TEN SEEMINGLY SMALL OVERSIGHTS WHICH COULD LEAD TO AUDIT FINDINGS AND PENALTIES
Financial aid and business offices can be found in a flurry of activity most days, and it is very easy to overlook seemingly simple issues. Yet, if these issues are missed or incorrectly performed, they could lead to audit or program review findings. We have compiled a checklist below for you to use as a guide, in order make you aware of the more common errors institutions make, and to remind you that if these errors persist they could lead to U.S. Department of Education sanctions or penalties.
1. Using the wrong or undocumented last date of attendance when completing an R2T4 calculation.
2. Failure to follow the appropriate and required protocol in refunding money to the U.S. Department of Education. Remember, unsubsidized loans are the first to be refunded, followed by subsidized loans then Pell and other grants.
3. Using an IRS 1040 instead of a tax transcript when completing a required verification. Not following the Department of Education’s guidance in providing V-1 through V-5 instructions on the ISIR.
4. Reporting a date for disbursements to COD which is different than the date on the student’s account. Auditors and ED officials are paying close attention to the fact that dates are the same.
5. Failure to reconcile the Federal Pell and Federal Direct Loan accounts at the institution with those recorded at COD. Reconciliation of COD/G-5 records with those at the institution on a regular and systematic basis are required.
6. Failure to report a student’s change of status (for any reason) to NSLDS, a system referred to as Enrollment Reporting. The reports must be reported in a systematic and regular basis and the institution should have documentation that the enrollment reporting has been done.
7. Failure to notify students with loan disbursements, when a loan is disbursed, that funds have been received, and giving the student the opportunity to accept or decline receiving the loan funds.
8. Failure to maintain student’s financial aid files in an orderly manner and not protecting student's files from intrusion, damage or fire. Poorly organized files indicate lack of order. Lack of order indicates poor management. Poor management leads to what the U.S. Department of Education refers to as a lack of administrative capability, which can lead to restrictions or penalties.
9. Failure to have adequate security measures in place to protect electronic data.
10. Failure to have students complete an Entrance Interview and an Exit Interview when they are recipients of student loans.