Top 10 Audit and Program Review Findings NJASFAA Conference Atlantic City, NJ November 2011...

Top 10 Audit and Program Review Findings

NJASFAA ConferenceAtlantic City, NJNovember 2011

Nautochia Webb, Training OfficerU.S. Department of Education

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Audit Findings

• 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

Tie

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Program Review Findings

• Verification Violations • Crime Awareness Requirements Not Met• Credit Balance Deficiencies• R2T4 Calculation Errors• R2T4 Made Late

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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

• 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


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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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)


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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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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• 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 officesRegulation: 34 C.F.R. § 668.22(j)

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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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

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)


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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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)

SAP Policy Not Adequately Developed/MonitoredFinding 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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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

SAP Policy Not Adequately Developed/Monitored

The“Extra” Finding

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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 titleRegulations: 34 C.F.R. §§ 668.16 and 668.174

Repeat Finding-Failure to Take

Corrective ActionFinding Example:• Repeat finding(s) of

any kind; finding from prior audit period or program review also appears in the current report

Possible Actions:• 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 CAPProvide 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.

…The Rest of the Story

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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

Corrective Action Plans

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Do:

Note whether or not you concur with the finding. Ifyou think you are right, sayso and provide evidence

Show how you corrected thespecific error (adjusted theaward, returned funds, etc.)AND will prevent future errors(training, checklist, etc.)

Don’t:

Blame the problem on:• “human error”• “the “system”• “staff turnover”• “new staff”• anything else that shows

a lack of administrative capability

QUESTIONS?

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Resources

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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

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 RemainingTop Audit Findings

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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


Overaward-Financial Need ExceededFinding 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

R2T4 Not Made

Finding Example:• R2T4 calculation not

completed for students who had withdrawn

Possible Actions:• 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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• Incorrect award amounts• Institution unaware that student(s)

withdrew• Changes in units/hours• Leave of absence (LOA) issues


Enrollment Status Not Verified Before Disbursement


Finding Example:• Several students

tested in the sample attended part-time, but disbursed as full-time students

Possible Actions:• Return ineligible funds

• Re-train staff on enrollment requirements

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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



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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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


The Remaining TopProgram Review Findings

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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)


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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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 Disseminationhttp://nces.ed.gov/pubs2010/2010831rev.pdf


http://www.ed.gov/admins/lead/safety/handbook.pdf

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)

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 DeficienciesOther 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



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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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)

Information in Student Files Missing or InconsistentFinding 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 InconsistentOther 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

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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mailto:[email protected]

mailto:[email protected]

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THANK YOU!

Top 10 Audit and Program Review Findings NJASFAA Conference Atlantic City, NJ November 2011...

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