Spring is in the air. Admissions is counting deposits for new students, graduation is just around the corner and for many Financial Aid administrators, it’s also the time of year to start planning for your annual audit. There’s nothing more intimidating than a bunch of strangers picking through your files looking for your mistakes (or at least that’s what it feels like). Take control of the process by being pro-active and using your auditors as a resource to improve your procedures.
If you’re a new financial aid director or haven’t had the pleasure of participating in the process before, here’s some background. In order to participate in the federal aid programs, an institution receiving federal funds must annually submit an audit report prepared by an independent party that assesses the institution’s financial position and its management of federal funds. The report is due within six to nine months of the end of the institution’s fiscal year (the variance is based on school type) and is filed via the eZ-Audit website. There are some exceptions to the requirement based on the amount of funds received and the type of institution. See the Federal Student Aid Handbook, Volume 2, Chapter 4 for all the details.
They say the best defense is a good offense, so here are some steps you can take ahead of time to make sure your experience is as smooth as possible.
- Review your current participation agreement to make sure it is up-to-date. This is particularly important if there have been personnel or academic program changes at your school.
- If you haven’t updated your policy and procedure manual in a while, it’s a good time to check and make sure it is current and is being followed by all.
- Make sure that the setup/programming in your Financial Aid processing system is consistent with your written policies and procedures (i.e. SAP standards).
- Make sure you are familiar with any prior findings of weaknesses in your operation and do your own audit to ensure whatever process changes made in response to that audit have been successful. One of the Top Ten audit findings is failure to take corrective action on a prior finding.
- Notify cross-functional departments of the impending audit and recommend they prepare as well (think ledgers/student account records, official/unofficial withdrawal documentation, NSLDS reports, transcripts, etc.). The annual audit is a school-wide event.
- If your office retains any 3rd party agents, your institution is responsible for their compliance too. Collect a copy of each agency’s annual audit report.
- Make sure any Professional Judgement decisions are “reasonable” and clearly documented in the students’ files.
- Are you still filing paper documents? If so, it is helpful to get the student sample as early as possible to track down any misfiled documents and have everything scanned and ready when the auditor makes their request.
At the end of the day, this annual process is really to assess your school’s administrative capability and that includes all departments/divisions involved in the administration of Federal aid. Your audit findings will help focus your attention on where changes must be made. Appropriate and quick responses to annual audit findings (before the auditors leave campus or close the file review portion) will go a long way in avoiding more serious actions like the Department of Education’s program review, corrective action, fines and loss of eligibility to participate in one or more programs.
It’s more challenging than ever to stay on top of the ever-changing regulations impacting financial aid administration. The Higher Education Assistance Group is here to help! Our compliance experts can assist with everything from updating your policy and procedure manual to preparing a response to a program review. Email email@example.com for more information.