HEA Title IV Audit Appeals and Program Reviews Jennifer Mauskapf, Esq. Brustein & Manasevit, PLLC [email protected] Spring 2011 Forum.

HEA Title IV Audit Appeals and

Program ReviewsJennifer Mauskapf, Esq.

Brustein & Manasevit, PLLC [email protected]

Spring 2011 Forum

OVERVIEW Audits vs. Program Review Visits Federal Audit Process Overview Visit Preparation After the Audit Visit: Resolution Process Recent Findings Preventative Measures

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Overview of the Federal “Players” Office of the Inspector General (OIG) USDE

Office of Postsecondary Education (OPE) Office of General Counsel (OGC)

Office of Hearings and Appeals (OHA) Administrative Law Judges (ALJs)

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Audits vs. Monitoring Visits

AUDIT ED OIG Few weeks notice Usually know which

program Likely to quantify cost of

adverse findings Relatively formal

MONITORING VISIT ED Program Side Generally scheduled well

in advance Usually notice of the

indicators they will monitor May quantify cost of

adverse finding Less formal

KEY SIMILARITY: ED may issue a determination letter in either case. Must be prepared for both!!!

Life Cycle of a Federal Audit

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Notification of Audit Visit

Entrance Conference

Exit Conference

Release of Draft Audit Report

Auditee Response (30 Days)

Release of Final Audit Report

Auditee Response to POC at ED

Issuance of PDL 180 days from Final Audit Report

Corrective Action Plan from Auditee (Often 60 Days)

Application for Review of PDL

Submission of Evidence (90 Days)

Initial Decision of OALJ

Petition for Review of Initial Decision (30 Days)

Final Decision of the Secretary (60 Days from Initial Decision)

Judicial Review – U.S. Circuit Court of Appeals (60 Days from Final Agency Decision)

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VISIT PREPARATION:What to Expect and How to Prepare

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Setting the Tone Common concern: Grantees are wary of

challenging USDE and compromising relationship.

Balancing Act Opportunity to maintain and enhance relations

with ED, BUT This is not a social call and you cannot treat it as

just that.

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Preparing for the Visit Planning Helps Prevent Avoidable Findings! Know what to expect. Organize for the visit.

Preparing for Known Substantive Areas Preparing Employees Documentation Ready

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Visit Time

Physical Arrangements Room space, including phones and copying

availability.

Management Involvement Have “higher-ups” involved; at least for the meet

and greet.

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Post-Visit: Determination Letters Adverse Findings - not at all uncommon

Findings are often based on very technical violations

Findings can be, and often are, successfully challenged

BUT…Avoid being in that position by being PROACTIVE! TRAIN, EVALUATE, and PREPARE!

AFTER THE VISIT:Resolving Adverse Audits and Program Review Reports

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Audit Resolution Stages

1) Draft Audit Report (DAR)

2) Final Audit Report (FAR)

3) Program Determination Letter (PDL)

4) ALJ Review

5) Final Decision of the Secretary

6) Judicial Review

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OIG Draft Audit Report Auditors’ Findings and Recommendations Not Public Response is to the Regional IG

OIG Opportunity to Revise Draft Audit Report based on your response!

30 Days for Response Extensions may be made upon request

Special Considerations re: Response to DAR

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OIG Final Audit Report Auditors’ Final Findings and

Recommendations to USDE Will be made PUBLIC!

Includes your response to DAR

Response is to the Asst Sec (OPE) 30 days for Response

Extensions may be given upon request Special Considerations re: FAR Response

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Program Determination Letter Issued by USDE office Responding to PDL

File Application of Review to OALJ 34 CFR §§ 81.12, 81.37 60 days to file

Failure to Respond = Waiver of Appeal Interest accrues as of PDL date (31 USC § 3717)

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OALJ truly objective Submit timely appeal!

Settlement negotiations can lower amount returned

Special Considerations Different Audience, different legal arguments

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Program Determination Letter (cont.)

After ALJ Decision Issued… Appeal to Secretary

Appeal to US Circuit Court of Appeals

Appeal to US Supreme Court

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AUDIT DEFENSE: Recent Findings and Defenses

Standard for Repayment of Funds

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OIG can recommend the grantee repay funds for a number of different reasons: Violation of the Program’s Statute, Regulations (ex. –

incorrect calculation of award) Violation of OMB Circulars (ex. – failure to

adequately document) Be creative in defending the audit

Most Common Audit Findings 1. Return of Title IV Funds Calculation Errors

2. Pell Over/Under Payments

3. Return of Title IV Funds Made Late

4. Verification Violations

5. Overaward – Financial Need Exceeded

6. Return of Title IV Funds Not Made

7. Enrollment Status Not Verified Before Disbursement

8. Improper Certification of Stafford Loan

9. Student Credit Balance Deficiencies

10. TIE:1. Ineligible Student – Not Making Satisfactory Academic Progress

2. Repeat Finding – Failure to Take Corrective Action

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Most Common Prog. Review Findings 1. Verification Violations

2. Crime Awareness Requirements Not Met

3. Student Credit Balance Deficiencies

4. Return of Title IV Funds Calculation Errors

5. Return of Title IV Funds Made Late

6. Entrance/Exit Counseling Deficiencies

7. Account Records Inadequate / Not Reconciled

8. Information in Student Files Missing or Inconsistent

9. SAP Policy Not Adequately Developed/Monitored

10. Pell Over/Under Payments

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MOST COMMON on both lists! Return of Title IV Funds Made Late Return to Title IV Calculation Errors Verification Violations Pell Grant Over/Underpayments Student Credit Balance Deficiencies Satisfactory Academic Progress

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R2T4 Made Late Returns not made within allowable timeframe

(45 days) Inadequate system in place to identify/track

official and unofficial withdrawals No system in place to track number of days

remaining to return funds Lack of coordination between offices

Regulation: 34 C.F.R. §668.22(j)

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R2T4 Calculation Errors Incorrect institutional charges for the period Scheduled breaks not included Incorrect number of day counted

for the period Incorrect withdrawal date Mathematical errors

Regulation: 34 C.F.R. §668.22(e)

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Verification Violations Verification worksheet not signed Untaxed income not verified Conflicting data on ISIR and verification

documents not resolved Required corrections not processed

Regulation: 34 C.F.R. §668.51-668.61

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Pell Grant Over/Underpayments Adjustments not made for change in enrollment status

between terms Attendance not documented in all coursework counted in

the enrollment status Modules or compressed coursework

Incorrect Pell formula Inaccurate proration calculation Incorrect Estimated Family Contribution Incorrect number of weeks/hours

Regulations: 34 C.F.R. §690.62 & 690.79

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Student Credit Balance Deficiencies No process in place to determine when a credit

balance has been created Credit balances not released to students within

required 14-day timeframe Credit balances held without student

authorizations

Regulation: 34 C.F.R. §668.164 (e)

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Compliance with Satisfactory Academic Progress Requirement Missing required components

Qualitative, quantitative, completion rate, maximum timeframe, probation, appeals

Policy not at least as strict as for non-Title IV recipients

SAP standards inconsistently applied Aid disbursed to students not meeting the

standards

Regulation: 34 C.F.R. §668.16 (e)

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PREVENTATIVE MEASURES

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IMPORTANCE OF TRAINING Helps you stay in compliance. You are responsible for constant changes

and innuendos in ED policy! Demonstrates to ED that you are proactive

and take compliance seriously. Make sure trainers know what they are

talking about and are up to date on current issues!

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ABOUT WHAT? FIRST: Start Broadly.

THEN: Get more specific tailoring to new issues and your specific weaknesses.

CONTINUE: Refresher trainings are always helpful. Also, new trends or changes in the law…keep your staff

and subrecipients up to date!

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Resources: Staying Up-to-date

Your Specific Problem Areas Recent Audits (Internal and Single) Recent Monitoring Reports (ED or Internal)

ED Policy and Trends OIG Monitoring Reports ED Guidance ED Press Releases ED Policy Letters to CSSOs, etc.

RESOURCES OIG “What’s New” (Chron. Listing)

http://www.ed.gov/about/offices/list/oig/whatsnew.html OIG Audit Reports by Office

http://www.ed.gov/about/offices/list/oig/areports.html USDE Office of Hearings and Appeals

http://www.ed-oha.org/ Information for Financial Aid Professionals

http://www.ifap.ed.gov/ifap/

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