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Federal Student Aid (FSA) Audit and Program Review Process

Policy
Purpose: 

FSA Guidelines state that “a school that participates in any FSA program, including a participating foreign school, generally must have an independent auditor conduct an annual audit of the school’s compliance with the laws and regulations that are applicable to the FSA programs in which the school participates (a compliance audit), and an audit of the school’s financial statements (a financial statement audit).” (FSA Handbook Chapter 12)

For the compliance audit segment of this requirement, public and nonprofit schools must comply with the Single Audit Act.  “The Single Audit Act requires these schools to have an audit conducted in accordance with the Office of Management and Budget’s (OMB) Uniform Guidance” (FSA Handbook, Chapter 12)

Both the financial statement audit and the compliance audit are required to be submitted to the Department of Education by March 31st following the end of the school’s fiscal year.

As an agency of the State of Kansas, the University is included in both the State’s Consolidated Annual Financial Report (CAFR) as well as the State’s Consolidated Single Audit Uniform Guidance Compliance Report.  Independent auditors hired by the State audit both reports.  The State’s and the University’s fiscal year-end is June 30th.  Annual reports are due to the Department of Education by March 31st.

Applies to: 

KU students, faculty and staff

Campus: 
Lawrence
Edwards
Medical Center, Kansas City
Policy Statement: 

Financial Statement Audit

On an annual basis, the State’s Financial Integrity Team sends out its “Regent Financial Statement Template” for the Comprehensive Annual Financial Report.  This submission form requests detailed year-end information regarding the University’s assets, liabilities, net assets, revenues, expenses, GAAP eliminations and other required GAAP disclosures.  The form is sent to all Kansas Regents Universities (Note – Since KU Lawrence Campus and KU Medical Center are separate state agencies, each is responsible for submitting their own form to the State). The annual deadline for this form is October 1st.

The Lawrence Campus Comptroller’s Office Financial Reporting Services Unit (FRS) is responsible for completing and submitting the KULC form to the State.  FRS is also responsible for consolidating KULC’s component units into KU’s financial statements. KULC’s component units include Kansas Athletics, Inc. (Athletics), the University of Kansas Center for Research, Inc. (KUCR), the University of Kansas Memorial Corporation (KU Unions), KU Campus Development Corporation (KUCDC) and the University of Kansas Endowment Association (KU Endowment).

The Medical Center Controller’s Office is responsible for completing and submitting the KUMC financial statement template to the State.  The Controller’s Office is also responsible for consolidating KUMC’s component units into KUMC’s financial statements.  KUMC’s component units include the University of Kansas Medical Center Research Institute (RI), the Student Union Corporation of the University of Kansas Medical Center, and Kansas University Health Partners, Inc.

In addition to completing the annual submission form required by the State’s Financial Integrity Team, the University also provides any additional information requested by the State’s independent auditors.  Examples of additional information requests include but are not limited to reviews of internal controls via process narratives and walkthroughs, explanations for revenue and expense variances, and supporting documents for detail testing.  Requests for additional information are coordinated through FRS and KUMC’s Controller’s Office.

In addition to being a part of the State’s CAFR, the University also publishes an unaudited consolidated Annual Financial Report prepared in conformity with generally accepted accounting principles accepted in the United States of America.  The consolidated annual financial report is a requirement established by the Kansas Board of Regents.  Copies of the University’s annual report are available at… https://financial-reporting-services.ku.edu/annual-financial-reports.

Single Audit A-133

On an annual basis, the University provides an “Annual Schedule of Expenditures of Federal Awards” (SEFA) to the State’s independent auditors. The SEFA form includes the following items…

  • ARRA Funded (Yes or No)
  • SMART Fund (State Financial System)
  • Program CFDA Number
  • Program Grant or Contract Number (Indirect Grants or Grants with no CFDA Number
  • Federal Awarding Agency
  • Cluster
  • Official Federal (CRDA) Program Tittle
  • Program Name
  • Program Fiscal Year Expenditures
  • Program Funding Source (Direct, Indirect, Non-monetary Award, or Transfer)
  • Program State Agency – If sub-contracted to KU
  • Sub-contracts to another state agency – Name and amount
  • Amount Sub-granted to State Agencies
  • Indirect Grants – Pass-Through or Grantor Name
  • Amount expended as pass-through to a sub-recipient (non-state entity)
  • Research & Development Grant (Yes or No)
  • Audit Inquiry -- “Was this a new program for FY20xx?” (Yes or No)
  • Audit Inquiry -- “Any instances of fraud noted by management related to this program?” (Yes or No)
  • Audit Inquiry -- “Any regulatory or Federal Agency reviews performed during FY20xx for this program?” (Yes or No)
  • Major programs are identified according to OMB Uniform Guidance. The independent auditors use the SEFA as part of their risk assessment analysis. Additional information is provided as requested depending upon the specific grants selected for detail testing.
  • On-site testing of the Student Financial Aid Cluster by the independent auditors is coordinated between the Comptroller’s Office and the Office of Financial Aid and Scholarships. All other federal program testing is coordinated between the Comptroller’s Office, and the KU Center for Research, Inc. (KUCR) for the Lawrence and Edwards Campuses and the Controller’s Office and KUMC Research Institute, Inc. (RI) for the Medical Center.
  • The State is responsible for completing its consolidated Single Audit submission forms to the Federal Clearing house.  The Kansas Board of Regents is responsible for submitting to the Department of Ed’s eZ-Audit web-based application by the required deadline.

Program Reviews

The Department of Education may conduct program reviews to identify possible problems in a school’s FSA administration. Lawrence Campus program review requests should initially be sent to the KULC Comptroller or KULC Director of Financial Aid and Scholarships. KU Medical Center program review requests should initially be sent to the KUMC Associate Vice Chancellor of Finance or the KUMC Director of Financial Aid.

Coordination of all program reviews is similar to the single audit process.

Key Contacts & Responsibilities:

KULC Comptroller

· Initial contact for all external audit and program review requests for Lawrence Campus

· Overall oversight of consolidated Annual Financial Report & KULC Annual Financial Report

· Overall oversight of State Submissions for Lawrence Campus

KULC Asst. Comptroller for Financial Reporting Services

· Preparation and submission of state forms for Lawrence Campus

· Preparation of consolidated Annual Financial Report

· Involved in coordination of information requests from independent auditors

KUMC Associate Vice Chancellor of Finance

· Initial contact for external audit and program review requests non-related to the Department of Education for Medical Center

· Overall oversight of KUMC Annual Financial Report

· Overall oversight of State Submissions for Medical Center

KULC Director of Financial Aid and Scholarships (FAS)

· Preparation and organization of information related to Student Financial Aid Cluster

· Key contact during audit field work for Student Financial Aid Cluster testing

KUMC Director of Student Financial Aid / OSFA

· Initial contact for external audit and program review requests related to the Department of Education for Medical Center

KU Center for Research, Inc. (KUCR)

· Related 501(c)(3) Foundation established to manage University of Kansas Lawrence Campus sponsored research

KUMC Research Institute (RI)

· Related 501(c)(3) Foundation established to manage University of Kansas Medical Center sponsored research

Contact: 
Janet Roecker
Associate Director, Financial Aid & Scholarships
KU Visitor Center
1502 Iowa St.
785-864-4700
Approved by: 
Associate Direct of Financial Aid and Scholarships and Financisl Project Director
Approved on: 
Thursday, January 1, 2009
Effective on: 
Thursday, January 1, 2009
Review Cycle: 
Annual (As Needed)
Keywords: 
Financial Aid Audit, FSA Audit, Single State Audit, FSA Program Review
Review, Approval & Change History: 
11/30/2017: reviewed and updated formatting.
09/09/2015: reviewed and updated.
08/12/2014: reviewed and updated.
07/31/2013: reviewed and updated.
07/30/2012: reviewed and updated.
08/18/2011: reviewed and updated.
10/28/2009: reviewed and updated.
01/15/2009: reviewed and updated aid year.
Financial Categories: 
Financial Oversight
Student Financial Aid

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