Comprehensive Guide to School Reconciliation Processes

1. Session 53 Foreign Schools: Reconciliation David A. Bartlett | Dec. 2014 U.S. Department of Education 2014 FSA Training Conference for Financial Aid Professionals

2. Foreign Schools Reconciliation Agenda • Reconciliation Defined • Internal Reconciliation • External Reconciliation • Regulatory Requirements • COD Reconciliation Tools • Program Year Closeout • Resources

3. Terminology • Records First Disbursement • Booked Loans • Accepted Origination Record • Accepted Master Promissory Note • Accepted First Disbursement Record • Direct Loans that must be reconciled • Subsidized • Unsubsidized • Parent Loans (PLUS) • Graduate PLUS loans • Substantiated

4. Reconciliation – General Definition • The process by which records from one system are compared to records from another, and any discrepancies are identified and resolved  • Example: Balancing a bank account / checkbook

5. Direct Loan Reconciliation • The process by which the Direct Loan Cash Balance recorded on the Department of Education system is reviewed and compared with a school’s internal records on a monthly basis • The school must: • identify and resolve discrepancies, and • document reasons for their Ending Cash Balance

6. Direct Loan Reconciliation • Internal Reconciliation between offices at the institution • Awarding Office (financial aid office) • Accounting/Business Office (drawing funds from G5) • External Reconciliation • Between Institution and COD (including G5 data) Financial Aid Office Business Office G 5 COD

7. School Receives SAS Compare Cash Detail NO NO Compare Cash Summary Resolve Issues Resolved ? Match ? Compare Loan Detail YES YES DONE DONE Direct Loan Recon Flowchart - SAS (Documentation)

8. Direct Loan Reconciliation Flowchart

9. Internal vs. External Reconciliation

10. Internal Reconciliation 10

11. Internal Process

12. Internal Reconciliation • Ensure that • What is posted to student accounts (i.e. amount and date) matches exactly the data in the school’s financial aid software • Net Drawdowns (ND) = Net accepted and posted disbursements (NAPD) • Cash is not held beyond cash management requirements • Internal cash transactions (drawdowns, refunds of cash, and adjustments) match school bank statements

13. External Reconciliation 13

14. External Comparison with ED’s records

15. External Reconciliation • Disbursement transactions • Internal school disbursement records (both business office and financial aid office) match exactly to disbursement records in FSA’s COD system • Cash transactions • Drawdowns, drawdown adjustments, and refunds of cash transactions in school internal records match exactly with transactions in COD and G5

16. System Relationships • Financial Aid Office enters/sends records to COD • Business/Accounts Office requests/draws funds from G5 • G5 provides funds to designated bank account and notifies COD • Institution sends Disbursement records to COD Financial Aid Office Business Office G 5 COD

17. Regulatory Requirements 17

18. Requirements • Monthly reconciliation REQUIRED for Direct Loans • What are the related regulatory requirements? • Direct Loan - 34 CFR 685.102 (b) - monthly reconciliation required

19. Requirements: Cash Management Timelines • Cash Management Regulations: • 34 CFR 668.161-166 • Key Concepts: • Immediate need – 3 business days • Excess Cash

20. Requirements Disbursement Reporting Deadlines: • Foreign Schools are records first, so this applies more to making adjustments • Title IV Aid disbursement/adjustment reporting requirement published annually in the Federal Register • 2013-14 Award Year reporting deadlines are included in Federal Register Notice dated July 8, 2013: http://ifap.ed.gov/fregisters/FR070813.html • Disbursements/adjustments going forward must be reported within 15 days of the actual disbursement date or date adjustment occurred

21. Requirements • 34 CFR 668.24 • Financial records that reflect each HEA, Title IV program transaction • Documentation that reflects each student/parent eligibility for any Title IV funds • Documentation that reflects the payment period/loan period, date, and amount of each Title IV program transaction

22. COD Reconciliation Tools 22

23. Tips for Internal Reconciliation • Daily/weekly check between Business Office and Financial Aid Office • Do disbursements reported match disbursements posted? • Do draws and returns of funds match disbursements? • Does the school banking information match G5 data?

24. Tips for Internal Reconciliation • Return funds appropriately to the correct program and year • Refunds of Cash should be made electronically • Adjustments should only be used to correct errors • Time frame for returning unclaimed funds (stale dated checks) no later than 240 days from the date check issued • 34 CFR 668.164(h) • FSA Blue Book Volume 5 page 27 • FSA Handbook Volume 4 page 48

25. Returning Funds • Return of funds through G5 should be made electronically • Set up a bank account through G5 for refunds (888-336-8930) • If funds are being returned through G5 for regulatory reasons schools MUST send downward disbursement adjustments for Direct Loan Programs • If returning funds from an audit or program review liability • Follow directions per the Final Audit or Program Review Determination letter • DL 120 day rule does not apply when returning funds due to regulatory/statutory requirements • 34 CFR 685.202 (c)(4)(i)

26. Tips for External Reconciliation • Pay attention to IFAP announcements and COD updates regarding funding reductions • Once you have confirmed that Business Office and Financial Aid Office records match (internal reconciliation) then…

27. Tips for External Reconciliation • Begin the regular external reconciliation with Department systems (COD/G5) • Daily/weekly monitor edit code rejects • Rejected disbursements and adjustments • COD and G5 web screens • COD and G5 reports

28. Edit Code Rejects/Warnings • Warnings are there to alert you of a potential problem • Edit code rejects - do not build on the COD system • Monitor your batch import results or view rejects by batch on the COD website • If you aren’t using the batch processing features of COD, you can still search using the batch screens

29. Edit Code Rejects/Warnings • Set aside time to resolve edit code rejects as needed • Rejected Direct Loan records can lead to unsubstantiated cash for advance funded schools • Rejected Direct Loan school records will not increase available funds in G5

30. COD Tools • Actual Disbursement List (SAIG and Web) • School Account Statement (SAS)* - (SAIG) • SAS Disbursement Detail on Demand* - (SAIG) • Direct Loan Tools software - for DL SAS reconciliation assistance • COD Action Queue (Web) • COD Reconciliation Coordinators • School Summary Financial Information Screen • Cash Activity Screen * Report Readers are available on the COD website

31. Direct Loan COD Reports 31

32. Direct Loan Actual Disbursement List • Direct Loan Actual Disbursement List (SAIG and COD web) • Assists in monitoring if actual accepted disbursements and amounts match what was posted to student accounts on a weekly basis • Provides actual disbursements posted in COD for reported week (Saturday – Friday) • Available via SAIG in Comma-Delimited format (DLAD14OP) and COD Newsbox

33. School Account Statement • Provides the Department’s official monthly Ending Cash Balance and detailed cash and disbursements (SAIG only) • Generated the first full weekend of the month and reflects data up to the end of the previous month (YTD or month to date depending on your settings)

34. School Account Statement • You MUST reconcile monthly to the balances reflected on the SAS and must document that you have done so • Composed of four Sections • Cash summary • Cash detail • Disbursement Summary by loan type (DL SAS Only) • Loan detail, loan level, or detail disbursement activity level

35. SAS Disbursement Detail on Demand • Requested via COD website • Delivered via the SAIG Mailbox • Available for DL program – SAS Reader if using SAIG • Format options similar to regular monthly SAS files • DL – Fixed Length, Comma-Delimited with or without Headers, Pipe Delimited • Month-to-date, Year-to-date, Date Range options • Contains Disbursement Activity Level detail only • Assists in reconciliation of disbursement-level detail between regularly scheduled SAS generation cycles

36. Additional COD Web Screens • School menu/School Summary Information • School menu/School Funding Information • School menu/School Summary Financial Information • Batch menu/Action queue

37. Monthly Reconciliation is complete when…

38. Program Year Closeout(PYCO) 38

39. Final Reconciliation and Closeout The process by which schools complete processing at the end of an award year. This process should: • Be an extension of regular reconciliation cycle (one final monthly reconciliation) • Result in a $0 ending cash balance (Net Drawdowns = Net Accepted and Posted Disbursements) in ALL systems • Occur shortly after final disbursements are made for a program and award year • Ensure that all cash management and disbursement reporting requirements have been met

40. Program Year Closeout Deadline Closeout / Reconciliation Deadlines • Direct Loan - July 31st of the year following the end of the award year • 2012-13 closeout deadline was July 31, 2014 • 2013-14 closeout deadline will be July 31, 2015 • Monitor http://ifap.ed.gov for the closeout deadline reminders • Don’t wait until the deadline to start your closeout process!

41. What Happens after Closeout Date? • After the PYCO deadline date COD will • Reduce your funding to net drawdowns • Reject award year specific submissions of awards and/or disbursements • Discontinue award year specific reports • Generate your final SAS and a PYCO letter • PYCO remaining balance letter • PYCO zero balance letter

42. Resources 42

43. Resources – Reconciliation • FSA Handbook - Volume 4 • COD technical reference • Implementation guide, edit code rejects, reports • Blue Book - updated version published 2013 • IFAP announcements - you must monitor IFAP to be considered administratively capable • Detailed recorded training materials available • COD reconciliation team • Federal Loan School Support Team (FLSST)

44. Resource – Contact Information • Foreign Schools Participation Division • E-mail:    FSA.Foreign.Schools.Team@ed.gov • Phone: (+1) 202-377-3168 • Fax:        (+1) 202-275-3486 • Common Origination and Disbursement (COD) • +1-571-392-3737 or CODSupport@ed.gov • Information for Financial Aid Professionals for Foreign Schools • http://ifap.ed.gov/ForeignSchoolInfo/ForeignSchoolInfo.html • Federal Loan School Support Team (FLSST) • DLOPS@ed.gov

45. QUESTIONS?