OIG Audit Finds Weaknesses in FSA Program Compliance Reviews

By Brittany Hackett, Communications Staff

A final audit report found many weaknesses in the Federal Student Aid (FSA) Program Compliance division’s process for performing program reviews, including issues with maintaining required forms and documents and conducting appropriate reviews of distance education programs.

The U.S. Office of the Inspector General (OIG) conducted the audit and the review covered offices in Washington, D.C., Philadelphia, Dallas, and San Francisco from July 1, 2010, through January 31, 2011, with follow-up work conducted in March, April, and July 2014. Between October 2013 and June 2014, OIG also reviewed FSA Performance Improvement and Procedures Services Group’s revised quality control process and the “Program Review Quality Control Procedures.”

The audit focused on the program compliance division’s review process to ensure that institutions properly administer the Title IV programs. Overall, OIG found weaknesses in these processes, as well as weaknesses in selecting institutions for program reviews. According to OIG, these weaknesses have led to FSA having “limited assurance that program reviews are appropriately identifying and reporting all instances of noncompliance.”

The audit found that FSA did not conduct program reviews in accordance with its procedures. According to OIG, staff conducting the program reviews did not do the following:

  1. Maintain or always complete all required forms and documents in the files for the program reviews;
  2. Always adequately document fiscal testing for timely disbursements of funds and excess cash;
  3. Always conduct program reviews for distance education in accordance with FSA’s procedures for such reviews; and 
  4. Determine an institution’s compliance with the quality assurance system requirement for the Direct Loan Program.

OIG also found “limited evidence or supervisory review” of files to ensure that the review procedures were completed adequately and that the time allotted to perform reviews – usually one week onsite – may not have been enough.

Another finding of the report is that FSA’s program compliance division managers did not consider high annual dropout rates when prioritizing institutions for program reviews.

During follow-up work, OIG confirmed that while FSA “did not change its policies and procedures for conducting program reviews, it had revised its program review quality control process to address some of the findings in the audit. OIG noted in the final report of the audit that FSA staff should identify the same deficiencies found by OIG if they follow the “Program Review Quality Control Procedures.”

Other recommendations issued by OIG include that FSA:

  • Revise its “Program Review Procedure” to ensure documentation of all work and that program review files require supervisory review;
  • Require that school participation team managers, on the recommendations related to the Performance Improvement and Procedures Services Group’s quality control reviews, take corrective action;
  • Reevaluate whether the allotted time to complete a program review is enough for staff to document their work and for supervisors to review it; and 
  • Consult with the National Center for Education Statistics on the ability to collect and calculate annual dropout rates for institutions, and to then use those rates as a prioritizing factor for reviews.

In reviewing a draft of the report, FSA agreed to three of the five recommendations offered by OIG and said it would “take corrective action to address” the remaining recommendations, according to OIG.


Publication Date: 10/2/2015

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