Session 22 Top 10 Audit & Program Review Findings Effie Barnett and

Session 22 Top 10 Audit & Program Review Findings Effie Barnett and Jan Brandow Nov. 2012 U.S. Department of Education 2012 Fall Conference

Top Audit Findings Repeat finding – failure to take corrective action Return to Title IV (R2T4) calculation errors R2T4 funds made late Student status – inaccurate/untimely reporting Pell overpayment/underpayment 2

Top Audit Findings 3 Verification violations Student credit balance deficiencies Qualified auditor’s opinion cited in audit Entrance/Exit counseling deficiencies Overaward – Financial need exceeded

Top Program Review Findings 4 R2T4 calculation errors Verification violations Entrance/Exit counseling deficiencies Crime awareness requirements not met TIE Student credit balance deficiencies Satisfactory Academic Progress policy not adequately developed/monitored

Top Program Review Findings 5 R2T4 funds made late Pell Grant overpayments/underpayments Account records inadequate/not reconciled Inaccurate recordkeeping Lack of administrative capability Information in student files missing/inconsistent TIE

Findings on Both Lists 6 R2T4 calculation errors R2T4 funds made late Pell Grant overpayment/underpayment Verification violations Student credit balance deficiencies Entrance/Exit counseling deficiencies

Audit Findings 7

Repeat Finding – Failure To Take Corrective Action Failure to implement Corrective Action Plan (CAP) CAP did not remedy the instances of noncompliance Internal controls not sufficient to ensure compliance with FSA guidelines Regulations: 34 C.F.R. § § 668.16 and 668.174(a) 8

Repeat Finding – Failure To Take Corrective Action Example: Repeat findings for (1) Late return of Title IV funds, (2) Incorrect R2T4 calculations Solution: Develop and implement CAP and implementation schedule; develop R2T4 monitoring report; establish internal controls to ensure accurate calculations and timely returns 9

Additional Compliance Solutions Ensure all staff are properly trained Perform quality assurance checks to ensure new policies & procedures are strictly followed Review results of CAP 10 Is it working? Are changes needed to improve process? Accountability – assign staff to monitor the CAP

R2T4 Calculation Errors Incorrect number of days Ineligible funds used as aid that ‘could have been disbursed’ Improper treatment of grant overpayments Incorrect withdrawal date Mathematical and/or rounding errors Regulation: 34 C.F.R. § 668.22(e) 11

R2T4 Calculation Errors Example: Incorrect calculation based on using the wrong number of days for the term/payment period Solution: Work with registrar to ensure clear understanding of when classes meet, including weekends; be sure to exclude all class breaks of five days or more 12

Additional Compliance Solutions Pay attention to new regulations; revise procedures as needed Perform self-assessment by reviewing a random sample of student files FSA Assessment: Schools Use R2T4 Worksheets 13 R2T4 module Electronic Web Application (https://faaaccess.ed.gov)/Paper (FSAH)

Return of Title IV Funds Made Late Regulations: 34 C.F.R. §§ 668.22(j) and 668.173(b) 14

Return of Title IV Funds Made Late Example: R2T4 calculations performed timely but the returns to appropriate Title IV program accounts were not made timely Solution: Review and revise policies and procedures for reviewing time frames for making returns; develop R2T4 monitoring system; provide staff training 15

Additional Compliance Solutions Periodically review processes and procedures to ensure compliance - Tracking/monitoring deadlines - Ensuring timely communication between offices and/or systems R2T4 on the Web FSA Assessments: Schools - R2T4 module 16

Student Status – Inaccurate/Untimely Reported Roster file (formerly called Student Status Confirmation Report [SSCR]) not submitted timely to NSLDS Failure to provide notification of last date of attendance/changes in student enrollment status Conflicting status change types and dates Regulation: 34 C.F.R. § 685.309(b) 17

Student Status – Inaccurate/Untimely Reported Example: Failure to submit roster file timely; conflicting enrollment status dates and types (G vs. W); no policies and procedures Solution: Develop policies and procedures for processing and submitting roster file; train staff on reporting requirements and procedures, including definitions of different status codes 18

Additional Compliance Solutions Maintain accurate enrollment records Automate enrollment reporting Batch uploads or individual online updates Update frequently Designate responsibility for monitoring the reporting deadlines Review NSLDS newsletters for updates Use the correct status codes 19

Pell Grant Overpayment/Underpayment Incorrect Pell Grant formula Inaccurate calculations Proration Incorrect EFC Adjustments between terms Incorrect number of weeks/hours Regulations: 34 C.F.R. §§ 690.62; 690.63; 690.75; 690.79 & 690.80 20

Pell Grant Overpayment/Underpayment 21

Additional Compliance Solutions 22

Verification Violations Verification worksheet missing/incomplete Income tax returns missing/not signed Conflicting data not resolved Untaxed income not verified Corrections that exceed tolerance/not submitted Regulations: 34 C.F.R. Subpart E: § § 668.51 ̶ 668.61 23

Verification Violations Example: Incomplete Verification - No tax return submitted for parent of dependent student Incorrect number in household size Verification worksheet not signed Solution: Revise verification procedures to ensure submission of all required documents; create a verification checklist; resolve conflicting information 24

Additional Compliance Solutions Monitor verification process Perform internal quality control file review FSA Assessments: Students - Verification Review Federal Student Aid Handbook, Application & Verification Guide, Chapter 4 Review verification regulations 25 Published October 29, 2010 Effective July 1, 2012

Student Credit Balance Deficiencies Credit balance not released to student within 14 days No process in place to determine when a credit balance has been created Non-compliant authorization to hold Title IV credit balances Regulations: 34 C.F.R. §§ 668.164(e) and 668.165(b) 26

Student Credit Balance Deficiencies Example: Credit balances held beyond 14 days without student authorizations Solution: Develop and implement procedures and controls to identify and release credit balances timely; provide training for staff 27

Additional Compliance Solutions 28 Increase internal controls associated with credit balances Conduct a self-audit of credit balance disbursements Ensure credit balance authorization is compliant with Title IV requirements

Qualified Auditor’s Opinion Cited in Audit Anything other than an unqualified opinion Serious deficiencies/areas of concern in the compliance audit/financial statements R2T4 violations Inadequate accounting systems and/or procedures Lack of internal controls Regulation: 34 C.F.R. § 668.171(d)(1) 29

Other Compliance Solutions Assessment of entire financial aid/fiscal process Design an institution-wide plan of action Adequate and qualified staff Appropriate internal controls Training – FSA COACH – FSA Assessments – FSA Online and In-Person trainings 30 Implement appropriate CAP timely and effectively

Entrance/Exit Counseling Deficiencies 31

Entrance/Exit Counseling Deficiencies Example: Failure to conduct entrance counseling before loan is disbursed; no documentation of exit counseling materials mailed to unofficially withdrawn students Solution: Develop and implement procedures to ensure entrance/exit counseling is completed; automate tracking, monitoring; post links on school’s web page: www.studentloans.gov for entrance, www.nslds.ed.gov for exit 32

Additional Compliance Solutions Assign responsibility for monitoring the entrance/exit interview process Develop procedures for ensuring communication among registrar, business, and financial aid offices Provide staff training FSA COACH: Module 4-03: Loan Counseling Requirements FSA Assessments: Schools 33 Default Prevention & Management

Overaward – Financial Need Exceeded 34

Overaward – Financial Need Exceeded Example: Student receives an outside scholarship before Federal Direct Loans are fully disbursed. School does not repackage student’s eligibility and does not reduce ineligible portion of Subsidized loan Solution: Develop procedures for ensuring communication between business and financial aid offices; provide staff training and establish procedures for determining overaward/overpayment situations 35

Additional Compliance Solutions 36 Establish procedures to ensure consistent handling of outside scholarships and tuition/fee waivers Determine if student’s costs exceed original cost of attendance (professional judgment) Routinely monitor FWS earnings to ensure students do not exceed allowable tolerance Determine if any aid can replace EFC, such as TEACH, PLUS or Unsubsidized Direct Loan

Program Review Findings 37

Program Review Findings 38 R2T4 calculation errors Verification violations Entrance/Exit counseling deficiencies Crime awareness requirements not met TIE Student credit balance deficiencies Satisfactory academic progress policy not adequately developed/monitored

Program Review Findings 39 R2T4 funds made late Pell Grant overpayment/underpayment Account records inadequate/not reconciled Inaccurate recordkeeping Lack of administrative capability Information in student files missing/ inconsistent TIE

Crime Awareness Requirements Not Met Campus security policies and procedures not adequately developed Annual report not published and/or distributed Failure to develop a system to track and/or log all required categories of crimes for all campus locations Regulations: 34 C.F.R. § § 668.41; 668.46(c); & 668.49 40

Crime Awareness Requirements Not Met Example: School failed to issue timely warning in response to a campus crime incident Solution: Develop and implement policy and procedures for timely warnings to include an alert system to keep its community abreast of potential threats to campus security; implement report notification procedures to ensure complete and accurate information was provided annually 41

Additional Compliance Solutions 42

SAP Policy Not Adequately Developed/Monitored One or more missing required components in school’s policy Qualitative, quantitative, completion rate, maximum timeframe, remedial/repeat coursework, warning, probation, appeals Failure to consistently or adequately apply SAP policy Aid disbursed to students not meeting the standards Regulations: 34 C.F.R. §§ 668.16(e); 668.32(f) & 668.34 43

SAP Policy Not Adequately Developed/Monitored Example: School’s policy did not include all required components; aid disbursed to students not meeting SAP standards Solution: Revise SAP policy to include all components; apply SAP standards consistently; return ineligible disbursements; establish internal controls to monitor SAP; review a sample of files 44

Additional Compliance Solutions 45 FSA Assessments: Students - Satisfactory Academic Progress (SAP) Module FSA Handbook, Volume 1, Chapter 1 Staff training on new regulatory requirements for SAP Published October 29, 2010 Effective July 1, 2011

Account Records Inadequate/Not Reconciled Failure to provide appropriate documentation of disbursements to reviewers Failure to balance school’s program accounts with G5 and COD Failure to identify Federal funds in institutional bank accounts Regulations: 34 C.F.R. §§ 668.24 and 668.161-668.167 46

Account Records Inadequate/Not Reconciled Example: Student records not reconciled to Federal Pell Grant and Direct Loan program records on a monthly basis Solution: Establish routine procedure to ensure that all program records are reconciled timely 47

Additional Compliance Solutions Perform routine reconciliation of all program accounts with COD and G5 Establish internal reporting procedure FSA Assessments: Schools FSA COACH 48 Fiscal Management School Responsibilities: Fiscal and Records Management The Blue Book Direct Loan School Guide

Inaccurate Recordkeeping Inadequate or mismatched attendance records for schools that are required to take attendance Failure to maintain consistent disbursement records Regulations: 34 C.F.R. §§ 668.24(a),(d) and 668.161-668.167 49

Inaccurate Recordkeeping Example: Federal Work-Study timesheets which appear as if student worked 15 hours instead of three due to a.m./p.m. errors Solution: Enhance oversight by FWS supervisors and payroll processors to ensure correct information; return ineligible disbursements 50

Additional Compliance Solutions 51 Communicate the importance of accuracy of all FSA records with all staff members Establish procedures to routinely check documents for accuracy Take advantage of FSA Assessments and IFAP training options to ensure that all staff members are well-informed

Lack of Administrative Capability Regulation: 34 C.F.R. § 668.16 52

Lack of Administrative Capability Example: Failure to obtain state, accreditor and/or ED approval before disbursing Title IV aid at an additional location Solution: Obtain state, accreditor, and ED approvals; determine date at which institution first began offering 50% of coursework at the ineligible location; return ineligible disbursements 53

Additional Compliance Solutions Training Fundamentals of Title IV administration FSA Coach Attend FSA training opportunities FSA Assessments 54 FSA Handbook, Volume 2 Establish fiscal policies and procedures to ensure that reconciliations are done monthly

Information In Student Files Missing/Inconsistent Regulations: 34 C.F.R. §§ 668.16(f) and 668.24(a),(c) 55

Information in Student Files Missing/Inconsistent Example: Aid application and ISIR showed student as married; tax return filed as ‘head of household’ Solution: Determine accuracy of tax filing status; reprocess, if required; adjust aid, if needed; develop policies and procedures for resolving conflicting information 56

Additional Compliance Solutions 57 Establish communication with other offices to identify and address inconsistent information Perform periodic ‘review’ of student files Develop process to monitor and verify that all documents are received and reviewed Where possible, automate requests for and receipt of documents File documents and/or scan to student files in a timely manner

Resources – www.ifap.ed.gov My IFAP What’s New Tools for Schools Publications Handbooks Letters & Announcements Training and Conferences 58

9 FSA Assessments Self-assessment tool designed to assist schools in evaluating their financial aid policies, processes, and procedures Includes assessment modules regarding Students, Schools, and Campus-Based Programs http://ifap.ed.gov/qahome/fsaassessment.html

FSA Assessments 60

SCHOOL ELIGIBILITY SERVICE GROUP (SESG) Ron Bennett - Director, School Eligibility Service Group, Washington, DC (202) 377-3181 School Eligibility Service Group General Number: (202) 377-3173 or e-mail: [email protected] Or call the appropriate School Participation Division manager below for information and guidance on audit resolution, financial analysis, program reviews, school and program eligibility/recertification, and school closure information. New York/Boston School Participation Division Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont, New Jersey, New York, Puerto Rico, Virgin Islands Betty Coughlin, Director (646) 428-3737 Tracy Nave – Boston (617) 289-0145 Patrice Fleming – Washington, DC (202) 377-4209 Chris Curry – New York (646) 428-3738 Philadelphia School Participation Division District of Columbia, Delaware, Maryland, Pennsylvania, Virginia, West Virginia Nancy Gifford, Director (215) 656-6436 John Loreng – Philadelphia (215) 656-6437 Sherrie Bell– Washington, DC (202) 377-3349 Foreign Schools Participation Division Michael Frola, Director Washington, DC (202) 377-3364 Barbara Hemelt Washington, DC (202) 377-4201 Joseph Smith Washington, DC (202) 377-4321 Atlanta School Participation Division Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina Charles Engstrom, Director (404) 974-9290 Christopher Miller – Atlanta (404) 974-9297 Barbara Murray – Washington, DC (202) 377-4203 Dallas School Participation Division Arkansas, Louisiana, New Mexico, Oklahoma, Texas Cynthia Thornton, Director (214) 661-9457 Jesus Moya – Dallas (214) 661-9472 Kim Peeler – Dallas (214) 661-9471 Kansas City School Participation Division Iowa, Kansas, Kentucky, Missouri, Nebraska, Tennessee Ralph LoBosco, Director (816) 268-0440 Dvak Corwin – Kansas City (816) 268-0420 Phillip Brumback Washington, DC (202) 377-3464 Clery/Campus Security (Managed under the Administrative Actions and Appeals Service Group) Jim Moore – Washington, DC (202) 377-4089 61 Chicago/Denver School Participation Division Illinois, Minnesota, Ohio, Wisconsin, Indiana, Colorado, Michigan, Montana, North Dakota, South Dakota, Utah, Wyoming Douglas Parrott, Director (312) 730-1532 Earl Flurkey – Chicago (312) 730-1521 Brenda Yette – Chicago (312) 730-1522 Kerry O’Brien Denver (303) 844-3319 San Francisco/Seattle School Participation Division American Samoa, Arizona, California, Guam, Hawaii, Nevada, Palau, Marshall Islands, North Marianas, State of Micronesia, Alaska, Idaho, Oregon, Washington Martina Fernandez-Rosario, Director (415) 486-5605 Gayle Palumbo San Francisco (415) 486-5614 or Seattle (206) 615-3699 Dyon Toney Washington, DC (202) 377-3639 Erik Fosker – San Francisco (415) 486-5606

Contact Information We appreciate your feedback and comments. We can be reached at: Effie Barnett Phone: 312-730-1587 E-mail: [email protected] Jan Brandow Phone: 816-268-0409 E-mail: [email protected] 62

QUESTIONS? 63