Title IV Reconciliation: Agreement, Accountability, Action Francisco Santiago Caraballo, CPA,MBA Andorra 1027 San Juan, Puerto Rico franciscos@prtc.net franciscosantiagocaraballo@gmail.com Tel. (787) 460-2643 & (787) 783-7933 1
Agenda Agreement: Who needs to Agree? Accountability: Why, What, When? Action: How? CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 2
Reconciliation and fiduciary responsibility Except for funds received by a school for administrative expenses and for funds used for the Job Location and Development (JLD) Program, funds received by a school under the federal student aid (FSA) programs are held in trust for the intended student beneficiaries. As a trustee of those funds, a school must have procedures in place that ensure FSA funds are used asintended. CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 3
Reconciliation and fiduciary responsibility The cash management regulations establish rules and procedures that a school must follow in requesting and managing FSA program funds. Under the cash management regulations, a school has a fiduciary responsibility to have a system in place to: CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 4
Reconciliation and fiduciary responsibility Safeguard FSA funds, Ensure FSA funds are used only for the purposes intended, Act on the student s behalf to repay a student s FSA education loan debt when the school is unable to pay a credit balance directly to the student, and Return to the Department any FSA funds that cannot be used as intended. CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 5
Reconciliation and fiduciary responsibility Failure to have such a system in place calls into question : a school s administrative capability, its fiscal responsibility, and its system of internal controls. In short, it calls into question a school s qualifications to participate in the FSA programs CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 6
Definition - Reconciliation Title IV 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. CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 7
Definition - Reconciliation Is a process in which financial records are compared and discrepancies resolved. Conducting reconciliation frequently can help ensure that your school is properly exercising its fiduciary responsibilities to safeguard federal funds and ensure that they are used as intended. Your school must meet all cash management and disbursement reporting requirements. CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 8
Definition - Reconciliation Your school should have documented reconciliation procedures that describe: 1. Who, 2. How, and 3. when your school will reconcile. You should review these procedures regularly to identify issues and make any necessary improvements. CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 9
Definition - Reconciliation 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. CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 10
Reconciliation Agreement What needs to agreed: 1. Date 2. Amount 3. Adjustment to initial disbursement How Often (frequency) CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 11
Internal Reconciliation When a school compares business office records of funds requested, received, disbursed, and returned to financial aid office records of funds awarded to students it is performing. Between business/bursar/accounting offices. Records and financial aid system origination and disbursement records. CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 12
Key Internal Reconciliation Players: All Title Aid Programs Business Office Reconcile Internally CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 13
Ensure that: Internal Reconciliation What is posted to student accounts (i.e. amount and date) matches exactly the data in the school s financial aid software. finding program review acct record and need analysis20141203_10190148.pdf CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 14
Ensure that: Internal Reconciliation Net Drawdowns (ND) = Net Accepted and Posted Disbursements (NAPD). Cash is not held beyond cash management requirements. CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 15
Ensure that: Internal Reconciliation Internal cash transactions (drawdowns, refunds of cash, and adjustments) match school bank statements. Records transmitted electronically between offices within the school environment match. Run a regular comparison to identify discrepancies. CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 16
Don t Forget: Internal Reconciliation The student/aid recipient. Return funds/update disbursements not wanted. Return funds/update disbursements not eligible to receive. Check prior award years for any changes that may have taken place. CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 17
Don t Forget: Internal Reconciliation Regular communication between the two offices and the registrar supports agreement of records (Electronic comparison of records & frequent touch point among offices) CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 18
External Reconciliation The school compares its reconciled internal records to the USDE s records of funds received and returned, and of grants or loans originated and disbursed to students at the school. USDE s records vs. school s records, both at the cumulative and individual student levels. CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 19
Key Reconciliation Players: Pell/DL/TEACH Business Office Reconcile Internally Reconcile with COD Reconcile with COD COD G 5 (Resource) CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 20
Key Reconciliation Players: Campus-Based Business Office Reconcile Internally Report/Reconcile Data on the FISAP Must be Equal Drawdown/Reconcile Funds in G5 ecb (FISAP) G 5 CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 21
External Reconciliation Disbursement transactions: Internal school disbursement records (both business office and financial aid office) match exactly to disbursement records in FSA systems (COD and FISAP). Cash transactions : Drawdowns, drawdown adjustments, and refunds of cash transactions in school internal records match exactly with transactions in COD/FISAP and G5. CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 22
Internal vs. External Reconciliation Internal Reconciliation Between business/bursar /comptroller office records and financial aid system origination and disbursement records External Reconciliation Between school records and the Department CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 23
Reconciliation At a minimum, your school should reconcile its FSA financial records monthly. More frequently your school performs reconciliation, the more likely you will be able to identify issues and resolve them before they become part of a systemic problem. CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 24
Reconciliation Frequent reconciliation is an important internal control procedure that can make a significant contribution to increasing the overall program integrity of the FSA programs at your school. CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 25
Reconciliation Schools that have systems in place to compare and identify discrepancies between their internal records and data from USDE reports will find that the required monthly reconciliation is much easier and makes closing out a year less time consuming. CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 26
Reconciliation Finding Samples cash management finding sample.docx CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 27
Accountability: Why? Monthly reconciliation REQUIRED for Direct Loans, TEACH, FWS, andseog. Regular reconciliation recommended for all programs. Identifies issues with meeting other cash management and disbursement reporting requirements Demonstrates administrative capability. CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 28
Accountability: Why? What are the related regulatory requirements? Direct Loan - 34 CFR 685.300(b) (5) TEACH - 34 CFR 686.37 FWS - 34 CFR 675.19 (b)(2)(iv) SEOG - 34 CFR 676.19 (b)(2) CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 29
Accountability: What? Disbursements Disbursement Reporting Deadlines: Title IV Aid disbursement/adjustment reporting requirement published annually in the Federal Register 2014-15 Award Year reporting deadlines are included in Federal Register Notice and electronics announcement. (electronic annou pell reconciliation 1-23-15.docx). CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 30
Accountability: What? Disbursements Disbursement Reporting Deadlines: Disbursements/adjustments must be reported within 15 days of the actual disbursement date or date adjustment occurred. Posted Date.docxTitle IV Aid Disbursement Reporting, Excess Cash, and Reconciliation Requirements.docx CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 31
Accountability: What? Disbursements Disbursement Reporting Deadlines: Notice also includes other critical deadline dates for each program. Disbursements for Campus-Based programs are reported annually through the FISAP submission CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 32
Accountability: When to draw/return $ Cash Management Regulations: 34 CFR 668.161-166 The institution, as a trustee of Federal funds, may not use or hypothecate (i.e., use as collateral) Title IV, HEA program funds for any other purpose. Key Concepts: Immediate need three business days Excess/Idle Cash up to seven days Can I keep the funds while I am reconciling - NO CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 33
Other Requirements 34 CFR 668.24 Record Retention Includes Financial records that reflect each HEA, Title IV program transaction. Documentation that reflects each student/parent eligibility for Title IV funds. Documentation that reflects the payment period/loan period, date, amount of each Title IV program transaction. CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 34
Other Requirements 34 CFR 668.24 Record Retention Includes Any other program records that document administrative and financial responsibility (i.e., reconciliation documentation). student record accounts.docx CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 35
Tips for Internal Reconciliation Daily/weekly check-in between Business Office and Financial Aid Office: Do disbursements reported match disbursements posted? Do draws and refunds of cash match disbursements? Does the school banking information match G5 data? CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 36
Tips for Internal Reconciliation Refund funds appropriately to the correct program and year: Refunds of Cash should be made electronically Drawdown Adjustments should only be used to correct errors (and are disabled in G5 for Campus-Based programs) CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 37
Tips for Internal Reconciliation Time frame for returning unclaimed funds (stale dated checks) no later than 240 days from the date check issued (holding credit balances.docx) 34 CFR 668.164(h) FSA Blue Book Volume 5, Chapter 2, - page 27 2014-15 FSA Handbook Volume 4 page 19 and page 48 CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 38
Action: How to Refund Funds All programs - ELECTRONICALLY via G5 O 2014-15 FSA Handbook, Volume 4 Chapter 4 O Blue Book, Volume 5 Chapter 5 Paper checks will no longer be accepted for Direct Loans after December 31, 2014 O http://ifap.ed.gov/eannouncements/022614 DLProcessingInfoDiscontinPaperCheckProces sdlrefundscashbeginjan12015.html CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 39
Action: How to Refund Funds All programs - ELECTRONICALLY via G5 If exceptional circumstances require your school to refund Grant funds via paper check. O 2014-15 FSA Handbook Volume 4, page 82. O Note the school s DUNS # and G5 award number (i.e., P063P14####) on the front of the check. CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 40
Refunding Funds Campus-Based Funds: FISAP change requests: Adjustments back for 5 years, currently back to 2009-10 Refund funds through G5 2014-15 FSA Handbook Volume IV page 4-85 CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 41
Action: Refunding Funds Refund of funds through G5 should be made electronically: O Set up a bank account through G5 for refunds (888-336-8930). O If funds are being refunded through G5 for regulatory reasons schools MUST send downward disbursement adjustments for Grant/Direct Loan Programs CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 42
Action: Refunding Funds Refund of funds through G5 should be made electronically: O For Grant Programs, disbursement changes cannot be submitted after funding for the award year has been canceled (five years after the end of the award year) CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 43
Action: Refunding Funds Refund of funds through G5 should be made electronically Reminders: O If refunding funds from an audit or program review, follow repayment instructions per the Final Audit or Program Review Determination letter O DL 120 day rule does not apply when refunding funds due to regulatory/statutory requirements - 34 CFR 685.202 (c)(4)(i) CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 44
Tips for External Reconciliation Keep current on daily/weekly processing and any edit code rejects. Complete Internal Reconciliation first before regular External Reconciliation to identify and eliminate any internal discrepancies. Pay attention to IFAP announcements and COD updates regarding processing issues and any funding reductions. What s new? Use COD and G5 reports and web screens CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 45
Action: Edit Code Rejects/Warnings Warnings are there to alert you of a potential problem: Edit code rejects - do not build on the COD system. Monitor your batch import results or view rejects by batch on the COD website. Set aside time to resolve edit code rejects daily/weekly. CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 46
Action: Edit Code Rejects/Warnings Rejected Direct Loan records can lead to unsubstantiated cash for advance funded schools. Rejected Pell Grant, TEACH, and Direct Loan HCM1 school records will not increase available funds in G5. CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 47
Action: New COD Tools COD report readers for Pell Year To Date (YTD), Pell Reconciliation, and Direct Loan School Account Statement (SAS) Disbursement Detail on Demand: Readers and instructions available on COD website/cod resources. Request the files in flat file format. Reports/files still delivered via SAIG, import into reader to use with Excel. CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 48
Action: Pell Reports for Reconciliation Electronic Statement of Account (SAIG) - cash transactions. Initial Obligation/Authorization, changes to obligation/authorization both by date and amount. Number of unduplicated YTD recipients. CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 49
Action: Pell Reports for Reconciliation Reconciliation Report (SAIG) - summary disbursement. Summary Pell Grant received YTD by each student. Included verification and POP status as well as Life-Time Eligibility used (LEU). CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 50
Action: Pell Reports for Reconciliation Year to Date (YTD) file (SAIG) - detail disbursement level. Contains complete year to date student/disbursement level data and can be used to help rebuild lost school data either by student or school. CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 51
Action: DL and TEACH SAS School Account Statement (SAS) Provides the Department s official monthly Ending Cash Balance and detailed cash and disbursements (SAIG only) Generated the first full weekend of the month and reflects data up to the end of the previous month (YTD or month to date depending on your settings) CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 52
Action: DL and TEACH SAS School Account Statement (SAS) You MUST reconcile monthly to the balances reflected on the SAS and must document that you have done so. Composed of four Sections: O Cash summary & Cash detail O Disbursement Summary by loan type (DL SAS Only) & Loan detail, loan level, or detail disbursement activity level. (example) CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 53
Action: Reports- Direct Loan Direct Loan School Account Statement Disbursement Detail on Demand (SAIG) O Request via COD batch menu O Year to date, month to date, date range O Can be in the same or different format than the School Account Statement (SAS) Example COD request; SAS Disbursement CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 54
Action: Reports - DL and TEACH Pending Disbursement Listing: O Assists in identifying pending disbursements that should be actual disbursements, or that should be reduced to $0. O Provides list of pending disbursements 45 days in the future or any date in the past. CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 55
Action: Reports - DL and TEACH Direct Loan Actual Disbursement List*DL only O Assists in monitoring if actual accepted disbursements and amounts match what was posted to student accounts on a weekly basis. O Provides actual disbursements posted in COD for reported week (Saturday Friday). CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 56
Action: COD Web Screens School menu/school Summary Information School menu/school Funding Information School menu/school Summary Financial Information Services/School (reports available on the COD web) School menu/cash Activity CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 57
Action: All Programs - G5.gov G5 award numbers are school, program, and award year specific. Example for 2014-15 award year. Funds are drawn or returned by program and year. ### represents each school s unique G5 (gaps) ID. CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 58
Title IV Reconciliation ACTION: Final Reconciliation and Closeout CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 59
Action: Final Reconciliation and Closeout Definition: The process by which schools complete processing at the end of an award year. This process should: Be an extension of regular reconciliation cycle (i.e., one final monthly reconciliation). Result in a $0 ending cash balance (Net Drawdowns = Net Accepted and Posted Disbursements) in ALL systems. CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 60
Action: Final Reconciliation and Closeout Definition: The process by which schools complete processing at the end of an award year. This process should: Occur shortly after final disbursements are made for a program and award year (or reported for CB Programs) Ensure that all cash management and disbursement reporting requirements have been met CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 61
Action Closeout Deadlines System processing deadlines may impact the actual date final disbursements are accepted Pell/Iraq Afghanistan Service Grant - September 30th of the award year http://ifap.ed.gov/eannouncements/090514p ellgrantiraqafghanservgrant1314ayprocdead line.html CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 62
Action Closeout Deadlines System processing deadlines may impact the actual date final disbursements are accepted) TEACH Grant - September 30 th of the award year ifap.ed.gov/eannouncements/090514addit ionalteachgrantcloseoutinformationfor20 132014AY.html CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 63
Action Closeout Deadlines System processing deadlines may impact the actual date final disbursements are accepted. Direct Loan - July 31st of the year following the award year The closeout deadline for Direct Loan 2012-2013 was July 31, 2014 O http://ifap.ed.gov/eannouncements/062 614Additional1213DirectLoanProgramYea rcloseoutinformation.html CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 64
Action Closeout Deadlines System processing deadlines may impact the actual date final disbursements are accepted. Direct Loan - July 31st of the year following the award year. O The close out deadline for Direct Loans 2013-14 will be July 31, 2015 CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 65
Action Closeout Deadlines System processing deadlines may impact the actual date final disbursements are accepted. Campus-Based - FISAP filing deadline September 30 th O http://ifap.ed.gov/eannouncements/082714r eminderoct12014deadlineforsubmittingfisa P.html CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 66
Action Closeout Deadlines System processing deadlines may impact the actual date final disbursements are accepted. O FISAP reporting must correspond to G5 draws (i.e. what you report you paid must equal what you drew) O Campus-Based Closeout reduction occurs February following FISAP filing deadlines (February 2015 reduce funding for 2013-14 awards) CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 67
Action Closeout Deadlines system processing deadlines may impact the actual date final disbursements are accepted. O Unprocessed de-obligations (negative G5 balance) that have not been refunded (repaid) to G5 will result in an Accounts Receivable being set up to collect the amount due. CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 68
Action Closeout Deadlines system processing deadlines may impact the actual date final disbursements are accepted. Interest accumulates on the balance owed CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 69
Action Closeout Deadlines System processing deadlines may impact the actual date final disbursements are accepted. Campus-Based - FISAP filing deadline September 30 th O http://ifap.ed.gov/eannouncements/0827 14ReminderOct12014DeadlineforSubmitti ngfisap.html O FISAP reporting must correspond to G5 draws (i.e. what you report you paid must equal what you drew) CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 70
Action Closeout Deadlines System processing deadlines may impact the actual date final disbursements are accepted. Campus-Based - FISAP filing deadline September 30 th O Campus-Based Closeout reduction occurs February following FISAP filing deadlines (February 2015 reduce funding for 2013-14 awards) CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 71
Action Closeout Deadlines System processing deadlines may impact the actual date final disbursements are accepted. Campus-Based - FISAP filing deadline September 30 th O Unprocessed de-obligations (negative G5 balance) that have not been refunded (repaid) to G5 will result in an Accounts Receivable being set up to collect the amount due O Interest accumulates on the balance owed CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 72
Action: Closeout Tips Remember - A school must follow all existing regulations for drawing funds and reporting expenditures/disbursements and disbursement adjustments timely. Most schools should be able to reconcile and complete processing well before closeout deadlines. DL- must have a $0 ending cash balance SAS to officially closeout, i.e., don t wait until July to reconcile or you won t be able to officially close out by the deadline. CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 73
Action: Closeout Tips You must monitor IFAP closely for announcements related to funding and reconciliation deadlines for all Title IV programs CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 74
Action: Funding Cancellation Pell Grant and Campus-Based Occurs five years after the end of the award year (Pell 2013-14 funding will cancel effective September 30, 2019) ACG and SMART 2009-10 award year will cancel September 30, 2015 (five year cycle) School MUST be fully reconciled to $0 cash balance CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 75
Action: Funding Cancellation Pell Grant and Campus-Based No further disbursement or adjustment data can be reported to COD No further funds are available to request from G5 Funds needing to be returned must be returned via G5 to miscellaneous CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 76
Reconciliation Resources FSA Handbook - Volume 4 COD technical reference Implementation guide, edit code rejects, reports Blue Book - updated version published 2013 IFAP announcements - you must monitor IFAP to be considered administratively capable Detailed recorded training materials available COD reconciliation team - contact via the main school services number 800-848-0978 or 800-474-7268 Federal Loan School Support Team (FLSST) dlops@ed.gov CPA Francisco Santiago (787) 460-2643 (franciscos@prtc.net) 77