Sessions in this track surveyed current issues and best practices in the core business office functions of accounting, tax administration, and compliance.
Combatting Occupational Fraud on Campus
In his role as executive director of internal auditing at Auburn University, Alabama, Kevin Robinson has heard some strange explanations of why certain purchases were made by university staff. He shared his thoughts with a standing-room-only crowd in a session titled "How to Protect Your Institution From Fraud."
Robinson defined occupational fraud as "the use of one's occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization's resources or assets." To combat occupational fraud, Robinson believes it is a college or university's responsibility to have the best system of controls in place so the odds are reduced that an employee makes a bad choice. He reminded the audience that evaluating controls is not a one-time thing.
"Processes change, positions are not replaced, and new threats emerge," said Robinson. "We have to find a better way to communicate what internal controls are to our administrators and department heads who are of nonfinancial backgrounds."
Robinson suggested that NACUBO members train employees to understand internal controls and their role with respect to fiduciary responsibilities. He advised business officers to think about where someone would commit fraud against their institutions and to raise the perception of detection. Business officers need to be consistent in handling problems when they arise and to remember that the tone at the top matters in both what is said, but more importantly, in what is observed by employees. Robinson reminded the audience to make sure employees know how to report problems and to never ever put any employee in the position of having total control of a process.
Robinson also moderated a popular Ethics Roundtable at the annual meeting.
Tax Provision Watch
As the higher education community awaits the final report from the IRS on the results of its major compliance initiative, NACUBO Tax Council members Ed Jennings (chair) and Joe Irvine briefed the audience on the latest IRS actions affecting colleges and universities as well as expired and expiring tax provisions that require congressional action in the coming months. Jennings is tax director for the University of Michigan, and Irvine is development and tax counsel, the Ohio State University.
At the end of 2012, for example, the following are all scheduled to expire:
- American Opportunity Tax Credit (AOTC).
- Employer-provided educational assistance (Section 127) benefits.
- The expanded student loan interest deduction.
- Expanded Coverdell Education Savings Accounts.
Two other tax provisions important to students, families and institutions—the above-the-line deduction for qualified tuition and related expenses and the IRA charitable rollover—expired at the end of 2011. Final action on the extenders is not expected until later this year.
Irvine and Jennings also discussed recent IRS enforcement activities in the exempt sector, specifically audit programs focusing on employment taxes, 403(b) plans, and tax-exempt bonds, noting that the Service would be targeting organizations for bond compliance audits based on information reported on Schedule K of the Form 990. Also noted were continued IRS efforts to examine governance issues at exempt organizations, and political activity, particularly during the current presidential election cycle.
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