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Top 10 Audit and Program Review Findings NJASFAA Conference Atlantic City, NJ November 2011 Nautochia Webb, Training Officer U.S. Department of Education PowerPoint PPT Presentation


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Top 10 Audit and Program Review Findings NJASFAA Conference Atlantic City, NJ November 2011 Nautochia Webb, Training Officer U.S. Department of Education. Audit Findings. Return to Title IV (R2T4) Calculation Errors Pell Overpayment/Underpayment R2T4 Funds Made Late

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Top 10 Audit and Program Review Findings NJASFAA Conference Atlantic City, NJ November 2011 Nautochia Webb, Training Officer U.S. Department of Education

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Top 10 audit and program review findings njasfaa conference atlantic city nj november 2011 nautochia webb training

Top 10 Audit and

Program Review Findings

NJASFAA Conference

Atlantic City, NJ

November 2011

Nautochia Webb, Training Officer

U.S. Department of Education


Audit findings

Audit Findings

  • Return to Title IV (R2T4) Calculation Errors

  • Pell Overpayment/Underpayment

  • R2T4 Funds Made Late

  • Verification Violations

  • Overaward-Financial Need Exceeded


Audit findings1

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


Program review findings

Program Review Findings

  • Verification Violations

  • Crime Awareness Requirements Not Met

  • Credit Balance Deficiencies

  • R2T4 Calculation Errors

  • R2T4 Made Late


Program review findings1

Program Review Findings

  • Entrance/Exit Counseling Deficiencies

  • Account Records Inadequate/Not Reconciled

  • Info. in Student Files Missing/Inconsistent

  • SAP Policy Not Adequately Developed/ Monitored

  • Pell Overpayment/Underpayment


Findings on both lists

Findings on Both Lists

  • Verification Violations

  • R2T4 Made Late

  • R2T4 Calculation Errors

  • Pell Grant Over/Underpayments

  • Credit Balance Deficiencies

  • SAP Policy Errors


Verification violations

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


Verification violations1

Verification Violations

Finding Example:

Possible Actions:

Follow published procedures

Ensure all required items are verified (checklist)

Document student files

  • Incomplete Verification

    • Tax return unsigned

    • Tax return not submitted even required to file

    • Incorrect # in household size


Verification violations2

Verification Violations

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


R2t4 calculation errors

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)


R2t4 calculation errors1

R2T4 Calculation Errors

Finding Example:

Possible Actions:

Recalculate unearned aid and make needed adjustments

Modify policies and procedures

Have two staff members independently perform same calculation & compare

  • 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


R2t4 calculation errors2

R2T4 Calculation Errors

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


R2t4 funds made late

R2T4 Funds Made Late

  • 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 offices

    Regulation: 34 C.F.R. § 668.22(j)


R2t4 funds made late1

R2T4 Funds Made Late

Finding Example:

Possible Actions:

Determine why funds weren’t returned timely

Revise procedures

Assign responsibility for monitoring the process

  • School completed calculations, but did not return funds within the 45-day timeframe


R2t4 funds made late2

R2T4 Funds Made Late

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


Pell grant over under payment

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 payment1

Pell Grant Over/Under Payment

Finding Example:

Possible Solutions:

Adjust aid

Verify student eligibility prior to disbursing aid

Develop procedures for resolving errors once identified

  • Lack of internal controls over file maintenance and disbursement process resulted in Pell over/under payments


Pell grant over under payment2

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


Credit balance deficiencies

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)


Credit balance deficiencies1

Credit Balance Deficiencies

Finding Example:

Possible Actions:

Implement procedures that identify and release credit balances timely

Do NOT require all students to sign an authorization; must be voluntary!

  • Credit balances held from 32 to 111 days without student authorizations


Credit balance deficiencies2

Credit Balance Deficiencies

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


Sap policy not adequately developed monitored

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 monitored1

SAP Policy Not Adequately Developed/Monitored

Finding Example:

Possible Actions:

Return aid disbursed to ineligible students

Revise policy

Establish internal controls

  • School did not include courses in previous period of attendance in SAP determination


Sap policy not adequately developed monitored2

SAP Policy Not Adequately Developed/Monitored

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


The extra finding

The“Extra” Finding


Repeat finding failure to take corrective action

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 title

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


Repeat finding failure to take corrective action1

Repeat Finding-Failure to Take Corrective Action

Finding Example:

Possible Actions:

Require review all files for eligibility prior to disbursement of aid

Review sample files quarterly

  • Repeat finding(s) of any kind; finding from prior audit period or program review also appears in the current report


Repeat finding failure to take corrective action2

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


Suggestions for a strong cap

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.


Suggestions for a strong cap1

Suggestions for a Strong CAP

Provide 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

…The Rest of the Story


Other findings of note

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

Don’t:

Blame the problem on:

“human error”

“the “system”

“staff turnover”

“new staff”

anything else that shows a lack of administrative capability

Corrective Action Plans

Do:

Note whether or not you

concur with the finding. If

you think you are right, say

so and provide evidence

Show how you corrected the

specific error (adjusted the

award, returned funds, etc.)

AND will prevent future errors

(training, checklist, etc.)


Top 10 audit and program review findings njasfaa conference atlantic city nj november 2011 nautochia webb training

QUESTIONS?


Resources

Resources


Fsa assessments

FSA Assessments

  • 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


Http ifap ed gov ifap toolsforschools jsp

http://ifap.ed.gov/ifap/toolsforschools.jsp


School participation team spt contact information

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.


The remaining top audit findings

The RemainingTop Audit Findings


Overaward financial need exceeded

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

    Regulations: 34 C.F.R. §§ 682.204 and 685.301


Overaward financial need exceeded1

Overaward-Financial Need Exceeded

Finding Example:

Possible Actions:

Reallocate to unsubsidized

Conduct file review

Update policy and procedures; train staff

  • School disbursed subsidized loans in excess of student’s need


Overaward financial need exceeded2

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


R2t4 funds not made

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

R2T4 Not Made

Finding Example:

Possible Actions:

Return unearned aid

Implement an increase in controls over the Title IV funds

Provide training and support to staff

  • R2T4 calculation not completed for students who had withdrawn


R2t4 not made1

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


Enrollment status not verified before disbursement

Enrollment Status Not Verified Before Disbursement

  • Incorrect award amounts

  • Institution unaware that student(s) withdrew

  • Changes in units/hours

  • Leave of absence (LOA) issues

    Regulation: 34 C.F.R. § 668.164


Enrollment status not verified before disbursement1

Enrollment Status Not Verified Before Disbursement

Finding Example:

Possible Actions:

Return ineligible funds

Re-train staff on enrollment requirements

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


Enrollment status not verified before disbursement2

Enrollment Status Not Verified Before Disbursement

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


Improper certification of stafford loan

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

  • Regulations: 34 C.F.R. §§ 682.603 and 685.301


Improper certification of stafford loan1

Improper Certification of Stafford Loan

Finding Example:

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

  • Additional unsubsidized loans awarded to dependent students with no documentation of PLUS denial


Improper certification of stafford loan2

Improper Certification of Stafford Loan

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 top program review findings

The Remaining TopProgram Review Findings


Program review findings2

Program Review Findings

  • 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


Crime awareness requirements not met

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)


Crime awareness requirements not met1

Crime Awareness Requirements Not Met

Finding Examples:

Possible Actions:

Fully develop all required components of the report

Actively distribute the report as required

  • Report not distributed

  • Did not list statistics for three most recent years

  • No process for reporting crimes to school officials


Crime awareness requirements not met2

Crime Awareness Requirements Not Met

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 Dissemination

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


Entrance exit counseling deficiencies

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 deficiencies1

Entrance/Exit Counseling Deficiencies

Finding Example:

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

  • No documentation that students who unofficially withdrew completed exit counseling


Entrance exit counseling deficiencies2

Entrance/Exit Counseling Deficiencies

Other 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


Account records inadequate not reconciled

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

    Regulation: 34 C.F.R. § 668.16


Account records inadequate not reconciled1

Account Records Inadequate/Not Reconciled

FindingExample:

Possible Actions:

Purchase a system that meets GAAP (generally acceptable accounting principles)

Revise procedures to maintain accurate student account data

  • The school’s accounting system did not provide for student ledgers showing charges, payments, or the dates that credit balances were created or released


Account records inadequate not reconciled2

Account Records Inadequate/Not Reconciled

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


Information in student files missing or inconsistent

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 inconsistent1

Information in Student Files Missing or Inconsistent

Finding Example:

Possible Actions:

Determine if tax filing status was correct

Adjust aid if needed

Develop policies to address conflicts

  • ISIR lists student as married; tax return submitted for verification showed Head of Household; school did not resolve conflict


Information in student files missing or inconsistent2

Information in Student Files Missing or Inconsistent

Other 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

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


Top 10 audit and program review findings njasfaa conference atlantic city nj november 2011 nautochia webb training

THANK YOU!


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