WORK APPROACH

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WORK APPROACH FOR THE NCAA AGREED-UPON PROCEDURES
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AGENDA

• Objectives and Engagement Letter
• The Minimum Agreed-Upon Procedures
• Summary of Notes and Disclosures

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OBJECTIVES OF THE AGREED-UPON PROCEDURES

• To ensure that the President is made aware of all
  financial activity (both internal and external)
  for athletics purposes, and
• To assist the University in exercising control
  over financial activity made by or on behalf of
  the Athletics Program.

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THE ENGAGEMENT LETTER

• Includes only the minimum agreed-upon procedures
• Supplemental procedures must be requested by the
  President.

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MINIMUM AGREED UPON PROCEDURES

• List of documents need for both interim and end
  of year work
• Audit program is organized by revenue line for
  specific revenue procedures.

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BEFORE THE AGREED-UPON PROCEDURES BEGIN

• Agree amounts reported on the Statement of
  Revenues and Expenses (SRE) to the Universitys
  general ledger using
• the SRE and supporting schedules
• listing of accounts reflected on the SRE
• electronic download of account transactions.

7
INTERNAL CONTROL PROCEDURES

• Interim Procedure Identify unique aspects of
  the Universitys internal control structure and
  test specific elements
• Interim Procedure Test the procedures for
  gathering information on affiliated and outside
  organizational activity on behalf of the
  athletics program.

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REVENUE PROCEDURES

• Revenues are represented on lines 1 to 16 of the
  new SRE. Line 16 is the subtotal of operating
  revenues.
• Three procedures apply to all revenue lines.
• Compare and agree each SRE operating revenue
  category (line) reported to supporting schedules
• Compare and agree a sample of operating revenue
  receipts to supporting documentation.
• Compare each major revenue account and major
  contribution revenue account to prior periods and
  budget estimates, and document reasons for
  significant variations.

9
TICKET SALES LINE 1

• Compare tickets sold, complimentary tickets
  provided, and unsold tickets during FYE 2005 to
  the revenue reported in the SRE and related
  attendance figures.

10
STUDENT FEES LINE 2

• Interim Procedure Document an understanding of
  the Universitys methodology for allocating
  student service fees to the Athletics Program.
• Compare and agree student fees in the SRE to
  student enrollments during FYE 2005.

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GUARANTEES LINE 3

• Agree a sample of settlement reports for away
  games during FYE 2005 to the Universitys general
  ledger and/or the SRE.
• Agree a sample of contractual agreements for
  revenues from guaranteed contests during FYE 2005
  to the Universitys general ledger and/or the SRE.

12
CONTRIBUTIONS LINE 4

• Review supporting documentation for each
  contribution that constitutes 10 percent or more
  of all contributions for FYE 2005.

13
COMPENSATION AND BENEFITS PROVIDED BY A
THIRD-PARTY LINE 5

• Procedures for this line are addressed in our
  Procedures for Affiliated and Outside
  Organizations.

14
DIRECT STATE OR OTHER GOVERNMENTAL SUPPORT LINE
6

• Compare governmental support recorded by the
  University during FYE 2005 with state
  appropriations, University authorizations, and/or
  other supporting information.
• Includes Federal Work Study support for student
  workers employed by the Athletics Program.

15
DIRECT INSTITUTIONAL SUPPORT LINE 7

• Compare direct University support recorded by the
  University during FYE 2005 with University
  authorizations, and/or other corroborative
  supporting information.

16
INDIRECT FACILITIES AND ADMINISTRATIVE SUPPORT
LINE 8

• Compare indirect University support recorded by
  the University during FYE 2005 with University
  authorizations, and/or other corroborative
  supporting information.

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NCAA/CONFERENCE DISTRIBUTIONS INCLUDING ALL
TOURNAMENT REVENUES LINE 9

• Gain an understanding of the relevant terms and
  conditions of agreements related to the
  Universitys participation in tournaments during
  FYE 2005
• Agree the related revenues to the Universitys
  general ledger and/or the SRE.

18
BROADCAST, TELEVISION, RADIO, AND INTERNET RIGHTS
LINE 10

• Gain an understanding of the relevant terms and
  conditions of agreements related to the
  Universitys participation in revenues from
  broadcast, television, radio and Internet rights.
• Compare and agree related revenues to the
  Universitys general ledger, and/or the SRE.

19
PROGRAM SALES, CONCESSIONS, NOVELTY SALES, AND
PARKING LINE 11

• Included in overall revenue procedures

20
ROYALTIES, ADVERTISEMENTS, AND SPONSORSHIPS
LINE 12

• Gain an understanding of the agreements related
  to the Universitys revenues from royalties,
  advertisements and sponsorships during FYE 2005.
• Agree related revenues to the Universitys
  general ledger, and/or the SRE.

21
SPORTS CAMP REVENUES LINE 13

• Determine the Universitys methodology for
  recording revenues from sports camps by
  inspecting sports camp contracts between the
  University and persons conducting University
  sports camps or clinics during FYE 2005.
• Agree a sample of individual camp participant
  cash receipts from the schedules of sports camp
  participants to the Universitys general ledger,
  and/or the SRE.

22
ENDOWMENT AND INVESTMENT INCOME LINE 14

• Gain an understanding of the relevant terms and
  conditions of endowment agreements (if any).
• Agree the classification and use of endowment and
  investment income reported in the SRE during FYE
  2005 to the uses of income defined within the
  related endowment agreement.

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OTHER REVENUE LINE 15

• If Other Revenue is greater than 5 of total
  revenues, the University must reclassify adequate
  revenue to the appropriate categories in lines 1
  to 14 to reduce Other Revenue.
• Other Revenue must be less than 5 of the total
  revenue before we can perform our procedures.
• Included in overall revenue procedures.

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EXPENSE PROCEDURES
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OVERALL EXPENSE PROCEDURES

• Expenses are represented on lines 17 to 36 of the
  new SRE.
• Line 36 is the subtotal of operating expenses.
• Four procedures apply to all expense lines.
• The minimum procedures are not so minimum
  anymore.

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1ST EXPENSE PROCEDURE

• Compare and agree each operating expense category
  (line) reported in the SRE to supporting
  schedules.

FYE 2005 SRE
An Expense Line
SRE Worksheets
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2ND EXPENSE PROCEDURE

• Compare and agree a sample of operating expenses
  from each expense line to adequate supporting
  documentation.

Expense Line Population
Supporting Documentation
Selected Sample
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3RD EXPENSE PROCEDURE

• Compare each major expense account to budget
  estimates and prior period amounts, and obtain
  and document an understanding of any significant
  variations.

FYE 2005 Budget
FYE 2005 Actual
FYE 2004 Actual
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4TH EXPENSE PROCEDURE

• Recalculate each expense line total and each
  expense column (sports heading) total on the SRE.
• The recalculation is a foot and crossfoot.

Foot
Crossfoot
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SPECIFIC EXPENSE PROCEDURES

• Some of these procedures take into account the
  four previously discussed procedures. Some are
  in addition. Several are new.
• The populations and supporting documentation are
  usually specified.
• For one, a portion of the sample is specified.
• For a few, only supporting documentation is
  specified.

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ATHLETIC STUDENT AID LINE 17

• Population All students (including
  non-student-athletes) receiving student aid from
  the Intercollegiate Athletics Program during FYE
  2005.
• Supporting Documentation Students aid award
  letters.
• Comparison Student aid received (per the
  Universitys general ledger) for each selected
  student to supporting documentation.

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GUARANTEES LINE 18

• Population All away-games during FYE 2005.
• Supporting Documentation Settlement reports and
  contractual agreements for guaranteed contests
  for away-games.
• Comparison Procedure Amounts recorded in
  Universitys general ledger and/or the SRE to
  supporting documentation.

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COACHING COMPENSATION PAID BY THE UNIVERSITY AND
RELATED ENTITIES LINE 19

• Population A list of coaches employed by the
  University and related entities during FYE 2005.
• Sample Must include football and mens and
  womens basketball.
• Supporting Documentation Coaches contracts (or
  other financial terms and conditions), W-2s,
  1099s.
• Comparison Procedure Amounts recorded by the
  University in the SRE to supporting documentation.

34
COACHING OTHER COMPENSATION PAID BY A THIRD-PARTY
LINE 20

• Population A listing of coaches employed by
  third parties during FYE 2005.
• Supporting Documentation Coaches contracts (or
  other financial terms and conditions), W-2s,
  1099s.
• Comparison Procedure Amounts recorded by the
  University in the SRE to supporting documentation.

35
SUPPORT STAFF/ADMINISTRATIVE COMPENSATION PAID BY
THE UNIVERSITY AND RELATED ENTITIES LINE 21

• Population A listing of support
  staff/administrative personnel employed by the
  University and related entities during FYE 2005.
• Supporting Documentation W-2s and 1099s.
• Comparison Procedure Amounts recorded by the
  University in the SRE to supporting documentation.

36
SUPPORT STAFF/ADMINISTRATIVE OTHER COMPENSATION
PAID BY A THIRD-PARTY LINE 22

• Population A listing of support
  staff/administrative personnel employed by the
  third parties during FYE 2005.
• Supporting Documentation W-2s and 1099s.
• Comparison Procedure Amounts recorded by the
  University in the SRE to supporting documentation.

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SEVERANCE PAYMENTS LINE 23

• Population Intercollegiate Athletics Program
  employees receiving severance payments by the
  University during FYE 2005.
• Supporting Documentation Termination letter or
  employment contract.
• Comparison Procedure Amounts recorded in
  Universitys general ledger AND/OR the SRE to
  supporting documentation.

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RECRUITING LINE 24

• Supporting Documentation Universitys
  recruiting expense policies.
• Documentation Procedure Document an
  understanding of the Universitys recruiting
  expense policies.
• Comparison Procedure Existing University and
  NCAA-related policies to supporting documentation.

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TEAM TRAVEL LINE 25

• Supporting Documentation Universitys team
  travel policies.
• Documentation Procedure Document an
  understanding of the Universitys team travel
  policies.
• Comparison Procedure Existing University and
  NCAA-related policies to supporting documentation.

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• For the following lines
• EQUIPMENT, UNIFORMS, AND SUPPLIES LINE 26
• GAME EXPENSES LINE 27
• FUND RAISING, MARKETING, AND PROMOTION LINE 28
• SPORTS CAMP EXPENSES LINE 29

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• DIRECT FACILITIES, MAINTENANCE, AND RENTAL LINE
  30
• SPIRIT GROUPS LINE 31
• MEDICAL EXPENSES AND MEDICAL INSURANCE LINE 33
• MEMBERSHIPS AND DUES LINE 34
• No additional specific procedures are stated.

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INDIRECT FACILITIES AND ADMINISTRATIVE SUPPORT
LINE 32

• Supporting Documentation The Universitys
  methodology for allocating indirect facilities
  support.
• Documentation Procedure Document an
  understanding of the Universitys methodology for
  allocating indirect facilities support.
• Comparison Procedure The amount reported on
  this line to the amount reported in the
  corresponding revenue category (Indirect
  Facilities and Administrative Support Line 8).

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OTHER OPERATING EXPENSES LINE 35

• If the amount in Other Operating Expenses is
  greater than 10 of total expenses, the
  University should reclassify adequate expenses to
  the appropriate categories in lines 17 to 34 to
  reduce Other Operating Expenses.
• OPTIONAL Disclose in the notes to the SRE the
  top three categories of amounts in Other
  Operating Expenses, if it is to remain over 10.

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CAPITAL ASSETS PROCEDURES

• The Capital Expenditure Survey (CES) is a new
  document for the agreed-upon procedures that must
  be completed by the University.

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CAPITAL ASSETS POLICIES AND PROCEDURES

• Obtain the Universitys policies and procedures
  for acquiring, approving, depreciating, and
  disposing of athletics-related assets.
• Read the policies and procedures and prepare a
  disclosure for the notes to the SRE that
  discloses the Universitys policies and
  procedures for acquiring, approving,
  depreciating, and disposing of athletics-related
  assets.

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CAPITAL ASSETS RECONCILIATION TO THE GENERAL
LEDGER

• Agree the schedule information in the CES to the
  Universitys general ledger.
• The schedule information consists of
• Current-year additions and deletions
• Total estimated book value of athletically
  related and University plant and equipment net of
  depreciation
• Total annual debt service on athletics and
  University facilities
• Total debt outstanding on athletics and
  University facilities

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CAPITAL ASSETS DEBT REPAYMENT

• Obtain repayment schedules for all outstanding
  athletics debt maintained by the University
  during FYE 2005.
• Recalculate annual maturities (consisting of
  principal and interest) provided in the schedules
  obtained.
• Agree the total annual maturities to supporting
  documentation and the general ledger, as
  applicable.

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AFFILIATED AND OUTSIDE ORGANIZATIONS PROCEDURES

• The University must have procedures for gathering
  information on the nature and extent of
  affiliated and outside organizational activity
  for on behalf of the Universitys Athletics
  Program.
• The University must prepare a summary of revenues
  and expenses for or on behalf of all of the
  Athletics Programs affiliated and outside
  organizations.

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WHAT ARE AFFILIATED AND OUTSIDE ORGANIZATIONS?

• Organizations that have as a principal, or one of
  their
• principal purposes, the generating or maintaining
  of
• Moneys, goods, or services for or in behalf of
  the Athletics Program, or the promotion of said
  Program through other means. (Booster
  organizations)
• Grants-in-aid or scholarship funds, gifts,
  endowments, or other moneys, goods, or services
  to be utilized entirely or in part by the
  Athletics Program. (Foundations)
• Moneys, goods, or services for or in behalf of an
  Athletics Program and that contribute moneys,
  goods, or services directly to an Athletics
  Program or other affiliated and outside
  organization. (Alumni organizations)

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WHAT ARE AFFILIATED AND OUTSIDE ORGANIZATIONS?

• Size Organizations consist of two or more
  individuals.
• First Focus Money, goods, or services.
• Second Focus For the benefit, use, or in behalf
  of (whole or in part) the Intercollegiate
  Athletics Program or another affiliated and
  outside organization.

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IDENTIFYING THE ORGANIZATIONS

• Obtain the University's listing of all
  athletics-related affiliated and outside
  organizations that ARE UNDER and NOT UNDER the
  Universitys accounting control.
• Obtain the University-prepared summary of
  revenues and expenses for or in behalf of ALL of
  the Athletics Programs affiliated and outside
  organizations during FYE 2005.

52
IDENTIFYING THE ORGANIZATIONS

• Obtain the SREs of athletics-related affiliated
  and outside organizations that ARE NOT UNDER the
  Universitys accounting control during FYE 2005.
• If audited independent of the agreed-upon
  procedures, obtain the audited financial
  statements of athletics-related affiliated and
  outside organizations that ARE NOT UNDER the
  Universitys accounting control during FYE 2005.

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PERFORMING THE PROCEDURES
All Organizations

• Recalculate totals on the University-prepared
  summary.
• Select a sample of amounts from the
  University-prepared summary, and compare and
  agree each selection to supporting documentation,
  the Universitys general ledger, AND/OR the
  summary.

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PERFORMING THE PROCEDURES Organizations NOT
UNDER the Universitys Accounting Control

• Agree amounts reported for each SRE to each
  organizations general ledger, or confirm
  revenues and expenses directly with a responsible
  official of the organization.
• Determine corrective action taken by the
  University and organizational management in
  response to comments concerning internal control
  structure (if any) in reports for audits
  conducted independent of the agreed-upon
  procedures (if any).

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SUMMARY OF NOTES AND DISCLOSURES

• 10 of Contributions
• Categories within Other Operating Expenses
• Capital Expenditures
• Significant Additions and Changes

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10 OF CONTRIBUTIONS

• Each individual contribution of moneys, goods or
  services received directly by the Athletics
  Program from any affiliated or outside
  organization, agency, or individuals that
  constitutes 10 percent or more of all
  contributions received for athletics during FYE
  2005 shall be disclosed in the notes to the SRE
  and included in the agreed-upon procedures
  report.
• Disclosure of the source of funds, goods, and
  services, as well as the value associated these
  items, shall also be made within the notes to the
  SRE.

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OTHER OPERATING EXPENSE CATEGORIES

• If Other Operating Expenses represents over 10
  of total operating expenses after the SRE has
  been tied to the Universitys general ledger, the
  top three categories and amounts of "Other
  Operating Expenses" must be disclosed in the
  notes to the SRE.

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CAPITAL EXPENDITURES DISCLOSURES

• The schedule information in the Capital
  Expenditures Survey shall be included in the
  notes to the SRE.
• A description of the Universitys policies and
  procedures for acquiring, approving,
  depreciating, and disposing of athletics-related
  assets shall be included in the notes to the SRE.
• The repayment schedules for all outstanding
  athletics debt maintained by the University
  during FYE 2005 shall be included in the notes to
  the SRE.

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SIGNIFICANT ADDITIONS AND CHANGES

• Significant additions to restricted funds related
  to athletics shall be disclosed separately in
  the notes to the SRE.
• Significant changes to endowment and plant funds
  shall be disclosed separately in the notes to the
  SRE.

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FOLLOW-UP PROCEDURES

• Performed for each of the prior years
  outstanding recommendations
• Reported as
• Implemented
• Partially Implemented
• Not Implemented
• Management Assumes Risk

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• QUESTIONS?