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The Top Compliance Audit Findings and How to Avoid Repeat Findings

This session discusses the top compliance audit findings and provides tips and resources to avoid repeat findings. Topics include NSLDS roster reporting, entrance/exit counseling deficiencies, credit balance management, and more.

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The Top Compliance Audit Findings and How to Avoid Repeat Findings

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  1. Session FS7 The Top Compliance Audit Findings and How to Avoid Repeat Findings Marcia Fediw and Andy Hagedorn | Nov.-Dec. 2017 U.S. Department of Education 2017 FSA Training Conference for Financial Aid Professionals

  2. AGENDA • Top compliance audit findings • Resolving compliance audit findings • Audit rejection letters • Tips for a successful compliance audit • Resources

  3. TOP AUDIT FINDINGS • NSLDS roster reporting -- inaccurate/untimely reporting • Entrance/Exit counseling deficiencies • Student credit balance deficiencies • Repeat finding -- failure to take corrective action • Incorrect calculation of expected family contribution and/or cost of attendance

  4. TOP AUDIT FINDINGS • Enrollment status not verified before disbursement • Attendance records missing/policy inadequate • Lack of administrative capability • Borrower not notified timely of right to cancel all or part of loan or loan disbursement

  5. NSLDS ROSTER REPORTING • NSLDS roster file (formerly called Student Status Confirmation Report [SSCR]) not submitted timely to NSLDS • Failure to provide notification of last date of attendance/changes in student enrollment status • Failure to report accurate enrollment types and effective dates • Regulation: 34 C.F.R. § 685.309(b)

  6. ENTRANCE/EXIT COUNSELING • Entrance counseling not conducted/documented for first-time borrowers • Exit counseling not conducted/documented for withdrawn students or graduates • Exit counseling materials not sent to students who failed to complete counseling • Exit counseling completed late

  7. CREDIT BALANCES • Credit balance not released to student within 14 days • No process in place to determine when credit balance has been created • Non-compliant authorization to hold Title IV credit balances • Credit balances not released by end of loan period or award year

  8. REPEAT FINDINGS • Failure to implement Corrective Action Plan (CAP) • CAP did not remedy the instances of noncompliance • Ineffective CAP used from previous year(s) • Internal controls not sufficient to ensure compliance with FSA guidelines • Regulations: 34 C.F.R. §§ 668.16 and 668.174(a)

  9. INCORRECT CALCULATION OF COA • Failure to properly review ISIR or SAR • Failure to resolve conflicting information • Failure to properly develop budget

  10. DISBURSEMENT NOTIFICATION • Borrower not notified timely of right to cancel all or part of loan or loan disbursement • Email students notifying them of right to cancel • Part of your disbursement checklist

  11. ENROLLMENT STATUS VERIFICATION • Lack of internal controls • Verify with Registrar—document verified enrollment in student file • Consider disbursing after Add/Drop period ends • Notify students to arrive with living expense money • Discuss disbursement timing with relevant departments (Bursar, Housing, Registrar)

  12. ATTENDANCE RECORDS • Verify attendance before aid is disbursed • Lack of communication between offices • Document attendance in system and/or student file

  13. ADMINISTRATIVE CAPABILITY • Encompasses all Title IV administration • Missing/inadequate documentation of policies and/or procedures • Training deficiencies • Lack of internal controls

  14. RESOLVING AUDIT FINDINGS • Best practices • Corrective Action Plan • Title IV training • Reach out to Audit Resolution Specialists and Eligibility Analysts • How to avoid repeat findings • Corrective Action Plan must be implemented • Policies and procedures must be well developed

  15. AUDIT REJECTION LETTERS • Standard Incomplete Letter • Explains what is missing/rejected • Can be more than one issue • Refer back to Foreign School Audit Guide • 30 days to respond

  16. TIPS FOR A SUCCESSFUL AUDIT • Hire a competent auditor with experience in Title IV compliance audits • Follow the Foreign School Audit Guide exactly (school and auditor) • Submit annually prior to the deadline (six months after end of school’s fiscal year). Document proof of receipt • Keep accurate records • Standard Vs. Alternative Compliance Audits

  17. TIPS FOR A SUCCESSFUL AUDIT • For Institutions: • Compliance audit must be on institutional letterhead • Signed and dated by Chief Executive Officer • Include Corrective Action Plan--If no findings in prior year- must be noted in response instead of CAP

  18. TIPS FOR A SUCCESSFUL AUDIT • For Auditors: • Compliance audit must be on auditors letterhead • Signed and dated by auditor • Comments on resolution of prior year findings

  19. RESOURCES • Repeat Finding (Audit) • Regulations: 34 C.F.R. §§ 668.16 and 668.174(a) • NSLDS Reporting – Inaccurate/Untimely Reporting • Regulation: 34 C.F.R. § 685.309(b) • Dear Colleague Letter: GEN-12-06 • NSLDSFAP website - newsletter updates • https://www.nsldsfap.ed.gov/nslds_FAP/default.jsp • “News & Events” along top of home page

  20. RESOURCES • Entrance/Exit Counseling Deficiencies • Regulation: 34 C.F.R. § 685.304 • FSA Coach, Lesson B-404: Direct Loan Entrance Counseling and Lesson B-603: Exit Loan Counseling • FSA Handbook, Volume 2, Chapter 6 • Student Credit Balance Deficiencies • Regulations: 34 C.F.R. §§ 668.164(e) and 668.165(b) • FSA Handbook, Volume 4, Chapter 2

  21. RESOURCES • Borrower not notified timely of right to cancel all or part of loan or loan disbursement • Email/written notification is sufficient, however must be documented in writing if done in person • https://ifap.ed.gov/fsahandbook/attachments/1718FSAHbkVol4Ch2.pdf

  22. RESOURCES • Foreign School Webpage: https://ifap.ed.gov/ForeignSchoolInfo/ForeignSchoolInfo.html • Foreign School Audit Guide • Foreign School Handbook • Federal Student Aid (FSA) Handbook • Information For Financial Aid Professionals (IFAP) Website: https://ifap.ed.gov/ifap/ • Dear Colleague Letters (DCL)

  23. SCHOOL ELIGIBILITY SERVICE GROUP (SESG)Ron Bennett - Director, School Eligibility Service Group, Washington, DC 202-377-3181School Eligibility Service Group General Number: 202-377-3173 or email: CaseTeams@ed.gov Or call the appropriate School Participation Division manager below for information and guidance on audit resolution, financial analysis, program reviews, school and program eligibility/recertification, and school closure information. Chicago/DenverSchool Participation Division Illinois, Minnesota, Ohio, Wisconsin, Indiana, Colorado, Michigan, Montana, North Dakota, South Dakota, Utah, WyomingDouglas Parrott, Director 312-730-1532 Brenda Yette – Chicago 312-730-1522 Sarah Adams − Chicago 312-730-1514 San Francisco/Seattle School Participation Division American Samoa, Arizona, California, Guam, Hawaii, Nevada, Palau, Marshall Islands, North Marianas, State of Micronesia, Alaska, Idaho, Oregon, WashingtonMartina Fernandez-Rosario, Director 415-486-5605 Gayle Palumbo − San Francisco 415-486-5614 or Seattle 206-615-3699 Dyon Toney − Washington, DC 202-377-3639 Erik Fosker – San Francisco 415-486-5606 New York/Boston School Participation Division Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont, New Jersey, New York, Puerto Rico, Virgin Islands Betty Coughlin, Director 646-428-3737 Tracy Nave – Boston 617-289-0145Jeremy Early– Washington, DC 202-377-3620Chris Curry – New York 646-428-3738 Philadelphia School Participation Division District of Columbia, Delaware, Maryland, Pennsylvania, Virginia, West Virginia Nancy Gifford, Director 215-656-6436 Steven M. Marcucio – Philadelphia 215-656-5554 Sherrie Bell– Washington, DC 202-377-3349 Multi-Regional and Foreign Schools Participation Division Michael Frola, Director 202-377-3364 Joseph Smith − Washington, DC 202-377-4321 Mark Busskohl – Washington, DC 202-377-4572 Michelle Allred – Dallas 214-661-9466 Julie Arthur – Seattle 206-615-2232 Atlanta School Participation Division Alabama, Florida, Georgia, Mississippi, North Carolina, South CarolinaChristopher Miller, Director 404-974-9297 Vanessa Dillard – Atlanta 404-974-9418 Dallas School Participation Division Arkansas, Louisiana, New Mexico, Oklahoma, Texas Cynthia Thornton, Director 214-661-9457 Jesus Moya – Dallas 214-661-9472 Kim Peeler – Dallas 214-661-9471 Kansas City School Participation Division Iowa, Kansas, Kentucky, Missouri, Nebraska, TennesseeRalph LoBosco, Director 816-268-0440Dvak Corwin – Kansas City 816-268-0420 Angela Beam – Kansas City 816-268-0534 Jan Brandow – Kansas City 816-268-0409

  24. QUESTIONS?

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