investments, such as private equity interests, is determined by reference to the net asset values allocated to the University at the measurement date. The University believes the carrying amount of these financial instruments is a reasonable estimate of fair value. Because alternative investments are not readily marketable, their estimated value is subject to uncertainty and, therefore, may differ from the value that would have been used had a ready market for such investments existed. Such difference could be material. Net appreciation on endowment funds, whose income is unrestricted as to use, is required to be reported as net assets without donor restrictions unless such net appreciation has been restricted in perpetuity by the donor or by law. Accordingly, market appreciation on endowment funds without donor restrictions is classified in the accompanying financial statements as a part of net assets without donor restrictions. In those cases, where a donor has placed restrictions on the use of endowment income, any related net appreciation is also subject to the same restriction and is reported as part of net assets with donor restrictions until such time as the restriction has been met. See Note 6 for discussion of the University’s endowment spending policy. Accounts Receivable Student accounts receivable represent amounts due for tuition, fees, and room and board from currently enrolled and former students. The University extends unsecured credit to students and parents of dependent students in connection with their studies. Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a provision for bad debt expense and an adjustment to a valuation allowance based on its assessment of the current status of individual accounts and estimated collectability. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and a credit to accounts receivable. The allowance for doubtful accounts was $253,197 and $252,439 at May 31, 2023 and 2022, respectively. Charge-offs, net of recoveries, totaled $269,270 and $49,243 for the years ended May 31, 2023 and 2022, respectively. Provision for bad debt was $270,028 and $95,631 for years ended May 31, 2023 and 2022, respectively. Loans to Students Loans receivable are carried at unpaid principal balances, less an allowance for uncollectible loans. The allowance for uncollectible loans is increased by charges to income and decreased by charge-offs (net of recoveries). Management’s periodic evaluation of the adequacy of the allowance is based on Perkins loan program requirements, the University’s historical loan loss experience, specific impaired loans, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and current economic conditions. Loans are considered impaired if full principal or interest payments are not anticipated in accordance with the contractual terms. The University’s practice is to charge off any loan or portion of a loan when the loan is determined by management to be uncollectible due to the borrower’s failure to meet repayment terms, the borrower’s deteriorating or deteriorated financial condition, the depreciation of the underlying collateral, or for other reasons. Loans are placed on nonaccrual when management believes, after considering economic conditions, business conditions, and collection efforts that the loans are impaired or collection of interest is doubtful. Uncollected interest previously accrued is charged off or an allowance is established by a charge to interest income. Interest income on nonaccrual loans is recognized only to the extent cash payments are received. The amount of loans past due 90 days or more and still accruing interest as of May 31, 2023 and 2022 totaled $89,922 and $94,283, respectively. Interest on loans is recognized over the term of the loan and is calculated using the simple-interest method on principal amounts outstanding. Land, Buildings and Equipment Land, buildings and equipment are stated at cost at date of acquisition or fair value at date of donation in the case of gifts, less accumulated depreciation, computed on a straight-line basis over the estimated useful lives ranging from 5 to 75 years. Items having a useful life longer than one year and costing more than $5,000 are capitalized. Depreciation expense for fiscal years ended May 31, 2023 and 2022 was $2,418,466 and $2,143,214 respectively. Inventory Inventory is valued at the lower of cost on the first-in, first-out basis, and net realizable value. Inventory consists mainly of books, Bible class materials, and gift items sold by the Christian Store as well as goods to be sold from dining services. Income Taxes The University is exempt from federal income taxes under Section 501(c) (3) of the Internal Revenue Code; accordingly, no provision for income taxes is made in the financial statements. The University is current on filing its tax form 990 and form 990T. If interest and penalties are incurred such amounts are recognized in income tax expense. FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109, codified in ASC Topic 740 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attribute for tax positions taken or expected to be taken on a tax return including the entity’s status as a tax-exempt not-for-profit entity. Additionally, ASC 740 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosure. The University had no significant uncertain tax positions at May 31, 2023 or 2022. Endowment and Similar Funds The endowment and similar funds are subdivided into appropriate classifications. Endowment funds have been received from benefactors who, by the terms of their conveying instruments, have stipulated that the principal of their gifts may not be expended. Quasi-endowment funds are funds which the Board of Trustees of the University has determined are to be retained and invested until the Board, at its discretion, authorizes their expenditure. The principal of such funds may be either designated or undesignated as to use. Income derived from investments of endowment and similar funds is accounted for in the fund to which it is restricted, or if unrestricted, as revenues in unrestricted current funds. The Board of Trustees has established that, in the absence of further restrictions, 50 percent of the corpus of endowment gifts is to be recorded as net assets with donor restrictions held in perpetuity, since the University’s agreements did not explicitly state the amount of the gift that should be held in perpetuity. The remaining 50 percent is recorded as net assets with donor restrictions that are temporary in nature until those amounts are appropriated for expenditure for their donor restricted purpose, and is available to absorb market fluctuations and to award scholarships if the return on investment in any given year is not sufficient. Management has confirmed with donors the University’s interpretation of their endowment agreement. This correspondence effectively confirmed the donor’s intent for the amount of the gift that must be held in perpetuity. Subsequent to this confirmation, 50 percent of the corpus of these endowments was reclassified from net assets with donor restrictions held in perpetuity to net assets with donor restrictions that have purpose restrictions in accordance with the Board’s resolution. Tuition, Fees and Auxiliary Enterprises The University’s primary source of revenues from contracts with customers are from tuition, fees and sales and services of auxiliary enterprises. In accordance with the adoption of Accounting Standards Update (“ASU”) 2014-09, Revenues from Contracts with Customers, the University identifies a contract for revenue recognition when there is approval and commitment from both parties, the rights of the parties and payment terms are identified, the contract has commercial substance and the collectability of the consideration is probable. The University evaluates each contract to determine the number of distinct performance obligations in the contract, which requires the use of judgment. Performance obligations are determined based on the nature of the services provided by the University. Tuition and fees are derived from academic services rendered by the University on campus and online, as well as from related educational resources that the University provides to its students, such as access to courses and online materials. The University recognizes revenue for academic services pro-rata over the applicable academic term. Scholarships provided to students by the University are reflected as a reduction of gross tuition and fees. Tuition and fees received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. Sales and services of auxiliary enterprises include housing services, food services, a bookstore, camps, and events. The University recognizes revenue for housing and certain food services proportionately over the applicable academic term. Fees related to housing and food received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. The University typically recognized revenue from other sales and services of auxiliary enterprises at the point in time sales occur or as services are rendered. The University’s accounts receivable represents unconditional rights to consideration from its contracts with customers. Typically, once a customer is invoiced for tuition, fees, and auxiliary services, payment is due immediately. Accounts receivable, net of allowance for doubtful accounts as of the years ended May 31, 2023 and May 31, 2022, were $759,231 and $757,318, respectively. The University does not present information about outstanding performance obligations as of year-end because its contracts with students all had original terms of less than one year. The University does not have any contract assets. The University had no costs that were capitalized to obtain or to fulfill a contract with a student. The University maintains an institutional tuition refund policy, which provides for all or a portion of tuition and fees to be refunded if a student withdraws during the stated refund period. The University does not record revenue for amounts that may be refunded. Contributions and Private Gifts Contributions and private gifts, including unconditional promises to give, are recognized as revenues in the period received. Conditional promises to give are not recognized until they become unconditional; that is, when the conditions on which they depend are substantially met. Contributions of assets other than cash are recorded at their estimated fair value. Contributions to be received after one year are discounted at an appropriate discount rate commensurate with the risks involved. Amortization of discounts is recorded as additional contribution revenue in accordance with donor-imposed restrictions, if any, on the contributions. As of May 31, 2023 and 2022, there were $15,000 and $18,000 unconditional promises to give respectively. Functional Expenses Costs of providing the University’s programs are reported in the statements of activities on a functional basis. Program expenses include costs directly associated with the program and other indirect costs determined to benefit that program. These costs have been allocated between functional categories program and supporting services based on estimates made by management. Impairment of Long-Lived Assets The University evaluates the recoverability of its long-lived assets for possible impairment when events or circumstances indicate that the carrying amounts may not be recoverable. Long-lived assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are independent of the cash flows of other groups of assets. If it is determined that the carrying amounts of such long-lived assets are not recoverable, the assets are written down to their fair value. See Note 8. Leases The University adopted FASB Topic 842, Leases, using the modified retrospective approach with June 1, 2022, as the date of initial adoption. The University elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the University to carry forward the historical lease classification. Adoption of the new standard did not impact the University’s changes in net assets and had no impact on beginning net assets or cash flows. The University determines whether an arrangement is or contains a lease at lease inception. Under ASC 842, a contract is (or contains) a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined under the standard as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. On the commencement date, operating leases are recorded as operating lease right-of-use (“ROU”) assets and operating lease liabilities in the statements of financial position. Finance leases are recorded as equipment and finance lease liabilities in the statements of financial position. ROU assets represent the University’s right to use an underlying asset for the lease term, and lease liabilities represent the University’s contractual obligation to make lease payments. The lease liability is measured as the present value of the lease payments over the lease term using either the rate implicit in the lease, if it is determinable, or the University’s incremental borrowing rate if the implicit rate is not determinable. ROU assets are calculated as the present value of the remaining lease payments plus unamortized initial direct costs and prepayments of rent, less any unamortized lease incentives received. Lease terms may include renewal or extension options to the extent they are reasonably certain to be exercised. For operating leases, lease expense is recognized on a straight-line basis over the lease term. For finance leases, amortization of the asset is recognized on a straight-line basis over the useful life of the underlying asset and interest on the lease liability is recognized over the lease term. The University has elected not to recognize a ROU asset and lease liability for leases with an initial term of 12 months or less but includes the expense associated with short-term leases in lease expense in the statements of activities. ROU assets are assessed for impairment in accordance with the University’s long-lived asset policy. Management reassesses lease classification and remeasures ROU assets and lease liabilities when a lease is modified and that modification is not accounted for as a separate new lease or upon certain other events that require reassessment in accordance with ASC 842. Reclassifications Certain reclassifications have been made to the fiscal 2022 financial statements to conform to the fiscal 2023 presentation. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus (the “COVID-19 outbreak”). In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. In order to assist in the mitigation of the negative impact on its operational and financial performance, the University applied for and received grant funds from the U.S. Department of Education through the Higher Education Emergency Relief Fund Grant (the “HEERF”). During the fiscal year ended May 31, 2022, the university was awarded $2,524,307 in HEERF funds. Of this amount, $1,781,300 was awarded directly to students, prioritizing those with exceptional need. The remaining funds were used to replace lost revenue, improve infrastructure to help mitigate the spread of COVID-19. During the fiscal year ended May 31, 2023, the University was awarded $1,117,973 in HEERF funds. Of this amount, $2,917 was awarded directly to students, with the remaining funds used to replace lost revenue and improve infrastructure to help mitigate the spread of COVID-19. The University cannot estimate the length or future gravity of the impact of the COVID-19, if any. If the impact from the pandemic continues, it may have an adverse effect on the University’s results of future operations, financial position, and liquidity.

Title: Note 24. Subsequent Events Accounting Policies: Note 2. Summary of Significant Accounting Policies Basis of Accounting The financial statements of the University have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Basis of Presentation For reporting purposes, the University’s financial statements have been prepared to focus on the organization as a whole. Resources are classified into two net asset categories based on the existence or absence of donor-imposed restrictions. Accordingly, the net assets of the University and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions - Net assets that are not subject to donor imposed restrictions and may be expended for any purpose in performing the mission and primary objectives of the University. These net assets may be used at the discretion of the University’s management and those charged with governance. Net Assets with Donor Restrictions - Net assets subject to stipulations imposed by donors and grantors. Some donor restrictions are temporary in nature; those restrictions will be met by actions of the University or by the passage of time. Other donor restrictions are perpetual in nature, whereby the donor has stipulated the funds be maintained in perpetuity. Contributions received with donor-imposed restrictions that are met in the same year as received are reported as revenues of the unrestricted net asset class. Expiration of restrictions on net assets as the result of the passage of time and/or fulfilling donor-imposed stipulations are reported as net assets released from restrictions between the applicable classes of net assets in the statement of activities. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents For the purposes of reporting cash flows, cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less, except for investments purchased with endowment and annuity assets, which are classified as long-term investments. Investments Investments in marketable securities are stated at fair value. Real estate investments are stated primarily at current appraised value. Securities not publicly traded are stated at estimated market value. Unrealized gains and losses are included in the changes in net assets. The estimated fair value of certain alternative investments, such as private equity interests, is determined by reference to the net asset values allocated to the University at the measurement date. The University believes the carrying amount of these financial instruments is a reasonable estimate of fair value. Because alternative investments are not readily marketable, their estimated value is subject to uncertainty and, therefore, may differ from the value that would have been used had a ready market for such investments existed. Such difference could be material. Net appreciation on endowment funds, whose income is unrestricted as to use, is required to be reported as net assets without donor restrictions unless such net appreciation has been restricted in perpetuity by the donor or by law. Accordingly, market appreciation on endowment funds without donor restrictions is classified in the accompanying financial statements as a part of net assets without donor restrictions. In those cases, where a donor has placed restrictions on the use of endowment income, any related net appreciation is also subject to the same restriction and is reported as part of net assets with donor restrictions until such time as the restriction has been met. See Note 6 for discussion of the University’s endowment spending policy. Accounts Receivable Student accounts receivable represent amounts due for tuition, fees, and room and board from currently enrolled and former students. The University extends unsecured credit to students and parents of dependent students in connection with their studies. Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a provision for bad debt expense and an adjustment to a valuation allowance based on its assessment of the current status of individual accounts and estimated collectability. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and a credit to accounts receivable. The allowance for doubtful accounts was $253,197 and $252,439 at May 31, 2023 and 2022, respectively. Charge-offs, net of recoveries, totaled $269,270 and $49,243 for the years ended May 31, 2023 and 2022, respectively. Provision for bad debt was $270,028 and $95,631 for years ended May 31, 2023 and 2022, respectively. Loans to Students Loans receivable are carried at unpaid principal balances, less an allowance for uncollectible loans. The allowance for uncollectible loans is increased by charges to income and decreased by charge-offs (net of recoveries). Management’s periodic evaluation of the adequacy of the allowance is based on Perkins loan program requirements, the University’s historical loan loss experience, specific impaired loans, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and current economic conditions. Loans are considered impaired if full principal or interest payments are not anticipated in accordance with the contractual terms. The University’s practice is to charge off any loan or portion of a loan when the loan is determined by management to be uncollectible due to the borrower’s failure to meet repayment terms, the borrower’s deteriorating or deteriorated financial condition, the depreciation of the underlying collateral, or for other reasons. Loans are placed on nonaccrual when management believes, after considering economic conditions, business conditions, and collection efforts that the loans are impaired or collection of interest is doubtful. Uncollected interest previously accrued is charged off or an allowance is established by a charge to interest income. Interest income on nonaccrual loans is recognized only to the extent cash payments are received. The amount of loans past due 90 days or more and still accruing interest as of May 31, 2023 and 2022 totaled $89,922 and $94,283, respectively. Interest on loans is recognized over the term of the loan and is calculated using the simple-interest method on principal amounts outstanding. Land, Buildings and Equipment Land, buildings and equipment are stated at cost at date of acquisition or fair value at date of donation in the case of gifts, less accumulated depreciation, computed on a straight-line basis over the estimated useful lives ranging from 5 to 75 years. Items having a useful life longer than one year and costing more than $5,000 are capitalized. Depreciation expense for fiscal years ended May 31, 2023 and 2022 was $2,418,466 and $2,143,214 respectively. Inventory Inventory is valued at the lower of cost on the first-in, first-out basis, and net realizable value. Inventory consists mainly of books, Bible class materials, and gift items sold by the Christian Store as well as goods to be sold from dining services. Income Taxes The University is exempt from federal income taxes under Section 501(c) (3) of the Internal Revenue Code; accordingly, no provision for income taxes is made in the financial statements. The University is current on filing its tax form 990 and form 990T. If interest and penalties are incurred such amounts are recognized in income tax expense. FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109, codified in ASC Topic 740 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attribute for tax positions taken or expected to be taken on a tax return including the entity’s status as a tax-exempt not-for-profit entity. Additionally, ASC 740 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosure. The University had no significant uncertain tax positions at May 31, 2023 or 2022. Endowment and Similar Funds The endowment and similar funds are subdivided into appropriate classifications. Endowment funds have been received from benefactors who, by the terms of their conveying instruments, have stipulated that the principal of their gifts may not be expended. Quasi-endowment funds are funds which the Board of Trustees of the University has determined are to be retained and invested until the Board, at its discretion, authorizes their expenditure. The principal of such funds may be either designated or undesignated as to use. Income derived from investments of endowment and similar funds is accounted for in the fund to which it is restricted, or if unrestricted, as revenues in unrestricted current funds. The Board of Trustees has established that, in the absence of further restrictions, 50 percent of the corpus of endowment gifts is to be recorded as net assets with donor restrictions held in perpetuity, since the University’s agreements did not explicitly state the amount of the gift that should be held in perpetuity. The remaining 50 percent is recorded as net assets with donor restrictions that are temporary in nature until those amounts are appropriated for expenditure for their donor restricted purpose, and is available to absorb market fluctuations and to award scholarships if the return on investment in any given year is not sufficient. Management has confirmed with donors the University’s interpretation of their endowment agreement. This correspondence effectively confirmed the donor’s intent for the amount of the gift that must be held in perpetuity. Subsequent to this confirmation, 50 percent of the corpus of these endowments was reclassified from net assets with donor restrictions held in perpetuity to net assets with donor restrictions that have purpose restrictions in accordance with the Board’s resolution. Tuition, Fees and Auxiliary Enterprises The University’s primary source of revenues from contracts with customers are from tuition, fees and sales and services of auxiliary enterprises. In accordance with the adoption of Accounting Standards Update (“ASU”) 2014-09, Revenues from Contracts with Customers, the University identifies a contract for revenue recognition when there is approval and commitment from both parties, the rights of the parties and payment terms are identified, the contract has commercial substance and the collectability of the consideration is probable. The University evaluates each contract to determine the number of distinct performance obligations in the contract, which requires the use of judgment. Performance obligations are determined based on the nature of the services provided by the University. Tuition and fees are derived from academic services rendered by the University on campus and online, as well as from related educational resources that the University provides to its students, such as access to courses and online materials. The University recognizes revenue for academic services pro-rata over the applicable academic term. Scholarships provided to students by the University are reflected as a reduction of gross tuition and fees. Tuition and fees received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. Sales and services of auxiliary enterprises include housing services, food services, a bookstore, camps, and events. The University recognizes revenue for housing and certain food services proportionately over the applicable academic term. Fees related to housing and food received in advance of services performed are considered contract liabilities and recorded as deferred revenue and presented as student deposits and advanced payments in the statements of financial position. The University typically recognized revenue from other sales and services of auxiliary enterprises at the point in time sales occur or as services are rendered. The University’s accounts receivable represents unconditional rights to consideration from its contracts with customers. Typically, once a customer is invoiced for tuition, fees, and auxiliary services, payment is due immediately. Accounts receivable, net of allowance for doubtful accounts as of the years ended May 31, 2023 and May 31, 2022, were $759,231 and $757,318, respectively. The University does not present information about outstanding performance obligations as of year-end because its contracts with students all had original terms of less than one year. The University does not have any contract assets. The University had no costs that were capitalized to obtain or to fulfill a contract with a student. The University maintains an institutional tuition refund policy, which provides for all or a portion of tuition and fees to be refunded if a student withdraws during the stated refund period. The University does not record revenue for amounts that may be refunded. Contributions and Private Gifts Contributions and private gifts, including unconditional promises to give, are recognized as revenues in the period received. Conditional promises to give are not recognized until they become unconditional; that is, when the conditions on which they depend are substantially met. Contributions of assets other than cash are recorded at their estimated fair value. Contributions to be received after one year are discounted at an appropriate discount rate commensurate with the risks involved. Amortization of discounts is recorded as additional contribution revenue in accordance with donor-imposed restrictions, if any, on the contributions. As of May 31, 2023 and 2022, there were $15,000 and $18,000 unconditional promises to give respectively. Functional Expenses Costs of providing the University’s programs are reported in the statements of activities on a functional basis. Program expenses include costs directly associated with the program and other indirect costs determined to benefit that program. These costs have been allocated between functional categories program and supporting services based on estimates made by management. Impairment of Long-Lived Assets The University evaluates the recoverability of its long-lived assets for possible impairment when events or circumstances indicate that the carrying amounts may not be recoverable. Long-lived assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are independent of the cash flows of other groups of assets. If it is determined that the carrying amounts of such long-lived assets are not recoverable, the assets are written down to their fair value. See Note 8. Leases The University adopted FASB Topic 842, Leases, using the modified retrospective approach with June 1, 2022, as the date of initial adoption. The University elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the University to carry forward the historical lease classification. Adoption of the new standard did not impact the University’s changes in net assets and had no impact on beginning net assets or cash flows. The University determines whether an arrangement is or contains a lease at lease inception. Under ASC 842, a contract is (or contains) a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined under the standard as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. On the commencement date, operating leases are recorded as operating lease right-of-use (“ROU”) assets and operating lease liabilities in the statements of financial position. Finance leases are recorded as equipment and finance lease liabilities in the statements of financial position. ROU assets represent the University’s right to use an underlying asset for the lease term, and lease liabilities represent the University’s contractual obligation to make lease payments. The lease liability is measured as the present value of the lease payments over the lease term using either the rate implicit in the lease, if it is determinable, or the University’s incremental borrowing rate if the implicit rate is not determinable. ROU assets are calculated as the present value of the remaining lease payments plus unamortized initial direct costs and prepayments of rent, less any unamortized lease incentives received. Lease terms may include renewal or extension options to the extent they are reasonably certain to be exercised. For operating leases, lease expense is recognized on a straight-line basis over the lease term. For finance leases, amortization of the asset is recognized on a straight-line basis over the useful life of the underlying asset and interest on the lease liability is recognized over the lease term. The University has elected not to recognize a ROU asset and lease liability for leases with an initial term of 12 months or less but includes the expense associated with short-term leases in lease expense in the statements of activities. ROU assets are assessed for impairment in accordance with the University’s long-lived asset policy. Management reassesses lease classification and remeasures ROU assets and lease liabilities when a lease is modified and that modification is not accounted for as a separate new lease or upon certain other events that require reassessment in accordance with ASC 842. Reclassifications Certain reclassifications have been made to the fiscal 2022 financial statements to conform to the fiscal 2023 presentation. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The University has evaluated subsequent events through October 4, 2023, the issuance date of the University’s financial statements, and has determined that there are no subsequent events that require disclosure.