Educational Audit and Program Review Best Practices

1. Session C-30 Top 10 Audit and Program Review Findings and How To Identify Them Tom Beckerle Laura Hall U.S. Department of Education

2. Audit Findings: Top 10 • Repeat Finding-Failure to Take Corrective Action • Return of Title IV Funds Made Late • Return of Title IV Funds Calculation Errors • Entrance/Exit Counseling Deficiencies • Student Status-Inaccurate/Untimely Reporting

3. Audit Findings: Top 10 • Auditor Opinion Cited in Audit • Verification Violations • Pell Over/Under Payments • Student Confirmation Report Filed Late/Not Filed/Not Retained for Five Years/Inaccurate (similar to #5) • Student Credit Balance Deficiencies

4. Program Review Findings: Top 10 • Verification Violations • Crime Awareness Requirements Not Met • Return to Title IV Calculation Errors • Entrance/Exit Counseling Deficiencies • SAP Policy Not Adequately Developed and/or Monitored • Return of Title IV Funds Made Late Tie

5. Program Review Findings: Top 10 • Student Credit Balance Deficiencies • Information in Student Files Missing or Inconsistent • Pell Over/Under Payments • Consumer Information Requirements Not Met • Improper/Undocumented Dependency Overrides • Lack of Administrative Capability Tie Tie

6. Findings on Both Lists • Return to Title IV Calculation Errors • Return of Title IV Funds Made Late • Pell Over/Underpayments • Verification Violations • Entrance/Exit Counseling Deficiencies • Student Credit Balance Deficiencies

7. Audit Findings

8. Repeat Finding-Failure to Take Corrective Action • Same finding(s) identified in subsequent audit(s) • School failed to adequately develop, implement, and/or monitor procedures to ensure Corrective Action Plan was followed

9. Repeat Finding-Failure to Take Corrective Action • Example: Repeat findings for Pell Overpayments, Student Status Confirmation Report Submitted Late, and Credit Balance Deficiencies • Solution: Determine why CAP was not effective and make adjustments as necessary

10. Other Compliance Solutions • Review results of Corrective 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

11. Return of Title IV Funds Made Late • 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 • Lack of coordination between offices

12. Return of Title IV Funds Made Late • Example: Unearned Pell Grant funds were returned between 76 and 158 days late • Solution: Ensure a knowledgeable person has responsibility for tracking the return of funds

13. Other Compliance Solutions • Design processes and procedures to track/monitor the deadlines • Ensure timely communication between offices • Use R2T4 on the Web report feature

14. R2T4 Calculation Errors • Incorrect institutional charges for the period • Scheduled breaks not included • Incorrect withdrawal date • Use of out-of-date R2T4 forms • Mathematical errors

15. R2T4 Calculation Errors • Example: R2T4 calculation based on incorrect number of days in payment period • Solution: Review and modify R2T4 policies and procedures to ensure a correct understanding of the calculation requirements

16. Other Compliance Solutions • Use correct institutional charges for the payment period • Prorate if all charges assessed upfront • Understand when to include book charges • Use R2T4 Worksheets • Electronic Web Application • Paper

17. Entrance/Exit Counseling Deficiencies • Entrance counseling not conducted/not documented for first-time, first-year students • Exit counseling materials not mailed to students who failed to complete in-person or on-line counseling • Exit counseling not conducted for withdrawn students

18. Entrance/Exit Counseling Deficiencies • Example: School’s system failed to identify all students who ceased enrollment on at least a half-time basis, resulting in exit counseling materials not mailed to withdrawn students • Solution: Assign responsibility for monitoring the exit interview process; modify automated system

19. Other Compliance Solutions • Develop process for documenting student completion • Develop procedures for ensuring communication between Registrar, Educational, and Financial Aid Offices • Seek support from lenders/GAs or ED (for Direct Loans) • Provide staff training • FSA Coach, Module 4: Loan Counseling

20. Student Status-Inaccurate or Untimely Reporting • Submittal File not returned within 30 days of receipt of Roster File • Use of incorrect enrollment status code • “W” for graduated student • Incorrect graduated effective date • Student(s) reported as withdrawn for summer break even though expected to return in the fall

21. Student Status-Inaccurate or Untimely Reporting • Use of third-party servicers • School failed to transmit enrollment data to servicer • School failed to ensure file was submitted by servicer timely • School responsible for timely response to NSLDS

22. Student Status-Inaccurate or Untimely Reporting • Example: Student enrollment status and/or effective date reported incorrectly; SSCR Submittal Files returned late • Solution: Provide training to personnel on correct status/dates; implement monitoring system to ensure timely reporting

23. Other Compliance Solutions • Develop process for enrollment verification • Maintain accurate enrollment records • Use the correct status codes • A, D, F, G, H, L, W, X, Z • Designate responsibility for monitoring the SSCR reporting deadlines • Maintain SSCR documentation • Acknowledgement/Error File

24. Auditor’s Opinion Cited in Audit • Refers to anything other than an unqualified opinion • Indicates serious deficiencies/areas of concern in the compliance audit and/or audited financial statements

25. Auditor’s Opinion Cited in Audit • Failure to reconcile program accounts • High Perkins default rate • On-going problems with incorrect R2T4 calculations • Inadequate accounting systems and/or procedures • Lack of internal controls

26. Auditor’s Opinion Cited in Audit • Example: Lack of Administrative Capability • Incorrect R2T4 Calculations, Improper Academic Progress Standards, Inadequate Accounting System • Solution: Review and revise policies and procedures; implement accounting system in accordance with generally accepted accounting principles

27. Other Compliance Solutions • Perform monthly reconciliation of Title IV program accounts • Develop and implement a Perkins default management plan • Provide training on how to correctly calculate R2T4 • FSA Coach, Module 8

28. Verification Violations • Verification Worksheet not signed • Untaxed income not verified • Conflicting data on ISIR and verification documents not resolved • Required corrections not processed

29. Verification Violations • Example: Incomplete Verification • No tax return submitted for parent even though earned income required filing • Incorrect number in household size • Solution: Follow published verification procedures; ensure all required items are verified; document student files

30. Other Compliance Solutions • Monitor verification process to ensure procedures are followed • Perform a self-assessment by reviewing a random sample of student files • Use Verification Worksheets • School developed or ED worksheets

31. Pell Grant Over/Under Payment • Adjustments not made for change in enrollment status between terms • Attendance not documented in all coursework counted in the enrollment status • Modules or compressed coursework • Incorrect Pell Formula • Inaccurate proration calculation • Incorrect EFC

32. Pell Grant Over/Under Payment • Example: ISIR correction resulted in an increase to the EFC; however, aid was not recalculated/reduced • Solution: Develop procedures to ensure all subsequent ISIRs are reviewed and aid is adjusted accordingly

33. Other Compliance Solutions • Use correct enrollment status • Use correct Pell Formula/Schedule • Verify that student began attendance in all coursework • Prorate when needed

34. Student 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

35. Student Credit Balance Deficiencies • Example: Credit balance held for 111 days without student authorization • Solution: Develop and implement procedures and controls to identify and release credit balances timely

36. 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 new regulations regarding prior year charges • May create more credit balances if entire program cost is charged upfront

37. Program Review Findings

38. Program Review Findings: Top 10 • Verification Violations • Crime Awareness Requirements Not Met • Return to Title IV Calculation Errors • Entrance/Exit Counseling Deficiencies • SAP Policy Not Adequately Developed /Monitored • Return of Title IV Funds Made Late Tie

39. Program Review Findings: Top 10 • Student Credit Balance Deficiencies • Information in Student Files Missing or Inconsistent • Pell Over/Under Payments • Consumer Information Requirements Not Met • Improper/Undocumented Dependency Overrides • Lack of Administrative Capability Tie Tie

40. Crime Awareness Requirements Not Met • Policies and procedures not developed • Annual report not published and/or distributed annually to current students/staff • Failure to report statistics on website or crimes reported in wrong category • Failure to provide timely warnings and/or notifications of crimes committed

41. Crime Awareness Requirements Not Met • Example: Failed to develop/disclose procedures when a student reports a crime to campus pastoral counselors/professional counselors • Solution: Develop/disclose procedures to guide counselors in their dealings with students

42. Other Compliance Solutions • Develop process for gathering crime statistics • Identify person(s) responsible for campus crime requirements • Develop communications plan for timely warnings and notifications

43. SAP Policy Not Adequately Developed/Monitored • Policy fails to address required components • Qualitative, quantitative, completion rate, and/or maximum timeframe • Policy less strict than policy for non-Title IV recipients • SAP standards not consistently applied • Aid disbursed to students who were not meeting minimum SAP standards

44. SAP Policy Not Adequately Developed/Monitored • Example: Students were not meeting minimum GPA at the end of a probationary period and were therefore not eligible for aid; however, school disbursed the aid • Solution: Develop procedures to ensure policy is followed; check SAP prior to disbursing aid

45. Other Compliance Solutions • Develop adequate SAP policy • Required components, remedial and repeat coursework, probationary periods, appeal process • Document each student’s file to reflect eligibility for disbursements • Follow your written policy!

46. Information in Student Files Missing or Inconsistent • Institutional data (admissions, registrar) conflicts with ISIR data • ISIR data conflicts with other documentation in financial aid file • No documentation to support professional judgment/dependency override • Failed to retain ISIR used to establish award

47. Information in Student Files Missing or Inconsistent • Example: Income on ISIR conflicts with income reported on Institutional Non Tax-Filer Form; inconsistency not resolved • Solution: Design process to ensure all conflicts are researched and resolved

48. Other Compliance Solutions • Pay attention to student files • Perform your own ‘review’ of student files • Review all subsequent ISIRs • Establish communication with other offices at the institution to identify and address inconsistent information

49. Consumer Information Requirements Not Met • Written verification policy not provided to students selected for verification • R2T4 policy not published or incomplete • Withdrawal policy • Basic explanation of R2T4 calculation • SAP policy incomplete

50. Consumer Information Requirements Not Met • Example: Written verification policy did not include the required components • Deadlines, consequences, notifications, procedure for correcting data • Solution: Revise policy to include all required components