oversight

The Missouri Higher Education Loan Authority's (MOHELA's) compliance with requirements for the Federal Family Education Loan Programs (FFELP).

Published by the Department of Education, Office of Inspector General on 2006-02-02.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                     UNITED STATES DEPARTMENT OF EDUCATION
                                    OFFICE OF INSPECTOR GENERAL
                                             Chicago/Kansas City Audit Region

                         111 N. Canal St. Ste. 940                           8930 Ward Parkway, Ste 2401
                         Chicago, IL 60606-7297                              Kansas City, MO 64114-3302
                         Phone (312) 886-6503                                Phone (816) 268-0500
                         Fax (312) 353-0244                                  Fax (816) 823-1398




                                                    February 2, 2006


                                                                            Control Number ED-OIG/A07F0025


Raymond Bayer, Jr.
Interim Executive Officer and CEO
Missouri Higher Education Loan Authority
633 Spirit Drive
Chesterfield, MO 63005

Dear Mr. Bayer:

The purpose of this letter is to notify you that we are terminating our audit of the Missouri
Higher Education Loan Authority’s (MOHELA’s) compliance with requirements for the
Federal Family Education Loan Programs (FFELP). The objective of our audit was to
determine if MOHELA complied with 34 C.F.R. §§ 682.209 and 682.411, for conversion of
a FFELP loan to repayment status and due diligence in the collection of FFELP loans. Our
survey covered the period April 1, 2005, through June 30, 2005. We have terminated our
audit because we did not identify any reportable instances of noncompliance with 34 C.F.R.
§§ 682.209 or 682.411.

Methodology

Before terminating our audit, we performed the following procedures:

1. Reviewed the OMB Circular A-133 audit reports for MOHELA prepared by an
   independent public accountant for the years ended June 30, 2002, 2003, 2004, and 2005.

2. Reviewed the Exceptional Performance audit report prepared by an independent public
   accountant for the year ended June 30, 2005, and the supporting audit documentation.

3. Reviewed written policies and procedures and interviewed MOHELA officials to obtain
   an understanding of the process MOHELA used to provide reasonable assurance of
   compliance with the FFELP loan conversion and collection due diligence requirements,
   and used this review to identify data we needed to test compliance with the program
   requirements.




        Our mission is to promote the efficiency, effectiveness, and integrity of the Department’s programs and operations.
Mr. Raymond Bayer, Jr.                                                                               Page 2 of 3
ED-OIG/A07F0025

4. Identified the universe of defaulted FFELP loan claims (1,399) for which MOHELA
   received reimbursement from guaranty agencies during the period April 1, 2005, to June
   30, 2005.

5. Assessed the reliability of computer-processed data by (a) gaining a limited
   understanding of MOHELA’s computer system controls; (b) reviewing an American
   Education Systems SAS 70 report, titled COMPASS Loan Servicing System, for the year
   ended September 30, 2004; (c) reviewing a National Student Clearinghouse audit report
   for the year ended June 30, 2005; 1 and (d) testing selected loan data for missing data,
   the relationship of one data element to another, and values outside of designated ranges.

6. Tested a randomly selected sample of 30 defaulted FFELP loan claims from the universe
   of 1,399 claims to determine if MOHELA converted the loans to repayment in
   accordance with 34 C.F.R. § 682.209 and performed at least the minimum loan
   collection due diligence activities set forth in 34 C.F.R. § 682.411.

7. Observed MOHELA personnel performing their loan collection due diligence activities.

8. Discussed staffing levels and workload with MOHELA managers, supervisors, and
   employees and analyzed their responses to determine if staffing was sufficient given the
   size of MOHELA’s portfolio.

We conducted our fieldwork between October 24, 2005, and December 8, 2005, at
MOHELA’s office in Chesterfield, Missouri. We performed our work in accordance with
generally accepted government auditing standards appropriate to the scope of our audit.

Administrative Matters

Our audit was limited to the work described above and would not necessarily disclose all
material weaknesses in MOHELA’s administration of the FFELP. Accordingly, the
contents of this letter should not be construed as acceptance or approval of MOHELA’s
administration of the FFELP. The termination of this audit does not preclude further
reviews and audits of this or similar areas by the Office of Inspector General, and it does not
preclude the U.S. Department of Education from taking further action concerning
MOHELA’s administration of the FFELP. The work we performed is not a substitute for
any other reviews or audits required by law, license, or accreditation.

In accordance with the Freedom of Information Act (5 U.S.C. § 552), reports and other
documents issued by the Office of Inspector General are available to members of the press
and general public to the extent information contained therein is not subject to exemptions in
the Act.




1
  We did not review the supporting audit documentation or determine the quality of the work performed for
these reports.
Mr. Raymond Bayer, Jr.                                                              Page 3 of 3
ED-OIG/A07F0025
We wish to express appreciation for the cooperation and assistance extended by your staff
during the audit. Should you have any further questions regarding our work, please contact
Darryl Meador at (816) 268-0513 or Tom Sample at (715) 235-3648. No response to this
letter is required.


                                    Sincerely,



                                & Richard J. Dowd
                                I

                                    Regional Inspector General
                                    for Audit


cc: Matteo Fontana, General Manager for Financial Partners, FSA
    Mirek Halaska, Regional Director, Financial Partners - Southern Region, FSA
    Yolanda Marshall, Audit Liaison Officer, Financial Partners, FSA