By Michael Wherry, CPA
The old adage “what doesn’t kill you makes you stronger” is relevant to our clients who have gone through their first student financial aid compliance audit under the September 2016 Audit Guide (Guide). The Guide certainly caused an increase in the amount of work and posed some hurdles and learning curves for our clients and ourselves. A brief summary of the key items and results are as follows:
On average, the audit time increased approximately 50% as this was the initial learning curve for all parties involved. We are continuing to refine our audit procedures to ensure that we are requesting the correct information from clients and being as efficient as possible. We anticipate the additional time will be somewhat less for the December 31st year end audits.
New findings occurred as a result of the additional audit areas we had to test; many of which were in relation to gainful employment. For example, we found:
- Gainful employment programs which were not reported to ED.
- Incorrect debt information reported to ED related to gainful employment reporting.
- Errors on the gainful employment disclosure template (GEDT) in regard to one or multiple items disclosed
As a side note, ED recently accounced the release of the 2018 GEDT and the deadline for updating your current disclosures. Institutions will have until April 6, 2018 to update disclosures for each of their GE programs, and should keep in mind the July 1, 2018 deadline for complying with the distribution requirements described in 34 CFR 668.412(d) and (e). We will be reviewing 2017 GE disclosures during our audits this spring. If you haven’t already, it would be prudent to save copies of your 2017 GEDT’s and supporting documentation before updating your institution’s website with 2018 data.
On a positive note, the student confirmation process hasn’t delayed the audits or been overly onerous from an audit standpoint.
- We are able to send the confirmations electronically in Outlook using an email merge with a Word document. If the institution is able to provide accurate contact information, the process has worked well. The process to obtain this contact information has varied by school and depends significantly on the student information system, however once this process is completed for this year’s audit, the procedures can be documented for future audits.
- While the confirmation process hasn’t resulted in significantly more hours, the response rate and overall value of the confirmations is very low. The response rate has been approximately 5% with only a handful of students completing the confirmation survey completely. M&A has performed alternative procedures by reviewing attendance records and subsequent disbursements.
Program length testing, another new procedure from the Guide, has resulted in additional questions for clients. We are required to test one graduated student from each program to ensure the student’s credits and length are consistent with the program’s structure. Questions arise for the following reasons and while we have been able to resolve the discrepancies, these issues have added time to the audit process.
- Students switch programs or drop / re-enroll and thus take longer to graduate.
- Students transfer in credits and thus take less time to graduate, or
- The program credits and weeks on the ECAR changed and thus differ from the students in our sample.
M&A is committed to being efficient on our student financial aid compliance audits and communicating best practices to our clients during the audit process. For clients who are about to have their first audit under the new Guide, we appreciate your patience and understanding through the process.
