The National Association of College and University Business Officers (NACUBO) conference is always a vital source of information for higher education institutions navigating complex financial and operational landscapes. This year was no exception—industry experts offered valuable insights into risk management, regulatory changes, and sustainability initiatives. If you weren’t able to attend, here are the key takeaways that your institution should be aware of.
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Using Analytics to Drive Risk Decisions
Risk management in higher education is more than just a financial exercise—it’s about protecting the institution’s mission and future. This year, NACUBO emphasized the importance of using analytics to make informed risk decisions. Key considerations included:
- Internal vs. External Analysis: Deciding whether to build risk management capabilities internally or to seek external expertise is crucial. While internal analysis allows for greater control, external validation can provide objectivity.
- Top-Down vs. Bottom-Up Approaches: Understanding where to focus risk management efforts within the organization is vital. A top-down approach might streamline decision-making, but a bottom-up strategy can ensure that risks are identified and addressed at all levels.
- Downside Planning: It’s essential to plan for what happens if your risk assessments are incorrect. This involves not just predicting potential issues but also preparing for worst-case scenarios.
Key Lesson: Effective risk management requires a balanced approach that leverages internal strengths, engages key stakeholders, and remains flexible enough to adapt to new data and circumstances.
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GASB Accounting Update: Prepare for Upcoming Changes
The Governmental Accounting Standards Board (GASB) is set to introduce several updates that will significantly impact financial reporting for public institutions. Although GASB had slowed its pace in recent years, upcoming changes are poised to reshape how institutions handle accounting and financial disclosures. Highlights include:
- New Financial Statement Model: Effective for FY26, this model introduces changes in reporting that institutions need to start preparing for now. This includes the renaming of extraordinary and special items to “unusual or infrequent,” and adjustments to the Statement of Revenues, Expenses, and Changes in Net Position (SRECNP).
- Revenue and Expense Recognition Project: Scheduled for completion in 2027, this project will alter how institutions recognize and report revenue and expenses, requiring proactive planning to ensure compliance.
Key Lesson: Institutions should begin reviewing their current financial reporting processes and consider early adoption strategies to ease the transition to these new standards.
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The Inflation Reduction Act: A Catalyst for Sustainable Energy Projects
Sustainability is a growing concern for higher education institutions, and the Inflation Reduction Act provides a unique opportunity to invest in clean energy projects. The act offers various tax incentives and bonuses that can make projects like solar PV installations and geothermal heat pumps more financially feasible, even for institutions with limited capital.
- Available Incentives: Tax incentives, such as the Energy Community Bonus and Low-Income Community Bonus, are now available to institutions looking to invest in renewable energy.
- Flexible Contracting Options: Institutions are encouraged to explore different contracting options that can spread out the costs and benefits of clean energy projects over time.
Key Lesson: By taking advantage of the new incentives and planning carefully, institutions can reduce their carbon footprint and operational costs while also addressing deferred maintenance backlogs.
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Avoiding Repeat Audit Findings: A Strategic Approach
Repeat audit findings can have serious consequences, from increased scrutiny by federal agencies to potential damage to an institution’s reputation and financial standing. NACUBO highlighted the need for a Risk-Based Corrective Action Plan to address these issues proactively:
- Senior Leadership Involvement: Success in mitigating audit findings often hinges on securing support and involvement from senior leadership.
- Cross-Functional Engagement: Solutions to audit findings typically require cooperation across various departments. Clear responsibility and accountability are essential.
- Ongoing Monitoring: Regular monitoring and reporting to senior leadership ensure that corrective actions are implemented effectively and that similar issues do not recur.
Key Lesson: A proactive, risk-based approach to audit findings not only addresses the immediate concerns but also strengthens the institution’s overall compliance framework.
These takeaways from the NACUBO conference underscore the importance of staying informed and proactive in managing the financial and operational challenges facing higher education institutions today.
If you’re interested in exploring how these insights can be applied to your institution, we are here to help. Contact us today to discuss how we can support your strategic goals and ensure your institution remains compliant, sustainable, and financially sound.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.
