# Presentation: 411144

## Session C-30

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

## 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

## 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

## 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***

## 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***

## 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

## Audit Findings

## 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

## 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

## 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

## 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

- 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

**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

- Solution: Ensure a knowledgeable person has responsibility for tracking the return of funds

**Return of Title IV Funds Made Late**

## Design processes and procedures to track/monitor the deadlines
Ensure timely communication between offices
Use R2T4 on the Web report feature

- Ensure timely communication between offices
- Use R2T4 on the Web report feature

**Other Compliance Solutions**

## 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

## 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

## 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

## 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

## 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

## 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

## 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

- 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

**Student Status-Inaccurate or Untimely Reporting**

## 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

## 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

## 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

## 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

## 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

## 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

## 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

## Verification Violations

- Verification Worksheet not signed
- Untaxed income not verified
- Conflicting data on ISIR and verification documents not resolved
- Required corrections not processed

## 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

## 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

## 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

## 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

## Other Compliance Solutions

- Use correct enrollment status
- Use correct Pell Formula/Schedule
- Verify that student began attendance in all coursework
- Prorate when needed

## 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

## 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

## 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

## Program Review Findings

## 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***

## 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***

## 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

## 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

## Develop process for gathering crime statistics
Identify person(s) responsible for campus crime requirements
Develop communications plan for timely warnings and notifications

- Identify person(s) responsible for campus crime requirements
- Develop communications plan for timely warnings and notifications

**Other Compliance Solutions**

## 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

## 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

## 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!

- Required components, remedial and repeat coursework, probationary periods, appeal process
- Document each student’s file to reflect eligibility for disbursements
- Follow your written policy!

**Other Compliance Solutions**

## 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

## 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

## 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

## 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

## 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

## Ensure all required consumer information is accurate, complete, and provided to students in writing
Ensure someone is available during normal operating hours to address student questions or concerns about consumer information

- Ensure someone is available during normal operating hours to address student questions or concerns about consumer information

**Other Compliance Solutions**

## Improper/Undocumented Dependency Overrides

- Dependency override performed for invalid reason
- Student was self-sufficient
- Parent(s) didn’t claim student on tax return
- No documentation in student file
- Failure to confirm continued unusual circumstance in new award year

## Improper/Undocumented Dependency Overrides

- Example: Routinely performed dependency overrides for students whose parents reside in a foreign country and the students supported themselves
- Solution: Develop policies that conform to Title IV rules; obtain adequate documentation to support the _*unusual*_ circumstance

## Develop written procedures
Make decisions by committee
Ensure your process does not allow for ‘mass’ D/O based on similar situations
Document, document, document!

- Make decisions by committee
- Ensure your process does not allow for ‘mass’ D/O based on similar situations
- Document, document, document!

**Other Compliance Solutions**

## Lack of Administrative Capability

- Indicates numerous/significant findings
- Most common areas of noncompliance involve
- Separation of duties
- Adequate checks and balances
- System of internal controls
- Adequate staffing

## Lack of Administrative Capability

- Example: Late R2T4, incorrect COA used for awarding, incomplete verification, loans not prorated, Perkins Loan Program not adequately administered
- Solution: Designate capable individual(s) to oversee financial aid process; develop and implement internal controls

## Hire and retain adequate number of experienced personnel
Establish a process of timely communication between all relevant offices
Ensure that no one person or office has the ability to award and disburse aid

- Establish a process of timely communication between all relevant offices
- Ensure that no one person or office has the ability to award *and* disburse aid

**Other Compliance Solutions**

## 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

- Includes assessment modules on Students, Schools, Managing Funds, and Policies and Procedures
- _http://www.ifap.ed.gov/qahome/fsaassessment.html_

**FSA Assessments**

## Slide 59

## Contact Information

**Contact Information**

- We appreciate your feedback and comments
- Tom Beckerle
-   Phone:	(816) 268-0418
-   Email:	_[Tom.Beckerle@ed.gov](mailto:Tom.Beckerle@ed.gov)_
- Laura Hall
-   Phone:	(404) 562-6265
-   Email:	_[Laura.Hall@ed.gov](mailto:Laura.Hall@ed.gov)_