NCAA's 2017 Procedures Guide Includes Revenue and Expense Reporting Changes
The National Collegiate Athletic Association (NCAA) requires its member institutions to annually submit financial data detailing operating revenues and expenses related to intercollegiate athletic programs. The data are subject to agreed-upon procedures performed by a qualified, independent accountant, and must be certified by the institution’s president or chancellor.
The procedures had been fairly standard for a long time, but there have been several significant changes in recent years. The 2017 procedures don’t contain quite the volume of changes as in previous editions, but there are a few things your institution and audit team should be aware of.
We’ve summarized the changes to help you identify and understand them.
- Change in scope for required procedures and variance analysis — In prior years, if a specific reporting category was more than 0.5 percent of total revenues, the minimum agreed-upon procedures were required. The NCAA has changed that amount to 4 percent. For any specific reporting categories under 4 percent of total revenues, no procedures are required for that specific category. In addition, the scope for variance analysis for revenue categories that are more than 10 percent of total revenues has changed from “the lesser of 10 percent and $1 million” to just “10 percent” for further analysis and documentation.
- Step 28 – Bowl Revenues — While this was added as a specific revenue category prior to 2017, no minimum procedures had been added to the guide. Two procedures related to this reporting category have now been added. They pertain to post-season bowl revenue agreements and recalculation of the total amount reported.
- Definition of expenses for Category 20 Athletic Student Aid — The updated language notes that Pell Grants are provided by the government, so they should not be included in this reporting category.
- Change in scope for required procedures and variance analysis — In prior years, if a specific reporting category was more than 0.5 percent of total expenses, the minimum agreed-upon procedures were required. The NCAA has changed that amount to 4 percent. For any specific reporting categories under 4 percent of total expenses, no procedures are required for that specific category. In addition, the scope for variance analysis for expense categories that are more than 10 percent of total expenses changed from “the lesser of 10 percent and $1 million” to just “10 percent” for further analysis and documentation.
- Step 30 – Athletic Student Aid — Maximum sample sizes for this procedure have been added for clarity. For institutions using the NCAA Compliance Assistant (CA) software, a sample 10 percent of the total population is required, with a maximum sample size of 40. For institutions not using the NCAA CA software, a sample of 20 percent of the total population must be selected, with a maximum sample size of 60. In addition, there are procedures related to the inclusion of Pell grants and the proper reporting of such aid in terms of equivalency and aid provided to athletes.
- Steps 66 and 67 – Student-Athlete Meals and Bowl Expenses — These are two reporting categories added in a prior year, but a new step has been added to the minimum agreed-upon procedures that requires independent accountants to select a sample of transactions for validation.
A new procedure was added to the NCAA Membership Financial Reporting System to include the total Pell Grant awards made to Division I athletes in a report generated by your institution’s financial aid department.
Other reporting items
The NCAA added eight additional procedures related to other reporting requirements, generally contained within the notes to the statements of revenue and expense. The procedures include corroborating the information contained therein with the minimum agreed-upon procedures related to revenues and expenses. Each procedure is listed under a specific reporting item.
Procedures are listed for:
- Excess transfers to institution and conference realignment expenses
- Total athletics-related debt
- Total institutional debt
- Value of athletics-dedicated endowments
- Value of institutional endowments
- Total athletics-related capital expenditures
How we can help
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 offer best practices for or serve as your independent accountant in performing agreed-upon procedures for NCAA compliance.