Transcript Document

Top 10 Audit and
Program Review Findings
NJASFAA Conference
Atlantic City, NJ
November 2011
Nautochia Webb, Training Officer
U.S. Department of Education
Audit Findings
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Return to Title IV (R2T4) Calculation Errors
Pell Overpayment/Underpayment
R2T4 Funds Made Late
Verification Violations
Overaward-Financial Need Exceeded
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Audit Findings
• R2T4 Not Made
• Enrollment Status Not Verified Before
Disbursement
• Improper Certification of Stafford Loan
• Credit Balance Deficiencies
• Ineligible Student-Not Making Satisfactory
Academic Progress (SAP)
• Repeat Finding—Failure to Take Corrective
Action
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Program Review Findings
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Verification Violations
Crime Awareness Requirements Not Met
Credit Balance Deficiencies
R2T4 Calculation Errors
R2T4 Made Late
4
Program Review Findings
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Entrance/Exit Counseling Deficiencies
Account Records Inadequate/Not Reconciled
Info. in Student Files Missing/Inconsistent
SAP Policy Not Adequately Developed/
Monitored
• Pell Overpayment/Underpayment
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Findings on Both Lists
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Verification Violations
R2T4 Made Late
R2T4 Calculation Errors
Pell Grant Over/Underpayments
Credit Balance Deficiencies
SAP Policy Errors
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Verification Violations
• Verification Worksheet not signed
• Untaxed income not verified
• Conflicting data on ISIR and verification
documents not resolved
• Required corrections not processed
Regulations: 34 C.F.R. §§ 668.51-668.61
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Verification Violations
Finding Example:
• Incomplete
Verification
– Tax return unsigned
– Tax return not
submitted even
required to file
– Incorrect # in
household size
Possible Actions:
• Follow published
procedures
• Ensure all required
items are verified
(checklist)
• Document student
files
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Verification Violations
Other Compliance Solutions:
• Monitor verification process to ensure
procedures are followed
• Perform your own audit of sample files
• FSA Assessments: Students
– FSA Verification
• Use Verification Worksheet
– School developed or ED worksheet
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R2T4 Calculation Errors
• Incorrect institutional charges for the period
– Payment period vs. period of enrollment
• Scheduled breaks not correctly determined
• Incorrect # of days counted for the period
• Incorrect withdrawal date
• Mathematical and/or rounding errors
Regulation:
34 CFR § 668.22(e)
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R2T4 Calculation Errors
Finding Example:
• Clock hour school
used completed hours
rather than scheduled
hours
• For student who failed
to return from a LOA,
used last date of LOA
for withdrawal date
rather than LDA
Possible Actions:
• Recalculate unearned
aid and make needed
adjustments
• Modify policies and
procedures
• Have two staff
members
independently perform
same calculation &
compare
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R2T4 Calculation Errors
Other Compliance Solutions:
• Pay attention to new regulations; revise
procedures as needed
• Perform self-assessment by reviewing a
random sample of student files
• FSA Assessments: Managing Funds
– R2T4 module
• Use R2T4 Worksheets
– Electronic Web Application
– Paper
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R2T4 Funds Made Late
Returns not made timely (45 days)
• Inadequate system in place to
identify/track official and unofficial
withdrawals
• No system in place to track number of
days remaining to return funds
• Lack of coordination between offices
•
Regulation: 34 C.F.R. § 668.22(j)
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R2T4 Funds Made Late
Finding Example:
• School completed
calculations, but
did not return
funds within the
45-day timeframe
Possible Actions:
• Determine why
funds weren’t
returned timely
• Revise procedures
• Assign
responsibility for
monitoring the
process
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R2T4 Funds Made Late
Other Compliance Solutions:
• Periodically review processes/procedures
– Tracking/monitoring deadlines
– Timely communication between offices
• Use R2T4 on the Web
• FSA Assessment: Managing Funds
– Fiscal Management
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Pell Grant Over/Under Payment
• Adjustments not made for change in
enrollment status between terms
• Attendance not documented in all
coursework counted in enrollment status
– Modules or compressed coursework
• Incorrect information used
– Pell formula, EFC, # of weeks/hours
• Inaccurate proration calculation
Regulations: 34 C.F.R. §§ 690.62 and 690.79
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Pell Grant Over/Under Payment
Finding Example:
• Lack of internal
controls over file
maintenance and
disbursement
process resulted
in Pell over/under
payments
Possible Solutions:
• Adjust aid
• Verify student
eligibility prior to
disbursing aid
• Develop procedures
for resolving errors
once identified
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Pell Grant Over/Under Payment
Other Compliance Solutions:
• Use correct enrollment status
• Use correct Pell Formula/Schedule
• Verify that student began attendance in all
coursework
• Prorate when needed
• Assign responsibility of monitoring to ensure
Pell disbursements are accurate and timely
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Credit Balance Deficiencies
• No process in place to determine when a
credit balance has been created
• Credit balances not released to students
within required 14-day timeframe
• Credit balances held without student
authorizations
Regulation: 34 C.F.R. § 668.164 (e)
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Credit Balance Deficiencies
Finding Example:
• Credit balances
held from 32 to
111 days without
student
authorizations
Possible Actions:
• Implement
procedures that
identify and
release credit
balances timely
• Do NOT require all
students to sign an
authorization;
must be voluntary!
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Credit Balance Deficiencies
Other Compliance Solutions:
• Develop a process to determine when a
credit balance is created
• Develop a system to track number of days
remaining to release funds timely
• Understand regulations regarding minor prior
year charges
– May create more credit balances if entire program
cost is charged upfront
– 2010-11 FSA Handbook, Vol. 4, pp. 4-10 to 4-13
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SAP Policy Not Adequately
Developed/Monitored
• Missing required components
– Qualitative, quantitative, completion rate,
maximum timeframe, probation, appeals
• Policy not at least as strict as for non-Title IV
recipients
• Standards inconsistently applied
• Aid disbursed to students not making SAP
Regulation: 34 C.F.R. § 668.16(e)
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SAP Policy Not Adequately
Developed/Monitored
Finding Example:
• School did not
include courses in
previous period of
attendance in SAP
determination
Possible Actions:
• Return aid
disbursed to
ineligible students
• Revise policy
• Establish internal
controls
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SAP Policy Not Adequately
Developed/Monitored
Other Compliance Solutions:
• Develop adequate SAP policy
– remedial and repeat coursework
– warning/probation periods
– appeal process
• Document each student’s file to reflect
eligibility for disbursements
• 34 C.F.R. 668.34 consolidated all SAP
regulations - published Nov. 1, 2010
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The
“Extra” Finding
Repeat Finding-Failure to Take
Corrective Action
• Same finding(s) in subsequent audit(s)/
program review(s)
– School failed to adequately develop,
implement, and/or monitor procedures to
ensure Corrective Action Plan (CAP) was
followed
– Problem identified too late to avoid repeat
finding
– New issue but same finding title
Regulations: 34 C.F.R. §§ 668.16 and 668.174
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Repeat Finding-Failure to Take
Corrective Action
Finding Example:
Possible Actions:
• Repeat finding(s) of
any kind; finding from
prior audit period or
program review also
appears in the current
report
• Require review all files
for eligibility prior to
disbursement of aid
• Review sample files
quarterly
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Repeat Finding-Failure to Take
Corrective Action
• Review results of Correction Action Plan
– Is it working?
– Are changes needed to improve process?
• Develop specific procedures for CAP action
items
• Assign responsible person/office to ensure
CAP is implemented/monitored
• Conduct student file reviews
• FSA Assessments
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Suggestions for a Strong CAP
Include adequate detail.
Sample CAP: We trained all staff on proper
verification procedures.
Better CAP: The FAD developed a checklist to
use when completing verification. All FA
staff attended a two hour training session
on verification in November 2011. The FAD
will review five files where verification was
done by FA staffer each quarter.
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Suggestions for a Strong CAP
Provide a strong solution.
Sample CAP: This finding was the result of staff
oversight. Staff will be more careful in the future.
Better CAP: The FAD will run a weekly
report each Monday to identify withdrawals
from the prior week. All FA staff will review
the report for the addition of their assigned
students. The FAD will also run a report of
students who withdrew more than 30 days
ago, but with no R2T4 calculation.
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…The Rest of the Story
Other Findings of Note…
• Ineligible Location (or Program or Student)
• Excess Cash
• Early Disbursements
• Lack of Administrative Capability
• Consumer Info. Requirements Not Met
• Borrower Not Notified (Timely) of
Disb./Right to Cancel
• Failure to Follow Institutional Policy
• Failure to Resolve Conflicting Information
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Corrective Action Plans
Do:
Don’t:
Note whether or not you
concur with the finding. If
you think you are right, say
so and provide evidence
Blame the problem on:
Show how you corrected the
specific error (adjusted the
award, returned funds, etc.)
AND will prevent future errors
(training, checklist, etc.)
•“human error”
•“the “system”
•“staff turnover”
•“new staff”
•anything else that shows
a lack of administrative
capability
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QUESTIONS?
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Resources
FSA Assessments
• Self-assessment tool designed to assist
schools in evaluating their financial aid
policies, processes, and procedures
• Includes assessment modules on Students,
Schools, Managing Funds, and Policies and
Procedures
http://www.ifap.ed.gov/qahome/fsaassessment.html
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http://ifap.ed.gov/ifap/toolsforschools.jsp
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School Participation Team
(SPT) Contact Information
Call your SPT for
information and
guidance on audit
resolution,
financial analysis,
program reviews,
school and
program eligibility/
recertification and
school closure
information.
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The Remaining
Top Audit Findings
Overaward-Financial Need
Exceeded
• No system in place to ensure overawarding
does not occur
• Lack of communication between offices
• Non-Title IV funds not included with
financial aid received
• Incorrect budget
Regulations: 34 C.F.R. §§ 682.204 and 685.301
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Overaward-Financial Need
Exceeded
Finding Example:
• School disbursed
subsidized loans in
excess of student’s
need
Possible Actions:
• Reallocate to
unsubsidized
• Conduct file review
• Update policy and
procedures; train
staff
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Overaward-Financial Need
Exceeded
Other Compliance Solutions:
• Assign staff responsibility to monitor
effectiveness of revised policies and
procedures
• Perform internal review of student files
• Increase communication between offices
• Review systems/calculations to ensure
compliance
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R2T4 Funds Not Made
• Institution unaware that student withdrew
• No system in place to verify that R2T4
calculations (or the return) were made
• Lack of communication/coordination
between offices
Regulation: 34 C.F.R. § 668.22
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R2T4 Not Made
Finding Example:
Possible Actions:
• R2T4 calculation not
completed for
students who had
withdrawn
• Return unearned aid
• Implement an
increase in controls
over the Title IV funds
• Provide training and
support to staff
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R2T4 Not Made
Other Compliance Solutions:
• Design procedures to ensure timely
communication among offices
• Train and assign responsibility to staff for
monitoring the R2T4 process
• Perform internal audit by reviewing a
random sample of student files of students
who have withdrawn
• Review internal system to track
withdrawals
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Enrollment Status Not Verified
Before Disbursement
• Incorrect award amounts
• Institution unaware that student(s)
withdrew
• Changes in units/hours
• Leave of absence (LOA) issues
Regulation: 34 C.F.R. § 668.164
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Enrollment Status Not Verified
Before Disbursement
Finding Example:
Possible Actions:
• Several students
tested in the sample
attended part-time,
but disbursed as fulltime students
• Return ineligible funds
• Re-train staff on
enrollment
requirements
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Enrollment Status Not Verified
Before Disbursement
Other Compliance Solutions:
• Verify student enrollment status prior to
disbursement
• Perform “self-audit” of student files
• Conduct meetings for all offices involved in
monitoring status of students
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Improper Certification of
Stafford Loan
• Use of incorrect annual loan amount based
on college grade level or dependency status
• Failure to prorate loans when necessary
• At least ½ time enrollment not documented
Regulations: 34 C.F.R. §§ 682.603 and 685.301
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Improper Certification of
Stafford Loan
Finding Example:
• Additional
unsubsidized loans
awarded to
dependent
students with no
documentation of
PLUS denial
Possible Actions:
• Return loan funds
incorrectly awarded
• Document/maintain
documentation for
PLUS denial
• Implement system
edits to prevent
certification of loans
without appropriate
PLUS denial flag
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Improper Certification of
Stafford Loan
Other Compliance Solutions:
• Maintain documentation to support award
– Enrolled at least ½ time, grade level,
remaining period of study
• Monitor loan periods and enrollment
• Implement system edits to prevent
disbursements to ineligible students
• Perform “self-audit” of student files
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The Remaining Top
Program Review Findings
Program Review Findings
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•
•
•
•
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Crime Awareness Requirements Not Met
Return to Title IV Calculation Errors
Return of Title IV Funds Made Late
Entrance/Exit Counseling Deficiencies
Account Records Inadequate/Not Reconciled
Information in Student Files Missing or
Inconsistent
• SAP Policy Not Adequately Developed and/or
Monitored or Ineligible Student
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Crime Awareness
Requirements Not Met
• Policies and procedures regarding campus
security not adequately developed
• Annual report not published and/or
distributed annually to current
students/staff by the required deadline
• Failure to develop a system to track and/or
log all required categories of crimes
Regulations: 34 C.F.R. §§ 668.41 and 668.46(c)(1)
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Crime Awareness
Requirements Not Met
Finding Examples:
• Report not
distributed
• Did not list
statistics for three
most recent years
• No process for
reporting crimes to
school officials
Possible Actions:
• Fully develop all
required
components of the
report
• Actively distribute
the report as
required
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Crime Awareness Requirements
Not Met
Other Compliance Solutions:
• Review Handbook for Campus Crime Reporting
http://www.ed.gov/admins/lead/safety/handbook.pdf
• Review HEOA additional requirements
– Emergency response, timely warnings
– Fire safety, missing persons
• Review Information Required to be Disclosed Under
the Higher Education Act: Suggestions for
Dissemination
http://nces.ed.gov/pubs2010/2010831rev.pdf
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Entrance/Exit Counseling
Deficiencies
• Entrance counseling not conducted/not
documented for 1st-time, 1st-year
borrowers
• Exit counseling materials not mailed to
students who failed to complete in-person or
online counseling
• Exit counseling not conducted for withdrawn
students
Regulation: 34 C.F.R. § 682.604(f),(g)
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Entrance/Exit Counseling
Deficiencies
Finding Example:
• No documentation
that students who
unofficially
withdrew
completed exit
counseling
Possible Actions:
• Mail required exit
counseling materials
• Revise procedures to
ensure all borrowers
receive counseling
• Conduct file review to
determine if other
students failed to
complete counseling
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Entrance/Exit Counseling
Deficiencies
Other Compliance Solutions:
• Assign responsibility for monitoring the
entrance/exit interview process
• Develop procedures for ensuring
communication between offices
– Registrar, Bursar, Financial Aid
• Provide staff training
– FSA Coach, Module 4: Loan Counseling
– FSA Assessments: Schools
• Default Prevention & Management
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Account Records
Inadequate/Not Reconciled
• Failure to maintain financial records
reflecting all program transactions
• Failure to reconcile financial aid records
with general ledger and/or Department
systems
• Incomplete audit trail
Regulation: 34 C.F.R. § 668.16
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Account Records
Inadequate/Not Reconciled
Finding Example:
• The school’s
accounting system
did not provide for
student ledgers
showing charges,
payments, or the
dates that credit
balances were
created or released
Possible Actions:
• Purchase a system
that meets GAAP
(generally acceptable
accounting principles)
• Revise procedures
to maintain
accurate student
account data
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Account Records
Inadequate/Not Reconciled
Other Compliance Solutions:
• Develop policies and procedures
– G5, handling credit balances,
drawdowns and disbursements
• Provide for a clear audit trail
– Trace federal cash from drawdown to
its final destination
– Cross-reference accounting entries
• FSA Assessments/Fiscal Management
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Information in Student Files
Missing or Inconsistent
• No method to coordinate information
collected at different offices at the school
• ISIR data conflicts with data in student’s file
• Insufficient or missing documentation
needed to support PJ or DO decisions
Regulation: 34 C.F.R. § 668.24(a),(c)
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Information in Student Files
Missing or Inconsistent
Finding Example:
• ISIR lists student
as married; tax
return submitted
for verification
showed Head of
Household; school
did not resolve
conflict
Possible Actions:
• Determine if tax
filing status was
correct
• Adjust aid if
needed
• Develop policies to
address conflicts
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Information in Student Files
Missing or Inconsistent
Other Compliance Solutions:
• Develop adequate policies and procedures
to address conflicting information
• Establish communication with other offices
to identify and address inconsistent
information
• Perform a periodic review of student files
to determine if procedures are working
• Review all subsequent ISIRs
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Contact Information
• If you have follow-up questions about
this session, contact me at:
– Nautochia Webb, Training Officer
– [email protected]
– 646-428-3758
• To provide feedback to my supervisor:
– Tom Threlkeld, Supervisor
– [email protected]
– 617-289-0144
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THANK YOU!
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