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

2 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

3 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

4 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

5 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

6 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

7 Audit Findings

8 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

9 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

10 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

11 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 Return of Title IV Funds Made Late

12 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 Return of Title IV Funds Made Late

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

14 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

15 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

16 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

17 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

18 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

19 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

20 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 Student Status-Inaccurate or Untimely Reporting

21 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

22 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

23 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

24 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

25 Auditor’s 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

26 Auditor’s 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

27 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

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

29 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

30 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

31 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

32 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

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

34 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

35 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

36 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

37 Program Review Findings

38 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

39 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

40 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

41 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

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

43 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

44 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

45 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! Other Compliance Solutions

46 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

47 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

48 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

49 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

50 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

51 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 Other Compliance Solutions

52 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

53 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

54 Develop written procedures Make decisions by committee Ensure your process does not allow for ‘mass’ D/O based on similar situations Document, document, document! Other Compliance Solutions

55 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

56 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

57 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 Other Compliance Solutions

58 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 FSA Assessments

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60 Contact Information We appreciate your feedback and comments Tom Beckerle Phone:(816) Laura Hall Phone:(404)