1. Direct Loan Reconciliation

2. Agenda Reconciliation Definition & Requirement ECB Equation Advantages & Disadvantages of Reconciliation Tools and Resources School Account Statement Reconciliation Demonstration Year End Closeout Best Practices Wrap up

3. Session Objective To understand basic Direct Loan Reconciliation concepts and to gain the analytical skills necessary to reconcile your school’s Direct Loan records with the Department of Education.

4. Direct Loan Reconciliation Definition The process by which the Direct Loan Cash Balance recorded on the Department of Education COD system is reviewed and compared with the school’s internal records on a monthly basis. The school must: identify and resolve discrepancies document reasons for their Ending Cash Balance

5. Reconciliation Requirement Schools must reconcile each month 34 CFR 685.102(b) origination options School reconciles internally, FAO and Business Offices School reconciles externally with COD Like balancing the checkbook, but at the school level

6. Ending Cash Balance Equation (ECB) Beginning Cash Balance Draw- downs Return of Excess Cash + - Ending Cash Balance = Downward Adjust- ments + Upward Adjust- ments - Disburse- ments -

7. 5 Types of Actions and Effect on School’s Ending Cash Balance Drawdown Return of Excess Cash Disbursement Upward Adjustment Downward Adjustment

8. Total Net Drawdowns – Total Net Booked Disbursements =Ending Cash Balance Ending Cash Balance (ECB)

9. Advantages of Reconciling Monthly  Problems resolved as they occur.  Loans are booked and serviced timely.  End of processing year means only the final month needs reconciling.  Stay within monthly reconciliation requirements.  Can document monthly reconciliation efforts for audit purposes.

10. Disadvantages of Not Reconciling Monthly  Unable to remember outstanding issues.  No documentation of having met monthly reconciliation requirements.  May not have met 30-day reporting requirements.  Improper/untimely loan servicing leading to borrowers placed at a disadvantage.

11. Reconciliation Tools and Resources  School Account Statement (SAS)  COD Website  DL Tools Software (SFAdownload.ed.gov)  Student Files  Financial Aid Office Reports  Business Office Reports

12. COD Customer Service  Customer Service Representative  Reconciliation Team  Weekly monitoring e-mails Reconciliation Tools and Resources

13. School Account Statement (SAS)  Generated by COD on 1 st weekend of the month  The SAS is a monthly statement listing the school’s DL processing activity as reported to (and accepted by) COD  Two Types of SAS files (DSLF or DSDF)  Separate SAS for each open award year

14. School Account Statement (SAS)  Different SAS Report Options  Format (Fixed Length,Pipe or Comma Delimited)  Content Depends on Options Selected  Four Primary SAS Components  Cash Summary (YTD and Monthly)  Disbursement Summary by Loan Type (YTD & Monthly)  Cash Detail (YTD or Monthly)  Loan Detail (Loan or Disbursement Activity Level) (YTD or Monthly)

15. SAS Options Screen

16. Euclid University

17. SAS Cash Summary -YTD

18. SAS Cash Summary - Monthly

19. SAS YTD Disbursement Summary By Loan Type

20. SAS Monthly Disbursement Summary By Loan Type

21. SAS Cash Detail

22. SAS Disbursement Detail

23. Reconciliation Demonstration

24. School Receives SAS Match ? Resolve Issues Compare Cash Detail Compare Loan Detail NO YES Resolved ? Compare Cash Summary DONE Reconciliation: A Process Flow NO (Documentation)

25. Monthly Reconciliation Is the SAS’s reported Ending Cash Balance (ECB) different from what my school records show? Net Drawdowns – Net Booked Disbursements = ECB Hmm…

26. School Account Statement Cash Summary - YTD Do the totals match my school records? Can you explain the ECB And Unbooked Loans?

27. School Account Statement Cash Summary - Monthly

28. Issues – ECB and Unbooked Loans SAS Shows:  Ending Cash Balance (ECB) = $7253  Total Net Unbooked = $3264 Why?

29. Cash Summary from School Records Booked + Unbooked Internal Ending Cash Balance Report - Summary

30. Compare School Records to SAS Cash Summary Month Ending 4/30/2010

31. What Did You Find? Discrepancies:  Difference in Refund of Cash = ($725)  Difference in Booked Adj = $1250  Difference in Unbooked Disbs = $862 Why?

32. Cash Discrepancies: Common Causes Timing Issues Cash Transactions in wrong year or split between years Funds sent as refunds of cash that should have been a payment (or reverse) Funds recycled for disbursement in a different award year

33. Cash Discrepancies: Research Tools Cash Detail Comparison Report SAS Cash Detail Cash Management Tool COD Website Business Office Cash Report Bank Statements Cancelled Checks

34. Cash Detail Comparison Refund 4/29/2010$725UnmatchedSchool

35. FAO Cash Report Refund 04/29/2010$725

36. 04/15/2010$10000909SF215 04/18/2010 $3500909SF215 05/01/2010 $7250909SF215 ELECTRONIC UNIVERSITY ‘09-’10 COD Website Review Processed 05/01/2010

37. Cash Activity

38. Explaining Discrepancies Sent Refund of Cash on 4/29/10 for $725 to G5. Processed on COD 5/1/10.

39. Documenting Discrepancies 1 discrepancy – school sent refund of cash to G5 on 4/29/10 for $725. COD Received and Processed on 5/1/10 Action Item List:  Track refund of cash timing difference for May SAS Reconciliation

40. Disbursement Analysis

41. Compare School Records to SAS Cash Summary Month Ending 4/30/2010

42. Disbursement Discrepancies: Common Causes Unsent/unacknowledged disbursement batches Rejected disbursements Disbursements recorded in Business Office – not in Financial Aid system Unbooked records School data loss

43. Disbursement Discrepancies: Research Tools Disbursement Detail Comparison Report Financial Aid Office Disbursement Report Business Office Disbursement Report SAS Disbursement Detail COD Website – Award/Disbursement Detail Student Account Files Business Office Ledgers/Statements of Account

44. Disbursement Detail Comparison BOOKED RECORDS THAT ARE MATCHED

45. Disbursement Detail Comparison = ($1250) ?? BOOKED RECORDS THAT ARE UNMATCHED

46. Disbursement Detail Comparison = $3264 UNBOOKED RECORDS THAT ARE MATCHED

47. Disbursement Detail Comparison SCHOOL RECORDS THAT ARE NOT ON SAS OR MISMATCHED SAS UNBOOKED RECORDS = $862

48. School Disbursement Report $862 Not at COD

49. School Disbursement Report $1632 Future Dated Disbs

50. School Disbursement Report = $3264 +$1632 Future Dated Disbs

51. Explaining Discrepancies

52. Documenting Discrepancies 2 discrepancies  ($1250) in booked adjustments entered via COD web  $862 disbursement batched, not sent to COD (unbooked ) Additional $3264 Unbooked on SAS future dated Add to Action Item List:  Record ($1250) Adjustments at school  Send $862 Disbs for Jesse James to COD  Document booked $3264 amount in new month

53. Ending Cash Balance

54. Documenting Reasons SAS ECB $7253 -$725 RF Timing Diff -$3264 Future Dated -$862 Send Disb $2402 What is the cause of remaining balance?

55. Perform Internal Reconciliation Develop procedures/schedule for internal reconciliation and assign responsibilities Compare based on overall cash/disbursement totals and/or student detail Troubleshoot discrepancies Compare Business Office and Financial Aid Office Records

56. ECB: Compare Business Office to Financial Aid Cash Summary Internal Reconciliation at School As of 4/30/2010

57. Compare School Disbursements

58. Explaining Reasons ECB $7253 = -$725 RF Timing Diff -$862 Send Disb -$3264 Future Dated Disb -$2402 Disb not in FA DL System and not at COD

59. Documentation

60. Documenting Differences and Reasons for ECB

61. Documenting Differences and Reasons Explain Differences &/or Reasons for ECB ECB Differences Financial Aid Office to SAS of ($1975): Entered Refund of Cash on 4/29/10 for ($725) on G5. Processed on COD 5/1/10 ($1250) in adjustments done via COD web, not entered in school database.

62. Documenting Differences and Reasons Explain Differences &/or Reasons for ECB Reasons for SAS ECB of $7253: $725 Refund timing issue $862 Disb not sent to COD $3264 Future Dated Disbursements $2402 Disbs credited in the Business Office, but not entered in FAO or sent to COD.

63. Documenting Differences and Reasons Explain Differences &/or Reasons for Unbooked Unbooked Differences FAO to SAS of $862: $862 Disb not sent to COD Additional $3264 Future Dated Disbursements on both systems

64. Monthly Reconciliation Action Items Month Ending: 4/30/2010Program Year: 2009-2010 Reconciliation: Action Item List Summary No.Action ItemDate DueDate Completed 1.Track refund of cash timing difference of $725 for May SAS Recon. Refund made on 4/29/2010, processed 5/1/2010. 6/05/2010 2.Record ($1250) Adjustments on FA System for Bradshaw PLUS Loan. 5/06/2010 3.Send $862 Disbs for Jesse James to COD. Ensure disbursements are accepted and booked. 5/06/2010 4.Verify $3264 future-dated disbursements book on COD.5/11/2010 5.Post 5/5 Disbursements totaling $2402 in FA System. Batch and Send to COD. 5/11/2010

65. How Do I Know I Am Finished? All discrepancies have been identified and resolved Timing issues are tracked for reconciliation in next month’s SAS Reasons for any Ending Cash Balance have been identified All monthly reconciliation efforts have been documented DONE

66. Program Year Close-out  The process by which schools complete final processing at the end of a Direct Loan award year.  Extension of the monthly reconciliation process  All COD records match all school DL records and business office system transactions.  COD and School show an ending cash balance of zero  All Schools must complete program year closeout and the balance confirmation process each year.

67. Program Year Close-out  Final deadline: July 31st of the year following end of the award year (7/31/2011 for 2009-2010).  Note: 30 Day reporting requirement supersedes both reconciliation and closeout requirements

68. School Balance Confirmation

69. Best Practices

70. Finish What You Start Make sure that ALL electronic records sent to COD have been received, acknowledged and imported. (transmission log) Identify and fix all rejected transactions as they occur. Manage timing issues so that you finish what you started in the same processing month. Run reports to check for origination, MPN’s and disbursements not in an Accepted status. Track all unfunished business.

71. Communicate Between Offices Form reconciliation and DL processing teams in FA and Business Office and schedule regular meetings. Compare FA and Business Office systems based on totals and/or student accounts. Develop procedures and schedule for internal reconciliation and assign responsibilities.

72. Final Reconciliation Suggestion Do not draw down funds based on a COD negative ending cash balance unless:  Your school agrees with this balance.  You actually disbursed those funds (in that program year).  You have documented these facts.

73. Contact Information Thank you for attending. Your comments and feedback are welcomed. Robert Tschinkel – RGT Consulting Email: RGTschinkel@hotmail.comRGTschinkel@hotmail.com Phone: (201) 655-0769