Our objectives were to determine whether (1) Federal Student Aid (FSA) consistently administered its heightened cash monitoring (HCM) payment methods and (2) FSA’s use of heightened cash monitoring is an effective oversight tool. Our audit covered FSA’s oversight of schools on heightened cash monitoring from July 1, 2014, through June 30, 2016.
Overall, FSA’s use of HCM was an effective oversight tool, and it consistently administered its HCM payment methods for schools that it placed on HCM. However, we also identified areas needing improvement. The audit found that FSA did not have adequate internal controls to reasonably ensure that it consistently placed schools on HCM payment status when they submitted late annual financial statements or had composite scores that fell below the minimum financial responsibility score. It also found that FSA did not have control activities to track a school’s method of payment status from FSA’s recommendation for HCM placement until the placement was made, and it did not retain all required documentation for administering HCM payment methods for some of the schools we reviewed.
We made three recommendations. We recommended that FSA develop and implement controls to (1) ensure consistent, appropriate, and timely actions are taken when schools fail to submit financial statements timely or receive nonpassing composite scores; (2) track a school’s method of payment status from the recommendation for placement until the change is implemented; and (3) ensure that all required HCM documentation is retained.
Oversight and Monitoring—Student Financial Assistance Programs
See other OIG reports involving heightened cash monitoring.