Audit Monitoring for Direct Loan Reconciliations

Policy Name: Audit Monitoring for Direct Loan Reconciliations
Policy Number: 07-01-001
Accountable Senior Administrator: Vice President of Enrollment Management and Student Success
Issued: September 7, 2021
Last Updated: September 7, 2021

Policy Statement
In accordance with federal regulations (34 CFR 685.300(b)(5)), New Jersey City University reconciles direct loan programs monthly. Reconciliation ensures that funds are disbursed accurately to students and that the University is meeting the objectives of the Direct Loan Program. To ensure compliance, this policy outlines relevant procedures and accountabilities.

Reason for the Policy
In accordance with provisions of the Direct Loan Program, NJCU is required to document its quality assurance processes related to monthly reconciliation. Reconciliation compares the loan amounts reflected on the federal government’s records with the figures posted on the University’s Peoplesoft system. This policy documents the business process and steps involved in direct loan reconciliation, review, documentation, and audit.

Stakeholders Affected by Policy
The stakeholders affected by this policy include:

  • Students receiving financial aid
  • Staff in the Financial Aid Department
  • Vice President of Enrollment Management and Student Success
  • Chief Financial Officer and Controller
  • Internal Auditor

Definitions
COD stands for the US Department of Education’s Common Origination and Disbursement.

  • G5 is the Department of Education’s Grants Management System. The G5 is used for the administration of Federal Student Aid.
  • Reconciliation is the student record by student record matching of the loan and dollar amount of COD vs. PeopleSoft.

Policy Text
In accordance with federal regulations (34 CFR 685.300(b)(5)), New Jersey City University reconciles direct loan programs on a monthly basis. Reconciliation ensures that funds are disbursed accurately and that the University is meeting the objectives of the Direct Loan Program.

This policy requires the Vice President of Enrollment Management and Student Success (VPEMSS) to review and sign off on all monthly loan reconciliation processes conducted by and reports created by the Financial Aid Department. The VPEMSS is responsible for review and approval of the results of the monthly draw-down processes. Upon conclusion of the review and approval by the VPEMSS, all relevant documentation is provided to the CFO, Controller, and Internal Auditor.

Procedures
The Federal Government provides information on Title IV Aid Disbursement Reporting, Excess Cash, and Reconciliation Requirements. This section summarizes the NJCU business process; details and screenshots are contained in Technical References and Report Paths for Direct Loan Reconciliations document, available in the Financial Aid Office.

  • The Financial Aid Department reconciles the Direct Loan (DL) program monthly. The reconciliation is between the Cash Receipt records on COD vs. the Cash Receipt records (amount NJCU has drawn down from G5) and the booked disbursements on COD vs. the actual disbursements recorded in PeopleSoft. Reconciliation is the student record by student record matching of the loan and dollar amount of COD vs. PeopleSoft.
  • After monthly reconciliation is completed, the VPEMSS reviews and signs off on the reports.
  • Finalized monthly reports are maintained in a folder on the Financial Aid Office network drive.
  • The Director of Financial Aid forwards a copy of approved monthly reports to the CFO, the Controller, and the Internal Auditor.
  • The Financial Aid Office also performs a final reconciliation and year-end closing of the program on COD. This is due before July 1.

Violations
Failure to comply with the federal requirements pertaining to direct loan reconciliations and maintenance of corresponding supporting documentation may result adverse actions for the University including audit exceptions and/or penalties assessed by the Department of Education.

Failure of accountable staff to comply with this policy may result in review and action by the individual’s supervisor.

Related Policies and Documents

Responsibility

Responsible Duties
Staff in the Financial Aid Department
  • Perform all steps needed to reconcile the direct loan balances per the University’s records (PeopleSoft) and the Department of Education’s records.
  • Maintain supporting documentation for loan reconciliation processes and research performed.
  • Respond to any inquiries made by the Director and other University officials pertaining to the reconciliation processes.
  • Provide regular updates to the Director of Financial Aid.
  • Prepare historical reports for loan reconciliation processes and results.
Director of Financial Aid
  • Provides support and guidance for Financial Aid employees.
  • Works closely with staff throughout the loan reconciliation processes.
  • Reviews and approves documentation for the monthly reviews prior to submission to auditors.
  • Maintains regular communications with the Vice President, Enrollment Management.
  • Provides auditors with reconciliation documentation
Vice President of Enrollment Management and Student Success
  • Maintains responsibility over all Financial Aid business processes including monthly loan reconciliations.
  • Maintains regular communications with the Director of Financial Aid to discuss results of loan reconciliation processes.
  • Reviews all loan reconciliation documentation and related files and signs-off prior to submitting this material for audit review.
  • Works with Finance and Treasury to develop and implement standard procedures for drawdowns. Incorporates these standards into Financial Aid standards.
Director, Internal Audit
  • Reviews the documents and related reports submitted by the Director of Financial Aid.
  • Provides feedback and may present questions for any information that is not clear or not complete.
  • Prepares and presents monthly results to the President, Chief of Staff and the Finance and Audit Committee of the Board of Trustees.
  • Meets with KPMG periodically to discuss loan reconciliation processes.

Contact for Questions
Financial Aid Department
201-200-3173

Office of the Controller
201-200-3041