CHAPTER 1 ACCOUNTING REQUIREMENTS - GENERAL
ACCOUNTING PROCEDURES
Accounting is one of the major responsibilities assumed by an institution as part of the participation in the health professions and nursing student assistance programs. Each participating school has an important responsibility to itself and to its students to develop procedures which will allow it to maintain good records and control over the student financial aid programs. While Accounting Procedures has been prepared with the intention of assisting institutions in meeting their responsibilities, it is not intended to be considered an accounting manual for instructional purposes.
CHAPTER 1 ACCOUNTING REQUIREMENTS - GENERAL
Accounting for scholarship and loan funds should be in accordance with generally accepted accounting principles consistently applied. Any generally accepted accounting method is satisfactory if it:
The program contact person is the individual who will be responsible for distributing DSA program mailings to the appropriate offices and individuals within the institution and will be responsible for ensuring the return of material. Any changes to the contact person, refer to Appendix I.
A professional, experienced staff is vital to the successful administration of the health professions and nursing student assistance programs. An institution cannot overburden the staff charged with the programmatic and fiscal functions of its student assistance activities, nor should it give these functions to a part-time or temporary employee. This job is permanent, important, full time, and requires experienced, trained, and responsible people with the attitude and ability to relate well to the student and to the administration of an institution. Staff members must have sufficient authority to carry out the requirements of the programs they administer.
The fiscal office should be adequately staffed to keep accurate fiscal records leading to proper management of the funds. The duties of the Fiscal Officer should be clearly separated from the functions of the Financial Aid Administrator to avoid confusion of authority and promote management of the program funds. The functions of the Fiscal Officer must include maintenance of records which reflect all transactions, provide accurate ledger and related subsidiary accounts, and are reconciled on a regular (i.e., monthly) basis. It is also recommended that the responsibility for the collection process (including the exercise of due diligence) be placed under the supervision of the Fiscal Officer.
It is important that the Financial Aid Administrator and the Fiscal Officer become totally familiar with the authority, functions and procedures of each other to ensure that all related activities are conducted so as to comply with Federal, State, and institutional standards. This is bestaccomplished with written job descriptions and through a continuing, open dialogue between the individuals responsible for program and fiscal operations at the school.
One of the most important and time-consuming responsibilities of an institution is the maintenance of records. Sound record keeping techniques will result in greater ease of locating applications, completing reports, collecting loans, and meeting Federal audit and monitoring requirements. Accurate records enable the school to document all activities occurring within the programs.
In the financial aid office there are three types of records to be maintained:
The fiscal office must maintain separate and distinct accounts for the various programs and keep records and supporting documentation of all transactions. These records could include copies of the Application to Participate, Notices of Awards, Annual Operating Reports, Financial Status Reports, records of collection, receipts of expenditures, and balances of accounts. These records constitute an accounting entity which, although kept separately from the general books of the school, need to be controlled by the ledger system of the school, maintained by the Fiscal Officer, and be auditable within the school's total ledger system.
Student records, collection records, and fiscal records have different retention and disposition schedules and requirements. The school must comply with the requirements of 45 CFR Part 74 concerning record keeping, audit, and inspection.
Student records which must be retained by the school for five years after the individual student ceases to be a student are:
These records may be destroyed at the end of the five-year period except when questions have been raised as a result of a Federal audit. In such cases, records should be retained until the questions have been resolved and the audit closed.
[42 CFR Part 57.215 and 42 CFR Part 57.315]
Student records for scholarship awards must be retained by the school for five years after the funds were awarded. If an audit by or on behalf of the Department of Health and Human Services has not occurred within this five-year period, the records must be retained until an audit has been conducted and all audit questions resolved.
Those records which have been produced as evidence of collection, billing and repayment activity must be kept for at least five years from the date of retirement of a loan. Records included in this requirement are listed in Section 5 below.
As in any fiscal accounting system, fiscal records kept as evidence of Federal funds being utilized must be kept indefinitely or until the Department of Health and Human Services indicates the school may dispose of these records. Records included in this requirement include all supporting documentation, such as bank statements and receipts of expenditures.
After the borrower leaves the school, a student file must be maintained as part of the school's collection responsibilities. The file can take on any format as long as it includes evidence of all activities taken in the collection of a loan. It is especially important to keep all evidence of correspondence and other contacts in the billing process. At a minimum, the school must retain the following records for five years from the date of retirement of a loan:
[42 CFR Part 57.215 and 42 CFR Part 57.315]
The school should also retain those records listed in Fiscal Management, Collections, Chapter 2, Due Diligence Procedures. It is suggested that the original student financial aid file be combined with the collection file to provide additional references to be used in contacting borrowers.
The accounting records and procedures described in the following chapters may be adapted to the school's own accounting system as long as the records of the funds are maintained in accordance with generally accepted accounting principles and provide the necessary information for preparation of financial reports and for management of the funds. If the adaptation to the school's accounting system does not protect the integrity of the funds or readily provide the necessary information, then the accounting procedures in the following chapters must be followed.
It should be noted that the accounting system described in Fiscal Management, Accounting Procedures, Chapter 3, Maintenance of Accounts will facilitate the preparation of the required reports. In addition, as report preparation is automated a school may want to interface the accounting system to the report to facilitate its preparation.
