NCAA Agreed-Upon Procedures: Recommended Practices for DI and DII Programs

Higher education institutions with intercollegiate athletic programs must submit annual reports to the NCAA with financial data detailing operating revenue and expenses related to those programs.

As part of this report, colleges and universities with Division I programs are obliged to have agreed-upon procedures (AUPs) performed by a qualified, independent accountant every year. Those with Division II programs must perform AUPs every third year.

There’s a wide variation in who prepares the NCAA report. Sometimes it’s a single person in the athletic department preparing the report, while other times it’s the finance department’s responsibility.

Ideally, the report and preparation for the AUPs performance should be a collaborative effort from both departments as the information needed for the NCAA report comes from many different areas. You also may need to involve student financial aid.

Explore recommended practices to help your institution’s athletic, finance, and financial aid teams work together to generate accurate data.

Recommended practices for NCAA agreed-upon procedures

Form an agreed-upon procedures report team

Assemble a team with representation from the business office, the athletic department, and financial aid department. Assign roles for building the report and collecting supporting information.

Certain tasks are more aligned with the business office (e.g., gathering detail from the general ledger), and other tasks are better handled by the athletic department (e.g., gathering team rosters). Financial aid will be responsible for detailed support relating to athletic aid tested.

Gather information from affiliated organizations

Information may be needed from affiliated and outside organizations if applicable for your institution, such as a related foundation where endowments are held. Plan ahead to gather the detailed information needed for these endowments and obtain the foundation’s audited financial statements.

Review new reporting categories and procedures

Take time to review changes to the reporting categories and procedures each year before beginning the preparation of the NCAA annual workbook. There are many new sub-categories added annually and it’s crucial to understand where to categorize revenues and expenses accurately within them.

Seek advice from the NCAA

If you’re having trouble figuring out where to put certain revenues and expenses in the various categories, check the NCAA FAQs, which is a great resource for commonly asked questions.

Another option is to have your independent auditor (or yourself) reach out to the NCAA directly. There are individuals listed as contacts on the NCAA website.

Retain data annually

Once the NCAA annual workbook is completed, retain the detail data used to populate the revenue and expenses for the AUP engagement. Do this annually.

Review the report carefully

Make sure the detail lists trace exactly to the number on the report. In other words, total the detail and use that number for the report.

Have someone review the detail and documentation used to produce the numbers for the workbook. Make sure the detail being supplied for the AUPs matches the reports filed.

Consider incorporating the NCAA reporting categories

Consider using the NCAA’s reporting categories as your own budgeting categories. They don’t necessarily need to be incorporated into the master budget, but could be included in a separate budget for NCAA purposes only.

As part of the procedures, auditors are required to review the NCAA reporting categories against budget. In many cases, auditors can’t do this step as the institution doesn’t budget by category.

This is an extremely common report note for many institutions as sometimes the NCAA reporting categories are too detailed for budgeting purposes.

Pay special attention to ticket sales and student fees

Ticket sales and student fees are revenue categories for NCAA reporting that typically have discrepancies when tested. Consider implementing a process with a reconciliation of the number of game tickets sold by type to mitigate this common deficiency.

The ticket data should match the revenue recorded by game and the corresponding deposit slips. If possible, run a report showing the number of students and the number of credits each student is taking so the independent accountant can recalculate the student athletic fees with no exceptions.

Seek a final independent review

Have an independent employee review the NCAA workbook after you’ve prepared it to make sure it is accurate and complete and any unusual items have been properly recorded.

Learn from noted exceptions

Remember, this is an agreed-upon procedures engagement. That means, if an exception is found, your independent auditor is required to report the nature of the exception in detail.

For example, if the detail provided for team travel expenses didn’t tie back to the NCAA annual report by $15,000, the report would state that.

Discuss materiality and sample sizes before starting your audit

Prior to starting your AUP with your independent auditor, discuss materiality and sample sizes within the AUP. AUPs don’t have materiality unless stated in the statement of work. An agreed-upon amount for materiality can help mitigate exceptions within the final report.

The NCAA AUPs don’t dictate exact sample sizes, so this is another area to discuss what makes sense with your independent auditor prior to beginning the work.

How CLA can help with NCAA agreed-upon procedures

CLA’s higher education industry professionals have a comprehensive understanding of these procedures and can help your institution interpret and apply them. We can also serve as your independent accountant in performing agreed-upon procedures for NCAA compliance.

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