Session C-30

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Session C-30

• Top 10 Audit and Program Review Findings and How
  To Identify Them
• Tom Beckerle
• Laura Hall
• U.S. Department of Education

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Audit Findings Top 10

• Repeat Finding-Failure to Take Corrective Action
• Return of Title IV Funds Made Late
• Return of Title IV Funds Calculation Errors
• Entrance/Exit Counseling Deficiencies
• Student Status-Inaccurate/Untimely Reporting

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Audit Findings Top 10

• Auditor Opinion Cited in Audit
• Verification Violations
• Pell Over/Under Payments
• Student Confirmation Report Filed Late/Not
  Filed/Not Retained for Five Years/Inaccurate
  (similar to 5)
• Student Credit Balance Deficiencies

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Program Review Findings Top 10

• Verification Violations
• Crime Awareness Requirements Not Met
• Return to Title IV Calculation Errors
• Entrance/Exit Counseling Deficiencies
• SAP Policy Not Adequately Developed and/or
  Monitored
• Return of Title IV Funds Made Late

Tie
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Program Review Findings Top 10

• Student Credit Balance Deficiencies
• Information in Student Files Missing or
  Inconsistent
• Pell Over/Under Payments
• Consumer Information Requirements Not Met
• Improper/Undocumented Dependency Overrides
• Lack of Administrative Capability

Tie
Tie
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Findings on Both Lists

• Return to Title IV Calculation Errors
• Return of Title IV Funds Made Late
• Pell Over/Underpayments
• Verification Violations
• Entrance/Exit Counseling Deficiencies
• Student Credit Balance Deficiencies

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Audit Findings
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Repeat Finding-Failure to Take Corrective Action

• Same finding(s) identified in subsequent audit(s)
  
• School failed to adequately develop, implement,
  and/or monitor procedures to ensure Corrective
  Action Plan was followed

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Repeat Finding-Failure to Take Corrective Action

• Example Repeat findings for Pell Overpayments,
  Student Status Confirmation Report Submitted
  Late, and Credit Balance Deficiencies
• Solution Determine why CAP was not effective
  and make adjustments as necessary

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Other Compliance Solutions

• Review results of Corrective Action Plan
• Is it working?
• Are changes needed to improve process?
• Develop specific procedures for CAP action items
• Assign responsible person/office to ensure CAP is
  implemented/monitored

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Return of Title IV Funds Made Late

• Returns not made within allowable timeframe (45
  days)
• Inadequate system in place to identify/track
  official and unofficial withdrawals
• No system in place to track number of days
  remaining to return funds
• Lack of coordination between offices

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Return of Title IV Funds Made Late

• Example Unearned Pell Grant funds were returned
  between 76 and 158 days late
• Solution Ensure a knowledgeable person has
  responsibility for tracking the return of funds

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Other Compliance Solutions

• Design processes and procedures to track/monitor
  the deadlines
• Ensure timely communication between offices
• Use R2T4 on the Web report feature

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R2T4 Calculation Errors

• Incorrect institutional charges for the period
• Scheduled breaks not included
• Incorrect withdrawal date
• Use of out-of-date R2T4 forms
• Mathematical errors

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R2T4 Calculation Errors

• Example R2T4 calculation based on incorrect
  number of days in payment period
• Solution Review and modify R2T4 policies and
  procedures to ensure a correct understanding of
  the calculation requirements

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Other Compliance Solutions

• Use correct institutional charges for the payment
  period
• Prorate if all charges assessed upfront
• Understand when to include book charges
• Use R2T4 Worksheets
• Electronic Web Application
• Paper

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Entrance/Exit Counseling Deficiencies

• Entrance counseling not conducted/not documented
  for first-time, first-year students
• Exit counseling materials not mailed to students
  who failed to complete in-person or on-line
  counseling
• Exit counseling not conducted for withdrawn
  students

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Entrance/Exit Counseling Deficiencies

• Example Schools system failed to identify all
  students who ceased enrollment on at least a
  half-time basis, resulting in exit counseling
  materials not mailed to withdrawn students
• Solution Assign responsibility for monitoring
  the exit interview process modify automated
  system

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Other Compliance Solutions

• Develop process for documenting student
  completion
• Develop procedures for ensuring communication
  between Registrar, Educational, and Financial Aid
  Offices
• Seek support from lenders/GAs or ED (for Direct
  Loans)
• Provide staff training
• FSA Coach, Module 4 Loan Counseling

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Student Status-Inaccurate or Untimely Reporting

• Submittal File not returned within 30 days of
  receipt of Roster File
• Use of incorrect enrollment status code
• W for graduated student
• Incorrect graduated effective date
• Student(s) reported as withdrawn for summer break
  even though expected to return in the fall

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Student Status-Inaccurate or Untimely Reporting

• Use of third-party servicers
• School failed to transmit enrollment data to
  servicer
• School failed to ensure file was submitted by
  servicer timely
• School responsible for timely response to NSLDS

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Student Status-Inaccurate or Untimely Reporting

• Example Student enrollment status and/or
  effective date reported incorrectly SSCR
  Submittal Files returned late
• Solution Provide training to personnel on
  correct status/dates implement monitoring system
  to ensure timely reporting

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Other Compliance Solutions

• Develop process for enrollment verification
• Maintain accurate enrollment records
• Use the correct status codes
• A, D, F, G, H, L, W, X, Z
• Designate responsibility for monitoring the SSCR
  reporting deadlines
• Maintain SSCR documentation
• Acknowledgement/Error File

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Auditors Opinion Cited in Audit

• Refers to anything other than an unqualified
  opinion
• Indicates serious deficiencies/areas of concern
  in the compliance audit and/or audited financial
  statements

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Auditors Opinion Cited in Audit

• Failure to reconcile program accounts
• High Perkins default rate
• On-going problems with incorrect R2T4
  calculations
• Inadequate accounting systems and/or procedures
• Lack of internal controls

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Auditors Opinion Cited in Audit

• Example Lack of Administrative Capability
• Incorrect R2T4 Calculations, Improper Academic
  Progress Standards, Inadequate Accounting System
• Solution Review and revise policies and
  procedures implement accounting system in
  accordance with generally accepted accounting
  principles

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Other Compliance Solutions

• Perform monthly reconciliation of Title IV
  program accounts
• Develop and implement a Perkins default
  management plan
• Provide training on how to correctly calculate
  R2T4
• FSA Coach, Module 8

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Verification Violations

• Verification Worksheet not signed
• Untaxed income not verified
• Conflicting data on ISIR and verification
  documents not resolved
• Required corrections not processed

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Verification Violations

• Example Incomplete Verification
• No tax return submitted for parent even though
  earned income required filing
• Incorrect number in household size
• Solution Follow published verification
  procedures ensure all required items are
  verified document student files

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Other Compliance Solutions

• Monitor verification process to ensure procedures
  are followed
• Perform a self-assessment by reviewing a random
  sample of student files
• Use Verification Worksheets
• School developed or ED worksheets

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Pell Grant Over/Under Payment

• Adjustments not made for change in enrollment
  status between terms
• Attendance not documented in all coursework
  counted in the enrollment status
• Modules or compressed coursework
• Incorrect Pell Formula
• Inaccurate proration calculation
• Incorrect EFC

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Pell Grant Over/Under Payment

• Example ISIR correction resulted in an increase
  to the EFC however, aid was not
  recalculated/reduced
• Solution Develop procedures to ensure all
  subsequent ISIRs are reviewed and aid is adjusted
  accordingly

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Other Compliance Solutions

• Use correct enrollment status
• Use correct Pell Formula/Schedule
• Verify that student began attendance in all
  coursework
• Prorate when needed

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Student Credit Balance Deficiencies

• No process in place to determine when a credit
  balance has been created
• Credit balances not released to students within
  required 14-day timeframe
• Credit balances held without student
  authorizations

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Student Credit Balance Deficiencies

• Example Credit balance held for 111 days without
  student authorization
• Solution Develop and implement procedures and
  controls to identify and release credit balances
  timely

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Other Compliance Solutions

• Develop a process to determine when a credit
  balance is created
• Develop a system to track number of days
  remaining to release funds timely
• Understand new regulations regarding prior year
  charges
• May create more credit balances if entire program
  cost is charged upfront

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Program Review Findings
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Program Review Findings Top 10

• Verification Violations
• Crime Awareness Requirements Not Met
• Return to Title IV Calculation Errors
• Entrance/Exit Counseling Deficiencies
• SAP Policy Not Adequately Developed /Monitored
• Return of Title IV Funds Made Late

Tie
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Program Review Findings Top 10

• Student Credit Balance Deficiencies
• Information in Student Files Missing or
  Inconsistent
• Pell Over/Under Payments
• Consumer Information Requirements Not Met
• Improper/Undocumented Dependency Overrides
• Lack of Administrative Capability

Tie
Tie
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Crime Awareness Requirements Not Met

• Policies and procedures not developed
• Annual report not published and/or distributed
  annually to current students/staff
• Failure to report statistics on website or crimes
  reported in wrong category
• Failure to provide timely warnings and/or
  notifications of crimes committed

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Crime Awareness Requirements Not Met

• Example Failed to develop/disclose procedures
  when a student reports a crime to campus pastoral
  counselors/professional counselors
• Solution Develop/disclose procedures to guide
  counselors in their dealings with students

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Other Compliance Solutions

• Develop process for gathering crime statistics
• Identify person(s) responsible for campus crime
  requirements
• Develop communications plan for timely warnings
  and notifications

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SAP Policy Not Adequately Developed/Monitored

• Policy fails to address required components
• Qualitative, quantitative, completion rate,
  and/or maximum timeframe
• Policy less strict than policy for non-Title IV
  recipients
• SAP standards not consistently applied
• Aid disbursed to students who were not meeting
  minimum SAP standards

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SAP Policy Not Adequately Developed/Monitored

• Example Students were not meeting minimum GPA
  at the end of a probationary period and were
  therefore not eligible for aid however, school
  disbursed the aid
• Solution Develop procedures to ensure policy is
  followed check SAP prior to disbursing aid

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Other Compliance Solutions

• Develop adequate SAP policy
• Required components, remedial and repeat
  coursework, probationary periods, appeal process
• Document each students file to reflect
  eligibility for disbursements
• Follow your written policy!

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Information in Student Files Missing or
Inconsistent

• Institutional data (admissions, registrar)
  conflicts with ISIR data
• ISIR data conflicts with other documentation in
  financial aid file
• No documentation to support professional
  judgment/dependency override
• Failed to retain ISIR used to establish award

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Information in Student Files Missing or
Inconsistent

• Example Income on ISIR conflicts with income
  reported on Institutional Non Tax-Filer Form
  inconsistency not resolved
• Solution Design process to ensure all conflicts
  are researched and resolved

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Other Compliance Solutions

• Pay attention to student files
• Perform your own review of student files
• Review all subsequent ISIRs
• Establish communication with other offices at the
  institution to identify and address inconsistent
  information

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Consumer Information Requirements Not Met

• Written verification policy not provided to
  students selected for verification
• R2T4 policy not published or incomplete
• Withdrawal policy
• Basic explanation of R2T4 calculation
• SAP policy incomplete

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Consumer Information Requirements Not Met

• Example Written verification policy did not
  include the required components
• Deadlines, consequences, notifications, procedure
  for correcting data
• Solution Revise policy to include all required
  components

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Other Compliance Solutions

• Ensure all required consumer information is
  accurate, complete, and provided to students in
  writing
• Ensure someone is available during normal
  operating hours to address student questions or
  concerns about consumer information

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Improper/Undocumented Dependency Overrides

• Dependency override performed for invalid reason
• Student was self-sufficient
• Parent(s) didnt claim student on tax return
• No documentation in student file
• Failure to confirm continued unusual circumstance
  in new award year

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Improper/Undocumented Dependency Overrides

• Example Routinely performed dependency overrides
  for students whose parents reside in a foreign
  country and the students supported themselves
• Solution Develop policies that conform to Title
  IV rules obtain adequate documentation to
  support the unusual circumstance

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Other Compliance Solutions

• Develop written procedures
• Make decisions by committee
• Ensure your process does not allow for mass D/O
  based on similar situations
• Document, document, document!

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Lack of Administrative Capability

• Indicates numerous/significant findings
• Most common areas of noncompliance involve
• Separation of duties
• Adequate checks and balances
• System of internal controls
• Adequate staffing

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Lack of Administrative Capability

• Example Late R2T4, incorrect COA used for
  awarding, incomplete verification, loans not
  prorated, Perkins Loan Program not adequately
  administered
• Solution Designate capable individual(s) to
  oversee financial aid process develop and
  implement internal controls

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Other Compliance Solutions

• Hire and retain adequate number of experienced
  personnel
• Establish a process of timely communication
  between all relevant offices
• Ensure that no one person or office has the
  ability to award and disburse aid

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FSA Assessments

• Self-assessment tool designed to assist schools
  in evaluating their financial aid policies,
  processes, and procedures
• Includes assessment modules on Students, Schools,
  Managing Funds, and Policies and Procedures
• http//www.ifap.ed.gov/qahome/fsaassessment.html

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Contact Information

• We appreciate your feedback and comments
• Tom Beckerle
• Phone [phone]
• Email Tom.Beckerle_at_ed.gov
• Laura Hall
• Phone [phone]
• Email Laura.Hall_at_ed.gov

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