Maintained for Historical Purposes

This resource is being maintained for historical purposes only and is not currently applicable.

(General) Subject: Citing Institutions for Late Annual Audit Submissions

Posted Date:January 17, 2012

Author: Robin Minor, Chief Compliance Officer, Federal Student Aid

Subject: Citing Institutions for Late Annual Audit Submissions

In order to participate in federal student aid programs, schools must generally submit an audit conducted by an independent auditor that includes a compliance audit and audited financial statements in accordance with 34 C.F.R.§ 668.23. Audits not received (missing) or submitted after the due date (late) demonstrate a lack of administrative capability and financial responsibility and may indicate mismanagement of federal student financial aid funds.

To reduce risk and safeguard taxpayers’ interests associated with late or missing audit submissions, the Department of Education is bolstering enforcement of the existing past performance regulations in 34 C.F.R. § 668.174(a)(3).

Effective for any late audits submitted after December 31, 2011
or missing audits that were due on or after December 31, 2011

When the annual audit is not received (missing) or is submitted after the due date (late), the school may be cited for a past performance violation that causes the institution to fail the financial responsibility requirements in the regulations.

To continue participation in the federal student aid programs, an institution that is not financially responsible because of a past performance violation will be required to:


Participate in federal student aid programs under provisional certification;

2. Post an irrevocable letter of credit for a minimum of 10% of the Title IV, HEA program funds, received by the institution during its most recently completed fiscal year for past performance violations that will remain on file 5 years from the most recent past performance violation; and
3. Participate under heightened cash monitoring payment method that requires the institution to disburse funds and submit supporting documentation before requesting/drawing down federal funds.

Further, 34 C.F.R.§ 668.171(e) provides that an institution’s failure to submit compliance and financial statement audits by the date permitted and in the manner required under 34 CF.R.§ 668.23 may result in the Department initiating adverse action against the institution, including terminating or revoking the institution’s program participation agreement.

Contact Information

If you have any questions about this information, you may contact the School Participation Team (SPT) for your state. The telephone numbers for the SPTs can be found at

Last Modified: 01/16/2012