Facing Audit Phobia, Part III: Embrace Learning Opportunities

By Luke Hoey, FAAC® | July 26, 2022

The last thing an institution wants to hear while undergoing an audit is, “We’ve identified some processes that aren’t compliant with Title IV rules.”

In a perfect world, a compliance audit comes and goes swiftly and without any findings. But in the real world, one where regulations change regularly and it’s difficult to keep up, there will be missteps — and that’s OK. The important thing is that an institution learns from its mistakes and grows from them.

Follow these steps to help turn a negative into a positive.

Review processes

If an auditor turns up a finding, it’s possible the root of the problem can be found in an institution’s processes. Perhaps a rule change was never implemented correctly but, nevertheless, ended up in a policies and procedures manual. That’s why institutions should regularly review their processes regarding Title IV, particularly when rules change. When you’re adjusting specific policies, it’s worth examining the rest to confirm compliance.

These reviews may require administrators to collaborate with other campus offices, such as the registrar (enrollment reporting), student accounts (credit balances) or academic departments/advisors (satisfactory academic progress).

Update policy and procedures manual

Once administrators identify what processes must be changed or implemented, it is best to codify it by adding it to the institution’s policy and procedures manual. If there is no manual, then there’s no better time to create one.

An institution’s auditor may be willing and able to assist with this, but there are helpful resources to make this a smooth process, as well. NASFAA members, for example, have access to a Policies & Procedures Builder, a step-by-step guide to the creation of a centralized, accessible manual.

Make a timeline/action plan

Along with the changes an institution may be making post audit, there will always be several regulations that are updated, overhauled or eliminated each year. An institution should create a timeline or action plan to implement new rules and processes. Here are some questions an institution should consider when creating this plan:

  • What is the effective date for implementation, and will there be a phased-in implementation period?
  • How early should the planning process begin?
  • Will there be a testing period?
  • Who needs to be notified?
  • What training might be required?

Train staff and assign accountabilities

Institutions can review and adjust their processes following an audit finding, but it’s all for naught without investing time in training staff on the changes and understanding the impact of being out of compliance. Not only is it key to keeping everyone on the same page, but training is an Administrative Capability and a principle of Internal Control.

In another best practice, staffers should be assigned to monitor specific processes and perform quality assistance checks that ensure the processes are strictly followed. By performing an internal audit, administrators can catch errors and correct them prior to the auditor finding them. Focusing on processes that have been a problem in the past is a good way to start.

Keep learning

Even if a compliance audit goes without a hitch, there will likely be new processes to implement or ways to improve the ones already in place. This means institutions and their employees must be lifelong learners, monitoring for regulatory updates from the Department of Education, following industry groups and associations for news, and attending conferences, presentations and webinars when possible.

Of course, there’s such a thing as information overload — which an institution does not need on top of audit phobia. That’s where the Title IV compliance experts at McClintock & Associates can help. Schedule a call today to chat about your audit questions and concerns, and for a full rundown on overcoming audit phobia, watch our recent webinar.

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