Applicability of Single Audit Act to Title IV student aid programs
FINANCIAL REPORTING INSIGHTS |
On August 5, 2016, the U.S. Department of Education (ED) issued a memorandum the subject of which was Applicability of Single Audit Act Regulations to the Title IV Student Aid Programs. The memorandum discusses the ED’s recently announced policy position that Title IV student assistance programs are required to be audited annually under the Higher Education Act, as well as how this policy affects an institution’s 2016 Single Audit. Auditors most frequently encounter these Title IV programs when auditing the Student Financial Assistance (SFA) Cluster identified in Part 5, Clusters of Programs, of the Office of Management and Budget Compliance Supplement.
Per the memorandum, if an auditee expends funds under the SFA Cluster and it is a Type A program that will not be audited as a major program, either because it is considered low-risk under the Uniform Guidance or is not needed to meet the percentage-of-coverage audit requirements, the institution (not the auditor) should contact the ED’s School Participation Division with which it normally works to report that the program will not be audited as a major program in the 2016 Single Audit. Contact with the ED School Participation Division is required for Single Audits that are just starting, already underway or near completion. Contacts by an institution with the respective ED School Participation Division may be by made by email or phone.
Upon receiving such contact from the institution, the ED School Participation Division staff will review the prior years’ audits and other information to ensure they are not aware of anything that would preclude the low-risk Type A program determination for the 2016 Single Audit. If the ED School Participation Division agrees with this determination, the SFA Cluster will not have to be audited in 2016 as a major program. We believe the institution should ask for and retain written documentation of the ED’s conclusions.
For Single Audits that already have been completed where the SFA Cluster was determined to not be a major program, the ED School Participation Division will review the submitted audits to determine whether they agree with this determination. The ED School Participation Division will notify institutions if there is any disagreement.