Applicability of Single Audit Act Regulations to the Title IV Student Aid Programs

Update On Single Audit Act Compliance From The U.S. Department of Education

The United States Department of Education ('the Department') has recently announced its policy position that Title IV student assistance programs are required to be audited annually under the Higher Education Act. The Department has clarified how this policy affects an organization’s 2016 Single Audit where it has been determined that no Single Audit of the Title IV student assistance program needs to be conducted because the program did not meet the ‘high risk’ threshold of those regulations.

What Is Required by the Single Audit Act?

Per recent changes to the Single Audit Act, if certain conditions are met, a Single Audit may only need to be conducted every three years and not annually. These conditions relate to whether the entity’s participation triggers the “major program” provision of 2 CFR 200.518 (related to the total dollar amount and whether the auditor has identified the ‘major program’ as a ‘low-risk program’). To clarify, a ‘low risk’ program exists when it had been previously audited as a major program in at least one of the most recent audit periods, and the program didn’t have any internal control deficiencies identified as material weaknesses.

What Is Required by the Higher Education Act?

The Higher Education Act requires institutions participating in Title IV submit a financial and compliance audit on an annual basis at a minimum. This requirement can be met by submission of either an audit conducted under the Title IV Audit Guide or an audit conducted under the Single Audit Act.

What Is The Issue?

For entities that must comply with the Single Audit Act and 2 CFR 200, does the organization meet the requirements of the Department of Education in a year in which no compliance audit was performed due to the “low risk” nature of Title IV participation?

What Is The Resolution?

An institution can meet the annual submission requirement by submitting annual audited financial statements and a compliance audit that were prepared in accordance with the OIG audit guides or in accordance with the Single Audit Act. However, a submission prepared under the Singe Audit Act, but does not include a compliance audit, will not meet the requirements. The Department plans to issue additional guidance in the 2017 Compliance Supplement that will be applicable to audits beginning after June 30, 2016. Until this guidance is issued, it has been recommended that institutions continue to provide Single Audit submissions that were prepared using the standards in place prior to the Single Audit Act regulatory change referenced above. If you have or are in the process of preparing a Single Audit under the new OMB guidance referenced above, with a determination that the Title IV programs were low risk, contact us for specific guidance.