Regulatory Updates

By Michael T. Wherry, CPA | June 22, 2018

With all the recent and potential regulatory changes being made or proposed by the current administration, it is a good time to take a quick review of some key regulatory items.  Regulatory compliance continues to be a “hot” topic and we don’t foresee this trend changing at a macro-level.  These reminders are items we have seen in our recent student financial aid audits under the new Audit Guide and from recent conference presentations.

Consumer information is an area which continues to remain a very important topic as frequent news stories address the value of post-secondary education and its outcomes.

  • Annual Security Report (ASR) – Ensure the ASR addresses 100% of the Clery Act requirements. ED provides a Cleary Handbook and an extensive checklist. While this can be a voluminous requirement, recent fines have ranged from $35,000 to $100,000.
  • ED provides online Clery Training which can be found by searching for “fsae-training”
  • We have noted that consumer right-to-know completion / graduation rates have differed from the IPEDS rates. We recommend that these calculations and rates are reviewed before the IPEDS submission is completed and retained for future reference.
  • The Veterans Administration Shopping Sheet is still in existence and institutions need to ensure the information is accurate.


Written policies and procedures are required to be obtained these as part of our audit per federal regulations.  Policies and procedures should be written which describe the basic financial aid packaging, awarding, disbursing, and refund of Title IV aid.  Policies must exist which document who Campus Based Aid is award, the verification process, and how high school diplomas are reviewed to ensure they are valid.  In addition, a written Federal Direct Loan Assurance Program must be developed and maintained.


Gainful Employment is still in effect until new regulations are issued.

  • GE Warnings – These must be disclosed if a program has failed, is still being taught, unless an earnings appeals is still pending. No exceptions exist even if they program is in a teach out process.
  • Ensure your completers list information is accurate. In M&A’s opinion, the required gainful employment reporting process may still be required under a new proposed regulation as ED will still need to know from the institution who are the completers for each CIP Code and Credential Level. Even if ED computes a gainful employment debt-to-earnings metric solely on Title IV aid, the institution may be the initiator of the completers list.


The incentive compensation testing performed by auditors was expanded under the new Audit Guide.

  • Function of 3rd-party recruiters – Auditors will want to know if the institution utilizes 3rd-party companies for marketing. The key question is whether these 3rd-party companies are just media companies (radio, TV, print) and lead generators (PPC) or if these 3rd-party companies perform recruiting services (level of contact, setting appointments, calling students, connecting to school admissions department, etc.).  These 3rd-party companies could be subject to your auditor’s incentive compensation testing.
  • Auditors may also be asking for annual employee evaluation forms to determine if their performance is being rated based upon student enrollments or the amount of Title IV aid awarded.
  • Having a thorough summary of your payroll process, any bonus plans, employee evaluation template forms, and any nuances of the payroll process during the audit period (i.e. cost of living wage increase or companywide pay decrease) is important to support how an institution complied with the incentive compensation regulations.

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