top 10: audit & program review findings fy2011 - kasfaa · findings on both lists ... 668.22(e)...

KASFAA Fall Conference October 10-12, 2012

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Top Ten Compliance

For discussion purposes only

Top 10:

Audit & Program Review

Findings FY2011

David Bartnicki

404-974-9312; [email protected]

U.S. Department of Education

1. Repeat Findings/Failure to Correct

2. R2T4 – calculation errors

3. R2T4 – late refunds

4. Student Status – inaccurate/untimely reporting

5. Pell Over/Under Payments

6. Verification

7. Credit Balances

8. Qualified Auditor‟s Opinion

9. Entrance/Exit Counseling

10. Overaward – financial need exceeded

Top 10 Audit Findings - by occurrences: FY2011

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1. R2T4 – Calculation errors

2. Verification

3. Entrance/Exit Counseling

4. Crime Awareness Requirements not met

5. Credit Balances

6. Satisfactory Academic Progress

7. R2T4 – late refunds

8. Pell Grant Over/Under Payments

9. Account records inadequate/not reconciled

10. Inaccurate recordkeeping

Top 10 Program Review Findings –

by occurrences: FY2011

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TIE

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Top Ten Compliance


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Findings on Both Lists

• R2T4 calculation errors

• R2T4 funds made late

• Pell Grant over/under payments

• Verification violations

• Student credit balance

deficiencies

• Entrance/Exit counseling

deficiencies

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Audit

Findings

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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


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Top Ten Compliance


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.

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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

• Is it working?

• Are changes needed to improve process?

• Accountability – assign staff to monitor

the CAP

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R2T4 Calculation Errors

• Incorrect number of days

• Ineligible funds as aid that „could

have been disbursed‟

• Improper treatment of

overpayments

• Incorrect withdrawal date

• Mathematical and/or rounding

errors

Regulation: 34 C.F.R. § 668.22(e)


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Top Ten Compliance


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

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• Be aware of new regulations; revise procedures as

needed

• Perform self-assessment by reviewing a random

sample of student files

• FSA Assessment: Schools

• R2T4 module

• Use R2T4 Worksheets

• Electronic Web Application/Paper

• Compare with school version

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Return of Title IV Funds Made Late

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• School‟s policy and procedures not followed

• Returns not made within allowable timeframe (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

Regulation: 34 C.F.R. § 668.22(j)


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Top Ten Compliance


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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

Student Status – Inaccurate/Untimely Reported

• Roster file (formerly called Student Status

Confirmation Report [SSCR]) not submitted

timely in 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)

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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.

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Student Status – Inaccurate/Untimely Reported


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Top Ten Compliance



• 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

• If use a third party servicer – school still

responsibility for meeting deadlines

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Pell Grant Overpayment/Underpayment

• Incorrect Pell Grant formula

• Inaccurate calculations

• Proration

• Incorrect EFC

• Adjustments between terms

• Incorrect number of weeks/hours

• Incorrect enrollment status

Regulations: 34 C.F.R. §§ 690.62; 690.63; 690.75 & 690.80


• Prorate when needed

• Use correct enrollment status

• Establish internal controls and procedures to verify

enrollment status before disbursing aid

• Use correct Pell Grant formula/schedule

• Assign responsibility for monitoring to ensure Pell

Grant disbursements are accurate and timely

• Conduct random file reviews

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Top Ten Compliance


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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. §§ 668.51-668.61

Remember findings from FY2011 – Oct. 1, 2010-Sept. 30 2011

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• Monitor verification process

• Perform internal quality control file review

• FSA Assessments: Students - Verification

• Review Federal Student Aid Handbook,

Application & Verification Guide, Chapter 4

• Review “NEW” verification regulations and

develop procedures accordingly

• 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); 668.165(b)

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Top Ten Compliance



• Develop and implement procedures and controls

to identify and release credit balances timely • Conduct a self-audit of credit balance disbursements

• System enhancements

• Provide training for staff (may need to be

nonfinancial aid staff)

• Ensure student/parent credit balance authorization is compliant with Title IV requirements

• Which office is developing and securing authorizations

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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)

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• Assessment of entire process

• Design an institution-wide plan of action

• Adequate and qualified staff

• Appropriate internal controls

• Training

– FSA COACH

– FSA Assessments

– Online and In-Person trainings

• Implement appropriate CAP timely and effectively


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Top Ten Compliance


Entrance/Exit Counseling Deficiencies

• Entrance counseling not conducted/

documented for first-time borrowers

• Exit counseling not conducted/documented for

withdrawn students or graduates

• Exit counseling materials not mailed to students

who failed to complete counseling

Regulation: 34 C.F.R. § 685.304

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• Assign responsibility for monitoring the

entrance/exit interview process

• Especially unofficially withdrawn students

• Develop procedures for ensuring communication

between registrar, business, and financial aid

offices

• Utilize ED‟s electronic counseling tools

• Studentloan.gov (entrance); NSLDS (exit)

• Provide staff training

Overaward – Financial Need Exceeded

• Failure to factor in outside scholarships that result

in overawards

• Failure to calculate tuition or fee waivers

• Enrollment status changes

• Incorrect EFC from an earlier ISIR transaction

Regulation: 34 C.F.R. § 673.5

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Top Ten Compliance


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• Establish procedures to ensure consistent handling

of outside scholarships

• Communication strategy with ALL offices

• 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 unsub

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Program Review

Findings

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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

Regulations: 34 C.F.R. §§ 668.41, 668.46(c)(1)


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Top Ten Compliance


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• Ensure reports submitted timely

• Identify person(s) responsible for information

• Develop process for gathering crime statistics (accurately)

• Develop communications plan for timely warnings and

notifications

• Review The Handbook for Campus Safety and Security

Reporting

• http://www2.ed.gov/admins/lead/safety/ campus.html


SAP Policy - Not Adequately Developed/Monitored

• Missing required components

• Qualitative, quantitative, completion rate, maximum

timeframe, remedial/repeat coursework, probation, appeals

• Failure to consistently or adequately apply SAP

policy

• Aid disbursed to students not meeting the standards

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Regulation: 34 C.F.R. § 668.16(e); 668.34

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• 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.

• FSA Assessments: Students - Satisfactory Academic Progress (SAP) Module

• Staff training on new regulatory requirements for SAP

• Published October 29, 2010

• Effective July 1, 2011


http://www2.ed.gov/admins/lead/safety/campus.html


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Top Ten Compliance


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Account Records - Inadequate/Not Reconciled

• Failure to provide appropriate documentation of

disbursements to reviewers

• Failure to balance program accounts with G5 and

COD

• Failure to identify Federal funds in institutional

bank accounts

Regulation: 34 C.F.R. § 668 Subpart K

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• Perform routine reconciliation of all program

accounts with COD and G5

• Monthly process

• Establish internal reporting procedure

• FSA Assessments: Schools

• Fiscal Management

• FSA COACH

• School Responsibilities: Fiscal and Records Management

• The Blue Book (when updated)

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Inaccurate Recordkeeping

• Inadequate or mismatched

attendance records for schools that

are required to take attendance

• Failure to maintain consistent

disbursement records

• Documents do not support eligibility

status

Regulation: 34 C.F.R. § 668 Subpart K


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Top Ten Compliance


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: Enhanced oversight by FWS supervisors

and payroll processors to ensure correct information.

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• 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

Where do you go from here?


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Top Ten Compliance


Communication

• Internal • Within offices

• Between offices (periodic meetings, workshops, etc.)

• With students/parents

• External • Between schools

• U.S. Department of Education

• Accrediting Agencies

• State Agencies

• Servicers

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Training & Technical Assistance

• Why?

• Knowledge (refresh, improve, increase)

• Changes (new procedures, policies, technology)

• Back-up personnel, cross-training, succession planning

• How?

• Associations, conferences, workshops

• FSA Coach (ED CBT); FSA Assessments

• Institutional Program Reviews and Audits

• ACA Funds (Pell and Campus-Based)

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Internal Reviews/Audits

Who

• Compliance/Quality Assurance Office

• School Auditor

• Different Offices focus on specific areas

How

• School Programs Reviews/Audits - foundation

• Program Review Guide (typical items reviewed)

• IFAP – “Publications”

• FSA Assessments

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Top Ten Compliance


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• 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

FSA Assessments

Resources, References & Contacts

• Information

o Audit Guides, Blue Book, FISAP Instructions, Dear Colleague, Default rate guide, FAFSAs, Federal Registers, Federal Student Aid Handbooks…

o Automatic mailer under “My IFAP” (Subscriptions)

• Websites

• IFAP, NSLDS, FISAP, COD, Direct Loan, SAIG enrollment, FAA Access to CPS on the Web…

• U.S. Department of Education Contacts • Under “HELP” on IFAP

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“NEW” - Training Feedback

To ensure quality training we ask all participants to

please fill out an online session evaluation

• Go to http://s.zoomerang.com/s/DavidBartnicki

• Evaluation form is specific to David Bartnicki

• This feedback tool will provide a means to educate and

inform areas for improvement and support an effective

process for “listening” to our customers

• Additional concerns about training can be directed to

[email protected]

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http://s.zoomerang.com/s/DavidBartnicki

http://s.zoomerang.com/s/DavidBartnicki

mailto:[email protected]