If your school has been a Single Audit filer, ED recently provided an update to the submission requirements for 2018 that you’ll want to pay attention to. Last year, the Department required Single Audit filers to submit an audit annually and, in the event that the Student Financial Assistance Cluster, which includes the Title IV programs, was not audited as a major program because it was identified as a low-risk program, filers were instructed to contact their School Participation Division to report the low-risk determination.

Updated Audit Requirements for 2018

Public and non-profit entities with institutions participating in the Title IV programs that submit a Single Audit that does not include the Student Financial Assistance Cluster as a major program will no longer be required to notify their respective School Participation Division of the low-risk assessments.

According to 2 C.F.R. § 200.518(a), under a Single Audit, an auditor must use a risk-based approach to determine which Federal programs are major programs. Part of the major program determination requirements at 2 C.F.R. § 200.518 require an auditor to identify larger Federal programs (Type A programs) which are low-risk. If a Type A program is identified as low-risk, it is not required to be audited as a major program, unless necessary to comply with the percentage of coverage rule. For a Type A program to be considered low-risk, it must, among other requirements, have been audited as a major program in at least one of the two most recent audit periods.

Institutions must still submit (via the Department’s eZ-Audit system) their complete Single Audit each year by the due date regardless of whether the Student Financial Assistance Cluster was audited as a major program.

The impact on year three testing requirements (after two years of low risk assessments) for fiscal year 2019 audits and beyond is still under review.

You can read the full electronic announcement from Federal Student Aid here.


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: http://bit.ly/2qXbkzW

Need help responding to Audit and Program Review findings? We’re here to help. Call 203-836-4806 or Email Info@Ed-Executives.com



The Higher Education Act of 1965, as amended,  requires annual financial and compliance audits of Title IV HEA programs for all institutions that participate in in FSA programs. Schools are required to arrange for regular independent audits that include the operation of the Federal Student Aid programs.
According to the U.S. Department of Education, these are the top ten audit findings from institutions annual FSA Audits conducted by IPAs and CPAs.
  • Repeat Finding – Failure to Take Corrective Action
  • NSLDS Roster Reporting – Inaccurate/Untimely Reporting
  • Return to Title IV (R2T4) Calculation Errors
  • Return to Title IV (R2T4) Funds Made Late
  • Verification Violations
  • Pell Grants – Overpayment/Underpayment
  • Qualified Auditor’s Opinion Cited in Audit
  • Entrance/Exit Counseling Deficiencies
  • Student Credit Balance Deficiencies
  • Improper Origination of Direct Loans

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