preparing foraudits PhonesLunch Workbook Restrooms.

preparing for audits

agenda

Audit Preparation ■ Types of Audits■ Institutional Responsibility

Top 10 Audit Findings

■ Examples■ Resolutions

Program Reviews ■ Program review findings

Workbook page 2

Workbooks

Preparing for an Audit

■ Types of Audits♦ Compliance audit♦ Financial statement audit

■ Schools♦ For-profit schools (and servicers)

• Compliance audit conducted under ED’s FSA Audit Guide

♦ Public & nonprofit• Audit conducted in accordance with

Office Management and Budgets A-133

audits

2009-2010 FSA Handbook, Vol 2, Chapter 11 and Chapter 12 34 CFR 668.23(a)(1), 34 CFR 668.23(a)(5)

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■ Think like an auditor♦ Audit date

♦ Auditors are looking at samples to extrapolate into trends• Focus on your basic processes before

the audit• Policy and Procedures Manual

– Up-to-date

audit preparation

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■ Who♦ Schools must hire a qualified

independent auditor♦ State schools may use state auditors

■ When♦ Compliance and financial audits must be

conducted annually on the basis of the school's fiscal year

audit preparation

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■ Policy and procedures manual

♦ Focus on functionality, not appearance

■ Emphasis on content

■ Policy and procedures manual should be the “road map” for all of your internal processing

audit preparation

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■ FSA assessments toolhttp://ifap.ed.gov/IFAPWebApp/qualityassurance/SFAAssessment.jspFF

■ The assessments assist

♦ evaluating processes

♦ providing citations

♦ self-test activities and summaries to ensure completeness

auditing tools

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http://ifap.ed.gov/IFAPWebApp/qualityassurance/SFAAssessment.jspFF



■ Select files at the end of a term, check processes♦ Policies and procedures – up-to-date

♦ Verification – complete, correct

♦ Packaging - correct

♦ Disbursements – timely, correct

♦ Other – credit balances

the self-audit

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■ Organize documents within files before the audit

■ Documents need to be in a consistent order

■ Auditors searching files for documents may encourage a more methodical review

the audit

■ Be prepared to respond to findings

■ Auditors are not always correct —findings can be an area for discussion

■ It is possible to discuss a potential finding before it is included in a report

the audit

■ Documents examined

♦ School catalog

♦ Accreditation letter

♦ Licenses, if applicable

♦ Program Participation Agreement

♦ Enrollment records

the audit - documents

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■ Loan applications and counseling documents

■ Award calculations

■ Title IV funds received and disbursed

■ R2T4 calculations

■ NSLDS reports

■ G5 records

the audit - documents

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■ How♦ Schools must now use ED's eZ

-Audit Web site to submit their financial statements and compliance audits

♦ Effective June 16, 2003

FSA AUDIT GUIDE http://www.ed.gov/about/offices/list/oig/nonfed/sfa.html

the audit

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https://ezaudit.ed.gov/EZWebApp/common/login.jsp


20

■ Provides Instant Audit Info

■ Identifies Overdue Audits

■ Streamlined FSA Review Process

■ Non-editable PDF file (official record) Retained & Used to Validate Data

■ Add’l Changes to Reduce Reporting Burden

Ez-Audit Systemhttps://ezaudit.ed.gov/EZWebApp/common/login.jsp

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Top 10 Audit Findings

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#10 Credit Balance Deficiencies

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#10 credit balance deficiencies

■ Must pay A. Date balance , if balance

occurred after first day of class of a

B. First day of classes of payment period if occurred on or before first day of class

occurred

payment period

credit balance

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■ Examples

♦ Unable to determine when a credit balance occurred

♦ Credit balances not released within 14 days

♦ Credit balances held without student authorization

#10 credit balance deficiencies

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#9 Student Status Confirmation Reporting

(SSCR) Errors

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#9 SSCR reporting errors

■ Report filed late

♦ After 30 days of receipt of roster

■ Report not filed

♦ Not less than twice a year

■ Report not retained for 3 years

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SSCR reporting errors

■ Examples

♦ File not submitted within 30 days

♦ Using incorrect enrollment status code

♦ Incorrect graduation effective date

♦ Student(s) reported withdrawn incorrectly

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#8 Incorrect Pell Payments

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■ Recalculation not performed♦ Changes in EFC due to

• Corrections• Updating• Adjustments

♦ Overpayments can be repaid by• Adjusting future disbursements• Repayment

#8 incorrect Pell payments

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■ Change in enrollment status between terms

♦ Term-based, credit-hour programs must calculate a student’s payment for each term

♦ Enrollment status may be different in each term

♦ Must recalculate if different


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TRUE or FALSE

A student is considered to have begun attendance in all classes if student attends at least one day of class for each course?


T

TRUE or FALSE

A school must have a procedure in place to know whether a student has begun attendance in all classes?


T


■ Annual award calculated incorrectly♦ Examples

• Incorrect EFC used• Incorrect Pell formula• Inaccurate proration calculation• Adjustments not made when

enrollment status changed/courses not counted in enrollment status

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■ Interim disbursement not recovered♦ An interim disbursement allowed before

verification is complete• First payment period

♦ School is liable for interim disbursement if student• Received an overpayment• Fails to complete verification


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#7 Verification Violations

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■ Examples ♦ Verification worksheet ♦ Untaxed income ♦ Conflicting information ♦ Required corrections ♦ Verification ♦ Dependency overrides

*finding on both audits & program reviews

#7 verification violations

not signed

not verifiednot resolved

not processed

incomplete

improperly/undocumented*

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#6 Auditor’s Opinion Cited in Audit

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#6 auditor’s opinion cited in audit

■ Independent auditor’s opinion cited♦ Refers to anything other than an

unqualified opinion

♦ Indicates serious deficiencies/areas of concern in the audit

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Examples

■ Failure to reconcile program accounts

■ High Perkins default rates

■ Continuing problems with R2T4

■ Inadequate accounting systems and/or procedures

■ Lack of internal controls


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■ Lack of Administrative Capability

■ Incorrect R2T4 calculations

■ Improper academic progress standards

■ Inadequate accounting system


Workbook page 14

#5 Student Status vs. Common Mistakes

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Examples

■ “W” for graduated students

■ Incorrect graduation date

■ Students reported as withdrawn for summer break

#5 student status vs. common mistakes

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#4 Entrance and Exit Counseling Deficiencies

must complete loan

counseling before first disbursement

is made

A. First-time borrowers

B. May be conducted

#4 entrance counseling

■ Entrance counseling

individually, in groups

or online

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C. Materials not received online must bemailed to borrower

#4 exit counseling

■ Required for exit counseling♦ Review of entrance counseling ♦ Consequences of default

• Adverse credit• Collection and litigation

♦ Repayment required♦ Average monthly repayment schedules♦ Repayment options

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#4 exit counseling

■ Required for exit counseling♦ Debt management strategies ♦ Forbearance, deferment and

cancellation options♦ NSLDS and FSA Ombudsman ♦ Rights and Responsibilities♦ Personal contact information

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#4 exit counseling

■ You must ensure students

■ May be conducted

■ Must document

graduating orwithdrawing receive loan counseling

individually, in groupsor online

that student participated in and completed counseling

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#4 entrance & exit deficiencies

■ What can you do♦ Without notification

• Online• Mail sent to last known address

♦ Materials must be mailed • Within 30 days

♦ Not required to use certified mail with a return receipt requested

♦ Must document student’s file2009-10 FSA Handbook

Volume 2, Chapter 6, Pages 78-84

#3 R2T4 Calculation Errors

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■ Examples

♦ Institutional charges incorrect

♦ Scheduled breaks not included

♦ Incorrect withdrawal dates

♦ Use of out-of-date R2T4 forms

♦ Mathematical errors

#3 R2T4 – calculation errors

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■ Tools to assist in R2T4

♦ Worksheets can be found athttp://www.ifap.ed.gov/ifap/titleiv.jsp

♦ Software can be accessed at

http://www/fafsa.ed.gov/FOTWWebApp/faa/faa.jsp

♦ Worksheets and software is optional

#3 R2T4 – calculation errors

2008-09 FSA HandbookVolume 5, Chapter 2, Page 119-125



#2 R2T4 Returns Made Late

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■ An institution does not satisfy the requirements if♦ Institution’s records show check was

issued more than 45 days

♦ Date on cancelled check shows bank endorsed check more than 60 days or later

#2 R2T4 returns made late

Interim Final RegulationsFederal Register, Vol 71, No 152, Page 45672

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■ Examples♦ Returns not made within 45 days♦ Inadequate system in place to

identify/track withdrawals♦ No process in place to track number

of days remaining to return funds♦ Lack of coordination between offices

#2 R2T4 returns made late

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#1 Repeat FindingsFailure to Take

Corrective Action

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■ School failed to adequately develop, implement and/or monitor procedures to ensure corrective action plan was followed

■ Same finding(s) indentified in subsequent audit(s)

#1 repeat findings

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Program Review Findings

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audit & program review findings

■ R2T4 Calculation errors■ Return of Title IV funds made late■ Pell Overpayment/Underpayment■ Verification Violations■ Entrance/Exit counseling deficiencies■ Credit Balance deficiencies

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■ Consumer information requirements not met

■ Lack of administrative capability

■ Policies and procedures not developed

■ Crime statistics not reported or reported incorrectly *

■ Inadequate SAP policy

program review findings

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consumer information

■ Campus Security■ Crime statistics■ Fire Safety Report for On-campus

Housing■ Missing Persons Policies and

Procedures■ Drug Violation Notification and Penalties■ Drug and Alcohol Prevention Program

Workbook page 22 & 23 DCL 08.12

knowledge

practice

application

closing thoughts…

Thank you for joining me today!

preparing foraudits PhonesLunch Workbook Restrooms.

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