James Moore, CPAs Highlights Changes to the NCAA Areed-Upon Procedures in Athletics Administration
Originally published on October 18, 2015
Updated on November 1st, 2023
In the October 2015 issue of Athletics Administration, James Moore, CPAs highlights recent changes to the NCAA financial reporting requirements and minimum agreed-upon procedures effective for the January 15, 2016 reporting submission deadline. The article is as follows:
In response to feedback from intercollegiate athletics managers of member institutions, the NCAA assembled a Financial Data Focus Group comprised of staff, member institutions and accounting firms to assess concerns regarding inconsistencies with financial reporting and to help further clarify the NCAA Agreed-Upon Procedures (AUP).
The focus group convened for numerous internal meetings and held four conference assemblies over two years to address the intercollegiate reporting specifications. In addition to reviewing membership concerns, the focus group developed methods of ensuring accuracy and consistency of data for reporting purposes and shared best practices.
The NCAA AUP Guidelines requires institutions to have an independent accountant perform certain procedures on their revenues and expenses. Furthermore, it mandates that member institutions understand these changes in order to effectively capture program expenses and revenues in their proper categories and to ensure consistency and accuracy of their required financial reporting.
The AUP is intended to provide financial comparability across member institutions to assist them in making formal decisions regarding athletics finances. After the NCAA receives this financial data, it then provides the data for all member institutions in the form of a dashboard, so that the institutions can pull the data out and make valuable decisions based upon it.
The group’s efforts resulted in the implementation of extensive changes to the NCAA financial reporting requirements and minimum AUP effective for the Jan. 15, 2016, reporting submission deadline. The changes will require an increase in amount of testing required by the independent accountants for many of the reporting categories.
A summary of the most notable changes is as follows:
- Athletic Student Aid: Testing of at least 10 percent of scholarship recipients is now required, compared to a sample size previously determined by the judgment of the independent accountant.
- “In Kind” is a new revenue category that must include all non-cash donations; such as hotel rooms, transportation, uniforms, etc.
- NCAA Distributions and Conference Distributions are now two distinct categories. As such, any NCAA distributions given to member institutions that pass through the conference must be categorized as an “NCAA distribution,” versus a “conference distribution.”
- “Athletic facilities, debt services, lease and rental fees” is a new category for the AUP. Athletic programs must record all debt service payments, including internal loans, and their athletic facility leases and rental fees in this category, regardless of the entity making the debt service payments (athletics, institution or other).
- “Conference Realignment Expenses” is also a new category for the AUP. This category captures all expenses associated with changing conferences, such as legal fees, signage, stationary, advertising and much more.
Based on our experience in working with numerous NCAA member institutions, we think the most significant change to the procedures is the expanded testing required for the Athletic Student Aid. Although this change requires more effort on the institution to retrieve additional information and to provide explanations for discrepancies, we surmise it will not significantly increase the work required to report on this category. Instead, it will provide more assurance for the NCAA in maintaining awareness that the institution’s reported grants-in-aid expenditures is, in fact, accurate. Similarly, the NCAA will also have increased confidence that each institution will sequentially receive an appropriate allocation of the funds distributed by the NCAA.
Carl Heck, the associate athletic director / internal operations at Butler University and Chauncey Winbush, the associate athletic director / business affairs at the U.S. Naval Academy, are just two of the group’s 19 members who are in the process of completing engagements implementing these new changes.
Heck expressed, after recently completing an external AUP engagement, the additional work (accompanied by the changes) was not burdensome for the administrators. Although the changes to the NCAA AUP will cause some additional work for the external accountants, the group felt some of these changes were necessary in order to ensure data was comparable amongst member institutions.
Winbush agreed and stated he thought the focus group accomplished its mission and believes clarifications to the AUP definitions and categories will prove beneficial to membership institutions.
“As a result of the group’s efforts, we think everyone is on the same page, and the member institutions have a better understanding about what data they need to provide and that it is being more effectively within the member institutions,” asserted Winbush.
Jeff O’Barr, associate director of accounting for the NCAA, agreed that the Financial Data Focus Group alleviated, or at least addressed, the major concerns that were identified prior to the formation of the group.
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