Presentation on theme: "HEA Title IV Audit Appeals and Program Reviews"— Presentation transcript:
1HEA Title IV Audit Appeals and Program Reviews Jennifer Mauskapf, Esq.Brustein & Manasevit, PLLCSpring 2011 Forum
2OVERVIEW Audits vs. Program Review Visits Federal Audit Process OverviewVisit PreparationAfter the Audit Visit: Resolution ProcessRecent FindingsPreventative Measures
3Overview of the Federal “Players” Office of the Inspector General (OIG)USDEOffice of Postsecondary Education (OPE)Office of General Counsel (OGC)Office of Hearings and Appeals (OHA)Administrative Law Judges (ALJs)
4Audits vs. Monitoring Visits KEY SIMILARITY: ED may issue a determination letter in either case. Must be prepared for both!!!AUDITED OIGFew weeks noticeUsually know which programLikely to quantify cost of adverse findingsRelatively formalMONITORING VISITED Program SideGenerally scheduled well in advanceUsually notice of the indicators they will monitorMay quantify cost of adverse findingLess formal
5Life Cycle of a Federal Audit Notification of Audit Visit2- 4 weeksEntrance ConferenceAt least 4 weeksExit ConferenceAt least 2 monthsRelease of Draft Audit ReportAuditee Response (30 Days)At least 3 monthsRelease of Final Audit ReportAuditee Response to POC at ED30 DaysIssuance of PDL 180 days from Final Audit ReportCorrective Action Plan from Auditee (Often 60 Days)60 Days from PDLApplication for Review of PDLSubmission of Evidence (90 Days)Initial Decision of OALJPetition for Review of Initial Decision (30 Days)Final Decision of the Secretary (60 Days from Initial Decision)Judicial Review – U.S. Circuit Court of Appeals (60 Days from Final Agency Decision)
6VISIT PREPARATION: What to Expect and How to Prepare
7Setting the ToneCommon concern: Grantees are wary of challenging USDE and compromising relationship.Balancing ActOpportunity to maintain and enhance relations with ED, BUTThis is not a social call and you cannot treat it as just that.
8Preparing for the Visit Planning Helps Prevent Avoidable Findings!Know what to expect.Organize for the visit.Preparing for Known Substantive AreasPreparing EmployeesDocumentation Ready
9Visit Time Physical Arrangements Management Involvement Room space, including phones and copying availability.Management InvolvementHave “higher-ups” involved; at least for the meet and greet.
10Post-Visit: Determination Letters Adverse Findings - not at all uncommonFindings are often based on very technical violationsFindings can be, and often are, successfully challengedBUT…Avoid being in that position by being PROACTIVE!TRAIN,EVALUATE,and PREPARE!
11AFTER THE VISIT: Resolving Adverse Audits and Program Review Reports
12Audit Resolution Stages Draft Audit Report (DAR)Final Audit Report (FAR)Program Determination Letter (PDL)ALJ ReviewFinal Decision of the SecretaryJudicial Review
13OIG Draft Audit Report Auditors’ Findings and Recommendations Not PublicResponse is to the Regional IGOIG Opportunity to Revise Draft Audit Report based on your response!30 Days for ResponseExtensions may be made upon requestSpecial Considerations re: Response to DAR
14OIG Final Audit ReportAuditors’ Final Findings and Recommendations to USDEWill be made PUBLIC!Includes your response to DARResponse is to the Asst Sec (OPE)30 days for ResponseExtensions may be given upon requestSpecial Considerations re: FAR Response
15Program Determination Letter Issued by USDE officeResponding to PDLFile Application of Review to OALJ34 CFR §§ 81.12, 81.3760 days to fileFailure to Respond =Waiver of AppealInterest accrues as of PDL date (31 USC § 3717)
16Program Determination Letter (cont.) OALJ truly objectiveSubmit timely appeal!Settlement negotiations can lower amount returnedSpecial ConsiderationsDifferent Audience, different legal arguments
17After ALJ Decision Issued… Appeal to SecretaryAppeal to US Circuit Court of AppealsAppeal to US Supreme Court
19Standard for Repayment of Funds OIG can recommend the grantee repay funds for a number of different reasons:Violation of the Program’s Statute, Regulations (ex. – incorrect calculation of award)Violation of OMB Circulars (ex. – failure to adequately document)Be creative in defending the audit
20Most Common Audit Findings Return of Title IV Funds Calculation ErrorsPell Over/Under PaymentsReturn of Title IV Funds Made LateVerification ViolationsOveraward – Financial Need ExceededReturn of Title IV Funds Not MadeEnrollment Status Not Verified Before DisbursementImproper Certification of Stafford LoanStudent Credit Balance DeficienciesTIE:Ineligible Student – Not Making Satisfactory Academic ProgressRepeat Finding – Failure to Take Corrective Action
21Most Common Prog. Review Findings Verification ViolationsCrime Awareness Requirements Not MetStudent Credit Balance DeficienciesReturn of Title IV Funds Calculation ErrorsReturn of Title IV Funds Made LateEntrance/Exit Counseling DeficienciesAccount Records Inadequate / Not ReconciledInformation in Student Files Missing or InconsistentSAP Policy Not Adequately Developed/MonitoredPell Over/Under Payments
22MOST COMMON on both lists! Return of Title IV Funds Made LateReturn to Title IV Calculation ErrorsVerification ViolationsPell Grant Over/UnderpaymentsStudent Credit Balance DeficienciesSatisfactory Academic Progress
23R2T4 Made Late Regulation: 34 C.F.R. §668.22(j) Returns not made within allowable timeframe (45 days)Inadequate system in place to identify/track official and unofficial withdrawalsNo system in place to track number of days remaining to return fundsLack of coordination between officesRegulation: 34 C.F.R. §668.22(j)
24R2T4 Calculation Errors Incorrect institutional charges for the period Scheduled breaks not includedIncorrect number of day counted for the periodIncorrect withdrawal dateMathematical errorsRegulation: 34 C.F.R. §668.22(e)
25Verification Violations Verification worksheet not signedUntaxed income not verifiedConflicting data on ISIR and verification documents not resolvedRequired corrections not processedRegulation: 34 C.F.R. §
26Pell Grant Over/Underpayments Adjustments not made for change in enrollment status between termsAttendance not documented in all coursework counted in the enrollment statusModules or compressed courseworkIncorrect Pell formulaInaccurate proration calculationIncorrect Estimated Family ContributionIncorrect number of weeks/hoursRegulations: 34 C.F.R. § &
27Student Credit Balance Deficiencies No process in place to determine when a credit balance has been createdCredit balances not released to students within required 14-day timeframeCredit balances held without student authorizationsRegulation: 34 C.F.R. § (e)
28Compliance with Satisfactory Academic Progress Requirement Missing required componentsQualitative, quantitative, completion rate, maximum timeframe, probation, appealsPolicy not at least as strict as for non-Title IV recipientsSAP standards inconsistently appliedAid disbursed to students not meeting the standardsRegulation: 34 C.F.R. § (e)
30IMPORTANCE OF TRAINING Helps you stay in compliance.You are responsible for constant changes and innuendos in ED policy!Demonstrates to ED that you are proactive and take compliance seriously.Make sure trainers know what they are talking about and are up to date on current issues!
31ABOUT WHAT? FIRST: Start Broadly. THEN: Get more specific tailoring to new issues and your specific weaknesses.CONTINUE:Refresher trainings are always helpful.Also, new trends or changes in the law…keep your staff and subrecipients up to date!
32Resources: Staying Up-to-date Your Specific Problem AreasRecent Audits (Internal and Single)Recent Monitoring Reports (ED or Internal)ED Policy and TrendsOIG Monitoring ReportsED GuidanceED Press ReleasesED Policy Letters to CSSOs, etc.
33RESOURCESOIG “What’s New” (Chron. Listing)OIG Audit Reports by OfficeUSDE Office of Hearings and AppealsInformation for Financial Aid Professionals
34This presentation is intended solely to provide general information and does not constitute legal advice or a legal service. This presentation does not create a client-lawyer relationship with Brustein & Manasevit, PLLC and, therefore, carries none of the protections under the D.C. Rules of Professional Conduct. Attendance at this presentation, a later review of any printed or electronic materials, or any follow-up questions or communications arising out of this presentation with any attorney at Brustein & Manasevit, PLLC does not create an attorney-client relationship with Brustein & Manasevit, PLLC. You should not take any action based upon any information in this presentation without first consulting legal counsel familiar with your particular circumstances.