Time sure flies when you are having fun! Or when you don’t know what’s going on…Turns out – either way time will be at a premium in 2016 as we gear up for another busy year and some new problems and challenges on the horizon.
Lots of things happening in 2016 – Are you ready?
Well it’s the beginning of audit season for many schools, so this month I’m sharing lots of audit related information to keep you all in the know.
Last year, the U.S. Department of Ed, created a “Third-Party Servicer Oversight Group. This group, headquartered in the Kansas City region and lead by Ralph LoBosco has been conducting program reviews of “Third-Party Financial Aid Servicers” while simultaneously conducting program reviews at up to six of that servicers client schools. This is the first time ever that Ed has conducted reviews of servicers and they found significant issues with every single servicer…and … every single school they visited as art of each review (see below for a summary of the top Third Party Servicer Program Review issues).
The problems Ed found were so pervasive that Ed is now publicly decrying their use by schools and reaffirming their long standing position that Ed, does not endorse or approve third-party servicers. And while the final program review determination letters from last years Program Reviews won’t be made public until later this year, Ed is already telling schools that use third party servicers to expect more program reviews in the coming year.
Whether your school uses a third party servicer or not, compliance is still the name of the game, the average fine per institution was $193,042 in Fiscal Year 2014 and $188,968 in FY15. Nearly half of all schools that received a program review in the last two fiscal years received a fine from Ed.
In addition to fines, when Ed finds problems, schools are often placed on Heightened Cash Monitoring which not only slows down cash flow, but usually the school to post an irrevocable letter of credit equal to a percentage of an institutions Title IV disbursements and the HCM status often comes with growth restrictions and a provisional PPA certification. In the most extreme cases, Ed will simply take an emergency action against the school and shut it down (Think Drake School of Business, Corinthian College etc.).
And a few words for the CPA Auditors out there. The OIG routinely conducts Quality Control Reviews (QCRs) of school audits. One problem that the OIG sees over and over is a lack of documentation. Turns out, auditors all too often fail to document in their work papers that they have performed the required audit procedures. The bottom line – If the work isn’t documented…it wasn’t done. (See this month’s Q & A below for a follow up question).
Also on the list of important things to keep in mind for 2016:
- 2014-2015 Disclosures must be on your website by January 31, 2016
- Draft Gainful Employment Completers Lists – (Early 2016)
- Draft Gainful Employment Debt-To-Earnings Rates – (Summer 2016)
- Final Debt-To-Earnings Rates – (Winter 2016)
Net Price Calculator
- 2014-2015 NPC must be posted on your schools website by January 31, 2016
- October 2016 – Using Prior-Prior-Year Tax info
Program Integrity Regulations – July 1st 2016
- Cash management
- Prior Year Charges
- Prorating Charges
- Provisions for Purchasing Books and Supplies
- Repeat Coursework
- Clock-To-Credit-Hour Conversion
Make a Great Day!