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KASFAA Fall Conference October 10-12, 2012
1
Top Ten Compliance
For discussion purposes only
Top 10:
Audit & Program Review
Findings FY2011
David Bartnicki
404-974-9312; [email protected]
U.S. Department of Education
1. Repeat Findings/Failure to Correct
2. R2T4 – calculation errors
3. R2T4 – late refunds
4. Student Status – inaccurate/untimely reporting
5. Pell Over/Under Payments
6. Verification
7. Credit Balances
8. Qualified Auditor‟s Opinion
9. Entrance/Exit Counseling
10. Overaward – financial need exceeded
Top 10 Audit Findings - by occurrences: FY2011
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1. R2T4 – Calculation errors
2. Verification
3. Entrance/Exit Counseling
4. Crime Awareness Requirements not met
5. Credit Balances
6. Satisfactory Academic Progress
7. R2T4 – late refunds
8. Pell Grant Over/Under Payments
9. Account records inadequate/not reconciled
10. Inaccurate recordkeeping
Top 10 Program Review Findings –
by occurrences: FY2011
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TIE
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KASFAA Fall Conference October 10-12, 2012
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Top Ten Compliance
For discussion purposes only
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Findings on Both Lists
• R2T4 calculation errors
• R2T4 funds made late
• Pell Grant over/under payments
• Verification violations
• Student credit balance
deficiencies
• Entrance/Exit counseling
deficiencies
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Audit
Findings
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Repeat Finding –
Failure To Take Corrective Action
• Failure to implement Corrective Action Plan (CAP)
• CAP did not remedy the instances of noncompliance
• Internal controls not sufficient to ensure compliance
with FSA guidelines
Regulations: 34 C.F.R. §§ 668.16 and 668.174
KASFAA Fall Conference October 10-12, 2012
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Top Ten Compliance
For discussion purposes only
Repeat Finding –
Failure To Take Corrective Action
Example: Repeat findings for (1) Late return of Title
IV funds, (2) Incorrect R2T4 calculations.
Solution: Develop and implement CAP and
implementation schedule; develop R2T4 monitoring
report; establish internal controls to ensure accurate
calculations and timely returns.
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Additional Compliance Solutions
• Ensure all staff are properly trained
• Perform quality assurance checks to ensure new
policies & procedures are strictly followed
• Review results of CAP
• Is it working?
• Are changes needed to improve process?
• Accountability – assign staff to monitor
the CAP
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R2T4 Calculation Errors
• Incorrect number of days
• Ineligible funds as aid that „could
have been disbursed‟
• Improper treatment of
overpayments
• Incorrect withdrawal date
• Mathematical and/or rounding
errors
Regulation: 34 C.F.R. § 668.22(e)
KASFAA Fall Conference October 10-12, 2012
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Top Ten Compliance
For discussion purposes only
R2T4 Calculation Errors
Example: Incorrect calculation based on using
the wrong number of days for the term/
payment period
Solution: Work with registrar to ensure clear
understanding of when classes meet, including
weekends; be sure to exclude all class breaks
of five days or more
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Additional Compliance Solutions
• Be aware of new regulations; revise procedures as
needed
• Perform self-assessment by reviewing a random
sample of student files
• FSA Assessment: Schools
• R2T4 module
• Use R2T4 Worksheets
• Electronic Web Application/Paper
• Compare with school version
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Return of Title IV Funds Made Late
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• School‟s policy and procedures not followed
• 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
Regulation: 34 C.F.R. § 668.22(j)
KASFAA Fall Conference October 10-12, 2012
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Top Ten Compliance
For discussion purposes only
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Compliance Solutions
• Periodically review processes and procedures to
ensure compliance
-Tracking/monitoring deadlines
-Ensuring timely communication between offices
and/or systems
• R2T4 on the Web
• FSA Assessments: Schools
- R2T4 module
Student Status – Inaccurate/Untimely Reported
• Roster file (formerly called Student Status
Confirmation Report [SSCR]) not submitted
timely in NSLDS
• Failure to provide notification of last date of
attendance/changes in student enrollment
status
• Conflicting status change types and dates
Regulation: 34 C.F.R. §685.309(b)
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Example: Failure to submit roster file timely;
conflicting enrollment status dates and types (G
vs. W); no policies and procedures.
Solution: Develop policies and procedures for
processing and submitting roster file; train staff
on reporting requirements and procedures.
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Student Status – Inaccurate/Untimely Reported
KASFAA Fall Conference October 10-12, 2012
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Top Ten Compliance
For discussion purposes only
Additional Compliance Solutions
• Maintain accurate enrollment records
• Automate enrollment reporting
• Batch uploads or individual online updates
• Update frequently
• Designate responsibility for monitoring the
reporting deadlines
• Review NSLDS newsletters for updates
• If use a third party servicer – school still
responsibility for meeting deadlines
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Pell Grant Overpayment/Underpayment
• Incorrect Pell Grant formula
• Inaccurate calculations
• Proration
• Incorrect EFC
• Adjustments between terms
• Incorrect number of weeks/hours
• Incorrect enrollment status
Regulations: 34 C.F.R. §§ 690.62; 690.63; 690.75 & 690.80
Compliance Solutions
• Prorate when needed
• Use correct enrollment status
• Establish internal controls and procedures to verify
enrollment status before disbursing aid
• Use correct Pell Grant formula/schedule
• Assign responsibility for monitoring to ensure Pell
Grant disbursements are accurate and timely
• Conduct random file reviews
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KASFAA Fall Conference October 10-12, 2012
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Top Ten Compliance
For discussion purposes only
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Verification Violations
• Verification worksheet missing/incomplete
• Income tax returns missing/not signed
• Conflicting data not resolved
• Untaxed income not verified
• Corrections that exceed tolerance/not submitted
Regulations: 34 C.F.R. §§ 668.51-668.61
Remember findings from FY2011 – Oct. 1, 2010-Sept. 30 2011
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Compliance Solutions
• Monitor verification process
• Perform internal quality control file review
• FSA Assessments: Students - Verification
• Review Federal Student Aid Handbook,
Application & Verification Guide, Chapter 4
• Review “NEW” verification regulations and
develop procedures accordingly
• Published October 29, 2010
• Effective July 1, 2012
Student Credit Balance Deficiencies
• Credit balance not released to student within
14 days
• No process in place to determine when a
credit balance has been created
• Non-compliant authorization to hold Title IV
credit balances
Regulations: 34 C.F.R. §§ 668.164(e); 668.165(b)
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KASFAA Fall Conference October 10-12, 2012
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Top Ten Compliance
For discussion purposes only
Compliance Solutions
• Develop and implement procedures and controls
to identify and release credit balances timely • Conduct a self-audit of credit balance disbursements
• System enhancements
• Provide training for staff (may need to be
nonfinancial aid staff)
• Ensure student/parent credit balance authorization is compliant with Title IV requirements
• Which office is developing and securing authorizations
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Qualified Auditor‟s Opinion Cited in Audit
• Anything other than an unqualified opinion
• Serious deficiencies/areas of concern in the
compliance audit/financial statements
• R2T4 violations
• Inadequate accounting systems and/or procedures
• Lack of internal controls
Regulation: 34 C.F.R. §668.171(d)
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Compliance Solutions
• Assessment of entire process
• Design an institution-wide plan of action
• Adequate and qualified staff
• Appropriate internal controls
• Training
– FSA COACH
– FSA Assessments
– Online and In-Person trainings
• Implement appropriate CAP timely and effectively
KASFAA Fall Conference October 10-12, 2012
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Top Ten Compliance
For discussion purposes only
Entrance/Exit Counseling Deficiencies
• Entrance counseling not conducted/
documented for first-time borrowers
• Exit counseling not conducted/documented for
withdrawn students or graduates
• Exit counseling materials not mailed to students
who failed to complete counseling
Regulation: 34 C.F.R. § 685.304
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Compliance Solutions
• Assign responsibility for monitoring the
entrance/exit interview process
• Especially unofficially withdrawn students
• Develop procedures for ensuring communication
between registrar, business, and financial aid
offices
• Utilize ED‟s electronic counseling tools
• Studentloan.gov (entrance); NSLDS (exit)
• Provide staff training
Overaward – Financial Need Exceeded
• Failure to factor in outside scholarships that result
in overawards
• Failure to calculate tuition or fee waivers
• Enrollment status changes
• Incorrect EFC from an earlier ISIR transaction
Regulation: 34 C.F.R. § 673.5
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KASFAA Fall Conference October 10-12, 2012
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Top Ten Compliance
For discussion purposes only
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Compliance Solutions
• Establish procedures to ensure consistent handling
of outside scholarships
• Communication strategy with ALL offices
• Determine if student‟s costs exceed original cost of
attendance (professional judgment)
• Routinely monitor FWS earnings to ensure
students do not exceed allowable tolerance
• Determine if any aid can replace EFC, such as
TEACH, PLUS or unsub
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Program Review
Findings
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Crime Awareness Requirements Not Met
• Campus security policies and procedures not
adequately developed
• Annual report not published and/or distributed
• Failure to develop a system to track and/or log all
required categories of crimes
Regulations: 34 C.F.R. §§ 668.41, 668.46(c)(1)
KASFAA Fall Conference October 10-12, 2012
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Top Ten Compliance
For discussion purposes only
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• Ensure reports submitted timely
• Identify person(s) responsible for information
• Develop process for gathering crime statistics (accurately)
• Develop communications plan for timely warnings and
notifications
• Review The Handbook for Campus Safety and Security
Reporting
• http://www2.ed.gov/admins/lead/safety/ campus.html
Compliance Solutions
SAP Policy - Not Adequately Developed/Monitored
• Missing required components
• Qualitative, quantitative, completion rate, maximum
timeframe, remedial/repeat coursework, probation, appeals
• Failure to consistently or adequately apply SAP
policy
• Aid disbursed to students not meeting the standards
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Regulation: 34 C.F.R. § 668.16(e); 668.34
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• Revise SAP policy to include all components
• Apply SAP standards consistently
• Return ineligible disbursements
• Establish internal controls to monitor SAP • Review a sample of files.
• FSA Assessments: Students - Satisfactory Academic Progress (SAP) Module
• Staff training on new regulatory requirements for SAP
• Published October 29, 2010
• Effective July 1, 2011
Compliance Solutions
KASFAA Fall Conference October 10-12, 2012
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Top Ten Compliance
For discussion purposes only
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Account Records - Inadequate/Not Reconciled
• Failure to provide appropriate documentation of
disbursements to reviewers
• Failure to balance program accounts with G5 and
COD
• Failure to identify Federal funds in institutional
bank accounts
Regulation: 34 C.F.R. § 668 Subpart K
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Compliance Solutions
• Perform routine reconciliation of all program
accounts with COD and G5
• Monthly process
• Establish internal reporting procedure
• FSA Assessments: Schools
• Fiscal Management
• FSA COACH
• School Responsibilities: Fiscal and Records Management
• The Blue Book (when updated)
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Inaccurate Recordkeeping
• Inadequate or mismatched
attendance records for schools that
are required to take attendance
• Failure to maintain consistent
disbursement records
• Documents do not support eligibility
status
Regulation: 34 C.F.R. § 668 Subpart K
KASFAA Fall Conference October 10-12, 2012
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Top Ten Compliance
For discussion purposes only
Inaccurate Recordkeeping
Example: Federal Work-Study timesheets which
appear as if student worked 15 hours instead of
three due to a.m./p.m. errors.
Solution: Enhanced oversight by FWS supervisors
and payroll processors to ensure correct information.
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Additional Compliance Solutions
• Communicate the importance of accuracy of all
FSA records with all staff members
• Establish procedures to routinely check documents
for accuracy
• Take advantage of FSA Assessments and IFAP
training options to ensure that all staff members are
well-informed
Where do you go from here?
KASFAA Fall Conference October 10-12, 2012
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Top Ten Compliance
For discussion purposes only
Communication
• Internal • Within offices
• Between offices (periodic meetings, workshops, etc.)
• With students/parents
• External • Between schools
• U.S. Department of Education
• Accrediting Agencies
• State Agencies
• Servicers
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Training & Technical Assistance
• Why?
• Knowledge (refresh, improve, increase)
• Changes (new procedures, policies, technology)
• Back-up personnel, cross-training, succession planning
• How?
• Associations, conferences, workshops
• FSA Coach (ED CBT); FSA Assessments
• Institutional Program Reviews and Audits
• ACA Funds (Pell and Campus-Based)
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Internal Reviews/Audits
Who
• Compliance/Quality Assurance Office
• School Auditor
• Different Offices focus on specific areas
How
• School Programs Reviews/Audits - foundation
• Program Review Guide (typical items reviewed)
• IFAP – “Publications”
• FSA Assessments
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KASFAA Fall Conference October 10-12, 2012
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Top Ten Compliance
For discussion purposes only
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• 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
FSA Assessments
Resources, References & Contacts
• Information
o Audit Guides, Blue Book, FISAP Instructions, Dear Colleague, Default rate guide, FAFSAs, Federal Registers, Federal Student Aid Handbooks…
o Automatic mailer under “My IFAP” (Subscriptions)
• Websites
• IFAP, NSLDS, FISAP, COD, Direct Loan, SAIG enrollment, FAA Access to CPS on the Web…
• U.S. Department of Education Contacts • Under “HELP” on IFAP
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“NEW” - Training Feedback
To ensure quality training we ask all participants to
please fill out an online session evaluation
• Go to http://s.zoomerang.com/s/DavidBartnicki
• Evaluation form is specific to David Bartnicki
• This feedback tool will provide a means to educate and
inform areas for improvement and support an effective
process for “listening” to our customers
• Additional concerns about training can be directed to
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