Leading by Example: Syracuse University Is Fastest Municipal Borrower to Complete Financial Audits
Syracuse University is known for many things: its Orangemen, its hilly campus, and its famous alumni, including Joe Biden, Dick Clark, and William Safire. But perhaps one of its lesser known accolades is that it is a leader in timely financial reporting among municipal bond issuers.
A recent Merritt Research Services report examined the timeliness of municipal financial audits, compared to their corporate counterparts – and to other municipal borrowers. Among a sample of over 8,000 audits for fiscal 2011, Syracuse University completed its audit in the least amount of time – just 28 days after the close of its fiscal year.
The 2012 study, entitled New, Expanded Municipal Audit Timing Study Shows Little Change from Previous Years, examined 8,083 audits in 16 municipal bond credit sectors. In the two higher education sectors, the study included audits from 519 private colleges/universities and 440 public colleges/universities.
Across all sectors, the median audit completion time was 145 days for fiscal 2011. With a median audit completion time of 113 days, the private higher education sector was the third-fastest sector to complete its financial audits. Wholesale electric utilities and not-for-profit hospital sectors came in first and second place, respectively.
Syracuse University has completed its audit within a range of 27 to 37 days following the close of its past five fiscal years. “It’s a fine statement when an academic institution teaches a best practice by its reliable example,” said Richard Ciccarone, President and Chief Executive Officer of Merritt Research Services.
For fiscal year 2011, the following colleges/universities were the fastest to complete their financial audits:
1. Syracuse University (28 days)
2. Stillman College (49 days)
3. Regis College (60 days)
4. Southern Wesleyan University (62 days)
5. Southern California College of Optometry (63 days)
1. University of South Alabama (46 days)
2. Victoria County Junior College District (56 days)
3. Central Michigan University (60 days)
4. (tie) – Francis Marion University (62 days)
Macomb Community College (62 days)
Montclair State University (62 days)
5. Greenville Technical College (63 days)
“The importance of receiving timely credit information in the municipal bond market was reinforced over the past year by bankruptcy or default concerns related to a small but significant number of highly publicized distressed cities that have been in the headlines,” said Ciccarone. “Timely financial reporting can make a difference in warning investors about potential credit vulnerabilities and can also clarify credit standing in cases where distress has already been identified.”
For now, the higher education sectors – both public and private – have avoided any high profile credit concerns, but their security is no more certain than any other type of municipal borrower. Prompt financial reporting remains critical. While Syracuse University and others in the top rung are blazing the trail, others will hopefully follow their path to consistent and timely financial reporting.
Merritt Research Services, LLC is an independent municipal bond data and research provider focused on credit information related to municipal bonds. The 2012 audit study is the third annual analysis of municipal borrower audit timing.
A complete copy of the 2012 Merritt audit timing study is available upon request. Please contact Mardee Handler at email@example.com to receive the report.