There are a lot of myths associated with the financial aid audit process in higher education. While some of these concerns are legitimate, many of them are not nearly as harmful as they appear. Let’s look at some of the popular financial aid audit myths.
The Auditor is Out to Get You
Auditors are not out to get you or anybody else; they objectively review a school’s financial documentation and accounts. Auditors should be considered an institution’s trusted advisor, not an adversary, as they can provide insight into how an organization can make adjustments to improve operations and their contribution margin. An auditor is a resource to help schools process and deliver financial aid packages that comply with regulations and requirements.
You'll Never Get a Perfect Audit
One myth is that auditors will always find something detrimental to an institution’s financial aid program. In truth, many schools actually have zero findings multiple years in a row, which is the result of a clean audit. Although auditors won’t overlook an error, there is not much cause for concern for most schools.
It's Too Late to Fix Anything
Once an audit begins, the thought is that it’s too late to make any adjustments. In reality, institutions are encouraged to discuss errors they find with the auditor. This proactive approach will help accelerate the entire financial aid audit.
Program Review is Due to Red Flags Noticed by the DOE
If an institution has never had a program review by the Department of Education (DOE), then it is probably due for one.
Schools that witnessed significant growth in their student enrollment numbers and distributed much more student aid as a result are also likely to encounter program reviews. Additionally, for-profit institutions are audited by the DOE more often than other schools.
A call, letter, or email from the DOE is no reason to panic.
Financial Aid Office is Solely Responsible for the Financial Aid Audit
Although the Financial Aid Office is accountable for the audit, the process should be a team effort. An audit should encourage collaboration across Student Accounts, the Register, Campus Director, and Admissions, etc. This will ensure that the auditor has full visibility and receives all the necessary documentation for the past year.
An Audit is the End of The World
To err is human. An audit is intended to merely address any possible mistakes; it is not the end of the world. Schools should prepare to work through any findings with the auditor. That being said, institutions must be transparent and should be open to changing processes and policies if necessary.
You Can Never Change Your Auditor
Changing an auditor is possible. In fact, there is no formal process when it comes to changing an auditor. If a school isn’t getting what it needs out of an auditor, audits are too easy, an institution doesn’t have a rapport with its auditor, or if it isn’t receiving mid-year assessments, it may be worthwhile to consider changing auditors. To initiate this change, raise this as a discussion point with senior management.
It Does Not Help to Build a Rapport With Your Auditor
A school’s relationship with auditors should be a consultative one. Building a good rapport with an auditor is essential to the relationship. Because regulations constantly change, working together can be a learning experience for both parties.
Auditors should be considered a resource during the year and institutions should utilize their expertise and relationships. For example, if a school needs information from the DOE but doesn’t have the time to get the answer, an auditor can contact the organization.
You’re Fine if You Document
Documentation is useful. For example, a school can benefit from documenting that it had limited information at the time of NSLDS disbursement. However, an institution should be sure that its documentation policies comply with DOE regulations.
All Findings Are Final
Schools can work with auditors regarding their findings, but it’s best to be prepared. Institutions should find out what auditors need to review a finding and how the school can help. Institutions should also show the regulation in error and explain how it was interpreted.
If a school has its policies written down and in place, it should use these for support. Other departments can also support interpretations.
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