1. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA Single Audit Presented by: Carey McKee, KPMG LLP AUDIT

2. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Agenda What is a Single Audit? Programs Audited Student Financial Aid Other Federal Programs American Reinvestment and Recovery Act Patient Protection and Affordable Care Act of 2010 and Reconciliation Act of 2010 Single Audit Timeline KPMG Audit Team 2 Year-End GAAP Training

3. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Learning Objectives Learn the programs to be audited, timing and campus selection of the A-133 Single Audit. Understand the changes in the audit process and GAAP manual from the prior year. Gain an understanding of the scope of the A-133 Single Audit procedures to be performed. Learn the American Reinvestment and Recovery Act’s impact on the A-133 Single Audit for June 30, 2010. Understand the new Health Care Legislation’s Impact on Higher Education. Year-End GAAP Training 3

4. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 What is a Single Audit? All non-Federal entities that expend $500,000 or more of Federal awards in a year are required to obtain an annual audit in accordance with the Single Audit Act of 1996, OMB Circular A-133. OMB Circular A-133 indicates the auditee shall: – Maintain internal control over Federal programs that provides reasonable assurance that the auditee is managing Federal awards in compliance with laws, regulations, and the provisions of contracts or grant agreements that could have a material effect on each of its Federal programs. – Comply with laws, regulations, and the provisions of contracts or grant agreements related to each of its Federal programs. 4 Year-End GAAP Training

5. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 What is a Single Audit?, Cont'd The A-133 Single Audit opinion includes: – One consolidated opinion for all CSU campuses and Federally funded programs subject to A-133. – Opinion on internal controls over compliance. – Opinion on compliance with applicable Federal regulations for the programs audited. Therefore KPMG audit procedures include both: – Understanding, assessment and tests of operating effectiveness of Campus internal controls over each of the compliance areas for each program audited. – Tests of actual compliance with applicable rules and regulations for each program audited. 5 Year-End GAAP Training

6. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Knowledge Check #1 CSU Campuses are encouraged but not required to maintain internal controls over its Federal programs? A. True B. False 6 Year-End GAAP Training

7. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Knowledge Check #1 Answer B. False Federal award recipients are required to maintain effective internal controls that provide reasonable assurance over their compliance with laws, regulations and provisions of grants and contracts. 7 Year-End GAAP Training

8. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 CSU’s Federal Funded Programs (FYE 6/30/09)* 8 *Based on preliminary information provided by CO, we are assuming that FYE 6/30/10 expenditures will be similar to FYE 6/30/09 Year-End GAAP Training

9. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Federal Programs Selected for Audit in 2010 9 Federal Program NameSelected in 2010 Student Financial Aid Cluster Yes TRIO ClusterYes Research and Development Cluster Yes Head Start ClusterYes ARRA – State Stabilization Fund No** ** We are not currently planning on auditing this program in 2010; however, this determination is pending guidance that will be included in the 2010 Compliance Supplement which has not yet been issued. It is expected to be issued before June 30, 2010. Year-End GAAP Training

10. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Updates and Changes in Audit Approach from the 6/30/09 Audit There will be a new specialized audit team to perform the Student Financial Aid audits that will be receiving some additional training to increase efficiency and knowledge of specific CSU programs. The start of the Student Financial Aid audits was moved forward to allow for the specialized audit team to visit multiple campuses. Due to the crossover of the scope of work being performed by CSU Office of University Auditor, we have scheduled meetings to share information before we begin our audit procedures. 10 Year-End GAAP Training

11. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Updates and Changes in Audit Approach from the 6/30/09 Audit, Cont’d New chapter in GAAP Manual for A-133 – Provide designated space for providing guidance and memorializing questions and answers that arise regarding preparation of SEFA – More comprehensive A-133 PBC lists to include more items that we previously obtained but requested while in the field – Separate phone list Updates to the SEFA page in Reporting Package – Added a new column for campuses to input “Direct” and “Pass through” program – Added “Federal Pell Grant Program” on Section 4 for Administrative Cost Allowance 11 Year-End GAAP Training

12. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Student Financial Aid Cluster of Programs included in Scope of Federal A-133 Audit Grant Programs Pell Grants Federal Supplemental Educational Opportunity Grants Academic Competitiveness Grants National SMART Grants TEACH Grants Scholarships for Disadvantaged Students Federal Work Study Loan Programs Federal Family Education Loans Sub/Unsubsidized Stafford PLUS Federal Direct Loans Sub/Unsubsidized Stafford PLUS Federal Perkins Loans Disadvantaged Student Loans Nursing Student Loans Health Professional Student/Primary Care Loans 12 Year-End GAAP Training

13. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Student Financial Aid – Full Scope Campuses San Bernardino 07/19/10 Stanislaus 07/19/10 San Diego 07/26/10 Northridge 08/02/10 Sonoma 08/09/10 Long Beach 08/09/10 Chico 08/16/10 San Francisco 08/30/10 13 Year-End GAAP Training

14. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Student Financial Aid – Compliance Areas Subject to Audit & Sample Procedures Cash Management – Select a sample of payments from the G5 system and compare with Campus accounting records to test for compliance with applicable payment method (i.e., Advance, Just-in-Time, Reimbursement, or Cash Monitoring). Eligibility – Select a sample of students and review Campus records to ascertain appropriate determination of: Student Eligibility for Various Grant and Loan Programs Calculation of Benefits 14 Year-End GAAP Training

15. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Student Financial Aid – Compliance Areas Subject to Audit & Sample Procedures, Cont'd Matching – Review reported matching funds on the FISAP and test Campus accounting records to determine if the amount and source are in accordance with requirements or Campus has an approved waiver. Earmarking – Review reported FWS on the FISAP and test Campus records to determine if required percentage of students worked at the required community service activity or Campus has an approved waiver. 15 Year-End GAAP Training

16. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Student Financial Aid – Compliance Areas Subject to Audit & Sample Procedures, Cont'd Reporting – Obtain FISAP and test for accuracy and completeness by selecting a sample of line items reported and comparing to Campus records. – Select a sample of students that received Pell Grants and compare the data reported on Pell origination and disbursement records to the COD to Campus records for accuracy. 16 Year-End GAAP Training

17. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Student Financial Aid – Compliance Areas Subject to Audit & Sample Procedures, Cont'd Separate Funds – Review Campus accounting records and verify that Perkins and Nursing Loan programs are maintained in separate funds. Verification – Select a sample of students that were selected for Verification and obtain Campus records to ascertain that verifications were performed in accordance with campus policies and Federal requirements. Disbursements to or on Behalf of Students – Select a sample of students and verify that the payments were made or returned in accordance with the required timeframes. 17 Year-End GAAP Training

18. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Student Financial Aid – Compliance Areas Subject to Audit & Sample Procedures, Cont'd Return of Title IV Funds – Students that Begins Attendance Select a sample of students and obtain Campus determination/calculation of amounts earned and due back. Obtain campus records to support calculations and test for accuracy and timeliness of returns (i.e., 45 days). – Students that do not Begin Attendance Select a sample of students and obtain Campus records to ascertain that any funds received were returned within the required timeframes (i.e., 30 days, 45 days). 18 Year-End GAAP Training

19. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Student Financial Aid – Compliance Areas Subject to Audit & Sample Procedures, Cont'd Student Status Changes (FFEL & Direct Loans) – Select a sample of students to test for timing and accuracy of the status change data submitted to the NSLDS. Federal Work-Study Agreements – Select a sample of students and verify that a written agreement exists between the campus and the employer of that student 19 Year-End GAAP Training

20. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Student Financial Aid – Compliance Areas Subject to Audit & Sample Procedures, Cont'd Borrower Data Transmission and Reconciliation (Direct Loans) – Select a sample of School Account Statements and ascertain that reconciliations are being performed. – Select a sample of borrowers and verify the accuracy of the information in the Direct Loan Servicing System by comparing to campus records. Denying Students’ Access to Lenders of Their Choice (FFEL) – Obtain the campuses policies and any suggested lender lists and review for compliance. 20 Year-End GAAP Training

21. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Knowledge Check #2 Which of the following Student Financial Aid programs will NOT be subject to the A-133 Single Audit of Student Financial Aid? A. Pell Grants B. Federal Supplemental Educational Opportunity Grants C. Cal Grants D. Academic Competitiveness Grants 21 Year-End GAAP Training

22. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Knowledge Check #2 Answer C. Cal Grants Cal Grants are funded by the State of California and not by the Federal government, therefore they are not subject to the Federal A-133 Single Audit. 22 Year-End GAAP Training

23. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Other Programs Included in Scope of Federal A- 133 Audit TRIO Cluster Student Support Services Talent Search Upward Bound McNair Post- Baccalaureate Achievement Head Start Cluster Head Start ARRA Head Start ARRA Early Head Start R&D Cluster Various Direct and Pass- Through Research Grants 23 Year-End GAAP Training

24. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Other Federal Program – Full Scope Campuses 24 Sonoma State TRIO Cluster San Francisco State Research and Development Cluster San Francisco State Sonoma State Head Start Cluster Year-End GAAP Training

25. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Other Federal Programs – Compliance Areas Subject to Audit & Sample Procedures Allowable Activities/Allowable Costs – Select a sample of expenditures charged to the program and test their allowability in accordance with OMB Circular A-21 and the applicable program regulations. – Select a sample of employees charged to the program and test if their time and effort documentation is in accordance with OMB Circular A-21 and supports the amount of expense charged to the program. – Obtain a copy of the approved indirect cost rate for the audit year and review the Campus’ calculation to determine if an appropriate base was used and the rate was applied correctly. 25 Year-End GAAP Training

26. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Other Federal Programs – Compliance Areas Subject to Audit & Sample Procedures, Cont'd Cash Management – Select a sample of cash receipts from the Federal government and obtain the Campus records that support the payment. Test for compliance with applicable timing requirements for advance payments or reimbursements. Eligibility – Select a sample of program participants and obtain the Campus records that support the eligibility of the participant and re-perform the eligibility determination in accordance with program guidelines. If applicable, test any amounts awarded to participants for compliance with program limitations. 26 Year-End GAAP Training

27. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Other Federal Programs – Compliance Areas Subject to KPMG Audit Procedures, Cont'd Equipment Management – Obtain the Campus records for equipment acquisitions, dispositions and cumulative inventory as of year-end that were purchased with Federal program funding. Test if the Campus complied with applicable identification, safeguarding, inventory and disposition requirements, as applicable. Matching – Review reported matching funds and obtain Campus documentation that supports the match. Test the accuracy, source allowability and compliance any required amounts from the Campus records. 27 Year-End GAAP Training

28. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Other Federal Programs – Compliance Areas Subject to Audit & Sample Procedures, Cont'd Earmarking Obtain the Campus documentation for its calculations regarding any required program earmark amounts or participants. Perform procedures to verify that the records support that at least the minimum or no more than the maximum was achieved. Period of Availability – Select a sample of transactions charged to the program during the fiscal year and subsequent to the expiration date and request Campus documentation to support whether transaction occurred during proper period. 28 Year-End GAAP Training

29. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Other Federal Programs – Compliance Areas Subject to Audit & Sample Procedures, Cont'd Procurement Suspension and Debarment – Select a sample of procurements and verify: Policies comply with Federal and/or State requirements Support for cost/price analysis or competitive bidding (as appropriate) Suspension and debarment certifications were received Vendors are not on the “List of Parties Excluded from Federal Procurement or Non-procurement Programs” (www.epls.gov)www.epls.gov Reporting – Obtain the reports submitted and supporting documentation from the Campus. Test the reports for accuracy and completeness with the Campus records. 29 Year-End GAAP Training

30. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Other Federal Programs – Compliance Areas Subject to Audit & Sample Procedures, Cont'd Subrecipient Monitoring – Select a sample of program subrecipients and determine if the Campus: Provided appropriate Federal award notification. Monitored the activities and expenditures of the subrecipient in accordance with program regulations. Obtained and reviewed the subrecipient’s single audit report. Special Tests and Provisions – As applicable, test any additional program specific requirements contained in the OMB Circular A-133 Compliance Supplement. 30 Year-End GAAP Training

31. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Knowledge Check #3 Which of the following areas of compliance will be part of the A-133 Single Audit? A. Allowable Costs B. Procurement C. Reporting D. All of the Above 31 Year-End GAAP Training

32. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Knowledge Check #3 Answer D. All of the Above Allowable Costs, Procurement and Reporting are all areas of compliance that will likely be tested as part of the A-133 Single Audit. 32 Year-End GAAP Training

33. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 33 American Reinvestment & Recovery Act (ARRA) On February 17, 2009, President Obama signed the American Recovery and Reinvestment Act of 2009 (P.L. 111-5), which provided approximately $300 billion in additional Federal funds to state and local governments and institutes of higher education. Year-End GAAP Training

34. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 CSU’s Programs Impacted by ARRA ARRA State Stabilization Head Start Research & Development Student Financial Aid COBRA Build America Bonds 34 Year-End GAAP Training

35. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Impact of ARRA Funding on CSU for 2009-2010 Student Financial Aid State Stabilization Head Start Research and Development Increase in maximum Pell Grant Award of approximately $129 per student Increase in Federal Work Study funding of approximately $3 million or 17.5% Received approximately $448 million to support salaries Received additional funding of approximately $400K to help improve staff compensation(i.e., COLA increases) Additional research grants awarded to CSU campuses Year-End GAAP Training 35

36. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Impact of ARRA Funding on CSU for 2009-2010, Cont'd Build America Bonds COBRA Continuation Coverage Assistance Programs NOT Covered Under A-133 Single Audit: Year-End GAAP Training 36

37. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Knowledge Check #4 Which of the following programs will NOT be included in CSU’s Single Audit for 2009-2010? A. Head Start B. Research and Development C. COBRA Continuation Coverage Assistance D. Student Financial Aid 37 Year-End GAAP Training

38. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Knowledge Check #4 Answer C. COBRA Continuation Coverage Assistance This subsidy had been excluded from the A-133 Single Audits. 38 Year-End GAAP Training

39. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Patient Protection and Affordable Care Act of 2010 & Reconciliation Act of 2010 Four primary area impacting higher education: Changes in student aid funding Increased funding for higher education Workforce development in health care fields Changes in the student loan delivery system Year-End GAAP Training 39

40. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Patient Protection and Affordable Care Act of 2010 & Reconciliation Act of 2010, Cont’d Year-End GAAP Training 40

41. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Patient Protection and Affordable Care Act of 2010 & Reconciliation Act of 2010, Cont’d Provides $13.5 billion for FY 2010 to fund existing base level appropriations increased due to increased demand/eligibility Increases maximum awards to $5,500 for FY 2011 and 2012, then increases for inflation for the next 5 years Pell Grants Beginning 2014 allows borrowers to limit student loan payments to no more than 10% of income after a basic living allowance (decreased from the prior 15%) Debt forgiveness after 20 years (15 if in public service) decreased from prior 25 years Income Based Loan Repayment Guidelines Provides $750 million ($150 million per year 2010-14) College Access Challenge Grants Provides $2 billion ($500 million per year 2011-14) Community College and Career Training Program Provides $2.55 billion ($255 million per year for 2010-19) Investment in Historically Black and Minority Serving Institutions Year-End GAAP Training 41

42. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Patient Protection and Affordable Care Act of 2010 & Reconciliation Act of 2010, Cont’d Eliminates FFEL Program of bank/private lender based lending systems Mandates that all federal student loans be originated under the Federal Direct Loan Program beginning July 1, 2010 Establishes a temporary Federal Direct Consolidation Program for one year (July 1, 2010 to June 30, 2011) whereby students can consolidate certain eligible FFEL loans into one consolidated Federal Direct Loan Elimination of Federal Family Education Loan Program (FFEL) Year-End GAAP Training 42

43. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 Single Audit Timeline Program JulyAugustSeptemberOctoberNovemberDecember Student Financial Aid FieldworkFISAP Test Work Review and Reporting Issuance R & D Cluster FieldworkReview and Reporting Issuance TRIO Cluster FieldworkReview and Reporting Issuance Head Start Cluster FieldworkReview and Reporting Issuance 43 Year-End GAAP Training

44. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 KPMG Team Partner Roger Martinez Senior Manager Carey McKee Senior Manager Bhakti Patel SoCal SFA Team Senior Associate Joe Guerrero Staff Associate NoCal SFA Team Senior Associate Evelyn Chan Staff Associate Other Programs Team Senior Associate Heather Schraeer Staff Associate 44 Year-End GAAP Training

45. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 KPMG Audit Team Organization SoCal SFA Audit Team #1 Long Beach San Bernardino NorthridgeSan Diego NoCal SFA Audit Team #2 San Francisco SonomaStanislausChico Other Program Audit Team #3 San Francisco Sonoma 45 Year-End GAAP Training

46. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15996ORA May 2010 KPMG LLP Contact Information Roger MartinezCarey McKee PartnerSenior Manager (213) 955-8671(213) 817-3269 ramartinez@kpmg.comcmckee@kpmg.com Bhakti Patel Senior Manager (213) 817-3185 bhaktipatel@kpmg.com Year-End GAAP Training 46