audit resolution process pasfaa spring training april 2011 greg martin (west) annmarie weisman...

Audit Resolution ProcessAudit Resolution Process

PASFAA Spring Training

April 2011

Greg Martin (West)

Annmarie Weisman (East)

U.S. Department of Education

Today’s AgendaToday’s Agenda

AUDIT REQUIREMENTSAUDIT REQUIREMENTS

Audit RequrementsAudit Requrements

• Schools must arrange for regular independent audits that include the operation of the FSA programs– Submit online via eZ-Audit system – School official, servicer, or auditor submits

via a secure login process– FAQs and registration information on the site

Audit RequirementsAudit Requirements

• Public & Non-Profit Institutions:– A-133 Circular– Due within 9 months

of the fiscal year end (FYE) date

(-More requirements, more time)

• For-Profit Institutions:– SFA Audit Guide– Due within 6 months

of the fiscal year end (FYE) date

Audit InstructionsAudit Instructions

• Other Audit Instructions:

• Compliance Supplements

• Dear CPA Letters

• http://www2.ed.gov/about/offices/list/oig/nonfed/sfa.html

• Other Resources– The Blue Book– FSA Handbook

Audit ExemptionAudit Exemption

• Exemption- Public and Non-Profit Institutions:– Due within 6 months of the fiscal year end (FYE) date– May be requested by institutions that disburse

<$500,000 in federal funds each award year

Reference: Section 487 (c) of HEA

Audit WaiverAudit Waiver

• Waiver - For-Profit Institutions:– Due within 6 months of the FYE date

– May be requested by institutions that disburse <$200,000 in Title IV funds each award year

– Cannot be on Heightened Cash Monitoring

– Must have same ownership for at least 3 prior yrs.

– No audit liabilities >$10,000 in 2 most recent FY

Reference: 34 CFR 668.27

Audit WaiverAudit Waiver

• Waiver - For-Profit Institutions:– Requires a Letter of Credit of 10% of the Title IV funds

disbursed in the most recent award year, and retain records for the waiver period for 2 years beyond the normal record-retention period

– Allowed for up to 3 years, beginning with the FY when the school requests the waiver

– Requires a compliance audit covering the entire period of the waiver, and an audited financial statement for the last fiscal year of the waiver, due 6 months after the waiver ends

Audit Waiver orAudit Waiver orExemption RequestExemption Request

• How to request a Waiver or Exemption:1. Log in to the ezaudit.ed.gov website.

2. On the upper left hand side of the page,

3. Click on “Other Submissions” (upper left side of the page)

4. Click on “Create Waiver/Exemption Request”

5. Confirm your OPEID number and school name.

6. Click on the Browse button to search for document(s) to be attached.

7. After the document(s) has been attached and the file type identified by checking the box, click the “ADD” button to ensure that the document(s) has been attached. Documents should be on letterhead and signed.

8. Select the Fiscal Year End date from the drop down menu for which you are requesting a waiver.

9. Click “SUBMIT TO ED”.

PREPARING FOR THE AUDITPREPARING FOR THE AUDIT

Info. to Provide to the AuditorInfo. to Provide to the Auditor

• Schools must supply DL disbursement and adjustment info. for each borrower (or loans) in the auditor’s sample– Auditor establishes due date– Obtain information from school system

and/or FSA systems (COD and NSLDS)

Info. to Provide to the AuditorInfo. to Provide to the Auditor

• An authorized school user should make screen shots of the following data for the aid recipient from COD:– SSN– Name– DOB– Loan ID #– Disbursement Amount(s) & Date(s), with

any adjustments

Info. to Provide to the AuditorInfo. to Provide to the Auditor

• An authorized school user should make screen shots of the following data for the borrower/loan from NSLDS:

– Loan Status

– Loan Type

Info. to Provide to the AuditorInfo. to Provide to the Auditor

• May email or copy info. to a CD

• Protect Personally Identifiable Information (PII)– Encrypt all data– Password protect all files– Communicate Passwords separately– Secure all data must be secure– Give access only to authorized individuals

AUDIT SUBMISSIONAUDIT SUBMISSION

https://ezaudit.ed.gov https://ezaudit.ed.gov

eZ-AuditeZ-Audit

• Extensive help available online

• In operation since April 1, 2003

• Avoid errors that delay processing– Must use Adobe Acrobat to create a PDF– Reports must be signed and scanned– Reports must be on appropriate letterhead

Audit StandardsAudit Standards

• Report on Compliance and Internal Controls Over Financial Reporting Based on an Audit of Financial Statements Performed in accordance with−– Generally Accepted Accounting Principles (GAAP)– Generally Accepted Government Auditing Standards

(GAGAS)

• Report on Internal Control Over Compliance

• Report on Compliance with Specified Requirements Applicable to the FSA Programs

ComponentsComponents

• Independent Auditors Report on Financial Statements (Financial Statements)

• Report on Compliance with Specified Requirements Applicable to the FSA Programs (Compliance Audit)

CORRECTIVE ACTION PLAN CORRECTIVE ACTION PLAN (CAP)(CAP)

Corrective Action PlansCorrective Action Plans

Do:

*Note whether or not you concur with the finding. If you think you are right, say so and provide evidence

*Show how you corrected the specific error (adjusted the award, returned funds, etc.) AND will prevent future errors (training, checklist, etc.)

Don’t:

*Blame the problem on:

• “human error”

• “the “system”

• “staff turnover”

• “new staff”

• anything else that shows a lack of administrative capability

Dos and Don’ts

SUBMITTING THE AUDIT—SUBMITTING THE AUDIT—eZ-AuditeZ-Audit

https://ezaudit.ed.govhttps://ezaudit.ed.gov

eZ-AuditeZ-Audit

Step 1: Review Institution Profile

•Confirm the:– Institution name– OPEID number– Demographic information

eZ-AuditeZ-AuditStep 2: Select the submission type:

– Annual

– Merger/Change in Ownership

– Change Fiscal Year End Date

– Stub Audit

– Exemption/Waiver Request

– Submit Additional Information

– Letter of Public Status (one time only)

– Initial*

– Reinstatement*

– Closeout

*Submit after filing an e-App to participate

eZ-AuditeZ-Audit

• Step 3: Complete the Financial Statements and/or Compliance Audit Information pages

• Step 4: Complete the eZ-Audit online completeness checklist

eZ-Audit eZ-Audit

• Step 5: Upload PDF attachments– financial statements – compliance audit, including the school’s

CAP, if applicable• An A-133 report can be uploaded as one PDF• No SSNs in attachments

• Step 6: Submit to ED

eZ-AuditeZ-Audit

• Step 7: Resubmissions– If a resubmission of a PDF file is required,

delete the existing PDF file in eZ-Audit first and then upload the corrected PDF file

eZ Audit HelpdeskeZ Audit Helpdesk

Phone:877-263-0780

Email:fsaezaudit.ed.gov

Corrective Action Plan ComponentsCorrective Action Plan Components

Non-Profit/Public schools: – must provide:

• the name(s) of the contact person(s) responsible for corrective action

• the action planned• the anticipated completion

date

*OMB Circular A-133 §315(c)

Proprietary schools:– must provide:

• all information on the institution’s letterhead

• the action planned• the name, title and telephone

number of the institution’s official responsible for the CAP preparation

*SFA Audit Guide, Jan. 2000

Corrective Action PlansCorrective Action Plans(cont.)(cont.)

CAP Example A:

These errors were the result of different circumstances in each case. They appear to be isolated incidents.

CAP Example B:

The institution concurs with this finding. A checklist for awarding aid was implemented for use by all Financial Aid Counselors effective Sept. 15, 2011. The Director also reviewed with the staff the importance of using accurate budget code.

Finding: An incorrect budget was used for two out of 20 students.

Corrective Action PlansCorrective Action Plans

CAP Example A:

The errors noted were the result of a system problem. Additional staff training will be conducted in the future.

CAP Example B:

The institution concurs with this finding. All staff with responsibility for R2T4 will attend training before Jan. 15, 2012. Effective Sept. 30, 2011, all R2T4 calculations will be reviewed by another staff member before funds are returned to ensure accuracy.

Finding: Five out of 20 R2T4 calculations contained errors.

AFTER THE SUBMISSIONAFTER THE SUBMISSION

Audit Resolution ProcessAudit Resolution Process

• Screening– Initial process by eZ-Audit system– Follow-up by eZ-Audit staff– Incomplete submissions returned to school

• Email notification only• Institution responsible for timely resubmission• Submission is late if not completed by due date

Audit Review ProcessAudit Review Process

• Routing of Complete Submissions– If no findings or only minor finding(s), the

eZ-Audit system sends a system generated letter via email to the President

– If significant finding(s) or repeat of a minor finding(s), the eZ-Audit system sends the submission to the School Participation Team (SPT) for review

Audit Review ProcessAudit Review Process

• Audit Submissions reviewed by the SPT– With rare exception, must be resolved

within 180 days– Staff member will use information from eZ-

Audit and other ED systems• Will contact the school for information if needed

Audit Resolution ProcessAudit Resolution Process

• Final Audit Determination (FAD) Letter:– Addresses selected findings in detail

• Includes regulatory citation, summary of auditor’s finding, summary of actions taken by the institution

• Specifies any liabilities the institution must repay, repayment instructions, and due date

– Provides information on how to appeal if liabilities are assessed

Audit RemindersAudit Reminders

• Use the audit as a learning opportunity

• Test & evaluate effectiveness of policies, procedures systems, & training

• Be forthcoming

• Never obstruct the audit process – Access to records, staff– Alteration of records, student samples

AUDIT FAQsAUDIT FAQs

• Should a school change auditors every few years for a fresh perspective?

• Does ED expect a school to have no findings?

• How does ED use the information from a school’s audit?

QUESTIONS?QUESTIONS?

Help with eZ-AuditHelp with eZ-Audit

• Website: https://ezaudit.ed.gov

• Phone: 1-877-263-0780 (toll-free)

• Email: fsaezaudit@ed.gov

School Participation TeamsSchool Participation Teams

Region III Training OfficersRegion III Training Officers

Greg Martingregory.martin@ed.gov215-656-6452

Craig Roriecraig.rorie@ed.gov215-656-5916

Annmarie Weismanannmarie.weisman@ed.gov215-656-6456

Thank

you!

Contact InformationContact Information

• For questions about this session, contact:Annmarie Weisman, Training Officerannmarie.weisman@ed.gov215-656-6456

-or-

Greg Martin, Training Officergregory.martin@ed.gov215-656-6452

• To provide feedback to our supervisor, contact:Tom Threlkeld, Supervisorthomas.threlkeld@ed.gov617-289-0144