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General Institutional Responsibilities

PublicationDate: 7/1/95
ChapterNumber: 2
ChapterTitle: General Institutional Responsibilities
SectionNumber: 2
SectionTitle: Responsibilities of Institutional Offices
PageNumbers: 29-36


2.2 Responsibilities of Institutional Offices

Effective management of Title IV programs hinges on institutional
personnel's understanding of the responsibilities of their offices and
how those offices must work together to ensure that standards are
maintained and good practices are achieved. This must be a school-
wide effort; each of three key offices plays an important role.
Descriptions of these roles follow.

2.2.1 The President/Chancellor/Chief Executive Officer

((Leadership role))
The leadership and management style of the President, Chancellor,
or Chief Executive Officer (CEO) set the tone and direction of the
financial aid program for the entire institution.

Although some authority and responsibility may be delegated to
other offices, the overall leadership and support of the
CEO/President are crucial to the success of the financial aid program
at a school. By recognizing the importance of federal aid programs,
making their program administration a high priority, and holding key
officials accountable, the CEO's/President's leadership can foster an
environment that promotes an effective and responsive financial aid
program that will meet the institution's goals, the needs of its
students, and the stewardship responsibilities to those entities
providing financial support for these programs.

((Responsibilities of the CEO/President))
In addition to this general leadership responsibility, the
CEO/President is also charged with specific responsibilities. The
CEO/President must ensure that:

- the school is financially responsible and administratively capable
to administer Title IV programs (see sections 2.1.2 and 2.1.3),

- a capable individual is responsible for administering Title IV
programs and for coordinating federal and nonfederal financial aid
programs,

- an adequate number of qualified staff administer Title IV
programs,

- clear lines of responsibility are established,

- good communication and cooperation exist between pertinent
institutional offices,

- the school maintains effective recordkeeping systems for both
student records and financial records (see section 2.8),

- an adequate system of checks and balances exists to ensure
separation of award and disbursement functions (see
section 2.1.4),

- the school has accurate information about student applications for
Title IV aid and that any discrepancies or inconsistencies in that
information are resolved,

- the school provides adequate financial aid and debt management
counseling to students,

- the school refers to ED's Office of Inspector General any
suspected cases of fraud, abuse, or misrepresentation in connection
with Title IV program funds,

- the school obtains and keeps current a fidelity bond and a
performance bond (if required by ED to do so or if the school
chooses to do so),

- an annual, nonfederal audit of the school's Title IV financial
operations is performed by an independent auditor (see
section 6.6.2),

- institutional personnel cooperate fully with any program reviews
or audits and that all necessary information is made available to
reviewers or auditors,

- no criminal or fraudulent activities occur in managing federal
funds and administering Title IV programs,

- the institution has reasonable standards of satisfactory academic
progress,

- the institution has a fair and equitable refund policy,

- the institution has an operable and accessible drug-abuse
prevention program, as required under the Drug-Free Schools and
Communities Act,

- the institution is a drug-free workplace, as required by the Drug-
Free Workplace Act, and

- the school makes available all published information required by
the Student Right-to-Know and Campus Security Act and by any
other laws and/or regulations and that the school provides the
services described in those publications.

Although these activities are listed under the office of the
CEO/President, other institutional offices will be involved in making
sure that these responsibilities are met.

2.2.2 The Financial Aid Office

While a school's financial aid office assumes most of the
responsibilities of administering Title IV programs, the office's role
in the institution's fiscal operation is usually a limited one. In
general, fiscal functions carried out by financial aid administrators
(FAAs) involve authorizing use of Title IV funds and might include:

((Fiscally related activities))
- authorizing payment of Title IV funds to student accounts or to
students directly,

- authorizing refunds to students,

- authorizing refunds to Title IV program accounts, and

- ensuring that the school collects any required repayments.

The extent to which the financial aid office is involved in other Title-
IV-related fiscal operations will depend on institutional
characteristics, such as organizational structure, size, and level of
automation. However, at all times, schools are required to adhere to
the principle of separation of functions (see section 2.1.4). This
means the functions of authorizing payments and disbursing funds to
students must be separated so that no single office or individual has
responsibility for both functions for any student assisted under any
Title IV program.

((Financial aid office responsibilities))
Working in conjunction with other campus offices, the financial aid
office is generally responsible for:

- advising and counseling students and parents about financial aid,

- providing students with consumer information, as required by
federal regulations (see section 2.4),

- developing written policies and procedures that affect the school's
administration of Title IV programs (see section 2.5),

- determining students' eligibility for financial aid and making
financial aid awards to students,

- coordinating activities of the financial aid office with those of
other institutional offices in administering financial aid programs,

- interacting with various outside groups, agencies, associations,
and individuals about issues concerning the school's
administration of financial aid programs,

- monitoring students' enrollment to ensure that satisfactory
academic progress is maintained,

- maintaining both school records and student records that
document activities of the financial aid office and provide data for
reports (see section 2.8),

- keeping current on changes in laws and regulations to ensure that
the school remains in compliance,

- assisting in reporting Pell Grant expenditures,

- managing and reporting on activities that involve financial aid
funds,

- assisting in reconciling Direct Loan records, and

- reconciling student financial aid data provided to the business
office to ensure that all payments have been made, refunds are
accounted for, and expenditures are reported.

((Loan counseling))
An additional, important institutional responsibility is providing
entrance and exit loan counseling to borrowers of FFEL Program
loans and Federal Direct Loans. At some schools, these counseling
activities are handled by the financial aid office as part of the award
and delivery process, while at other schools, these activities are
considered the responsibility of the business office as part of the
disbursement process.

2.2.3 The Business Office

Title-IV-related fiscal operations are handled by an institution's
business office. This office may go by another name--fiscal office,
finance office, comptroller's office, bursar's office, treasurer's office,
or student accounts office. For the duration of this book, this office
will be referred to simply as "the business office" or "the fiscal
office."

((Separation of functions))
Depending on the characteristics of an institution, a business office
may have several staff members who perform the fiscal functions of
managing Title IV programs or it may have only one staff member
who is responsible for managing all fiscal aspects of Title IV
programs for the school. In either case, separation of duties must be
maintained at all times, such that no single office or individual has
responsibility for the functions both of authorizing payments and
disbursing funds to students.

((Fiscal office responsibilities))
The business office provides critical services to the school in
managing both federal and nonfederal financial aid programs.
Maintaining accounting, recordkeeping, and reporting functions tied
to the institution's use of federal and other funds requires many
detailed, complex systems. Strong internal controls and sound
business and financial management practices are keys to the success
of these operations and delivery of funds to students.

In fulfilling its fiduciary responsibility of Title IV fund management,
some of the major responsibilities of the fiscal office are:

- coordinating activities and cooperating with the financial aid
office in

- projecting cash flow needed to cover awards,

- processing cancellations and refunds,

- obtaining authorization to pay Title IV funds,

- being aware of changes in Title IV laws and regulations,

- submitting accurate and timely reports,

- reconciling with the financial aid office to ensure that all
financial aid adjustments have been properly recorded,

- maintaining a system of internal controls that includes adequate
checks and balances,

- ensuring that the functions of authorizing and disbursing
Title IV funds remain separate,

- maintaining records according to federal and generally accepted
accounting principles,

- maintaining records to ensure a clear audit trail,

- drawing down and returning Title IV funds,*6*

- disbursing funds to eligible students from Title IV program
accounts,

- maintaining individual student accounts that record charges,
credits, and amounts due (if the school uses individual student
accounts),

- delivering FFEL Program loan proceeds,

- establishing and implementing the institution's refund policy,

- establishing and monitoring Federal Work-Study payroll and
time sheets,

- assisting in reporting Title IV expenditures to ED in a timely
manner,

- processing refunds and credit balances to Title IV accounts in
accordance with the institution's refund policy and applicable
federal regulations,

- reconciling accounts, including reconciling cash between
school records and bank statements and reconciling federal
funds between bank statements and federally reported balances,

- assisting in completing applications and fiscal reports for
federal funds,

- maintaining a cash management system to meet disbursement
requirements and federal laws and regulations,

- providing general stewardship for federal funds, including
maintaining bank accounts*7* and investments as appropriate,
and

- preparing for and participating in program reviews and audits.

((Federal Perkins Loan Program))
At some schools, the business office may also have responsibility for
administering certain aspects of the Federal Perkins Loan Program.
While the financial aid office will be responsible for awarding
Perkins Loan funds, the business office may be responsible for
collecting and handling promissory notes, billing borrowers in
repayment, collecting payments, authorizing deferments, cancelling
loans, and counseling students. A school may contract with a third-
party servicer for some of these activities, and some schools have a
separate loan office that is part of either the business office or the
financial aid office.

((Loan counseling))
Finally, as mentioned in the description of financial aid office
responsibilities, entrance and exit loan counseling for the Federal
Direct Loan and FFEL Programs is sometimes handled by the
business office as part of the loan-delivery process.


*6* Please note that many institutions use ED/PMS to draw down
other ED program funds besides Title IV funds. The same is true for
returning funds.

*7*However, postsecondary institutions are not required to have a
separate bank account for Title IV funds. See section 4.5.1.

Last Modified: 06/30/1995