1. Audit Resolution Process Annmarie Weisman U.S. Department of Education WVASFAA Conference Charleston, WV October 2011

2. Today’s Agenda Audit Requirements Audit Preparation Corrective Action Plans Audit Submission After Audit Submission 2

3. AUDIT REQUIREMENTS 3

4. Audit 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 4

5. Audit 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 5

6. Audit 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 6

7. Audit 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 7

8. Audit 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 8

9. Audit 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 9

10. Audit Waiver or Exemption 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”. 10

11. PREPARING FOR THE AUDIT 11

12. Info. 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)

13. Info. 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

14. Info. 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

15. Info. 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

16. AUDIT SUBMISSION 16

17. https://ezaudit.ed.gov https://ezaudit.ed.govhttps://ezaudit.ed.gov 17

18. eZ-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

19. Audit 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 19

20. Components Independent Auditors Report on Financial Statements (Financial Statements) Report on Compliance with Specified Requirements Applicable to the FSA Programs (Compliance Audit)

21. SUBMITTING THE AUDIT— eZ-Audit 21

22. https://ezaudit.ed.gov 22

23. eZ-Audit Step 1: Review Institution Profile Confirm the: –Institution name –OPEID number –Demographic information

24. eZ-Audit Step 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

25. eZ-Audit Step 3: Complete the Financial Statements and/or Compliance Audit Information pages Step 4: Complete the eZ-Audit online completeness checklist

26. 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

27. eZ-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

28. eZ Audit Helpdesk 28 Phone: 877-263-0780 Email: fsaezaudit.ed.gov

29. CORRECTIVE ACTION PLAN (CAP) 29

30. Corrective 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 30

31. Corrective Action Plans (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. 31 Finding: An incorrect budget was used for two out of 20 students.

32. Corrective 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. 32 Finding: Five out of 20 R2T4 calculations contained errors.

33. Corrective 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 33 Dos and Don’ts

34. AFTER THE SUBMISSION 34

35. Audit 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 35

36. Audit 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 36

37. Audit 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 37

38. Audit 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 38

39. Audit 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 39

40. AUDIT 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? 40

41. QUESTIONS? 41

42. Help with eZ-Audit Website: https://ezaudit.ed.govhttps://ezaudit.ed.gov Phone: 1-877-263-0780 Email: fsaezaudit@ed.govfsaezaudit@ed.gov

43. 43

44. School Participation Teams - Contact Information 44

45. Region III Training Officers Greg Martin gregory.martin@ed.gov 215-656-6452 Craig Rorie craig.rorie@ed.gov 215-656-5916 Annmarie Weisman annmarie.weisman@ed.gov 215-656-6456 45 Thank you!

46. Contact Information If you have follow-up questions about this session, contact me: Annmarie Weisman, Training Officer annmarie.weisman@ed.gov 215-656-6456 To provide feedback to my supervisor, contact: Tom Threlkeld, Supervisor thomas.threlkeld@ed.gov 617-289-0144 46