Compliance and Financial Statement Audit

In the past, annual compliance audits weren’t required for all schools participating in Title IV, but ED’s recent reinterpretation of the HEA has some colleges doubling back.

Last year the Department of Education announced its plan to begin requiring annual compliance audits at Public and Non-Profit colleges beginning in fiscal year 2017. Until now, some schools only conducted financial statement audits each year under guidance from the Office of Management and Budget under the Single Audit Act and 2 CFR 200. Until recently, the Single Audit Act and 2 CFR 200 allowed schools to submit a compliance audit once every three years when an institution’s participation in the Title IV programs was determined to be low-risk. However, the Department’s position was announced in an August 2016 electronic announcement which stated that the provisions of both the HEA and the associated implementing regulations require submissions of the institution’s audited financial statements and compliance audit every year.

Last month the Department announced that this guidance was not able to be incorporated into the Office of Management and Budget’s 2017 Compliance Supplement, but still plans to include it in the Fiscal Year 2018 guidance schedule to be released later this year

The Department also reiterated the guidance from their August 2016 announcement that institutions should contact their School Participation Division if their auditor, in following previous OMB guidance, made a determination that their Student Financial Assistance Program Cluster was low risk. ED also confirmed that this guidance stands for calendar year 2016 and 2017 audits as well. You can read the full electronic announcement here:

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