The Top Compliance Audit Findings and How to Avoid Repeat Findings

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• Entrance counseling not conducted/documented for first-time borrowers • Exit counseling not conducted/documented for withdrawn students or graduates • Exit counseling materials not sent to students who failed to complete counseling • Exit counseling completed late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