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PublicationDate: 7/1/97 AuditGuideType: Audit Guide for Schools SectionNumber: SectionTitle: Contents PageNumbers: SECTION I AUDIT PLANNING AND OTHER CONSIDERATIONS Purpose of Guide - I-1 Engagement Periods and Report Due Dates - I-3a Matters Requiring Immediate Action - I-3b Auditor Qualifications - I-4 General Planning Considerations - I-5 Engagement Letter - I-5 Third Party Servicers Audit - I-5 Escrow Agent/Reimbursement - I-5 Follow Up on Prior Audit Findings - I-6 Site Visits - I-6 Corrective Action Plan - I-6 Close Out Examinations - I-6 Student Confirmations - I-7 Audit Report Package - I-7 Financial Statement Audit - I-7 Management and Legal Counsel Representation Letters - I-8 Consideration of Internal Control Structure - I-8 85/15 Revenue Test - I-8 Contact Office - I-8 Financial Statement Reporting - I-9 Compliance Attestation Engagement - I-9 Computer and Electronically Processed Data - I-9 Consideration of The Internal Control Structure - I-10 Materiality - I-11 Sampling Methodology - I-11 Sample Results - I-12 Reporting Noncompliance - I-13 Compliance Attestation Reporting - I-13 Quality Control Review of Audit Reports - I-14 Future Revisions - I-14 SECTION II REQUIRED MANAGEMENT ASSERTIONS, COMPLIANCE REQUIREMENTS AND SUGGESTED PROCEDURES Introduction - II-1 Institutional Eligibility and Participation - II-2 Reporting - II-8 Student Eligibility - II-11 Disbursements - II-14 Refunds - II-19 Cash Management - II-23 Close Out (If Applicable) - II-25 Perkins Loan Collections and Due Diligence - II-27 SECTION III PLANNING AND OTHER CONSIDERATIONS FOR AUDITS OF INSTITUTION SERVICERS Purpose of This Section - III-1 Requirements and Standards for Service Attestation Engagements - III-1 Annual Compliance Audit - III-1 Standards for Servicer Audits Audit - III-2 Engagement Periods and Due Dates - III-3 First Year Engagements - III-3 Subsequent Engagements - III-3 Due Dates - III-3 Servicer’s Reporting Entity - III-3 Contracting with More Than One Institution, Lender or Guaranty Agency - III-3 Servicer’s Responsibilities - III-4 Servicer Corrective Action Plan - III-4 Practitioner Responsibilities - III-4 Engagement and Management Representations - III-4 Planning Considerations for Servicer Audits - III-5 Consideration of the Servicer’s Internal Control Structure - III-5 Materiality - III-6 Sampling Methodology - III-6 Sample Results - III-6 Reporting Noncompliance - III-7 Compliance Attestation Reporting - III-8 SECTION IV REQUIRED SERVICER MANAGEMENT ASSERTIONS, COMPLIANCE REQUIREMENTS AND SUGGESTED PROCEDURES Introduction - IV-1 Institutional Eligibility and Participation - IV-2 Reporting - IV-3 Student Eligibility - IV-4 Disbursements - IV-5 Refunds - IV-6 Cash Management - IV-7 Close Out (If Applicable) - IV-8 Perkins Loan Collections - IV-9 Servicer Eligibility - IV-10 Servicer’s Systems and Internal Controls - IV-13 SECTION V - ILLUSTRATIVE REPORTS AND APPENDICES Financial Statement Report on the Audit of the Basic Financial Statements - Example A-1 Report on the Internal Control Structure Based on an Audit of the Basic Financial Statements - Example A-2 Report on Compliance Based on the Audit of the Basic Financial Statements - No Reportable Instances of Noncompliance - Example A-3 Compliance Attestation Compliance Report Section - Example B Servicer Cover Page - Example B-1 Auditor Information Sheet - Example C Servicer Information Sheet - Example C-1 Report on Management's Assertions on Compliance With Specified Requirements Applicable to the SFA Programs - Example D Summary Schedules A, B and C - Example E Schedule of Findings and Questioned Costs - Example F Auditor's Comments on Resolution Matters Relating to the SFA Program - Example G Corrective Action Plan - Example H Appendices SFA Programs' Minimum and Maximum Amounts....Appendix A High Risk Indicators....Appendix B Regional Inspector General for Audit & Related Offices....Appendix C Instructions for Example E....Appendix D |