Not only should all colleges and universities – public and private – be financially accountable, they should also be to prove that accountability and to demonstrate it to all of their constituencies, including their parents.
Several groups specializing in academic finances are advising higher-ed institutions to adopt provisions that mirror those targeted at publicly traded corporations in the Sarbanes-Oxley Act, the federal law that was designed to better police corporate governance.
Principal among the groups is the National Association of College and University Business Officers (NACUBO), which has released guidelines that are intended to help college boards of trustees ensure that they are taking steps to maintain confidence in their own institution’s finances.
Here are some of NACUBO’s recommendations:
- Presidents and senior financial officers at colleges should:
- Adopt enforceable codes of financial ethics;
- Be prepared to certify the accuracy and completeness of a school’s finances; and
- Create confidential ways for employees to report concerns about financial issues, and a procedure for following up on those concerns.
- In addition, audit committees at schools should:
- First of all, be created if they do not exist already;
- Be granted real authority and be made up of individuals who are not officers or employees of the institution;
- Include at least one financial expert who is rotated out whenever practicable;
- Take responsibility for selecting and hiring independent auditors, and rotating them out too, at least once every seven years;
- Not allow its members to receive any consulting and/or advisory fees from the university.
NACUBO’s recommendations were developed in cooperation with the Association of College and University Auditors, and in consultation with senior financial officers at private schools such as Cornell, Johns Hopkins and Stanford, and at public universities such as Indiana University, the University of North Carolina at Chapel Hill and the University System of New Hampshire. Copies of the NACUBO guidelines may be obtained at www.nacubo.org.
If your son or daughter is attending, or considering attendance, at a college or university that is either not following the above recommendations or not publicizing its actions, then please let the university know that you think it should. You are spending a great deal of money on tuition and other related expenses. You deserve to know how that money is being spent, and what controls are in place to make sure that it continues to be utilized wisely.