Maintained for Historical Purposes

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

Summary: Notice implementing a new electronic process(eZ-Audit) for submitting compliance and financial statement audits.

Publication Date: May 2003

Page Numbers: 26586-26587

Summary: Notice implementing a new electronic process(eZ-Audit) for submitting compliance and financial statement audits.

Posted on 05-16-2003


[Federal Register: May 16, 2003 (Volume 68, Number 95)]
[Page 26586-26587]
From the Federal Register Online via GPO Access []



Student Assistance General Provisions

AGENCY: Department of Education.

ACTION: Notice implementing a new electronic process(eZ-Audit) for 
submitting compliance and financial statement audits.


SUMMARY: The Secretary gives notice that on June 16, 2003, the 
Department will fully implement the eZ-Audit process under which an 
institution that participates, or seeks to participate, in the Federal 
student aid programs submits its compliance and financial statement 
audit information electronically. The Federal student aid programs are 
authorized under Title IV of the Higher Education Act of 1965, as 
amended (Title IV, HEA Programs). This notice applies to any compliance 
or financial statement audits that an institution is required to submit 
under 34 CFR 600.20(a) or (b) to begin or continue participating in the 
Title IV, HEA Programs, any financial statement audits required for an 
institution that undergoes a change in ownership resulting in a change 
in control as provided under 34 CFR 600.20(g), any compliance and 
financial statement audits that an institution is required to submit 
annually under 34 CFR 668.23, and any compliance and financial 
statement audits required of an institution that ceases to participate 
in the Title IV, HEA Programs as provided under 34 CFR 668.26(b).
    Effective immediately, institutions may voluntarily begin using eZ-
Audit to submit any required audits. Beginning on June 16, 2003, all 
institutions are required to use eZ-Audit for submitting electronically 
any required audit that is due on or after that date. However, if an 
institution is unable to use eZ-Audit to submit its first audit that is 
due on or after June 16, 2003, it should contact the person identified 
below to make alternative arrangements for submitting that audit.

FOR FURTHER INFORMATION CONTACT: Ti Baker, Management and Program 
Analyst, Schools Channel, Federal Student Aid, U.S. Department of 
Education, Union Center Plaza, 074G2, 830 First Street, Washington, DC 
20202. Telephone: (202) 377-3156, Fax: (202) 275-5726, or via Internet:  
  If you use a telecommunications device for the deaf (TDD), you may 
call the Federal Information Relay Service (FIRS) at 1-800-877-8339.
    Individuals with disabilities may obtain this document in an 
alternative format (e.g., Braille, large print, audiotape, or computer 
diskette) on request to the program contact person listed under FOR 

SUPPLEMENTARY INFORMATION: eZ-Audit is a web-based process designed to 
facilitate the submission of compliance and financial statement audits, 
expedite the review of those audits by the Department, and provide more 
timely and useful information to institutions regarding the 
Department's review. This notice deals only with the procedures for 
submitting audits under the eZ-Audit process. More detailed information 
about other aspects of the eZ-Audit process is available under the 
Electronic Announcements section at htt
    Proprietary institutions are required to submit audits directly to 
the Department regardless of the reason those audits are required. 
Currently, all non-profit and public institutions are required to 
conduct and submit annual compliance and financial statement audits in 
accordance with Office of Management and Budget (OMB) Circular A-133. 
Under OMB Circular A-133, these institutions submit their annual audits 
to the Federal Audit Clearinghouse (Clearinghouse) that in turn 
provides copies to the Department and other Federal agencies. For any 
other audits that a non-profit or public institution is required to 
conduct under the Title IV, HEA Program regulations, those audits are 
submitted directly to the Department.
    OMB Circular A-133 also provides that in response to a request from 
a Federal agency, non-profit and public institutions must submit their 
annual audits directly to that agency. Accordingly, the Department 
hereby requests non-profit and public institutions to submit copies of 
their OMB Circular A-133 annual audits directly to us through eZ-Audit. 
The Department makes this request to maximize the utility of eZ-Audit 
by establishing a uniform process under which all institutions submit 
any audit required under the Title IV, HEA Program regulations. We note 
that non-profit and public institutions whose annual audits are 
conducted in accordance with OMB Circular A-133 must continue to submit 
those audits to the Clearinghouse.
    The Department will carefully monitor the utility of the eZ-Audit 
approach in identifying fraud and reducing error in Federal student aid 
programs and improving the validity and reliability of the data 
reported. The Department will also ensure that it minimizes the burden 
associated with submitting audits under this approach.
    After completing the first cycle of audits under this approach, the 
Department will implement any reforms necessary to enhance the utility 
of the data it receives and reduce burden on institutions. Moreover, 
the Department will consider modifying the eZ-Audit process in view of 
any significant changes the Clearinghouse may make in accepting 
electronic audit submissions and in response to the continuing efforts 
by the accounting community to standardize the format and presentation 
of electronic audit data.

eZ-Audit Process

    An authorized person at an institution submits required audits on 
behalf of the institution by (1) accessing the appropriate page on the 
eZ-Audit website using identity credentials issued to the institution 
by the Department, (2) entering general information about the 
institution's compliance audit, (3) entering general information and 
specific financial data from the institution's audited financial 
statements, and (4) attaching authentic copies of the signed audits.

Identity Credentials

    An institution obtains credentials for accessing the eZ-Audit 
system by completing and signing registration materials described under 
the Electronic Announcements section at h, and 
submitting them to: The U.S. Department of Education, Federal Student 
Aid, Attention: Ti Baker,830 First Street, NE.,Washington, DC 20202.
    After receiving the registration materials, the Department will 
send electronically identity credentials (initially a username and 
password) to the institution. Although we expect to be able to issue 
identity credentials within a few days after receiving a request, an 
institution should submit its registration materials as soon as 
possible to ensure that it can use the eZ-Audit system to submit 
required audits on and after June 16, 2003.

Entering Information About the Audits

    An institution enters general and specific information about its 
compliance audits and financial statements on the appropriate eZ-Audit 
web pages. General information is used to determine whether the audits 
are materially complete and conducted in accordance with applicable 

[[Page 26587]]

Specific financial data is used to make a preliminary determination as 
to whether a non-profit or for-profit institution is financially 
responsible under 34 CFR part 668, subpart L of the Student Assistance 
General Provisions regulations (or in the case of a change in ownership 
resulting in a change in control, whether the institution satisfies the 
financial ratio requirements under 34 CFR 668.15).

Attaching an Authentic Copy of the Audits

    After an institution enters all requested information, it must 
attach (or upload) to the eZ-Audit Web page an electronic copy of any 
required compliance and financial statement audits that were prepared 
and signed by the independent auditor(s) engaged by the institution to 
conduct those audits. The electronic copy of any required audit must be 
a read-only Portable Document Format (PDF) file made using Adobe 
Acrobat version 5.0 or higher.

Electronic Access to This Document

    You may view this document, as well as all other Department of 
Education documents published in the Federal Register, in text or Adobe 
Portable Document Format on the Internet at the following site:
    To use PDF you must have Adobe Acrobat Reader, which is available 
free at this site. If you have questions about using PDF, call the U.S. 
Government Printing Office (GPO), toll free, at 1-888-293-6498; or in 
the Washington, DC, area at (202) 512-1530.

    Note: The official version of this document is the document 
published in the Federal Register. Free Internet access to the 
official edition of the Federal Register and the Code of Federal 
Regulations is available on GPO Access at:

 Program Authority: 20 U.S.C. 1099c.

    Dated: May 13, 2003.
Theresa S. Shaw,
Chief Operating Officer, Federal Student Aid.
[FR Doc. 03-12286 Filed 5-15-03; 8:45 am]



Last Modified: 05/15/2003