Transcript Slide 1
preparing for
audits
agenda
Audit Preparation Top 10 Audit Findings ■ ■ Types of Audits Institutional Responsibility ■ ■ Examples Resolutions Program Reviews ■ Program review findings Workbook page 2
Preparing for an Audit
Workbook page 3
audits
■ 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
2009-2010 FSA Handbook, Vol 2, Chapter 11 and Chapter 12 34 CFR 668.23(a)(1), 34 CFR 668.23(a)(5)
audit preparation
■ 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 Workbook page 4
audit preparation
■ 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 Workbook page 4
audit preparation
■ 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 Workbook page 4
auditing tools
■ FSA assessments tool http://ifap.ed.gov/IFAPWebApp/qualitya ssurance/SFAAssessment.jspFF
■ The assessments assist ♦ evaluating processes ♦ providing citations ♦ self-test activities and summaries to ensure completeness Workbook page 5
the self-audit
■ 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 Workbook page 5
the audit
■ 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
■ Documents examined ♦ School catalog ♦ Accreditation letter ♦ Licenses, if applicable ♦ Program Participation Agreement ♦ Enrollment records Workbook page 5
the audit - documents
■ Loan applications and counseling documents ■ Award calculations ■ Title IV funds received and disbursed ■ R2T4 calculations ■ NSLDS reports ■ G5 records Workbook page 5
the audit
■ 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
Workbook page 6
Ez-Audit System https://ezaudit.ed.gov/EZWebApp/common /login.jsp
■ ■ ■ 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 Workbook page 6 20
Top 10 Audit Findings
Workbook page 7
Workbook page 8
#10 Credit Balance Deficiencies
#10 credit balance deficiencies
■ Must pay A.
occurred after first day of class of a
payment period
B.
First day of classes of payment or before first day of class Workbook page 8
#10 credit balance deficiencies
■ Examples ♦ Unable to determine when a credit balance occurred ♦ Credit balances not released within 14 days ♦ Credit balances held without student authorization Workbook page 10
#9 Student Status Confirmation Reporting (SSCR) Errors
Workbook page 10
#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 Workbook page 10
SSCR reporting errors
■ Examples ♦ File not submitted within 30 days ♦ Using incorrect enrollment status code ♦ Incorrect graduation effective date ♦ Student(s) reported withdrawn incorrectly Workbook page 10
#8 Incorrect Pell Payments
Workbook page 11
#8 incorrect Pell payments
■ Recalculation not performed ♦ Changes in EFC due to • Corrections • Updating • Adjustments ♦ Overpayments can be repaid by • Adjusting future disbursements • Repayment Workbook page 11
#8 incorrect Pell payments
■ 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 Workbook page 12
#8 incorrect Pell payments T
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?
#8 incorrect Pell payments T
TRUE or FALSE
A school must have a procedure in place to know whether a student has begun attendance in all classes?
#8 incorrect Pell payments
■ ♦ 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 Workbook page12
#8 incorrect Pell payments
■ 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 Workbook page 12
#7 Verification Violations
Workbook page 13
#7 verification violations
■ Examples ♦ Verification worksheet
not signed
♦ Untaxed income
not verified
♦ Conflicting information
not resolved
♦ Required corrections
not processed
♦ Verification
incomplete
♦ Dependency overrides
improperly/undocumented* *finding on both audits & program reviews
Workbook page 14
#6 Auditor’s Opinion Cited in Audit
Workbook page 14
#6 auditor’s opinion cited in audit
■ Independent a uditor’s opinion cited ♦ Refers to anything other than an unqualified opinion ♦ Indicates serious deficiencies/areas of concern in the audit Workbook page 14
#6 auditor’s opinion cited in audit
Examples ■ Failure to reconcile program accounts ■ High Perkins default rates ■ Continuing problems with R2T4 ■ Inadequate accounting systems and/or procedures ■ Lack of internal controls Workbook page 14
#6 auditor’s opinion cited in audit
■ Lack of Administrative Capability ■ Incorrect R2T4 calculations ■ Improper academic progress standards ■ Inadequate accounting system Workbook page 14
#5 Student Status vs. Common Mistakes
Workbook page 15
#5 student status vs. common mistakes Examples
■ “W” for graduated students ■ Incorrect graduation date ■ Students reported as withdrawn for summer break Workbook page 15
#4 Entrance and Exit Counseling Deficiencies
#4 entrance counseling
■ Entrance counseling A. First-time borrowers
must complete loan counseling before first disbursement is made
B.
May be conducted
individually, in groups or online
C. Materials not received online must be
mailed to borrower
Workbook page 16
#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 Workbook page 17
#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 Workbook page 17
#4 exit counseling
■ You must ensure students
graduating or withdrawing receive loan counseling
■ May be conducted
or online individually, in groups
■
in and completed counseling
Workbook page 18
#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 file
2009-10 FSA Handbook Volume 2, Chapter 6, Pages 78-84
#3 R2T4 Calculation Errors
Workbook page 19
#3 R2T4 – calculation errors
■ Examples ♦ Institutional charges incorrect ♦ Scheduled breaks not included ♦ Incorrect withdrawal dates ♦ Use of out-of-date R2T4 forms ♦ Mathematical errors Workbook page 19
#3 R2T4 – calculation errors
■ Tools to assist in R2T4 ♦ Worksheets can be found at
http://www.ifap.ed.gov/ifap/titleiv.jsp
♦ Software can be accessed at
http://www/fafsa.ed.gov/FOTWWebApp/fa a/faa.jsp
♦ Worksheets and software is optional
2008-09 FSA Handbook Volume 5, Chapter 2, Page 119-125
#2 R2T4 Returns Made Late
Workbook page 20
#2 R2T4 returns made late
■ 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
Interim Final Regulations Federal Register, Vol 71, No 152, Page 45672
Workbook page 20
#2 R2T4 returns made late
■ 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 Workbook page 20
Workbook page 20
#1 Repeat Findings Failure to Take Corrective Action
#1 repeat findings
■ 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) Workbook page 20
Program Review Findings
Workbook page 21
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 Workbook page 21
program review findings
■ Consumer information requirements not met ■ Lack of administrative capability ■ Policies and procedures not developed ■ Crime statistics not reported or reported incorrectly
*
■ Inadequate SAP policy Workbook page 21
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