Diane Stemper - Nebraska Association of Student Financial Aid

NeASFAA Fall Training
How to Survive a Title IV Audit
or Program Review
Diane Stemper
Executive Director
Enrollment Services
Student Financial Aid
The Ohio State University
 Federal Program Review and Audits
 What are they?
 Why?
 Preparation
 While audit is occurring - expectations
 Completion of audit and findings
 Next steps
Enrollment Services
What are Program Reviews and Title IV
Why do we have to endure a U.S. Department of Education
Program Review?
 Authority for Program Reviews is defined by Congress to
ED to ensure necessary oversight of Title IV institutional
 Section 498A (administrative capability & financial
 Purpose is to evaluate compliance, identify
liabilities/risks, and enhance institutional
administrative capabilities
 Ensure the efficient and effective use of taxpayer
dollars in support of American education
 Identify financial aid compliance risks and financial
 Make conclusions and recommendations
 Determine corrective action
Types of Audits
•Public & Non-Profit Institutions:
Due within 9 months of the
fiscal year end (FYE) date
(-More requirements, more
•For-Profit Institutions:
SFA Audit Guide
Due within 6 months of the
fiscal year end (FYE) date
Schools must arrange for regular independent audits
that include the operation of the FSA programs.
Types of Audits and Reviews
 Focused
 Full Scope
Program Review Triggers
High cohort default rate
Significant changes in Direct Loan or Pell volume
Late refunds
Deficiencies reported by state licensing or accrediting agencies
Financial responsibility standards
High withdrawal rates
Significant audit findings
Repeat findings or recurrent problems
Significant risk of noncompliance with administrative capability
Complaints from students or adverse publicity
Institutions that haven’t had a review in a number of years
Frequent change in financial aid leadership
ED’s Goals
Identify any institutional weakness(es)
Frame required actions to strengthen institutional
Quantify harm of noncompliance
Administrative action to protect students and
Institutional Goals
Understand and ensure compliance with Program
Review requirements
Respond as quickly and accurately as possible to the
multiple data requests prior to the on-site visit
Remain professional throughout the site visit and at
all times (email, phone, etc.)
Manage the Program Review and follow-up to
mitigate liabilities and administrative action
Positives of a Program Review
Increase visibility of our complex financial aid world
(one campus even received additional staff after their
Raise awareness of Federal Title IV compliance as a
campus-wide responsibility
Learn what you are doing right!
Assess and make focused
Mitigate liabilities and administrative actions
You’ve Been Selected
You’ve Received a Letter
Don’t Panic
 Remember that auditors and reviewers are financial
 Read the letter carefully
 Contact the reviewer
 Notify senior campus officials immediately
 Discuss with staff
 Provide overview of what to expect
Program Review Timeline
2-4 weeks advanced notice (but sometimes very
short notice, especially in cases of serious
complaints or adverse media)
Typically 1 week on-campus
Written report 1-6 months later
School response due in 30 days
Final Determination Letter (or, in cases of few or no
findings, an expedited Determination Letter)
Appeal process
Institutional Responsibility
3rd Party
How to Prepare
Read the 2009 ED Program Review Guide
Review the sample file and policy review checklists
Review and prepare for sample student/staff
interview questions
Obtain outside help if needed
Rally the Resources
Identify key staff to compile required documents –
share the responsibility
 Pull files
 Conduct individual interviews as needed
 Resolve issues
 Prepare to provide copies of entire student records
(FA files, admission applications, student records,
academic transcripts, student account files, R2T4
calculations/payments, etc.)
Internal Reviews
 Locate a Program Participation Agreement (PPA)
and Eligibility and Certification Approval Report
 Review prior audits
 Standard of Administrative Capability (34 CFR
 Corrective Action Plan (CAP) should have
indicated corrective steps taken
 What procedures are in place?
 Make sure prior deficiencies are addressed!
Tools of the Trade
 FSA Handbook
 ISIR Guide
 Dear Colleague Letters
 Federal Registers
 Code of Federal Regulations
 FSA Assessment Tool
 NASFAA Standards of Excellence
 NASFAA Self-Evaluation Guide
 The Blue Book
Preparation for Audit
 Review operational practices
 Review and update policy and procedures
documents for packaging
 Conduct training sessions on regulatory changes,
ongoing reminders and compliance information
Requested Documents Include:
 Policies and Procedures Manual
 Sample FSA forms
 Cost of Attendance Budgets
 Pell Electronic Statement of Account (ESOA)
 Return to Title IV (R2T4) worksheets
 Documentation of cash requests/refunds/returns
 Default management plan, if required
 Satisfactory Academic Program and refund policies
Requested Documents Include:
 Latest accreditation status
 Third party servicer contracts
 Administrative software utilized
 Program Participation Agreement (PPA) and
Eligibility and Certification Approval Report (ECAR)
 Financial statements for past two years
 Campus security report
 Catalog
 Consumer information
Specific Prep Items
Chart of accounts/funds information
Control/process memos
List of trainings and in-services for staff
Policies for notifying ED and NSLDS of student status
Reciprocity students
Cost of Attendance (COA) budgets
Compensation plans
Recruiting policies
Satisfactory Academic Progress & Academic progress
Consortium or other program agreements MOAs
Program Review and Audit: Helpful Hints
 Provide single point of contact
 Ask for requests in writing or confirm understanding
in writing for clarity
 Keep copies of everything provided: you will look at
the stuff again
 Provide a comfortable place for reviewers to work
 Respond promptly to requests
 Do not answer the “unasked” question
 Challenge findings
Managing the Visit
Give the Program Reviewers space, but be available
and check in periodically to see if anything is needed
Keep detailed notes of all questions, follow-ups,
documents provided
Track open items and resolutions
If possible, have your staff review COD and NSLDS
records of student sample group before the visit (or
as soon as you receive the list)
Entrance Interview
 President/Chancellor
 Vice President(s)/Provost
 Directors of key departments (Bursar, Admissions,
Comptroller, Chief Fiscal Officer(s), Internal Audit)
Entrance Interview Overview
Welcome and introductions
Program Reviewers will explain to the group:
 The purpose of the Review
 The scope of the Review
 The Timeframe, including the date/time of the Exit
Interview (typically with the same invitees)
Clarify the campus operating parameters (hours of access to
campus personnel) for Program Reviewers
Clarify who Program Reviewers will need to meet with
Remain professional, courteous and cautious responding only
to what is requested (and prepare others accordingly)
Exit Interview
Advise campus colleague attendees of any
preliminary issues you may be aware of before the
Exit Interview
Ask a campus colleague to take detailed notes
Ask for regulatory citations for any issues you may
Prepare your own list of questions for the Program
Discuss any findings or unresolved issues
appropriately – it is ok to ask questions (but don’t be
50 Ways to Survive a Federal Title IV Program
 Advise legal counsel of the visit in case they are needed
 Do everything you can to maximize the success of the review – do not feel
bad about asking staff or key responders to reschedule/postpone leave or
appointments to accommodate the review – this is important stuff
 You will need help – ask for it and keep asking until you get it!
 Trust that you know things
 Remember that no one knows everything, especially immediately from
 Stress that everyone involved should keep notes on all conversations of
 Ease tension for financial aid staff and other core responders by meeting to
discuss the review
 Listen more, talk less
50 Ways to Survive a Federal Title IV Program
 Be sure you understand any questions before trying to answer
 An honest answer to any question is all that is needed– however, do
not answer when you don’t know (no guessing!) or unnecessarily
expand an answer – it’s okay to say “I’d like to get back to you on
 Ask questions; respectfully disagree – a reviewer may not be an
expert in every area of financial aid (like systems)
 Keep organized; if you have the option, use an “assistant”
 Don’t treat reviewers like the enemy; be cautious but professional
 Establish a congenial working relationship with the reviewers
 Assume there will be findings
50 Ways to Survive a Federal Title IV Program
 When discussing findings, ask questions if you are unclear – you can
state “do not concur”
 You will have a good sense of what will be shared at the exit interview
- prepare those who will attend no matter how negative the findings –
it is much better to hear it from you first than in a group setting with
the reviewers
 During review ask for regulatory/statutory citations and make sure
you understand how they apply to the findings
 Make sure you keep all reviewed materials together to ensure you
know what reviewers saw at the time of the review
Completion of Audit
 Understand findings so corrective action can occur
 Write responses in timely fashion, involve other units
 Potential items:
Inaccurate/untimely reporting of enrollment status
Attendance first day (distance vs. non-distance)
Withdrawal date
Earn and unearned “F” grade
Grade level information, notification of
Full-time/part-time documented
Degree progress
Course repeat rules enforced
Frequent Audit Findings
 Auditor opinion cited in audit (qualified or adverse)
 Verification violations
 Pell over/under payments
 Student Credit Balance deficiencies
 Student confirmation report filed late/not filed/not
retained for five years/inaccurate
 Return of Title IV late, calculation errors
 Entrance/Exit Counseling
 Repeat finding – failure to take corrective action
 Student Status – inaccurate/untimely reporting
Most Frequent Program Review Findings
Crime awareness reporting
Return of Title IV late, calculation errors
Entrance/Exit Counseling
Student Credit Balance deficiencies
Missing or inconsistent information in student files
Pell over/under payments
Ineligible Pell disbursement
Most Frequent Program Review Findings
Consumer information deficiencies
Improper dependency overrides
Lack of administrative capabilities
Improper Certification of Student Loans
Repeat finding – failure to take corrective action
Student Status – inaccurate/untimely reporting
Some additional recent findings:
FWS students paid for time they were scheduled for class
Documenting Pell recipients’ initial attendance and/or
documenting dropping a class and reducing Pell
Findings on Both Lists
Return of Title IV late, calculation errors
Entrance/Exit Counseling deficiencies
Verification violations
Pell Grant over/underpayments
Student Credit Balance deficiencies
Repeat finding – failure to take corrective action
 Student Status – inaccurate/untimely reporting
Next Steps
 Create priority list for implementation of correcting
 Create an implementation timeline
 Review frequently
Online Resources
Top 10 Audit and Program Review
Findings: http://www.nasfaa.org/Main/orig/2012/Top_10_Audit_and_Program_R
Compliance Resources for Financial Aid
Professionals: http://www.nasfaa.org/compliance/
Program Review Guide for Institutions
Successfully Managing a Program Review (again, much of today’s slide deck
came from this NASFAA presentation):
FSA Handbook, Volume 2, Chapter 9, “Program Reviews, Sanctions &
Closeout” http://ifap.ed.gov/fsahandbook/attachments/1112FSAHbkVol2Ch9.pd
Moving Forward – OSU QA Model
Thank you!
Diane Stemper
[email protected]

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