Common Findings Corner: Top 10 Compliance & Program Review Findings

Quick hits on hot topics for higher education institutions

The Department of Education hosted the Federal Student Aid (FSA) Training Conference for Financial Aid Professionals in November 2021. Typically offered at the end of the year, the conference reminds us to start thinking about specific topics as we head in the new year. Much like the prior year, the Department of Education provided its Top 10 Compliance Audit and Program Review Findings – we wanted to take the opportunity to review the issues the Department noticed during its reviews:

Top 10 Compliance Audit Findings, according to the Department:

1. Repeat Finding – Failure to Take Corrective Action
2. Student Status – Inaccurate/Untimely Reporting
3. Return to Title IV (R2T4) Calculation Errors
4. Return to Title IV (R2T4) Funds Made Late
5. Verification Violations
6. Student Credit Balance Deficiencies
7. Qualified Auditor’s Opinion Cited in Audit
8. Pell Grants – Overpayment/Underpayment
9. G5 Expenditures Untimely/Incorrectly Reported
10. Entrance/Exit Counseling Deficiencies

Top 10 Program Review Findings, according to the Department:

1. Student Status – Inaccurate/Untimely Reporting
2. Return to Title IV (R2T4) Calculation Errors
3. Student Credit Balance Deficiencies
4. Entrance/Exit Counseling Deficiencies
5. Verification Violations
6. Crime Awareness Requirements Not Met
7. Inaccurate Recordkeeping
8. Bank Accounts – Federal Funds Not Identified
9. Consumer Information Requirements Not Met
10. Satisfactory Academic Progress Policy Not Adequately Developed/Monitored

Last year’s top 10 compliance audit findings were the same as this year, although in a different order. As for the top 10 program review findings, eight out of 10 from the prior year remained on the listing.

What This List Tells Us

So, what does this tell us about what is currently on the Department’s radar? Schools must focus its review process on its systems for any areas that are consistently making these listings. These are common issues that impact a lot of schools – not new findings by any means. These challenges are typically complex and require closer review throughout the Title IV process with your auditor. The best defense you can implement now is making sure you’re in compliance with these regulations.

Top Findings

Repeat Finding – Failure to Take Corrective Action being the number one compliance audit findings shows that schools are either not resolving the prior year findings or are having similar issues from one year to the next and are unable to address the controls over these areas in its systems.

When forming a corrective action plan each year, this gives schools the chance to address issues and work to avoid findings on future audits. A lot of times, these corrective actions may address the actual dollar amounts in question but don’t really dig deep enough into why the finding happened in the first place – or how to reduce the chances of the finding happening again in the future.

To avoid this, think about the following when forming a corrective action plan:

• Why did the error occur? Was it something that should have been caught with usual safeguards or was it simply a manual oversight? Was it a systematic error or more of an isolated incident?
• Who was responsible for the error, and do they have proper oversight?
• What safeguards can be added in the review process to eliminate this finding in the future?
• When did the error occur? This is important, because audits can occur up to almost six months after schools’ year-ends, so you are already through half of the next cycle by this point.

The questions could go on – the point is that you want to make sure you address these issues in a way that is meaningful. This means sitting down with the people involved in these processes and coming up with a game plan that addresses the current year finding and helps eliminate these findings from future audits. Throughout the last year or so, the Department of Education has begun rejecting corrective action plans that don’t attempt to address findings. It is, therefore, highly recommended to put the proper footwork in before finalizing your corrective action plan.

Taking the Next Step

Use the tools you have at your disposal to help eliminate unnecessary findings. Being well acquainted with the Federal Student Aid Knowledge Center is a good place to start. If you use a servicer, reach out to them with questions. You can also reach out to your auditors if you have more difficult questions, as they are the ones reviewing your work during the audit process.

There is no planning that can 100% eliminate findings on a year-to-year basis, but most of the time, there are steps to take that can reduce current year findings and address prior findings in a way that is positively impactful moving forward. Contact us if you have any questions, and we’ll be in touch.