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Extremely High Number of Failing Compliance Audits, as Recently Reported by the GAO

Schools that participate in federal student aid programs are required to submit annual compliance audits to the Department of Education’s Office of Federal Student Aid (“FSA”). See 34 C.F.R. § 668.23.  These compliance audits, conducted by independent auditors, provide critical information for FSA staff to use in assessing schools’ administration of federal student aid and identifying schools that require additional oversight. The Department’s Office of Inspector General (“OIG”), in turn, is required to assess the quality of school compliance audits themselves.

In a July 2018 report titled Education’s Postsecondary School Certification Process, ("GAO Report") the United States Government Accountability Office (“GAO”) conducted an analysis of the OIG’s findings regarding the quality of annual compliance audits.  Remarkably, the GAO’s analysis of the OIG data found that, “of the 739 compliance audits reviewed by the OIG from fiscal years 2006 through 2017, the OIG passed 23 percent (173) and failed 59 percent (436). An additional 18 percent (130) passed with deficiencies.” Id. at 15. The GAO Report further found that “FSA generally relies on compliance audits as the only annual on-site review to determine how schools applying for recertification administer federal student aid.” Id. at 14 (emphasis added).

On July 25, 2018, NSLDN submitted FOIA requests to both the Department and the OIG seeking: (i) communications informing schools or compliance auditors that a Title IV compliance audit submitted to the Department was rejected and (ii) documents constituting certain “input and feedback” that the OIG provided to the Department regarding how to address compliance audits with quality problems.

Copies of the FOIA requests are available here and here.

On August 29, 2018, the Department provided an interim response to the Request. Those documents are available here. On September 13, 2018, the Department provided its Final Response to the request, with NSLDN having agreed to accept a summary spreadsheet in lieu of documents. That spreadsheet is available here.

On August 23, 2018, the Office of the Inspector General provided a Final Response to the Request. Those documents are available here.

Tags   Oversight