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(1)

Changes to NCAA Financial

Reporting Requirements &

Minimum Agreed-Upon Procedures

Kathleen McNeely

NCAA Senior Vice President of Administration

and Chief Financial Officer kmcneely@ncaa.org

Debra Ladyman

National Industry Partner – Higher Education Group

BKD, LLP

(2)

Today’s Objectives

• Financial Data Focus Group

− Objectives − Members

• FY 2013 & FY 2014 Changes

• FY 2015 Changes Overview

− Revenue & Expense Categories − Agreed-upon Procedures

• Process for January 15, 2016 submission

• Questions & Discussion

(3)

Financial Data Focus

Group Objectives

Review of financial reporting cycle focused on:

1. Identify ways to streamline reporting 2. Review membership concerns

3. Ensure consistency of data

4. Share best practices in preparation of reporting & execution of agreed upon procedures

(4)

The focus group consisted of well-respected

cross-section of personnel representing:

• member institutions

• athletic programs

• professional service firms knowledgeable &

engaged in NCAA financial reporting

4

Financial Data Focus

Group Members

(5)

Financial Data Focus Group Members

Mike Bitter Faculty Athletic Representative Stetson University Mark Brown Director of Athletics Pace University

Kyle Clark Vice President Finance & Administration Florida State University Susan Eickhoff Partner KPMG

Peter Fields Director of Athletics Montana State University Ray Hayes Vice Chancellor for Financial Affairs Alabama System

Kevin Hayward Executive Senior Associate | CFO University of Missouri Carl Heck Associate AD | Internal Operations Butler University

Katie Hill Senior Associate AD Clemson University Scott Joraanstad Associate AD for Budget & Finance Indiana University Brad Kelsheimer Vice President for Finance & Administration DePauw University Debra Ladyman National Industry Partner–Higher Education Group BKD, LLP

Bob Lazard Partner Crowe Horwath

David Lechner Vice President for Business & Finance University of Nebraska Sue Menditto Director of Accounting Policy NACUBO

Drew Paluf Vice President for Finance Notre Dame University Patricia Snopkowski Chief Audit Executive Oregon University System Larry Templeton AD Emeritus/Consultant to SEC Commissioner Mississippi State/SEC Chauncey Winbush Associate AD, Business Affairs US Naval Academy

(6)

Issues Considered Not Resulting

in Changes to Reporting

6

• Recognition of student fees as

earned revenues instead of allocated

− Some schools provide free tickets to students

− Some schools provide discounted tickets to students

• Earlier deadline date

• Elimination of all capital related financial outflows

• Elimination of foundation data

(7)

Financial Report Submission Changes

7

In an effort for continuous improvement for financial

reporting cycle, there will be submission changes,

effective 2016:

− Enforcement of report due date of January 15 − Elimination of CEO review for

(8)

Fiscal Year 2013 – 2015 Changes

(9)

9

• Elimination of Capital Expenditure Survey

• Design & layout changes to system

• Ease of navigation during input phase

• Creation of drop down menus

• Single sign-on access to system

Changes to Financial

Reporting System in

FY 2013 & FY 2014

(10)

10

Changes to financial reporting cycle for FY 2015:

− Elimination of broad interpretations − Clear & concise definitions

− Renaming categories for consistent & accurate reporting

Changes to Financial

Reporting System for

FY 2015

(11)

11

Revision of Revenue Categories

Category 4: Direct Institutional Support

• Aligns with other allocated revenues such as student fees, governmental support

Category 5: Transfers to Institution

• Added a contra revenue category to net transfers back to institution from athletics against funds allocated to athletics by institution

Changes to Financial

Reporting System for

FY 2015

(12)

12

Revision of Revenue Categories

Category 6: Indirect Institutional Support

• Changed name from Indirect Facilities & Administrative Support • Debt service, rental fees & lease payments for athletics facilities for

reporting year should be included • Excludes depreciation

• For expenses paid or services provided which were not charged to athletics

Changes to Financial

Reporting System for

FY 2015

(13)

13

Revision of Revenue Categories

Category 8: Contributions

• Funds contributed for use of facility payments • Excludes pledge amounts

Category 9: In-Kind

• New category, excluding any in-kind given as part of sponsorship deal

Category 11: Media Rights

• Represent all institutional & conference distributed media rights

Changes to Financial

Reporting System for

FY 2015

(14)

14

Revision of Revenue Categories

Category 12: NCAA Distributions

• Revenues received from all NCAA distributions including

NCAA championships reimbursements & payments received from NCAA for hosting a championship

• NCAA distributions may be provided by conference office

Changes to Financial

Reporting System for

FY 2015

(15)

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Revision of Expense Categories

Category 20: Athletics Student Aid

• Summer school

• Tuition discounts & waivers (unless discount or waiver available to general student body)

• Aid given to student-athletes who are inactive or no longer eligible • The information entered into compliance assistance will automatically

populate to athletic student aid section within NCAA Financial Reporting System when CAI import feature is selected

Changes to Financial

Reporting System for

FY 2015

(16)

16

Revision of Expense Categories

Category 34: Athletic Facility Debt Service, Leases & Rental Fees

• Debt service payments (principal & interest, including internal loan programs)

• Leases & rental fees for athletics facilities for reporting year (paying entity: athletics, institution or other)

Changes to Financial

Reporting System for

FY 2015

(17)

17

Revision of Expense Categories

Category 35: Direct Overhead & Administrative Expenses

• Changed name from Direct Facilities, Maintenance & Rental

• Overhead & administrative expenses paid by or charged directly to athletics

• Facilities maintenance

• Security & risk management • Utilities

Changes to Financial

Reporting System for

FY 2015

(18)

18

Revision of Expense Categories

Category 36: Indirect Institutional Support

• Changed name from Indirect Facilities & Administrative Support to be consistent with revenue definition

Changes to Financial

Reporting System for

FY 2015

(19)

Changes to Agreed-Upon Procedures

19

• Revised procedures effective for FY 2015

agreed-upon procedures engagements

• Changes require an increase in procedures to be

performed, including more vouching of underlying

transactions

• Clarifies procedures are only required for line items

which are > 0.5% of total revenues or expenses

(20)

20

Defines thresholds for budget to actual & current year to

prior year variance analysis

– Must be completed for revenue accounts > $1M and/or 10% of total revenue

– Must explain variances for lines that fluctuated > $1M and/or 10% from budget or from prior year

– Moves reporting of variances from body of AUP report to supplemental schedule

Changes to Revenue

Procedures

(21)

21

Student Fees – new procedures

– Obtain & document understanding of institution’s

methodology allocating student fees to intercollegiate athletic programs

– If reported as generated revenue, recalculate totals of institution’s methodology for supporting institution is able to count each sport

– Tie calculation to supporting documentation such as seat manifests, ticket sales reports & student fee totals

Changes to Revenue

Procedures

(22)

22

• Transfers Back to Institution – new procedure

– Compare transfers back to institution with permanent transfers back to institution from athletics department – Recalculate totals

• In-Kind – new procedure

– Compare in-kind recorded by institution during reporting period with schedule of in-kind donations

– Recalculate totals

Changes to Revenue

Procedures

(23)

23

Media Rights – modified procedure

– Obtain & inspect agreements to understand institution’s total

media (broadcast, television, radio) rights received by institution or through their conference offices. Compare & agree media right revenues recorded to summary statement of all media rights

identified.

– Compare & agree related revenues to institution’s general ledger &/or statement. Ledger total may be different for total conference distributions if media rights are not broken out separately.

Changes to Revenue

Procedures

(24)

24

NCAA Distributions – new procedures

– Now broken out separately from Conference Distributions – Compare amounts recorded in revenue & expense reporting

to general ledger detail for NCAA distributions & other corroborative supporting documents

– Recalculate totals

Changes to Revenue

Procedures

(25)

Changes to Expense Procedures

25

• Defines thresholds for budget to actual &

current year to prior year variance analysis

– Must be completed for expense accounts > $1M and/or 10% of total revenue

– Must explain variances for lines that fluctuated > $1M and/or 10% from budget or from prior year

– Moves reporting of variances from body of AUP report to supplemental schedule

(26)

Changes to Expense Procedures

26

• Athletic Student Aid – modified procedures

– Defines number of student-athletes required to be tested

• 10% of student-athletes for institutions that used NCAA’s Compliance Assistant software to prepare athletic aid detail • 20% of student-athletes for

institutions that did not • Recalculate totals for each

(27)

Changes to Expense Procedures

27

• Athletic Student Aid – new procedure

– Perform check of each student selected to ensure information was reported accurately in either

NCAA’s Compliance Assistant software or entered directly into NCAA Membership Financial

Reporting System using pre-defined criteria

(detailed criteria are defined in minimum agreed-upon procedures)

(28)

Changes to Expense Procedures

28

• Salary Testing

– Eliminates requirement to obtain & inspect W-2s/1099s for selections

– Replaced with requirement to obtain & inspect payroll summary registers for

reporting year for each selection & to agree to recording in the statement

(29)

Changes to Expense Procedures

29

• Affects following line items:

– Coaching Salaries, Benefits & Bonuses Paid by University & Related Entities

– Coaching Other Compensation & Benefits Paid by Third-Party

– Support Staff/Administrative Salaries, Benefits & Bonuses Paid by University & Related Entities

– Support Staff/Administrative Other Compensation & Benefits Paid by Third-Party

(30)

Changes to Expense Procedures

30

• Coaching Salaries, Benefits & Bonuses Paid

by University & Related Entities

– Clarifies requirement to compare & agree totals recorded on statement to applicable employment contracts for period

(31)

Changes to Expense Procedures

31

• Recruiting & Team Travel – new procedure

– Clarifies requirement to obtain general ledger detail & compare to total

(32)

Changes to Expense Procedures

32

• Procedures updated to clarify requirement to select a

sample of transactions to validate existence of

transaction and accuracy of reporting in the statement

• Affects following line items:

− Equipment, Uniforms & Supplies − Games Expenses − Direct Overhead &

Administrative Expenses

− Medical Expenses & Medical Insurance

− Memberships & Dues − Sports Camp Expenses − Fundraising, Marketing &

Promotion

− Other Operating Expenses & Transfers to Institutions

(33)

Additional Required Procedures

33

• In order for NCAA to place reliance on financial

reporting for NCAA distribution purposes, the

following procedure is now required to be performed

– Compare & agree sports sponsored reported in NCAA Membership Financial Reporting System to squad lists of institution

– If there is a discrepancy, inquire about discrepancy & validate discrepancy is justifiable

(34)

Questions & Discussion

34

Details for FY 2015 changes are viewed at

www.ncaa.org

(35)

Presenters’ Contact Information

Kathleen McNeely

NCAA Senior Vice President of Administration

and Chief Financial Officer kmcneely@ncaa.org

Debra Ladyman

National Industry Partner – Higher Education Group

BKD, LLP

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