Make a List and Check it Twice: Top 10 Audit & Program Review Findings

No, it is not the winter holiday season yet, but it is never too early to check your institutional policies and procedures against the Department of Education’s (ED) Top 10 Audit and Program Review findings for this year.  If the word “audit” does not send a chill of fear up the spine of most any financial aid administer, “program review” is certainly guaranteed to do the job. ED officials did note at the NASFAA 2012 National Conference, that there has been an increase in program reviews in recent years. Schools that have not had a program review in many years may receive notification that ED is coming.  In the spirit of preventive maintenance and brevity, the top audit and program review findings that appear on both lists are included.

Top Findings from Both Lists 

  1. Return of Title IV funds (R2T4) calculation errors
  2. R2T4 returns made late
  3. Pell Grant overpayment or underpayment
  4. Verification violations 
  5. Student credit balance deficiencies
  6. Entrance or Exit Counseling deficiencies

Common return of Title IV (R2T4) calculation errors include an incorrect number of days in the payment period or period of enrollment, ineligible funds counted as “aid that could have been disbursed,” improper treatment of overpayments, incorrect withdrawal dates, and mathematical and/or rounding errors (usually caused by hand calculations). ED officials added that the Pell Grant is the common culprit in the improper treatment of overpayments because often administrators do not perform required recalculations of awards before completing the return of Title IV funds calculation. 

Schools return Title IV funds late due to failure to follow school policies and procedures, inadequate tracking of official and unofficial withdrawals, and no system to track the number of days remaining to return funds within the 45 day time frame. While it was noted that often the actual return of funds to G5 does not take place in the financial aid office, returning Title IV funds within the regulatory time frame is an institutional responsibility. Schools should have procedures in place to ensure that whatever office returns funds does so within the required time frame.

Pell Grant overpayments or underpayments can be the result of using the wrong Pell Grant formula or incorrect calculations.  Incorrect calculations can stem from inaccurate proration, using an incorrect expected family contribution (EFC), adjustments between terms, and the incorrect number of weeks and hours used in the calculation for certain formulas.

Verification violations to avoid include missing or incomplete verification worksheets, missing or unsigned tax returns, failure to resolve conflicting data, not verifying untaxed income, and allowing corrections that exceed tolerance or failure to submit corrections. (Please note that the $400 tolerance was eliminated with the implementation of the Program Integrity Final Rule, effective for the 2012-13 award year. See 668.59(a).)

Student credit balance (Title IV refund) deficiencies are often the result of funds not being released to students within 14 days. Likewise, there may not be processes in place to determine when a refund has been created or the school has an authorization from a student or parent, which is not in compliance with federal regulations for holding funds.

Finally, check to ensure that entrance and exit counseling is being conducted and documented. Schools should also ensure exit counseling materials are mailed to students who failed to complete counseling through NSLDS or whatever other means your institution deems appropriate.

Please refer to NASFAA's 2012 Conference presentation page for more information on the Top Audit and Program Review Findings. You can find the file in the ED presentations zip file.



Publication Date: 8/7/2012

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