Preparing for an ISAC Program Review

1. Preparing for an ISAC Program Review Presented by: Kim Eck, Illinois Student Assistance Commission March 31, 2011

2. General Information • Oversight of schools is handled by ISAC’s Compliance Department, Program Services & Operations Division • Most reviews are conducted at ISAC’s Deerfield location • Purpose of the Program Review • Evaluate compliance with state and federal rules and and regulations • Identify liabilities that may be owed to ISAC • Assist in improving operations and services • Noncompliance is generally the result of misunderstandings or misinterpretations of rules and regulations

3. Specific Objectives • To analyze the school’s data and records and identify any areas of weakness in the school’s procedures and recordkeeping activities • To ensure that proper internal controls, processes, procedures, tracking and recordkeeping activities have been established • To verify student eligibility and the documentation used to establish eligibility • To ensure that aid does not exceed cost of attendance and is properly credited • Provide recommendations that will strengthen the school’s compliance with federal and state rulesand regulations

4. School Review Process • Responsibilities are defined by ISAC Administrative Rules • Part 2700, General Provisions • Announcement of review • Entrance Conference • Review of school documents, transcripts and student records • Exit Conference • Review of findings • Next steps • Final Report

5. The Rules • Section 2700.60 Audits and Investigations • a) ISAC shall audit participating institutions of higher learning. Postsecondary institutions participating in ISAC gift assistance programs shall be audited once every three years (schedule permitting) unless more frequent audits appear to be necessary due to circumstances such as: substantial increases in student enrollment, evidence that the institution is experiencing difficulty meeting the requirements of ISAC's rules or federal regulations, or discrepancies in past audits conducted by ISAC. Secondary institutions may be audited when ISAC has a complaint indicating an audit is appropriate. Audits shall usually be announced, but ISAC reserves the right to make unannounced audits. ILASFAA 2011 Annual Conference

6. Frequency of Reviews • School reviews are conducted on a three-year cycle • Rotating schedule • Schedule permitting • May be scheduled more frequently due to certain circumstances • Evidence that the school is experiencing difficulties meeting state and/or federal requirements • Default rate 20% or higher

7. Notification • Announcement letter is sent to the school’s financial aid director via e-mail • Approximately two months prior to review date • If situation warrants, review may be scheduled on shorter notice or without notice • Letter will include details on • Review dates • Academic years • ISAC programs to be reviewed • Materials that should be sent to ISAC in advance • Due dates for the program review materials • Follow-up phone call will be made to • Confirm dates of the review • Or reschedule as needed • Address questions or concerns

8. Entrance Conference • Conducted via conference call • Should include staff members from financial aid office, registrar and business office • Important to have person(s) who understands school’s SAP policy available • May be held at the institution for on-site reviews • Explain purpose and scope of the program review • Discuss school’s population and financial aid programs and policies • Discuss how financial aid office maintains files • Identify staff members who will be available to answer questions

9. The Rules • Section 2700.60 Audits and Investigations • b) ISAC shall have access to all records related to ISAC programs. These records include, but are not limited to: admission records, financial records, registration records, attendance and enrollment records, financial aid transcripts, grades, academic transcripts and records maintained in accordance with ED verification procedures. ILASFAA 2011 Annual Conference

10. Documents Required for the Review • ISAC Program Review Questionnaire • Due to ISAC: two weeks after the Announcement Letter • School Materials • Samples/copies of various school documents • Due to ISAC: three weeks after the Announcement Letter • Student Records • For those selected in audit sample groups • Due to ISAC: two weeks from the audit start date

11. Submitting Required Materials • ISAC Program Review Questionnaire • Intended to provide information on the school’s financial aid operations and procedures as they relate to the administration of ISAC and Title IV programs • Important to complete every question • If there are separate policies for different programs, be sure to provide all of them for each year being reviewed • Can be submitted via mail or e-mail

12. Submitting Required Materials • Program Review Questionnaire Sections • General Information • Recordkeeping & Administrative Capability • Satisfactory Academic Progress (SAP) Standards • Illinois Residency Verification • Verification Process • Gift Assistance Programs Payment Processing and Reconciliation • MAP Paid Credit Hours Monitoring • Refunds Processing for Students • FFELP Procedures (if appropriate)

13. Submitting Required Materials • School Materials • Detailed list includes items such as: • School catalogs • Consumer information • Policies and procedures for awarding, verification, refunds, withdrawals • If separate policies or budgets for different programs, be sure to provide all of them • Documentation from College Zone or College Illinois is not acceptable; must be detailed and school-specific • Attendance and Leave of Absence policies • MAP institutional reports • Items should be shipped to ISAC rather than sent electronically

14. Submitting Required Materials • School Materials • Organize to correspond to numbered list • For example: • 2. School catalogs • 3. Consumer Information • Package each category of items bundled together with an index tab or label for easy identification • Links to electronic documents are not acceptable • Must print and send hard copies for review • Because the audit is for previous year, may not be able to access old links

15. Submitting Required Materials • Student Records • For selected audit samples • Academic transcripts • SAP monitoring documents • Award letters • Verification documents • Details are included in an e-mail sent to the school indicating the documents that should be provided for each student sample group

16. Submitting Required Materials • For example: #1: MAP Sample

17. Submitting Required Materials • For example: #4: Verification Samples - MAP & IIA • For example: #6: IVG Sample

18. Submitting Required Materials • Carefully read and follow the instructions provided for submitting materials • Important to send requested materials to ISAC in a timely manner • Some requested materials can be submitted via school’s FTP site • Others must be sent through the mail • Clearly identify materials and samples to correspond to the items requested in the instructions

19. Submitting Required Materials • An e-mail will be sent to provide information and instructions about audit samples (student records) being requested • Audit samples are sent in an Excel format and the files are placed in the school’s MAPnet “FTP” folder • Electronic documents sent to ISAC must be password-protected if SSNs are included • If sending screen prints from school systems, be sure to protect/remove SSNs

20. Preparing for the Review • Advise appropriate staff of review dates and times to ensure availability • Ensure that all applicable records will be readily accessible during the review • Complete student files are not required • Unofficial transcripts are acceptable • Establish a work area for the reviewers if the review is on-site

21. The Rules • Section 2700.60 Audits and Investigations • c) ISAC audits shall be conducted in accordance with generally accepted audit standards as promulgated by the U.S. General Accounting Office publication "Standards for Audit of Governmental Organizations, Program Activities and Functions," where applicable. ILASFAA 2011 Annual Conference

22. The Review • A thorough examination of materials and audit samples is conducted to identify: • Discrepancies or violations of policies and procedures • Suggestions for improvement • Required corrective action • Findings that could result in liabilities being assessed • Ineligible loan or grant award • Required refund not made or calculated incorrectly • Incorrect student status resulting in an ineligible payment ILASFAA 2011 Annual Conference

23. The Rules • Section 2700.60 Audits and Investigations • d) The institution shall be extended an opportunity to review and comment on the auditor's preliminary findings before the final audit report is submitted to the institution's chief executive officer. Audit findings may be appealed in accordance with Section 2700.70, Appeal Procedures. ILASFAA 2011 Annual Conference

24. The Rules • Section 2700.60 Audits and Investigations • e) If an audit identifies gift assistance funds which were claimed on behalf of ineligible students, the funds shall be repaid to ISAC by the institution. ILASFAA 2011 Annual Conference

25. Concluding the Review • Exit Conference • Oral report provides a summary of tentative findings • Address next steps in the process • Schools have five days to submit additional documentation • Preliminary Program Review Report • Issued 14 business days after the Exit Conference • Cites findings, regulations, requirements and liabilities • Responses must be submitted within 21 days • Final Program Review Report • Issued 14 business days after the response period for the Preliminary Program Review Report has ended ILASFAA 2011 Annual Conference

26. Exit Conference • Informal report on • Findings • Suggestions for improvement • Discrepancies and recommended or required corrective actions • Amount of any liabilities assessed • Time schedule for completing corrective action • Tentative follow-up review date, if needed • Format and procedure for submitting final report • Any disputes by the school in regard to the findings • Not intended to be an in-depth discussion or debate of the findings

27. Preliminary Program Review Report • Allows schools to: • Review exceptions noted by ISAC • Submit any documentation which may have been overlooked or previously unavailable • Consists of • Program Review Digest • Findings Summary • Verification Process • Observations • MAP & IIA Findings Categories • Preliminary Summary of Liabilities ILASFAA 2011 Annual Conference

28. School Responsibilities • If report cites any findings: • The school must take the required corrective action on all findings immediately • The school must respond to ISAC within timeframe specified in the report, explaining the action taken for each finding • The school must make immediate payment if a liability is assessed • Audit findings may be appealed in accordance with ISAC Rules

29. School Response to Findings • Responses or comments on findings must be well-documented • If school agrees with findings and liabilities assessed, a refund check is required prior to the final report being issued • Once the findings make it to the preliminary report, it’s too late to appeal • Will carry forward to Final Report ILASFAA 2011 Annual Conference

30. Final Program Review Report • Sent to school president and financial aid director • Presents the final review determination and closes the review • Includes • Scope of Review • Program Review Digest • Findings Summary • Verification Process • Observations/Recommendations • Summary of Liabilities

31. Final Procedures • ISAC reviews school’s response to determine if corrective action was taken. • When findings are adequately resolved, ISAC will notify the school that the audit is closed. • ISAC will also notify ED’s Division of Audit and Program Review that the audit is closed.

32. The Rules • Section 2700.60 Audits and Investigations • f) ISAC may visit institutions to conduct investigations related to fraud and abuse of its programs. Campus administrators and/or campus security police may be consulted as part of any ongoing investigation ILASFAA 2011 Annual Conference

33. Most Common Review Findings • Approved MAP and IIA Award Letter Language not being used • Illinois residency not verified • MAP reconciliation issues • Overbilling • Satisfactory Academic Progress policy either not in compliance or not monitored

34. Award Letters • Schools are required to • Announce MAP awards to the eligible students enrolled at their institutions • Clearly identify MAP on their award notifications as: State of IL MAP Grant (Est) • Include required MAP language on the school-issued award letter • Notify applicants of changes in their eligibility status.  ILASFAA 2011 Annual Conference

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36. Award Letters • For 2010-11, ISAC is sending an Acknowledgement Letter upon receipt of each student application • A copy of the MAP Rights & Responsibilities form is also sent with each letter. • In 2011-12, ISAC will send only Ineligible Award Acknowledgements that include the reason for ineligibility • Since only ineligible applicants will receive the letter, schools may want to provide students with a link to the MAP Rights & Responsibilities form or to CollegeIllinois.org ILASFAA 2011 Annual Conference

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39. Award Letters • Electronic award letters • Links to electronic versions are not acceptable for review purposes • Must send hard copies or screen prints • If not available, then must send the template used to program the electronic award letter ILASFAA 2011 Annual Conference

40. Illinois Residency • ISAC Rules -- Sections 2700.20 and 2735.20 • Verification guidance -- Section 2700.50 • Recipients of MAP must be residents of the State of Illinois. • It is the college or university’s responsibility to ensure that all MAP recipients meet the Illinois residency requirements. • If a student is selected for verification for federal student assistance, the student’s information must also be verified to determine MAP eligibility, even if the student is ineligible for federal student assistance. ILASFAA 2011 Annual Conference

41. Illinois Residency • Because ED verification procedures do not include procedures for verifying a student as a resident of Illinois, the following provisions shall be followed by the institution. • 1) Residency status shall be verified if the institution has any information that indicates the applicant may not be a resident of IL. • 2) Residency status shall be verified for each applicant who is selected for verification and has changed dependency status to become an independent student. • 3) Residency verification shall not be required for an applicant who received payment of a MAP award during the previous academic year. • 4) Residency verification shall not be required for an applicant who was enrolled in an ISAC-approved MAP institution or an ISAC-approved Illinois high school (see Section 2700.30) for the preceding consecutive 12 months prior to the start of the academic year for which assistance is requested. ILASFAA 2011 Annual Conference

42. Illinois Residency • For a dependent student, the parent who is required to complete the FAFSA must physically reside in Illinois and Illinois must be his/her true, fixed, and permanent home. • For an independent student, s/he must have physically resided in Illinois at the time of application and for 12 continuous full months immediately prior to the start of the academic year for which assistance is requested, and Illinois must be his/her true, fixed, and permanent home. ILASFAA 2011 Annual Conference

43. Illinois Residency • Key Issues • Any conflicting data must be resolved • Important to communicate and coordinate with admissions/records office • e.g. in-state tuition charge does not necessarily equal Illinois residency for ISAC programs • When school certifies payment request, it is also certifying that the student is an eligible Illinois student

44. Illinois Residency • Non-Illinois students will come up in audit samples • Social Security Numbers are one way to monitor • SSNs starting with 318 – 361 were issued in Illinois • http://www.ssa.gov/employer/stateweb.htm ILASFAA 2011 Annual Conference

45. Reconciliation • Section 2735.40 m) 2) Institutional Processing of Payments • Institutions are required to reconcile payments received through MAP and, as applicable, submit all necessary corrections to student records on a timely basis. Any payments received by the institution that are determined in the reconciliation to be refunds payable to ISAC are to be processed and returned to ISAC no later than 60 days following the end of the academic term unless ISAC has already deducted outstanding refunds from institutional payment requests during the applicable fiscal year. Refunds may be caused by billing errors, retroactive withdrawals and other miscellaneous reasons. Refunds showing as owed to ISAC must be remitted within 30 days after the end of the institution's regular school year. Should the payment arrive after the end of the regular school year, the institution will have 60 days following receipt of payment to complete the reconciliation process and return any refunds due. ILASFAA 2011 Annual Conference

46. Reconciliation • Will review records to verify that reconciliation was completed in a timely manner • Using information from Comptroller showing when money was released, when check was cashed and when reconciliation (credits and adjustments) took place • Important to reconcile at the end of every term, not just at the end of the year • Not only is it a requirement, it also results in more accurate records ILASFAA 2011 Annual Conference

47. Overbilling • Common issue is when credit hours billed is greater than the enrollment records justify • Caused by add/drop, program changes, etc. • Student records are checked to ensure • Appropriate adjustments were made • There were no conflicting grants or scholarships ILASFAA 2011 Annual Conference

48. Satisfactory Academic Progress • ISAC Rules define SAP as: • An institutional policy that establishes minimum standards of academic performance. For purposes of ISAC-administered programs, the standards must be at least as stringent as those required by ED pursuant to section 484 of the HEA (20 USC 1091). • Policy must be consistently applied to all identifiable groups • Must be as strict or stricter than school’s standard for non-aid students ILASFAA 2011 Annual Conference

49. Satisfactory Academic Progress • Audit samples should include grades • If necessary, include screen prints from systems (e.g. Banner) • Areas reviewed include: • Grade point averages • Completion requirements • Consistency in monitoring SAP at the end of specified intervals • Appeal process • Communication process ILASFAA 2011 Annual Conference

50. Satisfactory Academic Progress • Common SAP problem areas: • Periods of enrollment for which the student did not receive financial aid not being counted • Lapses in attendances • Development courses • Course of study changes • Pass/fail courses • Transfer credit policy • Repeat courses • Ineligible courses • Noncredit courses ILASFAA 2011 Annual Conference