What You Need to Know About Final Audit Determination Letters

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Final Audit Determination Letters (FADL) are the U.S. Department of Education’s (Department’s) final response to the institution’s annual Student Financial Aid (SFA) compliance audit. These letters list the findings noted in the audit report, state corrective actions taken by the institution and issue final resolution of the audit findings. These are issued after the Department has completed review of the audit report and determined if the finding is considered closed. They’re mailed to your institution and your auditor will request a copy of the letter during the next annual SFA compliance audit.

Let’s take a step back.

What Are Annual SFA Compliance Audits?

Annual SFA compliance audits are required for all schools participating in Title IV, Higher Education Act programs. Institutions are required to engage a Certified Public Accountant, in accordance with the Department’s Guide for Audits and Proprietary Schools and for Compliance Attestation Engagement of Third-Party Servicers Administering Title IV Programs Services-September 2016, to preform an annual SFA compliance audit.

Once the institution’s annual compliance audit has been completed, the audit report is submitted to the Department via the eZ-Audit website. After the audit is uploaded, it is reviewed by an Audit Resolution Specialist. The Audit Resolution Specialist is responsible for determining if all corrective action has been completed and may request additional documentation needed to do so.

A Corrective Action Plan (CAP) is required for all SFA compliance audit reports. This is the institution’s response to the annual SFA compliance audit. The CAP includes two main items: 1) a list of the audit findings and 2) the school’s response stating what will be done to correct the finding(s) noted. Also, the Department uses the CAP to help determine if sufficient corrective action has been taken.

How Can You Prepare Your School for Audits?

We always recommend being proactive regarding corrective action of the findings. It’s always better to take the required action prior to submitting the audit report. However, even if corrective action has been taken, it’s possible additional information will be requested or additional proof requested, and other times only request the auditor comment in the “Prior Audit” section of the next regularly scheduled audit.

Additionally, there are cases where the Department issues a Preliminary Audit Determination Letter asking for additional information to help with final audit determination. This is usually the case when there are repeat findings and/or findings that exceed a 10% error rate.

If no findings were reported in the audit report, a FADL may not be sent. If this is the case, the institution will be notified through the eZ-Audit website stating no action was required. You can print the screen shot and this will act as the FADL. If, the FADL is ever misplaced you can request a copy of the letter by contacting the Department.

For more information or if you have questions, please reach out to our Title IV team.

This publication contains general information only and Sikich is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or any other professional advice or services. This publication is not a substitute for such professional advice or services, nor should you use it as a basis for any decision, action or omission that may affect you or your business. Before making any decision, taking any action or omitting an action that may affect you or your business, you should consult a qualified professional advisor. You acknowledge that Sikich shall not be responsible for any loss sustained by you or any person who relies on this publication.

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