by SST Compliance Audit Manager Karen Eilert
In continuation of our review of the new audit guide for Audits of Proprietary Schools and for Compliance Attestation Engagements of Third-party Servicers Administering Title IV Programs, we will now explore Servicers and Incentive compensation.
If you have disclosed a servicer, for student financial assistance responsibilities, default management etc., on you ECAR, auditors must review servicer contracts and servicer compliance audits for each servicer listed.
The contract between servicer and school must include items cited in 34 C.F.R 668.25(c). If the contract does not include all required items, a finding will be cited in the audit report
If there is no written contract between the school and a servicer, or the servicer preforms services not in the contract, the auditor must report the school’s use of the servicer as noncompliance.
Be sure to update your ECAR with any servicer you are using and review your servicer contracts to make sure they are in compliance and that they encompass all services being provided.
It is the auditor’s responsibility to determine if the school provided any adjustments to employee compensation, profit sharing payments, commissions, bonuses, or other incentive payments based upon success in securing enrollments or the award of financial aid to students who receive Title IV funds. This has not changed. What has changed is the expansion of our testing.
If you use a contractor to perform any recruiting, admissions, enrollment, or Title IV services, the auditor will be required to perform audit procedures at the contractor location.
Whether at the school or contractor, auditors will review personnel files, compensation plans, performance evaluations, and wage or salary adjustments.
For more details, please review the audit guide here. If you have further questions feel free to contact me at firstname.lastname@example.org.