NCAA Issues 2016 Agreed-upon Procedures Guide With New Reporting Categories
The National College 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 your institution’s president or chancellor.
The NCAA updated these procedures in spring 2016. The changes aren’t as imposing as 2015’s updates, but there are some new or significantly revised reporting categories your institution and your audit teams should be aware of. Below is a list of the changes in revenue, expense, and other reporting procedures you should make note of.
Revenue reporting procedure changes
- Category 6 Indirect Institutional Support: The primary change in this category is the creation of Category 6A, Indirect Institutional Support – Athletic Facilities Debt Service, Lease and Rental Fees. No longer are facility debt service, rental fees, or lease payments (that are not charged to athletics) reported in this category; instead, they will be reported in the newly created category at 6A (see below). As a result of this change, this line should always equal category 36.
- Category 6A Indirect Institutional Support – Athletic Facilities, Debt Service, Lease, and Rental Fees: This is a newly created category for 2016. Inputs include debt service payments (principal and interest, including internal loan programs), leases, and rental fees for athletic facilities for the reporting year provided by the institution to athletics but not charged to athletics. If the institution is paying for all athletic facilities’ debt service, lease, and rental fees and not charging athletics, this will equal Category 34, Athletic Facilities, Debt Service, Lease and Rental Fees (Expense). If athletics or other entities are also paying these expenses or the institution is charging directly to athletics, this category will not equal category 34.
- Category 13 Conference Distributions (Non Media and Non Bowl): This clarifies that conference revenue generated by a post-season bowl distributed to conference members should be recorded in this category. Distributions for reimbursement of a post-season bowl expenses should be included in category 19.
- Category 19 Bowl Revenues: This is a new line in 2016. It should report all amounts received related to participation in a post-season bowl game, including expense reimbursements and ticket sales.
Expense reporting procedure changes
- Category 20 Athletic Student Aid: This clarifies the reporting of aid to student-athletes who are inactive for medical reasons or are who have exhausted their eligibility.
- The following categories’ definitions were clarified to state that bonuses related to participation in a post-season bowl game should be included in category 41 (see below) and not in either Category 22 Coaching Salaries, Benefits, and Bonuses Paid by the University and Related Entities or Category 23 Coaching Salaries, Benefits, and Bonuses Paid by a Third Party.
- Definitions were clarified for the following expense categories to state that expenses related to post-season bowls should be included in category 41 and not in the following categories:
- Category 28 Team Travel
- Category 29 Sports Equipment, Uniforms, and Supplies
- Category 30 Game Expenses
- Category 33 Spirit Groups
- Category 34 Athletic Facilities Debt Service, Leases, and Rental Fees: This definition was clarified to state that if the institution is paying for all athletic facilities’ debt service, lease, and rental fees and not charging athletics, this will equal Category 6A, Indirect Institutional Support – Athletic Facilities, Debt Service, Lease, and Rental Fees (Revenues). If athletics or other entities are also paying these expenses of the institution and charging directly to athletics, this category will not equal category 6A.
- Category 36 Indirect Institutional Support: This clarified that depreciation should not be reported in this category and that this category should equal category 6.
- Category 39 Student-Athlete Meals (Non-travel): This is a new category for 2016. Inputs should include meal allowance and food/snacks provided to student-athletes. Yet, as noted in the new definition, meals provided during team travel should be reported in Category 28, Team Travel.
- Category 40 (Expense) Other Operating Expenses: This definition was updated to include non-team travel (conferences), team banquets, and awards.
- Category 41 Bowl Expenses: This is a new category for 2016. It includes all expenditures related to participation in a post-season bowl game, including team travel, lodging, and meal expenses; bonuses related to bowl participation; spirit groups; and uniforms.
Other reporting items procedure changes
- Category 52 Total Athletics Related Debt: This clarified that disclosure should equal the total value of athletics debt at the end of the reporting year, and that the expense category 34 represents payments made against that debt during the reporting period.
- Category 54 Value of Athletics Dedicated Endowments: This definition was updated to state that this category should report the total fair market value of athletics-dedicated endowments at the end of the reporting year.
- Category 55 Value of Institutional Endowments: Similar to category 54, this definition was updated to state this category should report the total fair market value of institutional endowments at the end of the reporting year.
- Category 56 Total Athletic Related Capital Expenditures: This is a new reporting category for 2016. Institutions should report the costs of athletics-related capital expenditures for the reporting year.
Amendments to minimum required agreed-upon procedures
In addition to the updated reporting categories, there were minor amendments to the minimum required agreed-upon procedures. Changes included:
- In procedure 28 regarding athletic student aid, instructions were updated at the end of the step to state that the samples should be pulled from data captured by the institution through the creation of a squad list for each sponsored sport.
- Additional minimum agreed-Upon procedures were updated to include the following step: Obtain the institution’s “Sports Sponsorship and Demographics Forms Report” for the reporting year. Validate that the countable sports reported by the institution meet the minimum requirements set forth in by-law 18.104.22.168 for the number of contests and the number of participants in each contest that is counted toward meeting the minimum-contest requirement. Once countable sports have been confirmed, ensure that the institution has properly reported these sports as countable for revenue distribution purposes within the NCAA Membership Financial Reporting System. Note: Any discrepancies must be resolved within the NCAA Membership Reporting System prior to the report being submitted to the NCAA.
While we noted newly created revenue and expense categories above, we did not note any new procedures beyond the standard procedures that apply to all revenue and expense categories.
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 serve as your independent accountant in performing these agreed-upon procedures for NCAA compliance.