several document folders are laying on a table with two people sitting behind them.

Per the Department of Education (ED), the top 10 audit findings have been pretty consistent the last several years with very little change in the types of findings found during the audit process.

Remember, because of the timing of your next audit, your Corrective Action Plan may be working correctly now, but you could still have a repeat finding. Just indicate that the changes implemented are working and the errors in the current audit are due to some overlapping time frames.

What is a CAP and how do we implement one?

A Corrective Action Plan, or CAP, is a tool used to correct a less than desirable result. If there was an audit finding for inaccurate reporting, your CAP would be the plan used to prevent that particular mistake going forward.

Your organization can implement a CAP by evaluating the error(s) you’d like to address, and then discuss internally or with a professional what the best preventative steps may be. From there, educate everyone in the organization on the Corrective Action Plan and implement accordingly.

1. Repeat Finding – Failure to Take Corrective Action

Cause: Didn’t implement Corrective Action Plan (CAP) or the plan was not effective in resolving the finding; lack of internal controls and training.

Solution: Implement and monitor the effectiveness of the CAP; train staff; create new policies and procedures, and make sure they are followed.

2. Student Status – Inaccurate/Untimely Reporting

Cause: Untimely reporting of enrollment status, effective dates, withdrawal and graduate dates on NSLDS roster, late submission of NSLDS roster

Solution: Update the Student Information System (SIS) timely; have a process in place with specific people responsible for updating and submitting the roster timely; train staff; create and follow policies and procedures to ensure there are no delays in reporting a change in status.

3. Return of Title IV (R2T4) Calculation Errors

Cause: Not understanding what belongs in Step 1 under disbursed and could have been disbursed; Step 2 using incorrect dates, scheduled days or scheduled hours, and miscalculating scheduled breaks; Step 5, incorrect institutional charges; math and rounding issues, misunderstanding program charges; PWD not offered/disbursed

Solution: Step by step written policies and procedures; training; use a second person to review R2T4’s for errors; software to prevent math and rounding errors; outsource to a 3rd party.

4. Return of Title IV (R2T4) Funds Made Late

Cause: Students not withdrawn timely (14 – day rule for required attendance); unofficial withdrawals not reported; no R2T4 calculation; late reporting of drops to corporate office

Solution: Good policies and procedures; training; designated group to ensure compliance, utilizing a good SIS tracking system

5. Verification Violations

Cause: Verification not done or incomplete supporting documents; verification comment codes unresolved; ISIR corrections not processed; PJ issues

Solution: Good policies and procedures; use a verification checklist; use verification in a SIS system: second person to review verification or outsource to 3rd party; staff training. Another way to combat the possible verification violations is to bring in an experienced consulting team to conduct verification reviews.

6. Student Credit Balance Deficiencies

Cause: Incorrect credit balance; credit balance not paid timely, incorrect or no authorization to hold the credit balance; unable to determine that a credit balance exists

Solution: Ensure correct authorization form is offered to the student, if charging for longer than a payment period, use a subsidiary ledger to quickly identifying credit balances; train staff; create policy and procedures for identifying and disbursing credit balances timely; monitor carefully.

7. Qualified Auditor’s Opinion Cited in Audit

Cause: Inaccurate /untimely NSLDS reporting; R2T4 errors and late return of funds; verification issues; credit balances; Pell grant over/under awards

Solution: Use effective policies and procedures to address and correct all deficiencies; dedicated trained staff to monitor all aspects of administrative capability.

8. Pell Grants ‒ Overpayment/Underpayments

Cause: Enrollment status changes, Pell award proration; and missing policies and procedures

Solution: Create awarding and disbursing procedures; ongoing train for staff; monitor process

9. G5 Expenditures Untimely/Incorrectly Reported

Cause: Conflicting disbursement dates or amounts; late disbursement records; excess cash

Solution: Train staff, correct student accounts to agree with COD records; notify your 3rd party servicer, if you have one, and different date was used than on disbursement notice; written policies and procedures, reconcile accounts.

10. Entrance/Exit Counseling Deficiencies

Cause: Missing proof of entrance/exit counseling; exit materials incomplete or never mailed

Solution: Develop policies and procedures, make someone responsible for follow up on missing entrance/exit interview documentation; review materials for all requirements.

Audit preparation is key when organizing your institution’s data day-to-day, but the abundance of information can be overwhelming. Regulatory requirements are no joke, and it takes time to evaluate audit readiness. Using a financial aid consultant to prepare for and respond to your audit could take some of the burden off from your already very busy staff.


  • Sally Samuels

    Sally Samuels is the Director of Compliance at FAME, Inc. and one of the country’s leading authorities on Federal financial aid administration with more than 40 years of “in the trenches” experience. As a respected Industry leader, she is frequently called upon to speak at School, Accrediting, Regional and State conferences as well as to act as school liaison during program reviews and compliance audits. Having processed, reviewed and taught financial aid for over 38 years Sally’s experience includes representation at over 300 program reviews and certification visits for postsecondary institutions. In addition, Sally brings real life experiences, observations and illustrations to her audience, adding a touch of humor to regulatory compliance. Her style makes the sometime complex topics easy to understand and audiences always come away with practical knowledge that they can apply to their everyday situations. Sally is a board member for the Private Career Colleges & Schools (PCCS), a former board member and now serves on several committees for the American Association of Cosmetology Schools (AACS), as well as a member of NASFAA & SASFAA. Her experience and regulatory knowledge make her uniquely qualified to bring you the latest regulatory information and training.

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