In addition to being institutions of higher education, colleges and universities are all about money. And, I do not mean that in a bad way. In order to provide an education, higher education needs money.
And, higher education needs to manage its money well. (Thanks to this site for the dandy image.) Why? For at least the following reasons:
1. Because it makes good business sense. Why waste money when you can use it to do what you say you are going to do?
2. It is the responsible thing to do. The money comes from somewhere -- students, students' families, the federal or state government (and hence someone's tax dollars), private pockets (alumni, friends of higher education, foundations), corporations, etcetera. And, we know, they all want us to use the money for what we say we will use it for -- to ensure the best education for our students. Right?
3. Because the law says we have to. Both those of us in the not-for-profit world and for the for-profit institutions that have joined us are hemmed around by legalities that shape much of what we do. In fact, sometimes it feels like just too much when institutions the size of a city and institutions the size of a . . . . have to fill inthe same massive quantity of forms But, I digress. What I am trying to say is this: we are legally required to maintain our not for profit status in certain ways (for example). We have a relation to the tax code (for example). And, much much more.
4. And, of course, because the media pays more attention to higher education finance often than it does to the content of what we do. And, thus, there are tales out there that make it seem as though we are al rich, and all profligate, and all over-charging and etcetera.
There are other reasons, of course. But, these will suffice for today.
Here is where audits come into the picture. They help establish that we are doing what we say we are doing with money -- and that we are following our own stated procedures. As an example of an institution with audit problems, there is the University of Illinois, which recently had 30 "findings" on its audits. Now, not all audit findings are a big deal, I know that. And yet, click here if you want to see how these have been characterized in the press.
Other institutions in the Chicago(land) area put their financial statements and audit materials on line on occasion. For those of you interested in the finances of higher education, they are worth a look. And, some institutions, such as the City Colleges have extensive internal audit functions. (For the latter, click here.)
Yes, indeedy, audits matter!