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Business Officer Magazine

Best Practices in Tax, Accounting

Sessions in this track surveyed current issues and best practices in the core business office functions of accounting and tax administration.

Stronger Controls Needed

Recently, U.S. News & World Report has removed several institutions from its rankings upon discovering inaccuracies in nonfinancial information they reported. Such nonfinancial irregularities can be perceived as fraudulent, and can damage the reputation of an institution as well as that of its trustees and senior officers. Yet, business officers and audit committees may lack awareness of the broad scope of such reporting.

Nonfinancial data includes such areas as key performance indicators, compensation, institutional amenities, acceptance rates, retention, graduation, standardized test scores, environmental sustainability, and more. Often the controls over gathering and reporting such data are weaker than controls that are in place over financial reporting.

In the session "Protecting the Integrity of Nonfinancial Reporting," Robin Aspinall, Claremont McKenna College, Claremont, Calif., reviewed a case of poor controls over standardized test data stored by her institution. An internal investigation revealed no cross-checks of database output. Now, data collection and output and report preparation are separate risks in the institution's enterprise risk management process, and properly credentialed staff pay attention to the preparation and review of certain reports. 

David Surgala, Bucknell University, Lewisburg, Pa., reported a similar situation. Bucknell established an internal review team to understand exactly what was discovered concerning standardized test misreporting. Then, the university prepared an extensive communications plan for corrective outreach to the media, ratings agencies, external auditors, and municipal analysts.  

Aspinall and Surgala, along with Larry Ladd, Grant Thornton's director for its national higher education practice, helped attendees identify ways to elevate the profile of nonfinancial information so that it receives proper attention from senior management and trustees. They addressed such tactics as creating an inventory of information requests, regular reporting expectations, and necessary controls, as well as staff awareness and ongoing training. 

Dollars Drive Athletics Dialogue

"Out of more than 1,200 schools, only 23 earn more than they spend on athletics," noted Kathleen McNeely, vice president of administration and chief financial officer of the National Collegiate Athletic Association, in the session "Trends in Athletic Funding." In a thorough review of the NCAA's finances, McNeely pointed out that most of the association's revenues come from one source: men's basketball championships.

And institutions' expenses are growing at a higher rate, said McNeely, for several reasons: continuing escalation of coaches' salaries, an arms race in athletics facilities, a slowing down of football ticket sales, and institutional scholarships that may bump up tuition and fees.

What to do to address the issues? "Do pro formas to test your assumptions that athletics facilities and renovation are worthwhile," said McNeely. While NCAA subsidies provide millions of dollars for student scholarships, help donor giving, and facilitate networking among alumni, "we still need to set priorities," McNeely cautioned. (For detailed information on athletics funding trends, see "Finances on the Field," in the July/August issue of Business Officer.)

Read the main story.