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NACUBO/Washington
Update
James E. Morley, Jr.
President
National Association of College and University
Business Officers (NACUBO)
October 2002
Current national issues
Current national issues
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War against terrorism & homeland security
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Tax issues and accounting standards
Federal regulations
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Technology
National issues
War against terrorism and
homeland security
Homeland security:
Impact on colleges and universities
• Foreign students and visitors
• Sharing of information with law enforcement and privacy
concerns
• IT security
• Laboratory security and treatment of biohazards
Homeland security:
New federal laws
• USA Patriot Act (enacted October 26, 2001)
• Enhanced Border Security and Visa Entry Reform Act
(enacted May 14, 2002)
• Public Health Security and Bioterrorism Preparedness Act
(enacted June 12, 2002)
Homeland security:
USA Patriot Act
Information sharing:
This legislation provides simplification for federal officials
to receive court orders for student records and amends
FERPA to permit “emergency disclosure.”
• Calls for full implementation of INS foreign student
tracking system (SEVIS)
• With court order, Feds investigating terrorism may obtain
business and student records
Homeland security:
USA Patriot Act (cont’d)
Information sharing:
Updates surveillance laws to cover today’s
communications—e-mail, voice mail, etc.
Homeland security:
Public Health Security & Bio-terrorism
Preparedness Act of 2002
– Select agent list to be reviewed at least biennially
– Regulations will cover possession and use, not just
transfers, of select agents
– Tighter controls, including federal background checks
on persons allowed access to select agents
– Broad inspection authority for HHS
Department of Homeland Security:
Proposed
 The administration’s five organizational categories proposed for the new department
include 24 government entities
 Border and Transportation
 Emergency Preparedness and Response
 Chemical, Biological, Radiological and Nuclear Countermeasures
 Information Analysis and Infrastructure Protection
 Secret Service
 Sixty-one Congressional committees and subcommittees now have authority over the 24
organizations likely to be merged into the new department
 And, at present, the House Government Reform and Senate Governmental Affairs
committees have general oversight authority
•
Source: Congressional Quarterly
National issues
Tax issues and accounting standards
Tax issues:
Recent IRS actions
• Memo on FICA withholding for medical residents
• Final rules published for:
– Intermediate sanctions
– Corporate Sponsorships
• Re-proposed rules on 1098-T reporting
Tax issues:
Final rules on corporate sponsorships
• Safe harbor for qualified sponsorship payments
• Exclusive sponsorships allowed
• Exclusive provider arrangements not in safe
harbor—but not automatically subject to UBIT
• EO’s web site can link to sponsor’s site, but not
endorse it
• Rules published 4/25/02 Federal Register, and are
applicable for payments solicited or received after
December 31, 1997
Tax issues:
IRS Re-proposes 1098-T reporting
requirements
• Eases reporting burden
• Repeals requirement to collect name / SSN of individuals
claiming student as dependent
• Allows reporting of aggregate amount of qualified tuition /
expenses or amounts billed
• Effective date of new regulations will be for tax year 2003
(1098-Ts that will be filed in early 2004)
• Final rules expected by end of 2002
Accounting standards: GASB
• GASB Statement No. 34
• Basic Financial Statements-And Management’s
Discussion & Analysis-for State and Local
Governments
• GASB Statement No. 35
• Amends GASB34 to include Public Colleges and
Universities
• GASB Statement No. 37 - Omnibus Statement
– Addresses problems created by GASB34 and
GASB35
GASB Standards (cont’d)
• GASB Statement No. 38 - Note Disclosures
• Significantly modifies required disclosures
• GASB Statement No. 39 – Affiliated
Organizations
• Applies to foundations and other entities
supporting public institutions
Accounting standards: FASB
• FASB Statement No. 141 - Business Combinations
– Excludes not-for-profits
• FASB Statement No. 142 - Goodwill and Intangible Assets
• Not-for-profit business combinations
• Measuring financial instruments at fair value
Accounting standards: AICPA Project
• Exposure draft revises rules for Property, Plant &
Equipment accounting
• Specifies expenditures which qualify for
capitalization
Accounting legislation:
Sarbanes-Oxley Act of 2002
• Creates new, independent regulatory body, the Public Company
Accounting Oversight Board (PCOAB)
• Changes to ensure FASB independence in setting national accounting
standards
• Auditor independence requirements mandated for audits of publicly
traded companies
• New corporate responsibilities and restrictions for CEOs and CFOs
• Focus on greater disclosure and transparency in financial reporting,
internal controls, ethics, audit committee expertise
• Stricter provisions and for corporate fraud and white-collar crime
Planned future accounting group actions
• Increased disclosure: GASB Statement 39 (issued 2002)
• GASB performance measures “experiment”—coming
(end—2002)
• FASB mandated study of principles-based accounting
financial reporting system (due July 2003)
National issues
Federal regulations
Federal regulations: ED – Title IV
Program eligibility rules
• Replace the 12-hour rule with a one-day rule
• Clarify provisions for incentive compensation and identifies “safe
harbor” activities for student recruiters
• Clarify need to take attendance in order to comply with return of Title
IV funds requirements
• Amend overpayment rules to permit students owning small amounts to
retain their program eligibility
• Expand from 90 to 120 days for making late disbursements and require
institutions to offer them to students who complete the period of
enrollment
• Eliminate the rule for institutions to confirm the receipt of notices sent
to borrowers (or parents for PLUS loans) that loan funds have been
credited to students’ accounts
Federal regulations:
OMB Federal Financial Assistance
Management Improvement Act of 1999
• Proposed revisions to Circular A-133, Audits of States, Local
Governments, and Non-Profit Organizations
• Proposal for a standard format for federal agency use in announcing
discretionary grant and cooperative agreement funding opportunities
• Proposed standard data elements for federal agency use in creating
grant funding opportunity announcement summaries under the EGrants initiative
• Proposed revisions to three OMB cost principles circulars (A-21, A-87,
A-122) to clarify ambiguous language in the interpretation of similar
costs
• Proposed revision to Circular A-110, Uniform Administrative
Requirements for Grants and Agreements with Institutions of Higher
Education, et al
Issues in 2002:
Status of Congress
• September initiatives included bill establishing new
Homeland Security Agency and passage of Corporate
Accountability Bill in late July
– Corporate Accountability Bill affects only
corporations directly, including creation of an
independent oversight board loosely attached to the
SEC
– Debate of Homeland Security Agency parameters still
in committee
Issues in 2002:
Status of Congress (cont’d)
• Prospects for passage of FY2003 appropriations bills dim
before new congressional session in January 2003
• Likely scenario is passage of a long-term continuing
resolution (CR)
– Keeps funding levels at FY02 levels in short term, but
can switch to funding levels of proposed
appropriations
National issues
Technology
Technology: 2002 Issues
• Broadband access
• Distance education and federal student aid
• Information technology authorization
• Intellectual property
• Network security
• Privacy
• Workforce development
• FY’03 funding priorities
Technology:
Higher Education Information
Technology Alliance (HEIT)
• Five years old; convened by NASULGC and
EDUCAUSE
• Represents higher education’s collective interests
in federal information technology policy
• Hosts annual forum to share information and
formulate legislative issues agenda
• USA Patriot Act, cyber security legislation, and
homeland security activities have far-reaching
implications for higher education
Technology: HEIT Alliance members
AACC
Association of
Research Libraries
NAICU
AASCU
EDUCAUSE
NASULGC
ACE
Internet2
University Continuing
Education Association
AAU
NACUBO
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