Session C-30 Top 10 Audit and Program Review

Session C-30 Top 10 Audit and Program Review Findings and How To Identify Them Tom Beckerle Laura Hall U. S. Department of Education

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 2

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 3

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 4

Program Review Findings: Top 10 • Student Credit Balance Deficiencies • Information in Student Files Missing or Inconsistent • Pell Over/Under Payments • Consumer Information Requirements Met • Improper/Undocumented Dependency Overrides • Lack of Administrative Capability Tie Not Tie 5

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 6

Audit Findings 7

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 8

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 9

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 10

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 • 11

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 12

Other Compliance Solutions • Design processes and procedures to track/monitor the deadlines • Ensure timely communication between offices • Use R 2 T 4 on the Web report feature 13

R 2 T 4 Calculation Errors • • • Incorrect institutional charges for the period Scheduled breaks not included Incorrect withdrawal date Use of out-of-date R 2 T 4 forms Mathematical errors 14

R 2 T 4 Calculation Errors • Example: R 2 T 4 calculation based on incorrect number of days in payment period • Solution: Review and modify R 2 T 4 policies and procedures to ensure a correct understanding of the calculation requirements 15

Other Compliance Solutions • Use correct institutional charges for the payment period – Prorate if all charges assessed upfront – Understand when to include book charges • Use R 2 T 4 Worksheets – Electronic Web Application – Paper 16

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 17

Entrance/Exit Counseling Deficiencies • Example: School’s 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 18

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 19

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 20

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 21

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 22

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 23

Auditor’s 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 24

Auditor’s Opinion Cited in Audit • Failure to reconcile program accounts • High Perkins default rate • On-going problems with incorrect R 2 T 4 calculations • Inadequate accounting systems and/or procedures • Lack of internal controls 25

Auditor’s Opinion Cited in Audit • Example: Lack of Administrative Capability – Incorrect R 2 T 4 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 26

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 R 2 T 4 – FSA Coach, Module 8 27

Verification Violations • Verification Worksheet not signed • Untaxed income not verified • Conflicting data on ISIR and verification documents not resolved • Required corrections not processed 28

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 29

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 30

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 31

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 32

Other Compliance Solutions • Use correct enrollment status • Use correct Pell Formula/Schedule • Verify that student began attendance in all coursework • Prorate when needed 33

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 34

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 35

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 36

Program Review Findings 37

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 38

Program Review Findings: Top 10 • Student Credit Balance Deficiencies • Information in Student Files Missing or Inconsistent • Pell Over/Under Payments • Consumer Information Requirements Met • Improper/Undocumented Dependency Overrides • Lack of Administrative Capability Tie Not Tie 39

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 40

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 41

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 42

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 43

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 44

Other Compliance Solutions • Develop adequate SAP policy – Required components, remedial and repeat coursework, probationary periods, appeal process • Document each student’s file to reflect eligibility for disbursements • Follow your written policy! 45

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 46

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 47

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 48

Consumer Information Requirements Not Met • Written verification policy not provided to students selected for verification • R 2 T 4 policy not published or incomplete – Withdrawal policy – Basic explanation of R 2 T 4 calculation • SAP policy incomplete 49

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 50

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 51

Improper/Undocumented Dependency Overrides • Dependency override performed for invalid reason – Student was self-sufficient – Parent(s) didn’t claim student on tax return • No documentation in student file • Failure to confirm continued unusual circumstance in new award year 52

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 53

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! 54

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 55

Lack of Administrative Capability • Example: Late R 2 T 4, 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 56

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 57

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 58

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Contact Information We appreciate your feedback and comments Tom Beckerle • Phone: (816) 268 -0418 • Email: Tom. Beckerle@ed. gov Laura Hall • Phone: (404) 562 -6265 • Email: Laura. Hall@ed. gov 60