Reconciliation is the process by which a school reviews and compares Title IV aid (grants, loans, and campus-based aid) recorded on the Department’s systems with the information in the school’s internal records. Through reconciliation, disbursement and cash discrepancies are identified and resolved in a timely manner to ensure the school meets all regulatory requirements. Schools must document their reconciliation efforts and retain this documentation for auditing purposes.
There are two types of reconciliation schools must perform on an ongoing basis:
Internal Reconciliation – This is the process where the business and financial aid offices compare the monthly financial aid office roster of scheduled disbursements to a monthly business office cash detail report that reflects funds drawn down and funds disbursed for the month. If discrepancies are found, your school should document and resolve them in a timely manner.
External Reconciliation – The school compares its reconciled internal records to the Department’s records of funds received and returned, and loans originated and disbursed to students at the school. At a minimum, this reconciliation must be completed at least monthly to ensure that data is correct in all systems and that cash management and disbursement reporting timelines are being met. If you have completed your internal reconciliation first, your school will have fewer discrepancies to resolve when you perform this external reconciliation. The Department offers various tools to assist you with external reconciliation. For more information, see the attachment to this announcement.
Direct Loan schools must also complete a final reconciliation to a zero ($0) Ending Cash Balance at the end of their processing year. This should occur shortly after you submit and the COD System accepts, your final disbursements but no later than the Program Year Closeout deadline, which is the last processing day in July of the year following the end of the Award Year.
FSA recently provided an updated FAQ offering solid pointers for schools to aid in their ongoing reconciliation efforts. http://bit.ly/2hzXT2K