1

EDI CS Tracking and OMB Number: ( 1438.14 ) 1845
- 0072 Revised: 03 / 15 /2013 RI N Number: XXXX
- XXXX (if applicable) **SUPPORTING STATEMENT FOR PAPERWORK REDUCTION ACT SUBMISSION**  EDICS Tracking and OMB Number: ( 1438.14 ) 1845 - 0072

Revised 03 / 12 / 2013 RIN Number: XXXX - XXXX (if applicable) 

### A. Justification 1. Explain the circumstances that make the collection of information necessary. I dentify any legal or administrative requirements that necessitate the collection. Attach a hard copy of the appropriate section of each statute and regulation mandating or authorizing the collection of information , or you may provide a valid URL link or paste the applicable section
. Please limit pasted text to no longer than 3 pages. Specify the review ty pe of the collection (new, revision, extension, reinstatement with change, reinstatement without change) . If revised, briefl y specify the changes. If a rulemaking is involved, make note of the sections or changed sections, if applicable. **All public, non -**  **profit and proprietary institutions participating in the Title IV, HEA prog**  **rams are required to submit audited financial statements and compliance audits that are prepared in accordance with**  **Generally Accepted Accounting Principles (GAAP), Generally Accepted Auditing Standards (GAAS), and Generally**  **Accepted Government Auditing St andards (GAGAS). An institution is required to**  **submit audits annually (34 CFR 668.23), and whenever it seeks to begin or continue participating in the Title IV, HEA programs (34 CFR 6**  **0 0.20(a) or (b)), undergoes a**  **change in ownership that results in a chan ge in control (34 CFR 600.20(g)), or ceases**  **to participate in the programs (34 CFR 668.26(b )).**  **Under eZ -** **Audit, institutions log onto a secure Department website, enter general and specific information about their audits, and attach an electronic file of**  **those audits made using Adobe Acrobat version 5.0 or higher. The Department needs the**  **information in electronic form to more efficiently review audits and provide more timely and useful information to institutions re**  **garding the Department's review. Link t**  **o referenced regulations: 34 CFR**  **668.23**
- http://www.ecfr.gov/cgi
bin/retrieveECFR?gp=1&SID=10 436ddf220bd6dc9f2b9b35015b0999&ty=HTML&h=L &n=34 y3.1.3.1.34&r=PART#34:3.1.3.1.34.2.39.132

EDI CS Tracking and OMB Number: ( 1438.14 ) 1845
- 0072 Revised: 03 / 15 /2013 RI N Number: XXXX
- XXXX (if applicable) **34 CFR 600.20**
- http://www.ecfr.gov/cgi
bin/retrieveECFR?gp=1&SID=82b46309483c30f0a1c11eab5295d5ca&ty=HTML&h=L &n=34 y3.1.3.1.1&r=PART#34:3.1.3.1.1.2.23.1 **34 CFR 668.26**
- http://www.ecfr.gov/cgi
bin/retrieveECFR?gp=1&SID=82b46309483c30f0a1c11eab5295d5ca&ty=HTML&h=L &r=SECTION&n=34 y3.1 .3.1.34.2.39.16 2. Indicate how, b y whom, and for what purpose the information is to be used. Except for a new collection, indicate the actual use the agency has made of the information received from the current collection. **The Department continues to use t he information from eZ**  **- Audit to determine**  **whether an institution has submitted its audits within the required timeframes, to make a preliminary determination as to whether an institution satisfies the**  **financial responsibility standards in 34 CFR part 668, Subpart L of the Student**  **Assistance General Provisions regulations (or in the case of a change in ownership resulting in a change in control, whether the institution satisfies the**  **financial ratio requirements under 34 CFR 668.15), and to otherwise monitor an**  **institution's compliance with Title IV program requirements. The information also is used to assess whether the audits from an institution are materially**  **complete and conducted in accordance with applicable standards. Information**  **received from this c ollection has been used for data made to the public when**  **requested. There have been no changes to this collection since it was revised in 2007, which**  **significantly reduced the burden on submitting institutions. The general**  **information questions, used for the preliminary determination, have not changed**  **for any of institution types. The financial statements templates (balance sheet,**  **income statement, statement of financial position and statement of activities), also used as part of the preliminary determination, have not been modified and still**  **require only those items needed to compu te the composite score. There are eighteen**  **(18) non -**  **profit financial template line items. Proprietary financial template has sixteen (16) line items.**  **Additional data needed to perform more in -**  **depth analysis is collected using the attached electronic copy**  **of the audit.**3

EDI CS Tracking and OMB Number: ( 1438.14 ) 1845
- 0072 Revised: 03 / 15 /2013 RI N Number: XXXX
- XXXX (if applicable) **This collection continues to provide an immediate benefit , as institutions are able to meet their requirement to submit timely and materially complete audits, track**  **submission status and remediate any issues with their audit in a more time ly and**  **efficient manner.** 3. Describe whether, and to what extent, the collection of information involves the use of automated, electronic, mechanical, or other technological collection techniques or forms of information technology , e.g. permitting electroni c submission of responses, and the basis for the decision of adopting this means of collection. Also describe any consideration given to using technology to reduce burden. **eZ -**  **Audit is a web -**  **based application designed to facilitate the electronic submissio n**  **of required financial statements and compliance audits and to serve as a data repository for com**  **pliance and research purposes. All submissions and resubmissions, if required and additional information are submitted via the**  **application.** 4. Describe ef

forts to identify

duplication. Show specificall y wh y an y similar information already available cannot be used or modified for use for the purposes described in Item 2 above. **The Department does not use any other mechanism to collect this information.** 5. If the col lection of information impacts small businesses or other small entities, describe any methods used to minimize burden. A small entity may be (1) a small business which is deemed to be one that is independently owned and operated and that is not dominant in its field of operation; (2) a small organization that is any not - for
- profit enterprise that is independentl y owned and operated and is not dominant in its field; or (3) a small government jurisdiction, which is a government of a city, county, town, townsh ip, school district, or special district with a population of less than 50,000. **Because eZ -** **Audit is web -**  **based, an institution does not have to acquire any unique software. To facilitate the electronic submission of financial statements and**  **compliance audit s, the information collected on the data input screens is from the**  **auditor's report. With regard to the electronic copy of the audits, the Adobe PDF file format was chosen because it provides the security needed and is commonly**  **available at low cost.** 6. De scribe the consequences to Federal program or policy activities if the collection is not conducted or is conducted less frequentl y, as well as any technical or legal obstacles to reducing burden. **The Department would not be able to continue to fully implem ent the eZ**  **- Audit** 4

EDI CS Tracking and OMB Number: ( 1438.14 ) 1845
- 0072 Revised: 03 / 15 /2013 RI N Number: XXXX
- XXXX (if applicable) **process and would need to revert to the paper audit submissions process, forestalling the projected benefits of obtaining audit information in a**  **quicker, more efficient manner**  **and increasing the Department’s costs by having to manage these processes.**  7. Explain any

special circumstances that would cause an information collection to be conducted in a manner:
 requiring respondents to report information to the agency more often than quarterl y;  requiring respondents to prepare a written response t o a collection of information in fewer than 30 day s after receipt of it;
 requiring respondents to submit more than an original and two copies of any document;
 requiring respondents to retain records, other than health, medical, government contract, grant - i n - aid, or tax records for more than three years;  in connection with a statistical survey , that is not designed to produce valid and reliable results than can be generalized to the universe of study;  requiring the use of a statistical data classification that has not been reviewed and approved b y OMB;
 that includes a pledge of confidentiality that is not supported by

authority established in statute or regulation, that is not supported by disclosure and data security policies that are consistent with the p ledge, or that unnecessarily impedes sharing of data with other agencies for compatible confidential use; or
 requiring respondents to submit proprietary trade secrets, or other confidential information unless the agency can demonstrate that it has institut ed procedures to protect the information ’ s confidentiality to the extent permitted by law. **No special circumstances apply to this information collection.** 8. As applicable, state that the Department has published the 60 and 30 Federal Register notices as requi red by

5 CFR 1320.8(d), soliciting comments on the information collection prior to submission to OMB. Summarize public comments received in response to that notice and describe actions taken by the agency

in response to these comments. Specificall y addre ss comments received on cost and hour burden. Describe efforts to consult with persons outside the agency to obtain their views on the availability

of data, frequency

of collection, the clarity

of instruction and record keeping, disclosure, or reporting fo rmat (if any), and on the data elements to be recorded, disclosed, or reported. Consultation with representatives of those from whom information is to be obtained or those who must compile records should occur at least once every 3 years – even if the collection of information activity is the same as in prior periods. There may be5

EDI CS Tracking and OMB Number: ( 1438.14 ) 1845
- 0072 Revised: 03 / 15 /2013 RI N Number: XXXX
- XXXX (if applicable) circumstances that may

preclude consultation in a specific situation. These circumstances should be explained. **We published both the sixty -**  **day (60) and 30 -**  **day ( 30) Federal Register notices**  **inviting public comment.**
9. Explain any

decision to provide any

pay ment or gift to respondents, other than remuneration of contractors or grantees with meaningful justification
. **The Department will not provide payment or gifts to the users of eZ**  **- Audit. The**  **submission of financial and compliance audits is mandatory.** 10. Describe any assurance of confidentiality provided to respondents and the basis for the assurance in statute, regulation, or agency policy . If personally

identifiable information (PII) is being collected, a Privacy Act statement should be included on the instrument. Please provide a citation for the Sy stems of Record Notice and the date a Privacy Impact Assessment was completed as indicated on the IC Data Form . A confid entiality statement with a legal citation that authorizes the pledge of confidentiality should be provided. Requests for this information are in accordance with the following ED and OMB policies: Privacy

Act of 1974, OMB Circular A
- 108

– Privacy Act Implem entation

– Guidelines and Responsibilities, OMB Circular A
- 130 Appendix I

– Federal Agency Responsibilities for Maintaining Records About Individuals, OMB M
- 03
- 22

– OMB Guidance for Implementing the Privacy Provisions of the E
- Government Act of 2002, OMB M
- 06
- 15

– Safeguarding Personall y Identifiable Information, OM:6
- 104

– Privacy Act of 1974 (Collection, Use and Protection of Personally I dentifiable Information)
. If the collection is subject to the Privacy Act, the Privacy

Act statement is deemed sufficie nt with respect to confidentiality . I f there is no expectation of confidentiality , simply state that the Department make s no pledge about the confidentiall y of the data. **No assurance of confidentiality is provided to respondents. Audit information that is**  **provided through eZ -** **Audit or a paper -**  **based process is subject to release to the public under the applicable provisions of the Freedom of Information Act.**  11. Provide additional justification for any questions of a sensitive nature, such as sexual behavior an d attitudes, religious beliefs, and other matters that are commonly considered private. The justification should include the reasons why the agency

considers the questions necessary , the specific uses to be made of the information, the explanation to be g iven to persons from whom the information is requested, and any steps to be taken to obtain their consent. **No questions of a sensitive nature are requested in eZ -** **Audit.**6

EDI CS Tracking and OMB Number: ( 1438.14 ) 1845
- 0072 Revised: 03 / 15 /2013 RI N Number: XXXX
- XXXX (if applicable) 12. Provide estimates of the hour burden of the collection of information. The statement should:
 Indicate the number of respondents by affected public ty

pe (federal government, individuals or households, private sector

– businesses or other for
- profit, private sector

– not - for
- profit institutions, farms, state, local or tribal governments), f requency of response, annual hour burden, and an explanation of how the burden was estimated, including identification of burden ty pe: recordkeeping, reporting or third party

disclosure. All narrative should be included in item 12. Unless directed to do s o, agencies should not conduct special surveys to obtain information on which to base hour burden estimates. Consultation with a sample (fewer than 10) of potential respondents is desirable. If the hour burden on respondents is expected to vary widely be cause of differences in activity , size, or complexity , show the range of estimated hour burden, and explain the reasons for the variance. Generally, estimates should not include burden hours for customary and usual business practices.
 If this request for approval covers more than one form, provide separate hour burden estimates for each form and aggregate the hour burdens in the ROCI S IC Burden Analy sis Table. (The table should at minimum include Respondent types, IC activity , Respondent and Responses, Hours/Response, and Total Hours)
 Provide estimates of annualized cost to respondents of the hour burdens for collections of information, identifying and using appropriate wage rate categorie s. The cost of contracting out or paying outside parties for information collection activities should not be included here. Instead, this cost should be included in Item 14. **This collection represents a Reporting burden type. All institutions enter on t he eZ**  **** **Audit input screens only general information about their compliance audits. To determine whether non**  **- profit and proprietary institutions satisfy certain financially**  **responsible requirements under the program regulations, these institutions must ente**  **r on the eZ -**  **Audit data input screens general and specific information about their financial audits. However, because public institutions are not subject to these**  **requirements, they enter only general information about their financial audits. The burden h**  **our estimates in the table below reflect this difference. There are approximately 2,200 public institutions, 1,900 non**  **- profit institutions, and**  **2,000 proprietary institutions that are required to submit audits to the Department. The burden hour estimates**  **in the following table assume that an independent auditor, certified public account, or similarly qualified person at an institution is**  **completing the eZ -** **Audit input screens for both the compliance and financial audits (the burden hours are lower for all o**  **ther cases where only a compliance or financial**7

EDI CS Tracking and OMB Number: ( 1438.14 ) 1845
- 0072 Revised: 03 / 15 /2013 RI N Number: XXXX
- XXXX (if applicable) **audit is required). Institution**  **Type Burden Hour Estimates for**  **Completing the Input Screens Total Burden Hours**  **(for All Institutions)** All Public (State and L ocal)

2200 16 minutes 5 87 All Not
- for Profit

1900 27 minutes 855 All For Profit (Proprietary)

2000 27 minutes 900 **Total Burden Hours** : 2342 **In deriving the “Burden Hour Estimates for Completing the Input Screens” the total number of fields to be entered by each institution type was taken into**  **consideration. The table below provides a break out of eZ -** **Audit fields to be provided by institution type:** 

**Institution Type eZ**  **- Audit Fields**  All Public (State and L ocal)
- 2200 16 All Not
- for Profit

– 1900 34 All For Profit (Proprietary)
- 2000 31 **It was assumed that the total burden for each field is approximately 30** 

**– 60 seconds,**  **which includes preparation work and the actual time it takes to key the information and upload the documents. Therefore, multiplying the number of eZ**  **- Audit fields**  **by the am ount of time it takes per field resulted in the burden hour estimate.**  **The following table depicts the total cost burden for all institutions for creating the PDF document to be uploaded to the eZ**  **- Audit system and completing online input**  **of information into the eZ -**  **Audit system. The estimated PDF creation costs assume that an**  **institution will use either an on -**  **line service or the services of a copy center to make an authentic, electronic copy of both its compliance and financial statement**  **audits using Adobe Acrobat version 5.0 or higher. The cost range for these services**8

EDI CS Tracking and OMB Number: ( 1438.14 ) 1845
- 0072 Revised: 03 / 15 /2013 RI N Number: XXXX
- XXXX (if applicable) **is es timated at $52. The estimated online input burden costs assume that an**  **institution will utilize an employee whose total cost to the institution (including benefits and other fringe) will cost $104 an hour to input the data. This number is**  **then multiplied by the Total Burden Hour Estimates for Completing the Input**  **Screens (as defined previously) to get the total cost. Estimated Cost Burden for completing online input & PDF creation** 

Institution Ty

pe Cost of Creating

PDF Cost of Online

Input Total Cost All Public (State and L ocal)
- 2200 $11 4 , 400 $ 6 1 , 013 $17 5 , 413 All Not
- for Profit

– 1900 $98, 800 $ 88,9 18 $ 1 7 7, 718 All For Profit (Proprietary)
- 2000 $10 4 , 00 0 $ 93, 598 $ 197, 598 **Total Cost of Creating PDF** : $315,767 **Total Cost on online input:** $ 243,529 **Total Estimated Cost Burden:** $ 5 49 , 729 13. Provide an estimate of the total annual cost burden to respondents or record keepers resulting from the collection of information. (Do not include the cost of any hour burden shown in Items 12 and 14.)
 The co st estimate should be split into two components: (a) a total capital and start
- up cost component (annualized over its expected useful life); and (b) a total operation and maintenance and purchase of services component. The estimates should take into account costs associated with generating, maintaining, and disclosing or providing the information. Include descriptions of methods used to estimate major cost factors including s ys tem and technology acquisition, expected useful life of capital equipment, the discount rate(s), and the time period over which costs will be incurred. Capital and start
- up costs include, among other items, preparations for collecting information such as purchasing computers and software; monitoring, sampling, drilling and testing e quipment; and acquiring and maintaining record storage facilities.
 If cost estimates are expected to vary widel y, agencies should present ranges of cost burdens and explain the reasons for the variance. The cost of contracting out information collection s ervices should be a part of this cost burden estimate. In developing cost burden estimates, agencies may consult with a sample of respondents (fewer than 10), utilize the 60
- day pre - OMB submission public comment process and use existing economic or regulatory impact anal ys is associated with the rulemaking containing the information collection, as appropriate.9

EDI CS Tracking and OMB Number: ( 1438.14 ) 1845
- 0072 Revised: 03 / 15 /2013 RI N Number: XXXX
- XXXX (if applicable)  Generally , estimates should not include purchases of equipment or services, or portions thereof, made: (1) prior to October 1, 1995, (2) to achieve regulatory compliance with requirements not associated with the information collection, (3) for reasons other than to provide information or keep records for the government or (4) as part of customary

and usual business or private practices. Also, these est imates should not include the hourly

costs (i.e., the monetization of the hours) captured above in Item 12 Total Annualized Capital/Startup Cost: Total Annual Costs (O&M): Total Annualized Costs Requested: **There are no start -**  **up costs.** 14. Provide estimates of annualized cost to the Federal government. Also, provide a description of the method used to estimate cost, which should include quantification of hours, operational expenses (such as equipment, overhead, printing, and support staff), and any other expen se that would not have been incurred without this collection of information. Agencies also may aggregate cost estimates from Items 12, 13, and 14 in a single table. **The annualized cost to the Federal government is estimated at $2.5 million. This estimate includes the number of FTEs assigned**  **with varying grade levels , as well as**  **cost to provide services and**  **operate and maintain the application. Under the paper**   ** based** **collection method, the cost to the Department is estimated at $3.6 million annually.**  **This cost included an increased number of of FTEs assigned with varying grade levels as well as cost to provide services and operate and maintain the**  **application. A**  **dditio nal staff would be needed for tracking and processing of paper**  **submissions (mail). The electronic information collection represents a cost savings**  **of approximately $1 million over a manual collection method.** 15. Explain the reasons for any program changes or adjustments. Generall y, adjustments in burden result from re
- estimating burden and/or from economic phenomenon outside of an agency ’s control (e.g., correcting a burden estimate or an organic increase in the size of the reporting universe). Program change s result from a deliberate action that materiall y changes a collection of information and generall y are result of new statute or an agency action (e.g., changing a form, revising regulations, redefining the respondent universe, etc.). Burden changes should be disaggregated b y ty pe of change (i.e., adjustment, program change due to new statute, and/or program change due to agency discretion), ty pe of collection (new, revision, extension, reinstatement with change, reinstatement without change) and include to tals for changes in burden hours , responses and cost s (if applicable)
. **There are no program changes to this collection. There are minor adjustments to the burden as a result of correction**  **s to the**  **estimate s**  **for the institution types.** 16. For collections of inf

ormation whose results will be published, outline plans for tabulation and publication. Address any complex anal yt ical techniques that will be used.10

EDI CS Tracking and OMB Number: ( 1438.14 ) 1845
- 0072 Revised: 03 / 15 /2013 RI N Number: XXXX
- XXXX (if applicable) Provide the time schedule for the entire project, including beginning and ending dates of the collection of information, completion of report, publication dates, and other actions. **No tabulation or publication of the results will take place.** 17. If seeking approval to not display the expiration date for OMB approval of the information collection, explain the reas ons that display would be inappropriate. **All data collection instruments will include the OMB expiration date.** 18. Explain each exception to the certification statement identified in the Certification of Paperwork Reduction Act. **No exceptions are requested.**