February 24, 2016
TYPICAL EDUCATIONAL INSTITUTION AUDIT FINDINGS
Are educational institution audit findings serious? Not necessarily! The Department of Education expects that schools which
handle a large volume of eligible financial aid recipients will make mistakes. After all, human error will
occur. If mistakes are made, are there always financial assessments or penalties imposed? We have not
found that to be the case.
Examples of Findings That May Not Be Serious Include:
Incomplete leave of absence such as not in writing, no reason provided and unsigned
Second and subsequent Pell awards disbursed more than 10 days before payment period
Retaining students’ credit balances without permission
Retaining credit balances beyond the first year although student has given permission
Excess cash maintained in Federal funds bank account-oftentimes due to Pell refunded
Incomplete verification-tax return not signed, income is incorrect or income tax is incorrect
Satisfactory progress policy not followed
High school diploma or GED not retained-not necessarily required by Dept of ED but may be required by accreditation or State
Pell award miscalculated
Student awarded Pell although student had a bachelor degree from another Institute
Students’ eligibility for ACG Grant overlooked
Financial aid awarded and used to pay prior year’s charges that are not “minor charges ($200)”
Examples of Findings That May Be Serious Include:
Late refunds-two or more
Students failed ATB but enrolled and awarded Title IV aid
Students awarded Title IV for program not approved by Dept of ED
Institute failed to document 70% completion and 70% placement for a short-term program
Failure to pass the 90/10% cash basis revenue test
Payment of commissions to reps who enroll students
Failure to achieve a financial standards composite score of 1.0
Recurring/repeat findings
Findings that the auditor might consider as potential material non-compliance-error rate of sample generally in excess of 10%
Click here to visit the PAPSA website.
by Jay Alexander, CPA