What's in Your Audit?

A Comparison of NASFAA Peer Reviews with Annual Audit Requirements

Generally, schools participating in the Title IV aid programs must submit compliance and financial audits to the U.S. Department of Education (ED) each year. Many believe the compliance audit is sufficient to ensure they comply with the plethora of rules and regulations. But do you really know what goes into your audit? A NASFAA peer review through the Standards of Excellence (SOE) review program will find issues that your auditors can miss.

Let’s compare the professional experience, instructions provided, and topics evaluated between your annual audit and a NASFAA SOE peer review.

Who Performs Your Audit?

Audit FirmAudit Firm - Schools must have financial and compliance audits performed each year. Government Auditing Standards state that auditors performing financial audits must be licensed accountants, but does not specify who must perform compliance audits. To save money, it is likely that many schools will engage the same firm to perform both financial and compliance reviews. This means that someone outside of the financial aid industry is likely performing your school’s compliance review.

SOENASFAA SOE Review - NASFAA reviews are conducted by current financial aid practitioners. All our peer reviewers must have at least eight years of experience, but many have decades more. They are dealing with the same challenges you have daily: staffing and budgets, enrollment management goals, and regulatory burden. Our experienced peer reviewers can provide you with ways to improve your operations.

How Much Instruction Do Your Auditors Receive?

To perform an effective evaluation, reviewers need to know what to assess. While each auditing firm may have separate worksheets and checklists to determine the level of detail to include in the audit, the federal government provides general guidance on completing audits in one of two documents, depending on school type:

  • For-profit schools: Inspector General’s Audit Guide (for FSA school audits), which contains 42 pages of instructions to complete an audit.
  • Public and nonprofit schools: Office of Management and Budget Circular A-133 Compliance Supplement, which contains 65 pages of instructions to complete an audit.

NASFAA peer reviewers receive 458 pages of instructions and guidance provided to complete a full SOE Review, and 85 pages to perform a Consumer Information Assessment. This level of detail in our review results in consistent evaluations across all school types, fewer opportunities for missed findings, and a more comprehensive review.

SOE Chart

What Topics Does Your Auditor Review?

Compliance audits focus on one thing: whether the school fulfills the requirements outlined by Title IV aid rules and regulations. NASFAA SOE reviews not only evaluate compliance issues, but also identify strengths the school exhibits and make recommendations to improve the school’s administration of federal financial aid programs.

The Audit Guide and A-133 Circular only provide periphery summaries of the required provisions in the following areas, and auditors are required to refer to relevant rules and regulations applicable in a compliance audit at the audit firm’s discretion. NASFAA SOE reviewers perform a comprehensive evaluation in all the following areas of Title IV aid administration.

Topic

NASFAA SOE Review

Comprehensive Evaluation


Annual Audit

Unknown Level of Detail

Award Letters

X

 

Cash Management

X

X

Consortium/Contractual Agreements

X

X

Cost of Attendance

X

 

Drug-Free Workplace and Civil Rights Compliance

X

X

Facilities Review

X

 

Federal Programs – FSEOG

X

X

Federal Programs – Federal Work-Study

X

X

Federal Programs – Federal Pell Grant

X

X

Federal Programs – Federal Perkins Loan

X

X

Federal Programs – PLUS Loans

X

X

Federal Programs – Subsidized and Unsubsidized Loans

X

X

Federal Programs – TEACH Grants

X

X

Family Education Rights and Privacy Act

X

 

File Review

X

 

Financial Aid Application Process

X

 

FISAP

X

X

Funds Reconciliation

X

X

Institutional Eligibility and Title IV Aid Participation

X

X

Institutional Requirements Related to Education Loans

X

 

Overawards

X

 

Packaging

X

 

Professional Judgment

X

 

Program Eligibility

X

X

Program Eligibility – Clock/Credit Hour Conversion

X

X

Return of Title IV Funds

X

X

Recordkeeping

X

X

Satisfactory Academic Progress

X

X

Staff Interviews

X

 

Staff Assessment

X

 

Student Consumer Information

X

X

Student Eligibility Issues

X

X

Student Satisfaction Survey

X

 

Tech – Financial Aid System Processing and Functionality

X

 

Tech – General Technology Issues

X

 

Tech – Technology Management

X

 

Verification

X

X

Does This Mean My Audit Isn’t Enough?

Not necessarily. The detail and expertise of audit firms will vary, but it may be time for an outside evaluation to make sure critical compliance issues are not missed. For more information about NASFAA’s peer review services, visit nasfaa.org/SOE.

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